It's Even Worse Than You Think

by David Cay Johnston

The blind trust was also modified shortly after Trump took office. The changes allow him to withdraw as much cash as he wants at any time. Trump told Forbes that his sons fill him on how much money his businesses are making. Given those facts, what Trump created was an eyes-wide-open blind trust.

  The language in the contract making Trump ineligible because he was president seemed cut and dried. That is exactly what a contracting officer for the federal Government Services Administration, the GSA, which leased the Old Post Office to Trump, wrote in a letter that the agency made public. Still, Kevin M. Terry found Trump in “full compliance” with the lease terms because Trump had put his interest into that revocable trust.

  Gross and Pitts saw a conflict of interest problem for the GSA. Its top official served at the pleasure of the president. And they had no doubt that a GSA interpretation forcing the president to sell his lease interest to his hotel would not please him.

  The couple suggested three remedies. One would be shutting down the hotel, including its bar and restaurant, until Trump left office, the cleanest, if most costly, solution. Another solution would be for Trump and his family to “promptly and fully” sell their interests. Or they said, Trump could resolve the issue by “resigning as president of the United States.”

  Even a sale of the leasehold posed ethical problems. Who would determine if it was a sweetheart deal or a proper arm’s length negotiation? And how would anyone know unless every detail of any transfer was made public?

  Trump’s lawyers moved to dismiss the lawsuit, making contradictory arguments that he was in a position of privilege, immune to such a civil action as president, and yet at the same time that he was not enjoying any special benefit as president.

  His lawyers argued that the Constitution’s supremacy clause barred the lawsuit. A local court “may not declare conduct unlawful because it is performed by the President, for that is a transparent attempt to directly regulate the Presidency,” they wrote, invoking a long-established doctrine about the limited immunity the president, like other officials, enjoys for official actions.

  “The premise of this lawsuit is that D.C. common law prohibits the President of the United States from owning an interest in a hotel, precisely because he is President of the United States,” Trump’s lawyers wrote. However, the core of the Cork Wine Bar complaint was that the president was using his office for unfair competition and was in violation of the lease.

  Simultaneously, Trump’s lawyers argued that Cork Wine Bar had no case because Trump’s hotel was just another business competitor, one located more than a mile from their establishment, which had nothing to do with his being president.

  Taken together Trump’s lawyers crafted a legal argument for eating your cake and having it too. They were saying Trump’s office made him immune, but he had no advantages compared to any other citizen.

  Scott Rome, the lawyer representing Cork Wine Bar, said his clients believe the lease’s clause barring any elected official “is strong evidence that the government itself, in drafting the Lease, understood that such ownership by an elected official would be problematic and would result in unfair competition.

  “Trump should choose to be President or choose to continue to own or operate businesses,” Rome said. “If he chooses to keep his businesses while President, he should not be permitted to claim presidential immunity when he gets sued for their operation.”

  Rome also recalled a controversy when another business owner became president. “Jimmy Carter gave up his peanut farm.”

  To quell doubts about the integrity of his decisions as president, Carter in 1977 put his peanut business into a blind trust. He even gave the trustee authority to sell the business. Nonetheless a special prosecutor, Paul J. Curran, spent six months investigating Carter’s business, discovering that Carter’s brother Billy had been helping himself to more money than he was supposed to get and also found some routine small business accounting issues. “No indictment can or should be brought against anyone,” Curran’s 180-page report concluded.

  If Carter had to sell, or divest, in legalese, his small business in Georgia, why should Trump get special privileges? Trump’s vastly larger businesses, operating on five continents, and the Washington hotel lease raise much bigger questions, Rome said. Many others noted that these businesses created huge opportunities for corruption.

  Cork Wine Bar’s case, still pending at this writing, was not the only lawsuit challenging the connections between official business and the president profiting off his personal businesses. Others raised issues about anticorruption clauses in the Constitution. One of them involved a mere $150 payment and the opinion of a former Justice Department lawyer who later was a Supreme Court justice, as the next chapter explains.

  Emoluments

  Ensuring the integrity of the United States government was one of the major concerns of the Framers, who put three anticorruption clauses in the Constitution.

  When the first American Republic began in 1781 under the Articles of Confederation, the founders of the modern world’s first democratic society fretted about how to ensure against official corruption. They wrote and spoke about their worry that hidden or open payments to officials could interfere with the moral judgment of even the best of men. That was why they took such care with the corrupting effect of money. They wanted to limit payments, apart from government salaries, that could influence how the public’s business would be conducted. The Articles contained two emoluments clauses as anticorruption measures.

  When the Constitution was drafted in 1787, establishing the second American Republic in which we still live, this concern was even greater. The Constitution contains three emoluments clauses, relating to concerns foreign and domestic. The domestic clause applies to only one person—the sitting president.

  In drafting the foreign emoluments clause, the Framers knew full well the history of corrupting payments between foreign monarchs and others in Europe. Concerns about this type of influence were so great that in the early 1800s the states nearly ratified a Constitutional amendment that would have stripped the citizenship of any American who accepted payments from foreign governments and their agents without the explicit consent of Congress.

