Donald Trump’s charitable foundation has agreed to close down while the President fights allegations he misused its assets for business and political purposes.
The New York attorney general and Trump Foundation lawyers agreed in court on Wednesday morning (Australian time) to shut down the charity and distribute its remaining assets to other non-profit groups.
Attorney General Barbara Underwood alleged in a lawsuit last year that Mr Trump had illegally operated the foundation as an extension of his businesses and his White House campaign.
News of the closure came as sentencing in the trial of former Trump insider Michael Flynn was postponed after a stunning hearing in which the judge accused the one-time national security adviser of selling out his country.
The delay is to allow Flynn to continue cooperating with special counsel Robert Mueller’s Russia probe and get credit for it in his punishment.
Flynn pleaded guilty last year to lying to the FBI about his Russia contacts, just days after Mr Trump was inaugurated.
Ms Underwood’s lawsuit against Mr Trump and eldest his children, Donald Jr, Ivanka and Eric, will continue as she seeks US$2.8 million ($3.9 million) in restitution and a 10-year ban on the Trumps running any charities.
“This is an important victory for the rule of law, making clear that there is one set of rules for everyone,” Ms Underwood said in a statement.
“We’ll continue to move our suit forward to ensure that the Trump Foundation and its directors are held to account for their clear and repeated violations of state and federal law.”
Mr Trump and his eldest children have yet to comment.
Mr Trump had previously promised to dissolve the foundation and donate its funds to charity, but his lawyers said that was delayed by the attorney general’s demands to oversee the process.
Foundation officials first announced their intention to shut down more than a year ago.
The new agreement, which still needs a judge’s approval, comes weeks after a New York judge rejected arguments from the foundation’s lawyers that the case was politically motivated and should be dismissed.
Underwood’s predecessor, Eric Schneiderman, began investigating the Trump Foundation in 2016 after media reported that some of its spending personally benefited the Trump presidential campaign.
The lawsuit accused Mr Trump of illegally using the charity’s money to settle disputes involving his business empire and to boost his political fortunes during his run for the White House.
In late 2016, Trump said he wanted to dissolve the foundation but was prevented by then-New York Attorney General Eric Schneiderman as the investigation into the charity continued.
Alan S. Futerfas, a lawyer for the Trump Organization, issued a statement saying “the Foundation has been seeking to dissolve and distribute its remaining assets to worthwhile charitable causes since Donald J. Trump’s victory in the 2016 Presidential election. Unfortunately, the NYAG sought to prevent dissolution for almost two years, thereby depriving those most in need of nearly $1.7 million.”
The investigation was spurred by a series of reports in The Washington Post about the foundation’s activities, which suggested the foundation did little, if any, actual charitable giving and had a pattern of helping Trump’s business and political ambitions.
The foundation was established in the 1980s but first drew intense scrutiny after a January 2016 event in Iowa featuring then-candidate Trump. Trump had boycotted a Republican presidential debate and held what he described as a fundraiser for veterans instead. Several other GOP candidates also attended the event.
Trump claimed that he personally donated $1 million to veterans’ charities. Subsequent reporting from The Post’s David Fahrenthold could find no corroboration for that claim. Over time, his reporting turned up more evidence that the Trump Foundation was in violation of numerous laws. Fahrenthold won a Pulitzer Prize in 2017 for his reporting on the foundation and Trump’s charitable contributions.
Citizens For Responsibility and Ethics in Washington Executive Director Noah Bookbinder said, “It is good to see this fraud is finally over.” CREW had filed complaints calling for investigations into the foundation.
Underwood sued the foundation in June, saying it repeatedly solicited money from donors and then used it for campaign-related purposes, violating federal election law. The money also was used to benefit Trump’s business interests by settling legal claims against it, for example, Underwood said.
Underwood also said that Trump’s three oldest children — Donald Jr., Ivanka and Eric — had exercised no real control over the foundation’s activities, despite being nominal board members.
In its most recent available filing with the IRS, in 2016 the foundation reported $2,929,274 in revenue and $3,075,269 in expenses. Most of the foundation’s donations that year went to veterans groups, following a campaign promise made by Trump while campaigning. The foundation also donated $25,000 to Florida Attorney General Pam Bondi, according to CREW, in an apparent effort to dissuade her from investigating Trump University, another now-shuttered Trump venture.