Tag: Emoluments Clause

Don’t forget: Trump is Using the Presidency to Enrich His Family

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Amid the avalanche of news about North Korea, Russia and President Trump’s open feud with Senate Majority Leader Mitch McConnell (R-Ky.), don’t lose sight of this bit of news: Trump’s family business has earned a nearly $2 million profit in just four months this year from the new Washington hotel that bears his name.

Given that in the past 24 hours Trump has threatened nuclear war with North Korea, thanked Russian President Vladimir Putin for expelling U.S. diplomats from Moscow and publicly attacked his party’s leader in the Senate, it’s easy to lose sight of another ongoing scandal: How Trump continues to line his family’s pockets through the presidency.

It’s unprecedented to have a president who retains a stake in businesses as sprawling as the Trump empire. But Trump has taken business conflicts to yet another level by tying the Trump Hotel so explicitly to the presidency.

Trump’s Washington hotel is the new power hub in Washington. Before he became president, the Trump family company projected the hotel would lose money this year. But instead it has become a profit center, owing to its transformation into “a kind of White House annex,” The Post’s Jonathan O’Connell reported this week.

After spending just one month in the hotel’s public spaces, Post reporters witnessed, among other things, luminaries of Trump’s world, including current White House staffers and former New York mayor and Trump ally Rudolph Giuliani, “posing for selfies at the bar the night Trump fired FBI Director James B. Comey,” and former Trump campaign manager-turned-lobbyist Corey Lewandowski sitting in “a black leather chair marked ‘Reserved.’” In July, Republican fundraisers used the space to raise $10 million for Trump’s reelection campaign.

Trump’s tweets and Thursday’s mad, impromptu news conference might eclipse his presidency-for-profit, but don’t forget: his “working” vacation has also been a daily advertisement for his Bedminster, N.J., golf resort, another showpiece in his family’s vast holdings around the world. When Trump is on television, golfing or eating or roaming around Bedminster, it’s free advertising not only for the resort, but also for the Trump brand as a whole.

Of course, we knew this was coming. Before Trump took office in January, ethics watchdogs warned that unless Trump established a blind trust, he risked embroiling himself in unprecedented conflicts of interest. Trump declined to take this step, and although he has left the day-to-day operation of the family companies to his adult sons, he and his family members, including his daughter Ivanka, who works at his side in the White House, still stand to profit from them.

And they have. From the time the Washington hotel opened last year through June 2017, Ivanka Trump has earned $2.4 million from her stake in it.

The Trump Hotel is the most blatant example of how Trump is selling the presidency. No ordinary luxury hotel in a city that boasts more than a few, the Trump Hotel is where foreign dignitaries, lobbyists, White House staff, Cabinet officials, Trump confidants, Republican fundraisers, elected officials, religious leaders and assorted sycophants gather — to see and be seen, to rub elbows with the powerful, to possibly catch a glimpse of the president himself, and, most crucially, to patronize the hotel owned by the most powerful person in the world.

It doesn’t come cheap: Guests have paid, on average, $652.98 a night to stay there, according to the Post investigation; a special cocktail in the bar costs $100, and a bartender might try to sell you a $2,500 bottle of bubbly. With a social media-obsessed president, patrons are eager to post about reveling in the opulence and in praise of the Trump brand.

As Walter Shaub, the since-departed director of the Office of Government Ethics, has said of Trump’s refusal to divest from his business holdings, “a conflict of interest is anything that creates an incentive to put your own interests before the interests of the people you serve.” Trump’s continued stake in the hotel and ongoing promotion of it by using his name as the draw risks the appearance of “using the presidency for private gain,” Shaub told Vox.

But while the D.C. hotel is the most prominent example of Trump profiting off his office, it’s not the only one. Richard Painter, who served as George W. Bush’s ethics counsel, has called the hotel “really just a tip of the iceberg.”

There’s an even more cynical twist to the story that shouldn’t go unnoticed.

