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Commander in Thief
How much of Trump’s profiteering is unconstitutional, and how much is just sleazy? A field guide.
by Nicole Narea MAGAZINE
Jim Watson/Getty Images
Fête accompli: Donald Trump has spent more than a quarter of his presidency patronizing his own commercial properties. Each visit—like this state dinner at Mar-a-Lago with Chinese President Xi Jinping—funnels public money into his pocket.
No story has gripped Washington’s attention over the last year more than the Russia investigation. Robert Mueller’s inquest draws ever closer to the president. Three congressional committees are at least going through the motions of conducting their own probes. One breathtaking media scoop follows another. The question at the heart of it all is whether Donald Trump violated the law or the Constitution—and, ultimately, whether those violations merit his impeachment.
Yet all the while, official Washington has tolerated an entire other class of corrupt and potentially unconstitutional behavior being carried out in plain sight, as Trump uses the presidency to enrich himself and his family. He has installed immediate relatives at the helm of the Trump Organization, continued to accept payments from foreign governments and private interests, and lavishly billed the government for using his own properties—all without guaranteeing that he will prioritize his duties as president over his own bottom line.
No president ever entered office with the type of immense personal fortune and ongoing business interests that Trump has. Trump’s vast business empire spans more than 500 companies in twenty-five countries and has earned him an estimated net worth of $3.1 billion. Traditionally, on taking office, presidents have placed their assets in a “blind trust” whose trustee is legally barred from telling the beneficiary about the trust’s holdings. Jimmy Carter famously placed the family peanut business into a blind trust in 1977. Ronald Reagan, George H. W. Bush, Bill Clinton, and George W. Bush all followed suit.
Trump’s trust agreement is a little different. For one thing, it’s not blind—Trump’s children have admitted to providing their father with regular business updates. For another, the agreement allows him to withdraw profits and assets from the trust at any time. That means Trump has a direct and ongoing financial interest in any policy decision that could affect his businesses.
Much of this has happened in broad daylight. The mainstream media has covered Trump’s conflicts doggedly. But the steady drip-drip-drip of evidence hasn’t captured the public’s attention like Russia has, or motivated any serious response by the government—no investigations are under way, either in Congress or the executive branch. This despite the fact that the infractions raise the same terrifying possibility as Trump’s possible collusion with Russia: the sacrificing of American interests in the service of the president’s personal gain.
The only active effort to investigate Trump’s profiteering is happening through civil lawsuits in New York, D.C., and Maryland federal courts. The plaintiffs challenging Trump’s behavior include the watchdog group Citizens for Responsibility and Ethics in Washington (CREW); some 200 Democrats in Congress, led by Connecticut Senator Richard Blumenthal; attorneys general in Washington, D.C., and Maryland; and hotel and restaurant owners who compete with Trump. They all argue that Trump is in blatant violation of a provision in the Constitution meant to ensure that the president can’t exploit his office for profit. (Update: just before Christmas, but after this article went to press, a federal judge in New York dismissed one of the suits on the grounds that the plaintiffs lacked standing to sue. An appeal is likely.)
But aside from these civil suits, which may take years to resolve, Trump just keeps getting away with it. One reason this hasn’t generated more outcry is that the infractions have been a steady accumulation, rather than one smoking gun. So we thought now, one year into Trump’s presidency, would be a good time to pull everything together and document the full scope of what’s known about his corrupt behavior. (A more comprehensive list of the improper perks Trump has received can be found here.) Clearly, the Republican-
controlled Congress has no interest in holding Trump to account. But if the Democrats retake Congress, they should start an investigation on their first day. This is their background reading.
Full List: Here’s every time Trump has profited off the presidency.
Corruption Type 1: Foreign Emoluments
Foreign interference in our political system was of grave concern to the framers of the Constitution. They knew that when a federal officeholder receives gifts, money, or other benefits from foreign governments, his judgment is compromised and his loyalties are divided. So they wrote a strict rule into the text of the Constitution, the Foreign Emoluments Clause, which provides that federal officeholders may not “accept of any present, emolument, office, or title, of any kind whatever, from any king, prince, or foreign state” without Congress’s approval.
The mainstream media has covered Trump’s conflicts doggedly. But the steady drip-drip-drip of evidence hasn’t captured the public’s attention like Russia has, or motivated any serious response by the government—no investigations are under way, either in Congress or the Justice Department.