  Fast forward to 1986. During the Reagan era, the issue of foreign emoluments so troubled the National Aeronautics and Space Administration that it sought a formal ruling by the Justice Department. The issue? Could a NASA scientist accept a $150 payment from an Australian university for reviewing, on his own time, a doctoral thesis on aerosol sprays. The task of evaluating whether this tiny sum violated the Constitution fell to a Justice Department lawyer named Samuel Alito, who two decades later would become a Supreme Court justice. Alito may have to rule on emoluments clause issues raised by Trump’s presidency.

  Alito pointed out that the Australian university was not a foreign government, though it was funded by one, and the scientist would be reviewing the dissertation on his own time in a field in which he was a renowned authority. Alito also observed that the NASA scientist was sought because of his expertise, not his government position.

  Because of these limiting circumstances, Alito wrote, “we do not believe that it presents the opportunity for ‘corruption and foreign influence’ that concerned the Framers and that we must presume it exists whenever a gift or emolument comes directly from a foreign government or one of its instrumentalities.”

  * * *

  Questions of corruption and foreign influence are on the front burner today because of the extensive business holdings of Donald Trump and his actions encouraging foreign powers, lobbyists, and other favor seekers to spend money at his Washington hotel and other properties.

  The domestic emoluments clause that applies only to the president states that beyond his government salary the president may not receive “any other Emolument from the United States, or any of them.” Those last six words bar payments from the federal government or any of the fifty states to the president.

  Without doubt Trump
has been profiting from spending at his properties by foreign governments, like the party the Kuwaiti government held at his hotel in the Old Post Office described in the previous chapter. Also Trump has been profiting from federal, state, and local governments spending money at his properties as part of presidential security details. When Trump stays at Mar-a-Lago, his country clubs, or Trump Tower, these governments rent rooms, buy meals, and use golf carts for which they pay full retail prices.

  Trump controls the amount of money he collects this way. He could not leave the White House except to travel to the presidential retreat at Camp David. He could forgo golf while in office, as he repeatedly promised at campaign rallies. That would reduce his domestic emoluments in dollar terms. Instead, during his first 202 days in office, Trump spent sixty-five days at Mar-a-Lago, his New Jersey golf course, or Trump Tower. That’s almost one day in three.

  Lawsuits accusing Trump of violating the Constitution’s emoluments clauses have been filed by attorneys general from sixteen states and by 196 senators and representatives, Democrats all; a bipartisan ethics watchdog organization called Citizens for Responsibility and Ethics in Washington, or CREW; and a growing list of business owners who compete with Trump hotels and restaurants.

  Their lawsuits and public statements describe calculated, willfully blind violations of the anticorruption emoluments clauses. Trump’s lawyers, both his private counsel and Justice Department lawyers representing him as president, all contend there is nothing going on, and even if there was, the Constitution provides no pathway for these aggrieved parties to press their case in any court. Trump’s lawyers say the plaintiffs lack standing, meaning they have no right under the law to bring a case enforcing the Constitution. Trump’s position is that the plaintiffs cannot show they have suffered any personal or direct harm.

  The very different ways these sides see the same set of facts are a crucial issue of democratic self-governance. The emoluments issues may seem abstract—a word the president’s lawyers invoke—but they go to the very nature of the United States of America and whether we are a nation of laws or of people, whether elected office is for public service or it permits profiteering.

  Trump is the first president to pose numerous questions about whether he is receiving income from foreign governments, which the Framers felt was inherently corrupting. He is also the first to present the issue of profiting from spending by federal, state, and local governments with payments that the Framers denied to the president. How these cases are resolved will likely have an enormous influence on whether the American Republic endures not just in the current era but in the future when other rich men—and women—known more for their presumed wealth than any record of public service may get enough votes to occupy the White House.

  * * *

  In modern America emolument is a hoary word few people have ever used in conversation. Trump’s private and Justice Department lawyers narrowly define emolument. In court papers, the Justice Department argues that the foreign emoluments clause does “not prohibit any company in which the president has any financial interest from doing business with any foreign, federal, or state instrumentality.” In other words, anything short of a flat-out bribe is legal, just so long as the transaction is run through one of the more than five hundred companies owned by the president. That is the official line at the United States Justice Department.

  During the Constitutional Convention in Philadelphia, that’s not how the word was understood. Back then emolument was in common use. Dictionaries from the era when the Constitution was written show that emolument had a broad meaning, including profit, gain, benefit, and advantage.

  Sir William Blackstone’s Commentaries was well known to the Framers and remains in print today. John Mikhail, a Georgetown University law professor who has extensively researched the emoluments clause, found that “the majority of Blackstone’s usages of ‘emolument’ involve benefits other than government salaries or perquisites,” including profits from business and rents from land.