Consider the working-class voters Trump has duped into believing he’s come to Washington to save their jobs and way of life. They couldn’t possibly dream of spending the kind of money it takes to stay at Trump’s hotel. But Trump is continuing to use one of his chief selling points in running for president — his success as a businessman — to maintain support from this base. And the money Trump rakes in from his hotel feeds that image. For Trump and his supporters, then, those profits are not an abuse of his office, they are proof of the financial success he says is the mark of a strong leader.

Beyond this, there’s another dynamic at work: Trump is able to get away with this sort of self-dealing in part because he’s making a mess on so many other fronts. Because of the sheer chaos of Trump’s presidency — Trump’s erratic behavior, the West Wing mayhem, the cloud of the Russia investigation — this alarming new reality has gone overshadowed, and he has managed to move the ethical goalposts of the Oval Office. The public has only so much bandwidth to absorb the scale and scope of this administration’s unraveling of ethical norms.

One of the biggest challenges of the post-Trump era will be how to restore the norms and standards that Trump has so blithely trashed. Someday, Americans — from the people who run our government to the citizens in every corner of the country — will have to reckon with what he has done, and figure out how to undo it. That process will probably have to start with some basic reminders that the presidency is not for sale.

[Washington Post]

President Trump’s Hotel Received $270,000 from Saudi Arabia

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The Trump International Hotel recently took in about $270,000 in payments tied to the Kingdom of Saudi Arabia as the country fights to roll back a U.S. terrorism law, according to newly filed lobbying reports.

The spending, which covered lodging, catering and parking expenses, was disclosed in Justice Department filings last week by MSL Group Americas, a public relations firm. The filings detailed the work the firm engaged in between Oct. 1, 2016 and March 31, 2017 on behalf of the Saudis, Bahrain and other foreign governments.

In a statement Monday night, Trump Organization officials said they would donate any profits from the transactions at the end of the year.

The disclosure of Saudi spending, however, could spark fresh debate about President Trump’s decision to retain ownership of his real-estate and branding empire while serving in the White House. Trump turned over management of his companies to his adult sons and a veteran Trump Organization executive but still can benefit financially from his business interests.

Last month, Trump visited Saudi Arabia, the first stop on the first foreign trip of his presidency

The firm reported paying more than $190,200 for lodging, $78,204 for catering and roughly $1,600 for parking at the Trump International Hotel in Washington — part of a larger campaign by the Saudis that brought U.S. military veterans to the nation’s capital to lobby against the Justice Against Sponsors of Terrorism Act or JASTA. The Daily Caller first reported on the hotel payments.

Last year, Congress passed a bill over President Obama’s veto that would allow families of the victims of the Sept. 11, 2001 terrorist attacks to sue Saudi Arabia for any alleged role in the plot. The Gulf nation has denied any role in the attacks and is lobbying to ease the law’s provisions.

Democrats on Capitol Hill and ethics watchdogs have argued that Trump’s continued ownership of his businesses could lead to a violation of the Constitution’s Emoluments Clause, which bars foreign payments to U.S. officials without congressional approval.

White House officials referred questions about the Saudi payments to the Trump Organization.

Before he took office, Trump pledged to donate foreign profits from his hotels to the U.S. Treasury. However, the Trump Organization is not trying to comprehensively identify all foreign profits to its hotel business, according to a company policy document recently provided to the House Oversight Committee.

“To fully and completely identify all patronage at our properties by customer type is impractical in the service industry and putting forth a policy that requires all guests to identify themselves would impede upon personal privacy and diminish the guest experience of our brand,” the Trump Organization’s document said.

[USA Today]

Trump Is Not Even Pretending to Keep Promise to Donate All Hotel Profits From Foreign Governments

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Just before taking office, President Donald Trump promised to donate all profits earned from foreign governments back to the U.S. Treasury.

But MSNBC has learned the Trump Organization is not tracking all possible payments it receives from foreign governments, according to new admissions by Trump representatives. By failing to track foreign payments it receives, the company will be hard-pressed to meet Trump’s pledge to donate foreign profits and could even increase its legal exposure.