Unlike with bribery statutes, a violation of the Foreign Emoluments Clause doesn’t require proof that an official gave something in return. It’s designed to protect against not just quid pro quo corruption, but also the mere appearance of improper influence on government officials.
With that understanding, CREW argues in its suit that Trump’s business interests are “creating countless conflicts of interest, as well as unprecedented influence by foreign governments, and have resulted and will further result in numerous violations of the Constitution.” As an example, the group cites foreign governments’ lavish spending at Trump’s hotel and restaurants, particularly at the Trump International Hotel just steps away from the White House, in some cases at the prodding of Trump’s agents. After the election, the Trump International hosted more than 100 foreign diplomats for a tour, sending them home with goody bags and brochures in an attempt to encourage their patronage. Former Mexican diplomat Arturo Sarukhan has said that the State Department urged diplomats to stay at the Trump International while on official visits.
Delegations from at least eight countries have obliged. In September, Malaysian Prime Minister Najib Razak and other members of his administration were seen hobnobbing in meeting rooms at the hotel, bringing in what is estimated to be hundreds of thousands of dollars in revenue. Saudi Arabia has spent more than a quarter of a million
dollars—$190,000 on lodging, $78,000 on catering, and $1,600 on parking—at the hotel in connection with its lobbying against legislation that would allow American citizens to sue foreign governments over terrorist attacks.
And the Kuwaiti embassy suddenly changed the venue for its National Day celebration last February from the Four Seasons to the Trump International, paying an estimated $40,000 to $60,000. A source with knowledge of the conversations between the hotel and the embassy told ThinkProgress that Trump Organization members had pressured the Kuwaiti ambassador to cancel the embassy’s “save the date” reservation at the Four Seasons, where it had held the event in the past. Perhaps it’s purely a coincidence that neither Saudi Arabia nor Kuwait were among the Muslim-majority nations singled out by Trump’s travel ban.
Moreover, foreign governments continue to hold leases on units in Trump buildings. Trump Tower’s largest commercial tenant is the state-owned Industrial and Commercial Bank of China, which pays nearly $2 million per year for office space—and whose lease is up for renewal in 2019. Other governments, including Saudi Arabia, India, Afghanistan, and Qatar, continue to pay collective charges of at least $225,000 annually on units purchased prior to Trump’s election.
The full extent of these arrangements, of course, is unknown. If Congress or the Justice Department investigated, they could very well uncover many more examples.
In an ostensible attempt to mitigate such impropriety, Trump has pledged to donate the profits he receives from foreign governments to the U.S. Treasury, forfeiting funds earned in 2017 sometime in 2018. But it’s an empty promise, because there is no way to know if he’s following through unless he provides transparency into his business operations. Instead, Trump has gone to great lengths to keep his dealings secret, refusing to disclose his tax returns and leaving the public to wonder just how enmeshed with foreign governments he really is. It’s possible that he plans to donate all the proceeds, but his pattern of secrecy leaves little reason to give him the benefit of the doubt.
Curiously, Trump has an easy way to protect himself from running afoul of the Constitution while still profiteering from foreign governments. The Founding Fathers inserted flexibility into the Emoluments Clause by allowing public officials to disclose foreign emoluments and request the approval of Congress. Yet Trump has not even bothered to make this request, and Congress, controlled by the GOP, hasn’t demanded that he do so. The question is, why not just do this simple paperwork? Is it arrogance? Sloppiness? Or the fear that once the process of disclosing the foreign payments starts, facts will come out that Trump doesn’t want shared?
Moreover, Trump’s emoluments from foreign governments may extend beyond traceable cash payments. The Trump Organization has earned regulatory benefits like intellectual property rights in a number of foreign countries, most notably China, Russia, Mexico, and Indonesia.
In the decade before he became president, the Chinese government granted Trump seventy-seven trademarks. In the last year alone, it has granted at least thirty-nine, some of which it had previously rejected. The now-protected marks include those for spa and massage services, golf clubs, hotels, insurance, finance and real estate companies, restaurants, bars, and more. In one case, the Chinese green-lighted a Trump trademark application in February only days after he spoke with President Xi Jinping, pledging to uphold the “One China Policy” and maintaining the U.S.’s position that Taiwan is part of China (the opposite position from the one he campaigned on). “If this isn’t a violation of the Emoluments Clause,” noted Senator Dianne Feinstein, “I don’t know what is.” (First daughter Ivanka Trump pulled a similar trick last April, hosting, with her husband, Jared Kushner, a surf-and-turf dinner with the Chinese president at Mar-a-Lago the same day her company won provisional monopoly rights to sell Ivanka brand merchandise and spa services in the world’s second-largest market.)
