Trump’s New Legal Fund Is a Lean, Mean Grift Machine

When allies of former President Donald Trump launched his new legal defense fund, they created a group with few restrictions on how much it can raise, even fewer on how much it can spend, and the ability for deep-pocketed donors to remain anonymous.

In essence, Trump’s legal costs have gotten so high that he’s been forced to find a new way around campaign finance laws—a route that will allow him to draw massive donations from megadonors who could not otherwise write checks large enough to replenish his attorney costs.

While the plans for launching the group, called the “Patriot Legal Defense Fund,” were first reported on Sunday by The New York Times, it turns out the entity was created on July 19. That filing, however, won’t be found in the campaign finance database maintained by the Federal Election Commission, where political campaigns typically register.

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Instead, the PLDF was registered with the IRS as a special type of political nonprofit under section 527 of the tax code—as what’s loosely known as a “527” or “shadow” group.

Trump has reportedly asserted for years that only guilty people open legal funds. And while that describes a number of convicted former political advisers—George Papadopoulos, Roger Stone, and Mike Flynn, for instance—others haven’t been found guilty of crimes, like Rudy Giuliani, Sen. Lindsey Graham (R-SC), or even Trump himself.

The new fund reportedly won’t pay Trump’s own lawyer costs. But it will float allies, including possible witnesses in any number of legal threats facing the former president.

And yet experts said the shadiest, most notable part of the legal defense fund was not that it would pay for lawyers for potential witnesses against Trump. That part isn’t all that new. The Trump team reportedly worked hand-in-hand with CPAC chair Matt Schlapp’s “First Amendment Fund” earlier this year to provide legal help to Jan. 6 committee subpoena targets, and Trump’s “Save America” leadership PAC also bankrolled handpicked attorneys for Jan. 6 witnesses.

Instead, experts pointed to the group’s unique tax status opening an array of new fundraising opportunities for Trump as the most unsettling element—including for unlimited donations from individuals and corporations.

The new group comes at a critical time in Trump’s political career. Not only is he facing a number of serious legal threats, but his political operation is hemorrhaging cash from all of his legal expenses, to the tune of more than $20 million this year alone. While that’s about half of what early news reports had claimed the filings would show, it’s still more than the $16 million Save America spent on attorneys in the previous two years combined.

While this new 527 group will have to file regular reports that disclose its raising and spending, it also opens up channels for covert contributions that would be illegal for his political committees, experts said.

The Patriot Legal Defense Fund—not to be confused with Trump’s earlier Patriot Legal Expense Fund or his fabricated Election Defense Fund—was first incorporated in Virginia on July 18. State records list two top Trump advisers as its principal agents: 2020 campaign strategist Michael Glassner and current senior aide Susie Wiles. (Another aide, Lynne Patton, is also reported to be involved.) According to its July 19 filing with the IRS, the PLDF’s purpose is to “raise money and pay for or help defray legal expenses related to defending against legal actions arising from an individual or group’s participation in the political process.”

And that would mean that traditional fundraising limits that are a hallmark of campaign finance don’t apply to this group.

“Federal law does not establish any limits on the amount of money that individuals or corporations can contribute” to these organizations, said Brett Kappel, a campaign finance attorney at Harmon Curran. Whereas Trump’s various political committees can’t take donations over a certain dollar amount, and can’t take any corporate money, this new group doesn’t have those restrictions.

“Moreover, a donor can request that their name not be disclosed if they pay an excise tax equal to 35 percent of the amount of money they donate to the political organization,” Kappel said.

Legal experts told The Daily Beast that this last rule could also offer a loophole for so-called straw donations, contributions made in the name of another—something that also would be prohibited under federal campaign finance law. For example, PLDF donors can create untraceable companies to shield their contributions from public scrutiny and that wouldn’t be regulated by the FEC.

Brendan Fischer, deputy director of Documented, told The Daily Beast that, even with that 35 percent tax, the group could appeal to megadonors who want to keep their names out of public filings.

“527s are nominally regulated by the IRS, so if a donor were to try to use an LLC to facilitate a straw donation then the FEC isn’t monitoring it—the IRS is,” Fischer said. “Only recently has the FEC really begun to enforce the law about LLC straw donations to super PACs, and it remains to be seen whether the IRS will regulate this at all.”

The fund could also offer megadonors a brand-new, unrestricted lane to pour cash into Trump’s political efforts, as well as a way to relieve Trump’s “Save America” leadership PAC of the burden of his increasingly astronomical legal costs.

This weekend, The New York Times reported that the cash-strapped Save America recently asked a pro-Trump super PAC to refund the $60 million it donated last year—contributions that experts called illegal in the first place.