  Blackstone’s broad view is also favored by the chief ethics officers in the George W. Bush and Barack Obama administrations, Richard W. Painter and Norm Eisen. As leaders of Citizens for Responsibility and Ethics in Washington, they describe Trump’s conduct as a “flagrant abuse” of the Constitution for personal profit. CREW argued that not only was Trump prohibited from any connection to his Washington hotel under the lease, his whole business empire offends the Constitution’s emoluments clauses. One clause concerns money from foreign powers and their agents, which would include corporations, while the other concerns his pay. The president receives a fixed salary during his term and “shall not receive within that Period any other Emolument from the United States, or any of them.”

  Trump’s businesses have made lots of money from the federal government and the states when they pay for staff and security during his stays on his properties. CREW’s lawsuit says the extensive business holdings create “countless conflicts of interest, as well as unprecedented influence by foreign governments,” which it said violate the Constitution. Its lawsuit addresses both the foreign and domestic emoluments clauses.

  “As the Framers were aware, private financial interests can subtly sway even the most virtuous leaders, and entanglements between American officials and foreign powers could pose a creeping, insidious threat to the Republic,” CREW’s lawsuit argues. “The Foreign Emoluments Clause was forged of the Framers’ hard-won wisdom. It is no relic of a bygone era, but rather an expression of insight into the nature of the human condition and the essential preconditions of self-governance. And applied to Defendant’s diverse dealings, the text and purpose of the Foreign Emoluments Clause speak as one: this cannot be allowed.”

  Painter, the Bush ethics chief, who now teaches law at the University of Minnesota, is almost apoplectic at Trump’s conduct and the failure of his fellow Republicans to speak up.

  “I’m not anti-corporation, but I recognize that corporations in this economy are global. They are not going to be loyal to America or anyone else, they are going to be loyal to their bottom line,” Painter said. “Enormous concentrations of wealth and corporate wealth will follow the money, there is no concern about patriotism. That doesn’t mean corporations are bad, but if we have corporations choosing our elected officials we will be in deep trouble.”

  Painter is also vexed by how corporations and foreign powers can influence the larger Trump family and, though them, official actions. “We have this Chilean billionaire who wants to open a mine in Minnesota,” Painter said, referring to Andrónico Luksic, whose family is likely the richest in Chile. “So, what does he do? He buys up a house that Jared Kushner and his wife, Ivanka Trump, want and rents it to them,” Painter said, referring to Trump’s son-in-law and first daughter, both White House employees. The Obama administration blocked the Luksic family from opening what would be a huge mine to extract copper and nickel. Trump could overturn that by fiat. Luksic said no connection exists between the mine and the house rental.

  To Painter this is an example of the kind of foreign influence that requires vigilance by the citizenry or the United States government will be up for sale.

  Trump’s advocates at the Morgan Lewis law firm propose a narrow interpretation of the Constitution under which any president could benefit from favor seekers becoming customers just so long as these are arm’s length arrangements. This view fails to consider several important points. One is that the volume of business alone can be crucial, especially in times of financial stress. Another is the assumption that the arm’s length standard can be enforced in a world where different customers pay different prices and forensic auditors are relatively few and expensive. A third is that the public and the government have no inherent right to audit Trump’s books as a private business to see if deals really are arm’s length. Also, the Morgan Lewis argument ignores the history of the emoluments clauses, which were designed to be preventatives, not tools for exposing corruption after it occurs.
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  That Trump uses his properties to enrich the family was obvious the evening he launched a missile strike in Syria while dining on the taxpayers’ dime at Mar-a-Lago with President Xi Jinping of China. That very day the Beijing government granted Ivanka Trump three trademarks for her jewelry, handbags, and spa brands. In the first six months of the Trump presidency, China granted, provisionally or in full, at least twenty-four trademarks to her company Ivanka Trump Marks LLC. More than forty other intellectual property grants were pending in summer 2017, government records showed. In all the Trump family owned more than a hundred Chinese trademarks and Trump was seeking even more, including in Macau, a special administrative region of China that has surpassed Las Vegas as the planet’s top gambling city.

  Matthew Dresden, an intellectual property lawyer in Seattle, found the speedy Chinese approvals unusual. “The speed with which these appeals were decided is mind-blowing,” he told the Associated Press. “I have never seen any decisions made that quickly.” A Chinese intellectual property lawyer in Shanghai, You Yunting, said, “Considering the political element, the authorities are definitely not going to admit special treatment, but the possibility cannot be excluded.”

  Trump’s tone on China changed markedly between April 2016, when he was a candidate, and the next April, when he hosted Xi at Mar-a-Lago. Candidate Trump castigated China for an “economic assault” on America and promised voters he would face down Chinese leaders, making them stop what he said was their currency-manipulating, steel-dumping, North Korea–coddling ways. A year later, President Trump, the owner of more than a hundred Chinese trademarks, spoke glowingly in a television interview about how he and Xi shared “the most beautiful piece of chocolate cake that you’ve ever seen” at Mar-a-Lago. And he pledged cooperation between the two nations, even calling Xi for a history lesson about the thousands of years of differences between China and Korea.

  A month before the Xi dinner, an observation by Ivanka in Vancouver, British Columbia, at the opening of a Trump-branded hotel owned by Malaysian investors, gave some unintended insight into her father’s about-face. “You can’t have a great partnership if you are not on the same page,” she said.