The Trump Organization does not “attempt to identify individual travelers who have not specifically identified themselves as being a representative of a foreign government entity,” according to a new company pamphlet. The policy suggests that it is up to foreign governments, not Trump hotels, to determine whether they self-report their business.

That policy matches what several sources told MSNBC — Trump Organization employees are not soliciting information about whether reservations or business is from a foreign government.

Why foreign profits could be a problem for Trump

Since Trump’s election, critics have argued that the complex nature of his businesses opened up vast potential for conflicts of interest both at home and abroad. Of particular concern was the likelihood of foreign governments spending money at Trump properties. The Emoluments Clause in the U.S. Constitution bars foreign gifts to the president, and an open federal case in New York alleges the Trump Organization is in violation of that clause.

Back in January, Trump and his team said they did not believe renting a hotel room constituted a violation. Still, Trump pledged to track and donate all profits at his companies from foreign government travel and commerce.

Sheri Dillon, an attorney for the Trump Organization, said during a news conference the president-elect had directed that hotel profits from foreign governments would be donated to the U.S. Treasury because “he wants to do more than what the Constitution requires.”

“President-elect Trump has decided, and we are announcing today, that he is going to voluntarily donate all profits from foreign government payments to his hotels to the United States Treasury,” she said.

According to the new pamphlet, the Trump Organization does not plan to calculate foreign government profits, but rather to estimate them.

“To attempt to individually track and distinctly attribute certain business-related costs as specifically identifiable to a particular customer group is not practical,” the pamphlet states.

Congress to get involved

Rep. Elijah Cummings, the top Democrat on the House Oversight Committee, said the policy as written is insufficient.

“Under the policy outlined in this pamphlet, foreign governments could provide prohibited emoluments to President Trump, for example through organizations such as RT, the propaganda arm of the Russian government,” Cummings wrote in a new letter to the Trump Organization. He received the pamphlet from Trump’s chief compliance counsel.

“Those payments would not be tracked in any way and would be hidden from the American public,” Cummings added, pressing the Trump Organization to brief Congress on the matter by June 2.

Trump Organization spokesperson Amanda Miller said Wednesday in response, “We have received and are in the process of reviewing the letter. We take these matters seriously and are fully committed to complying with all of our legal and ethical obligations.”

A lawyer involved in the emoluments case against Trump who asked not to be identified said the company’s approach violates the Constitution’s ban on the president receiving foreign gifts.

Trump officials have argued there is no legal obligation to rebuff any foreign payments, but said they are donating foreign government profits in an abundance of caution.

The newly released pamphlet states the company will donate profits from its “wholly-owned properties” and profits from “management fees that is deemed attributed from foreign governments’ patronage,” and make an annual donation to the U.S. Treasury “in one lump sum payment.”

A Trump representative said that “the pertinent accounting rules” are well understood in the hospitality industry. But experts told MSNBC that there is no standard accounting system to track profits from foreign dignitaries.

Most hotels in the United States prepare financial statements in accordance with the Uniform System of Accounts for the Lodging Industry. While the system tracks customers, it does not track guests’ professions.

In theory, Trump Hotels could create specialized codes to flag when a foreign diplomat books a room or buys hotel services.

“The margins are pretty standard for a hotel,” said Joel Feigenheimer, a hospitality professor at Florida International University, so the company could track the profit margin on each foreign government booking.

But tracking by accounting code is just one small piece of the pie. Then the companies have to decide how to determine who represents a foreign government.

“What is the proof that they are or are not a foreign dignitary?” asked Toni Repetti, an assistant professor at the University of Nevada-Las Vegas Harrah College of Hotel Administration. “How do you know? There’s no universal list.”

“If someone doesn’t want you to know who they are — whether it’s a government, or a girlfriend or boyfriend who is cheating — you don’t register under your real name,” said Feigenheimer. “There’s no reason for these people to register. It is not the Chinese’s problem if they are staying at the Trump hotels.”

The new Trump policy, however, leaves that reporting up to foreign governments.

Who knows who’s staying at the hotels?

One approach that Trump hotels could use is already employed by many hotel chains — the well-known “government rate” offered for U.S. government employees.