Reports over the weekend framed the legal fund as a plan in the making, seemingly in response to stories about Save America’s skyrocketing legal expenses. But the fund had in fact already been created nearly two weeks before those reports.

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“At a minimum it frees up money for Trump’s political operation, because every dollar given to PLDF covers legal fees that Trump’s groups don’t have to,” Fischer explained. “Donors can max out to campaign, max out to Save America, and give even more to this group.”

Reports have indicated that the legal fund will not be covering Trump’s own attorneys, and will instead pick up the tab for others connected to the investigation. That could extend to witnesses—which Save America has already been doing—including those possibly testifying against Trump or weighing that decision.

Going by the tens of millions of dollars in legal expenses, that list could be quite long. Trump is also reportedly footing the bill for his alleged co-conspirators in the Mar-a-Lago documents case—aide Walt Nauta and club property manager Carlos De Oliveira. Special Counsel Jack Smith has reportedly asked a number of witnesses about legal costs, including who is paying for their representation.

The fund can also serve as a new account to park additional donations from Trump donors who have already maxed out to his political committees. Fischer noted that because the group isn’t technically Trump’s campaign, it could provide a buffer for “Trump-curious” or skeptical megadonors—Republicans who may not be entirely on board with the twice-impeached, twice-indicted former president, but who have come around to the idea that he’ll be the likely GOP nominee and want to begin currying favor.

Legal experts also said the fund appears to be walking a narrow legal line, even in this lightly regulated sphere of political spending.

Saurav Ghosh, director of federal reform at watchdog Campaign Legal Center, called the development “concerning,” because Trump has “so often, including in this election cycle, ridden right over the guardrails of campaign finance law.”

“This is a situation where a 527 is being created to ‘defray legal expenses,’ but that raises more questions than it answers,” Ghosh said.

“The decision to create it this way links the group to elections,” he added, saying it “doubles down on the red flags.”

527 groups exist in a gray area of political law. All federal campaigns and political committees that register with the FEC are also technically organized under section 527, but some groups fall outside of that jurisdiction. A group must register with the FEC only if its “major purpose” is to influence the election of federal candidates, meaning some 527s can theoretically spend 49 percent of their efforts on elections and still not have to register. That’s how those 527s—like Trump’s fund—earn that “shadow group” nickname.

According to IRS regulations, these groups are supposed to operate primarily to influence the “selection, nomination, election, appointment, or defeat of candidates for federal, state, or local public office.” And while they may spend money for things not directly connected to campaign activity—like lobbying, for instance—the groups could get taxed on those expenses.

Paul S. Ryan, a campaign finance law expert and deputy executive director for the Funders' Committee for Civic Participation, questioned whether the group was eligible that tax status.

Ryan pointed to the requirement that these groups must be involved in attempting to influence the selection of candidates for office. While that definition is very similar to the definition of a political committee under federal law, he said, groups typically register as 527s when they deal with elections that don’t fit into a single federal, state, or local bucket. (For instance, the Democratic and Republican Governors Associations are both 527s; while these groups work at the state level, they do so as national organizations operating in multiple state elections at the same time.)

But the Trump fund, Ryan observed, appears to connect its spending directly with a specific federal election—a point Ghosh also made, and which may trigger FEC registration.

“I’m scratching my head wondering whether this group is even eligible,” Ryan said.

He pointed to the group’s claim that the fund will cover costs related to the “political process.”

That appears to be a reiteration of an unfounded view that Trump himself has expressed loud and clear—that the investigations and indictments against him are purely political, and even qualify as “election interference.” Ryan said it was difficult to square that with the legal fund’s claim that its “major purpose” is not, in fact, raising and spending money in connection to a federal election.

Ryan also noted the presence of Wiles, a current top 2024 aide who appears on the campaign’s payroll via her personal consulting company, Right Coast Strategies. (Lynne Patton’s LinkedIn page currently claims she’s a senior campaign adviser.) If Wiles was have signed in her capacity as an agent of Trump, Ryan said, that could be evidence of coordination with the candidate, which would be prohibited.

Kappel agreed, saying that while Wiles’ mere presence doesn’t necessarily create an issue, “it could become problematic if the 527 starts making public communications about the campaign or his opponents.”

The Trump campaign itself has provided statements for news reports about the fund. In response to a comment request about the fund on Monday, spokesperson Steven Cheung gave The Daily Beast a statement attacking the “weaponized Department of Justice” and “deranged” Special Counsel Smith, who “have targeted innocent Americans associated with President Trump.”

The fund, the statement said, will shield Trump allies from “financial ruin” resulting from the so-called “unlawful harassment” of the investigations, and “prevent their lives from being completely destroyed.”

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