The framers, with their eighteenth-century understanding of economics, may not have foreseen a world in which emoluments take the form of intellectual property rights in a foreign market. But they could envision scenarios in which the president might be tempted to accept a foreign policy deal sweetened with direct personal benefits—precisely the kind of conflict of interest they aimed to prevent with the Emoluments Clause.
Corruption Type 2: Domestic Emoluments
The framers weren’t just worried about foreign influences. They intended the Domestic Emoluments Clause to ensure that Congress, other parts of the federal government, and the states “can neither weaken [the president’s] fortitude by operating on his necessities, nor corrupt his integrity by appealing to his avarice,” as Alexander Hamilton wrote in the Federalist Papers. It entitles the president to receive a salary (currently $400,000 a year) and benefits fixed by Congress, but prohibits him from taking any other profits from the public—whether from the federal government or from any of the states.
Trump doesn’t just rely on others to put money into his businesses—he patronizes them himself with stunning frequency, having spent more than 100 days at them, nearly a third of his presidency, while in office. Each visit funnels public money to Trump’s business, mainly in the form of exorbitant security costs.
Trump violates this provision, many constitutional scholars have argued, when state or federal entities patronize his properties and spend taxpayer money. Although the full extent of these violations is unknown, public reporting has confirmed that the president is at least receiving some revenue from state and federal officials through the businesses that he owns.
Business at the Trump International Hotel in the Old Post Office Building, which it leases from the federal General Services Administration, has been booming. It’s become a place to see and be seen for D.C. Republicans, including cabinet officials and members of Congress. And it’s where Maine Governor Paul LePage stayed during publicly funded travel to Washington over the summer, spending at least $2,250 just on accommodations for his security team.
Trump’s continued control over the hotel would seem to violate a provision in the contract that prohibits any U.S. elected official from participating in the lease or benefiting from it in any way. But the GSA has allowed him to keep the sixty-year lease based on his promise—totally unsubstantiated—not to receive profits until after he
leaves office. The GSA’s director is a presidential appointee, meaning Trump is both the landlord and tenant of this prime federally owned real estate.
The forty-six-story Trump SoHo Hotel in Manhattan has also been a lucrative source of public dollars. State pension funds in California, New York, Texas, Arizona, Montana, Michigan, and Missouri reportedly contributed millions to an investment fund that owns the hotel and has compensated the Trump Organization. The arrangement predated Trump’s inauguration by several years, but he continued to receive quarterly payments from the fund for almost a year after taking office. California’s pension fund alone paid the investment fund more than $1.7 million in management fees for the first three months of 2017. The Trump Organization, which received a cut of the hotel’s revenue, only severed ties with the investment fund in November, citing a decline in business in the deeply Democratic city.
But Trump doesn’t just rely on others to put money into his businesses—he patronizes them himself with stunning frequency, having spent more than 100 days at them, nearly a third of his presidency, while in office. Unlike any previous president, Trump’s vacation properties are for-profit enterprises, meaning each visit funnels public money to Trump’s business, mainly in the form of exorbitant security costs. Secret Service has blown through its budget due to Trump’s frequent travel expenses, requesting an additional $60 million to protect the first family in March. Trump’s detail reportedly paid Mar-a-Lago, Trump’s luxury club in Palm Beach, Florida, at least $63,000 between February and April, and has spent at least $144,975 on golf cart rentals at Trump properties in New Jersey, Virginia, and Palm Beach as of November. And last spring, the Defense Department signed a $2.39 million eighteen-month lease for space in Trump Tower for a military office meant to provide various presidential services, including access to nuclear launch codes.
Again, it’s theoretically possible that these dollars aren’t ending up in Trump’s bank account. Perhaps Trump’s businesses have provided every working lunch and hotel room to the government free of charge. But given Trump’s refusal to be transparent about that information, there is no way to confirm it. And even if Trump did start donating the revenue derived from public money, each visit would still amount to taxpayer-supported advertising for his properties.