The State Department issues diplomats “mission tax exemption cards,” which provide a point-of-sale exemption from sales tax on goods and services, including hotel rooms, across the United States. The Trump organization could keep track of foreign government payments based on which guests are using the mission tax exemption card.

Jim Abrams, a legal adviser with the California Hotel & Lodging Association, suggested that the Trump Organization post on its hotel websites a notice to foreign dignitaries asking that they notify the hotel if they plan to book a room. That would be the cleanest way to do it,” he said.

If the Trump Organization has not already started tracking foreign government diplomats who stay at Trump hotels, Repetti predicted that it would be “a nightmare” to gather the information.

“It would be almost impossible,” she said. “Someone is going to have to come in and go through every single reservation.”

The Trump Organization’s decision to use estimates could also be practically and legally problematic.

The term “profit” can have different meanings, which impacts what the Treasury receives.

“[While] net income is defined by generally accepted accounting principles, the term profit is not,” said Ralph Miller, co-author of the Uniform System of Accounts for the Lodging Industry. “It’s revenue minus costs, but which costs and at what level and over what period of time?”

Abrams also discussed the problem of defining what is “profit.” “If I was a cynical person, I’d say they’d take the one measure that puts the least amount of money in the treasury.”

Another sticking point is how to calculate expenses. Typically, hotels have a wide variety of expenses — such as electricity to keep on the lobby lights, heat for guest rooms, interest payments on loans, property taxes, the hotel chef’s salary, to name just a few of the costs to run the hotel.

Depending on how the Trump Organization includes those costs in calculating profit, the size of the donated profits could change significantly.

“It’s just very difficult to try and determine in advance what the calculation may look like,” Miller said.

Ultimately, there may not be any significant donation to the Treasury, said Abrams.

“If he is only giving away the net income and then claiming a deduction, then he hasn’t fully given away all his earnings from activities,” said University of Pennsylvania Tax Professor Michael Knoll, who cautioned, “We have no idea what he is going to do unless there is a lot more disclosure.”

How much foreign business?

There is no uniform data on how many foreign diplomats stay in American hotels annually. However, the American Hotel & Lodging Association reported that in 2014, the latest year for which statistics are available, 74.8 million international travelers came to the United States. The association said that international visitors accounted for about 20 percent of all lodging sales. The average length of stay for overseas hotel visitors was about 10 days.

There are many Trump-linked hotels that could scoop up some of that business. Thirty two hotels, resorts and golf clubs bear Trump’s name, including the iconic Mar-a-Lago club, which doubled its initiation fee to $200,000 after Trump won the election.

Records show the ownership structure of his resorts and hotels widely varies. In some instances, the Trump Organization licenses Trump’s name to developers for a one-time flat fee or for a share of profits. In other instances, his ownership stake in the hotels is hidden under layers of shell companies. In many cases, the Trump Organization receives some profits but is not an owner of the building itself.

“He learned his lesson about over-leveraging and a lot of how he invested in real estate was licensing his name to other developers,” said Barry LaPides, a partner at Berger Singerman, who practices complex commercial real estate.

At Trump Hotel SOHO, the owners of the property, a Los Angeles-based real estate investment group, pay the Trump Organization 5.75 percent of the hotel’s annual operating revenues, according to a report in the New York Daily News. In Chicago, Trump owns a Trump hotel through a series of LLCs (limited liability companies). The LLC agreements are not public.

Public reporting, although incomplete, has indicated Trump’s hotel in Washington, D.C., has received business from foreign governments like Bahrain, Kuwait, Azerbaijan and Saudi Arabia.

“He knows who is staying here,” Libowitz said of Trump.

No matter what reasons foreign governments have for doing business with the Trump Organization, no court has ever ruled on whether their commerce amounts to a gift under the Constitution. That is because no president has ever overseen such a large company while in the White House.

The Trump Organization’s approach may expand its legal liability, adding to headaches in court if a judge finds this foreign commerce is a gift. Or it may not matter, in the end, if courts rule that the Constitution does not require a president to reject this kind of benefit.

