President Trump’s inaugural committee may have overpaid the hotel owned by his family for use of event space, which would be a violation of federal law.
A joint investigation recently published by WNYC and ProPublica confirmed that the Trump International Hotel billed President Trump’s inaugural committee — legally classified as a nonprofit — $175,000 per day for use of its facilities during inauguration festivities, which apparently didn’t even include catering fees. The committee spent a total amount of $700,000 for just four days of event space rentals.
The investigation revealed that even internally, event planners worried the amount was almost $100,000 too high.
“Please take into consideration that when this is audited it will become public knowledge,” wrote Stephanie Winston Wolkoff, an experienced New York-based event planner, suggesting a fair rate for the event spaces would be at most $85,000 per day, less than half of what was ultimately paid. That fee did not cover catering.
Ari Krupkin, an event planner at the Markham Group in Washington, said event space rentals typically come as part of a package that includes catering and audio-visual. Without those services included in the price, he said, “$175,000 a day seems more than egregious.”
According to IRS law governing nonprofits, acts of self-dealing between a private foundation and a disqualified person include the sale, exchange, or leasing of property, as well as paying compensation or reimbursing expenses to a disqualified person. Other examples of self-dealing on the IRS website include “transferring foundation income or assets to, or for the use or benefit of, a disqualified person,” and “certain agreements to make payments of money or property to government officials.”
As Investopedia defines it, the term “disqualified person” can mean individuals like “trustees, attorneys, corporate officers, board members, and financial advisors, among others.”
The federal statute on self-dealing, 26 U.S.C.A. § 4941, establishes self-dealing between nonprofits and disqualified persons as a crime punished by the levying of a five percent tax on each instances of self-dealing between a disqualified person and a private foundation.
“Every legitimate nonprofit is very concerned with this,” Doug White, a veteran adviser to tax exempt nonprofits speaking in general terms, told WNYC and ProPublica. “You’re benefiting a private person, and you’re using the nonprofit to do it.”
According to the investigation, Trump’s inaugural committee also made a $1.5 million payment to a hotel partially owned by an investment firm led inaugural committee chairman Tom Barrack, which may have been illegal. Federal investigators with the U.S. Attorney’s Office for the Southern District of New York are currently looking into the finances of President Trump’s inaugural committee, partially to determine whether or not any representatives of foreign governments made donations, and also to investigate the occurrence of any mail fraud, wire fraud, or money laundering.
Tom Cahill is a contributor for Grit Post who covers political and economic news. He lives in Bend, Oregon. Send him an email at tom DOT v DOT cahill AT gmail DOT com.