The Domestic Emoluments Clause has long been interpreted as allowing presidents to receive some governmental perks that fall outside his salary, including security and other expenses when they travel. George W. Bush received these whenever he spent time at his Crawford ranch, just as Barack Obama did when he vacationed in Hawaii. Never before, however, have these expenses gone into the coffers of a company owned by the president himself, as happens every time Trump visits Mar-a-Largo or golfs at one of his clubs. At the very least, each visit appears to involve a transfer of taxpayer money to Trump’s bottom line—which looks like the kind of “appealing to his avarice” that the founders were afraid of.
Corruption Type 3: Slimy, but Probably Legal
Many presidents have been independently wealthy, but none before Trump entered the White House with a massive on-going business empire—or brazenly used the office to drive up that empire’s value.
Almost immediately following his inauguration, the annual membership rate at Mar-a-Lago, which Trump has dubbed his “Winter White House,” doubled, from $100,000 to $200,000, reflecting Trump’s eagerness to capitalize on the market value of access to the leader of the free world. In February, Mar-a-Lago management sold a tennis shirt featuring a “45” on the sleeve in reference to Trump, the forty-fifth president. By April, rates at the Trump International Hotel had jumped to at least $660 per night, an increase in hundreds from before his election. And in November, the president plugged his New Jersey golf course during a foreign policy speech in Seoul.
As sleazy as it is for a president to trade on his office to pad his bottom line, what’s truly shocking is that, when the money comes from private sources, there appears to be nothing illegal about it.
Despite Trump’s vow that his companies would make no new foreign deals while he is in office, the Trump Organization is actively expanding its portfolio and, in the past year, has opened two residential projects in India, a golf club in Dubai, and a hotel in Vancouver, while two real estate projects in Indonesia are still in the works. Trump insists that the public should take him at his word that he has no involvement in the Trump Organization, yet he continues to talk shop with his sons as they charge forward in promoting the brand worldwide.
As sleazy as it is for a president to trade on his office to pad his bottom line—and to continue to make international business deals while being responsible for America’s well-being—what’s truly shocking is that there appears to be nothing illegal about it. The Emoluments Clauses target domestic and foreign government payments, but say nothing about profiteering from private sources.
That means Trump doesn’t run afoul of the Constitution each time private organizations host an event at his properties, even if they are actively lobbying the government. And they do—frequently. At least fifteen interest groups—including the National Railroad Construction and Maintenance Association, the Commercial Real Estate Development Association, the private prison company GEO Group, and conservative organizations including the American Legislative Exchange Council and the Fund for American Studies—have all hosted events at Trump hotels in the last year and are registered lobbyists.
Among the most extravagant events was a $400,000 Red Cross ball hosted at Mar-a-Lago in February and themed “From Vienna to Versailles,” referencing the route traveled by Marie Antoinette in 1770 before she was married to the last French king, Louis XVI. (And long before the couple were beheaded in the French Revolution.) With the first lady on his arm, Trump himself attended, greeted with explosive applause from the party goers upon his arrival.
For the private organizations that dote on his hotels, Trump is likely to return the favor. He has shown himself to be susceptible to flattery, receiving twice-daily briefings on favorable press coverage of himself and condemning his media critics as universally “failing.”
Where the Constitution cannot regulate the president’s profiteering from private sources, federal ethics rules are also impotent. The rules bar executive branch employees from soliciting and accepting “gifts” from private interest groups, particularly if they have used their position to do so or have received a benefit for “being influenced in the performance of an official act,” according to the Office of Government Ethics. And political appointees, including Trump’s cabinet members, are explicitly prohibited from accepting “gifts or gratuities from registered lobbyists or lobbying organizations.” (Both White House adviser Kellyanne Conway and Treasury Secretary Steve Mnuchin have already been accused of violating those rules.)
But Trump isn’t subject to the same restrictions. Congress exempted the president from the 1978 Ethics of Government Act and the 1989 Ethics Reform Act, out of fear that presidents would have to recuse themselves from policy decisions. “They made a judgment call to rely on accountability and conscience as the restraint on presidential profiteering,” said Jed Shugerman, a law professor at Fordham University. “And for most of American history, those norms were sufficient.”
It looks like it might be time to rethink that judgment call.
Nicole Narea is a reporter based in New York City who covers public policy from a legal perspective.
© 2018 Washington Monthly.