The next round of the battle over Trump’s empire will play out in a federal court in New York, where Trump’s critics are asking for a ruling that would prevent his companies from taking not only profits from foreign governments, but any of their business at all.

“You don’t get to violate the Constitution and say that you’re only going to address some instances and not others because it’s inconvenient,” said Noah Bookbinder, executive director of Citizens for Responsibility and Ethics in Washington.

[MSNBC]

Man Behind Flynn’s Turkey Lobbying Holds Conference At Trump Hotel

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A conference at the Trump International Hotel is putting President Donald Trump’s conflicts of interest into the spotlight again.

The Annual Conference on U.S.-Turkey Relations usually happens at the Ritz-Carlton in D.C. but is moving to the president’s hotel this year, right down the street from the White House. Organizers say the Ritz wasn’t available.

One of the groups hosting the event is run by Ekim Alptekin. He also founded the firm that paid former national security adviser Michael Flynn to lobby on behalf of the Turkish government.

Alptekin himself has ties to the Turkish government.

There are ethical concerns here, notably from the Emoluments Clause of the U.S. Constitution. The clause prohibits presidents from accepting any sort of personal benefit from foreign governments.

And since Trump still has a stake in the hotel, he directly profits from the guests who rent space there — including conference hosts with ties to foreign governments.

The conference’s website says CEOs, entrepreneurs, and key members of the U.S. Congress and the Turkish Parliament will be attending.

[ABC News]

China Approves 38 New Trump Trademarks for His Businesses

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China has granted preliminary approval for 38 new Trump trademarks, paving the way for President Donald Trump and his family to develop a host of branded businesses from hotels to insurance to bodyguard and escort services, public documents show.

Trump’s lawyers in China applied for the marks in April 2016, as Trump railed against China at campaign rallies, accusing it of currency manipulation and stealing U.S. jobs. Critics maintain that Trump’s swelling portfolio of China trademarks raises serious conflict of interest questions.

China’s Trademark Office published the provisional approvals on Feb. 27 and Monday.

If no one objects, they will be formally registered after 90 days. All but three are in the president’s own name. China already registered one trademark to the president, for Trump-branded construction services, on Feb. 14.

If President Trump receives any special treatment in securing trademark rights, it would violate the U.S. Constitution, which bans public servants from accepting anything of value from foreign governments unless approved by Congress, ethics lawyers from across the political spectrum say. Concerns about potential conflicts of interest are particularly sharp in China, where the courts and bureaucracy are designed to reflect the will of the ruling Communist Party.

Dan Plane, a director at Simone IP Services, a Hong Kong intellectual property consultancy, said he had never seen so many applications approved so quickly. “For all these marks to sail through so quickly and cleanly, with no similar marks, no identical marks, no issues with specifications – boy, it’s weird,” he said.

The trademarks are for businesses including branded spas, massage parlors, golf clubs, hotels, insurance, finance and real estate companies, retail shops, restaurants, bars, and private bodyguard and escort services.

Spring Chang, a founding partner at Chang Tsi & Partners, a Beijing law firm that has represented the Trump Organization, declined to comment specifically on Trump’s trademarks. But she did say that she advises clients to take out marks defensively, even in categories or subcategories of goods and services they may not aim to develop.

“I don’t see any special treatment to the cases of my clients so far,” she added. “I think they’re very fair and the examination standard is very equal for every applicant.”

Richard Painter, who served as chief ethics lawyer for President George W. Bush, said the volume of new approvals raised red flags.

“A routine trademark, patent or copyright from a foreign government is likely not an unconstitutional emolument, but with so many trademarks being granted over such a short time period, the question arises as to whether there is an accommodation in at least some of them,” he said.

Painter is involved in a lawsuit alleging that Trump’s foreign business ties violate the U.S. Constitution. Trump has dismissed the lawsuit as “totally without merit.”

China’s State Administration for Industry and Commerce, which oversees the Trademark Office, and Trump Organization general counsel Alan Garten did not immediately respond to requests for comment.

