The lawsuit against former President Donald Trump’s 2017 inaugural committee and his private business could potentially go to trial after a D.C. Superior Court judge allowed some of the local attorney general’s claims to move forward on Monday.
The lawsuit, filed by District of Columbia Attorney General Karl Racine in January 2020, alleges that the Trump International Hotel in Washington illegally received more than $1 million by charging the Presidential Inaugural Committee inflated prices to use ballrooms and other event spaces — violating the city’s laws governing nonprofit organizations.
“It’s a big deal that our lawsuit is moving forward and going to trial,” Marrisa Geller, a spokesperson for Racine, said in a statement. “The Inaugural Committee misspent more than $1 million in nonprofit funds to unlawfully benefit private interests. We cannot allow those in power to get away with using money to illegally enrich themselves and their families.”
Racine has asked the judge to make the Trump hotel return the money so it can be given to a charity organization.
D.C. Superior Court Judge José M. López threw out one of Racine’s main arguments, deciding the committee had not wasted its money when renting the ballrooms. López noted that claims of “waste” were difficult to prove.
“It is not sufficient for a plaintiff to demonstrate that the defendant made a bad call or even that they were negligent,” he wrote. “Rather, ‘[t]he decision must go so far beyond the bounds of reasonable business judgment that its only explanation is bad faith.’”
But López allowed another allegation — that the nonprofit committee had misused assets for the Trump family’s private gain — to move forward. Nonprofits are not allowed to use funds for the private benefit of their leaders.
Racine’s lawsuit alleged in particular that Ivanka Trump, a White House adviser at the time and former senior executive at the Trump Organization, was involved in discussions about the rentals and was warned at least twice that the hotel’s prices could lead to charges of self-dealing against her father.
According to an email submitted as part of Racine’s suit, Rick Gates, the deputy inaugural committee director, told Ivanka Trump that the hotel’s $3.6 million proposal for space rental and food and beverage service might lead to negative publicity for Trump if the committee accepted it.
López said that in order to rule on Racine’s charge of what is called “private inurement,” he would need to know more about the Trump family’s involvement in the “workings” of the committee.
“Did higher ranking Trump family officials have the ability to control the workings of the [committee]? Did members of the [committee] ignore internal recommendations to pay the Trump Hotel for services that could have been offered free?” López wrote.
The Trump Organization has vigorously disputed Racine’s suit, calling the claims “false, intentionally misleading and riddled with inaccuracies.”
“The rates charged by the hotel were completely in line with what anyone else would have been charged for an unprecedented event of this enormous magnitude and were reflective of the fact that hotel had just recently opened, possessed superior facilities and was centrally located on Pennsylvania Avenue,” a statement from Trump’s hotel group said in 2020.