(h/t NBC News)

China Grants Trump a Trademark He’s Been Seeking For a Decade

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The Chinese government has granted President Trump and his business something they had been seeking for more than a decade: trademark protection for the use of the Trump name in the construction industry.

Trump fought unsuccessfully in Chinese courts for years to try to gain control of the trademark, but his fortunes changed suddenly last year during the latter stages of his campaign for the White House.

China’s trademark review board announced in September it had invalidated a rival claim for the Trump trademark, clearing the way for Trump to move in. In November, soon after the election, it awarded the trademark to the Trump Organization. The trademark was officially registered this week after a three-month notice period for objections expired.

The sequence of events makes some ethics experts uncomfortable: Chinese authorities reversed their position as Trump’s political star rose.

“China is going to want concessions from Mr. Trump, and this is now the first in what will be a series of efforts to influence him,” said Norman Eisen, a White House ethics counsel under President Obama. Eisen is part of a group that has sued Trump for violating the foreign emoluments clause of the Constitution by accepting foreign payments through his business ventures.

But Trump Organization attorneys told CNN that it was simply trying to protect the Trump trademark from someone who had been improperly squatting on it, and that any accusation that President Trump could be compromised by the trademark decision granted by the Chinese government is completely baseless and shows a disregard for the facts.

It is difficult to assess the value of the new trademark. It covers construction-related services, not for Trump’s core hospitality and real-estate businesses.

But even if construction-related services are not a core business for the Trump Organization, the company places a great value on anything with the Trump brand.

“The Trump brand is key to the value of the Trump Organization’s assets,” Sheri Dillon, a Trump lawyer, said last month.

Trump can also argue that he’s a lot more famous in China now than he was when he first started the trademark battle there in 2006, giving him a stronger claim to the Trump name. Trump already holds dozens of trademarks in China and is seeking dozens more.

“The Trump Organization has been actively enforcing its trademark rights in China for more than a decade and its latest trademark registration is a natural result of those efforts — all of which took place years before President Trump even announced his candidacy,” said Alan Garten, the Trump Organization’s chief legal officer.

The ethics concerns are fueled by Trump’s decision not to completely sever ties with his company.

Before taking office, he bucked the advice of ethics lawyers who urged him to avoid conflicts by selling off his vast business interests and putting the money in a blind trust. Instead, he pledged to place his assets in a trust run by his adult sons.

Trump talked tough on China in his campaign rhetoric, but so far hasn’t followed through on his threats to label it a currency manipulator on his first day in office, or to impose heavy trade tariffs.

China legal experts say they think Trump’s political ascendancy most likely played a role in the trademark decision.

“I’ve got clients who have fought these same cases time and time again without success. For this rapid turn of events, it does seem to be more than just a coincidence,” said Dan Plane, a China intellectual property expert in Hong Kong. “What’s striking about the Trump decision is the timing. I think it’s reasonable to assume that politics played a part — without Trump even necessarily asking for it.”

The Chinese Embassy in Washington told CNN that the case was handled in compliance with China’s trademark law.

“The Chinese trademark review board does not make its decisions publicly available, so we don’t know on what basis they made their decision,” said Matthew Dresden, an international trademark attorney. “I think these decisions were not made in a vacuum.”

The White House declined to comment, referring the question to the Trump Organization.

Another interpretation of the decision may simply be that China is becoming more responsive to Western companies that want to protect their trademark. In December, China’s top court found in favor of U.S. basketball start Michael Jordan, ruling that a Chinese company sportswear company, Qiaodan, had to stop using the Chinese characters that rendered the name Jordan.

“You could say there’s a nice ray of sunshine, that perhaps things are changing for foreign brands,” said Plane. “But [the Trump decision] really was a bit of a bolt out of the blue, particularly in relation to the case’s history and the decision’s timing.”

One remaining question is whether Trump will continue to find favor in future Chinese trademark decisions.

“If there’s a consistent pattern where you have ‘wins’ in every case to which Trump’s name is attached when normally, those cases would be non-starters for anyone else, then yes, I think there’s a real concern about his being given something that others wouldn’t receive,” Plane said.

(h/t CNN)

 

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