Trump inaugural committee ‘grossly’ overpaid Trump hotel, lawsuit says

Andrew Harris and David Voreacos

President Donald Trump’s inaugural committee violated nonprofit laws by “grossly” overpaying for events held at a hotel owned by his family business, according to a lawsuit by the District of Columbia’s attorney general.

Trump’s inaugural committee made an “unfair and unjustified” payment of more than $1 million to the Trump hotel in downtown Washington for events from Jan. 17 to 20, 2017, after failing to consider less expensive alternatives, according to the complaint by Attorney General Karl Racine made public on Wednesday.

In this March 11, 2019 file photo, the Trump International Hotel is seen in Washington. District of Columbia Attorney General is suing President Donald Trump's inaugural committee and two companies that control the Trump International Hotel in D.C., accusing the groups of abusing nonprofit funds to benefit Trump's family.

The president and his eldest daughter, Ivanka, now a senior White House adviser, were both aware that the Trump International Hotel was overcharging the committee for its use of event space and went ahead with the deal anyway, Racine said. The committee didn’t use the facilities for the full four days that included Inauguration Day, and one of the events “amounted to a private party for the Trump children,” he said.

Neither Trump is a named defendant in the case. Both were top executives at the family-owned Trump Organization before Trump became president.

“The Trump Hotel ended up charging rental rates that were well in excess of its own pricing guidelines,” Racine said. Those payments flowed directly to the Trump family.

A spokeswoman for the Trump Organization rejected Racine’s lawsuit as “a clear PR stunt” that was “false, intentionally misleading and riddled with inaccuracies.”

“The rates charged by the hotel were completely in line with what anyone else would have been charged for an unprecedented event of this enormous magnitude and were reflective of the fact that the hotel had just recently opened, possessed superior facilities and was centrally located on Pennsylvania Avenue,” she said in a written statement.

The lawsuit, filed in the District of Columbia Superior Court, is the latest legal attack on Trump by Racine, a Democrat. He previously sued Trump for violating the emoluments clause of the U.S. Constitution, which bars presidents from profiting from their office. That case is pending before a federal appeals court.

Racine asked a Superior Court judge to place the funds paid to the Trump Organization by the inaugural committee in a trust and to restore them to a “proper public purpose” by directing them to another nonprofit “dedicated to promoting civic engagement” of U.S. citizens.

Racine’s lawsuit detailed internal concerns about the high prices demanded by the Trump hotel, which initially proposed charging $450,000 a day over eight days. The committee eventually agreed to pay more than $250,000 a day over four days, totaling $1.03 million.

Rick Gates, the deputy committee chairman who later pleaded guilty to federal crimes unrelated to the inauguration, wrote an email to Ivanka Trump saying the cost “seems quite high compared” with other properties. He said he was “a bit worried about the optics of PIC 1 / 8Presidential Inaugural Committee 3 / 8 paying Trump Hotel a high fee and the media making a big story out of it.”

Stephanie Winston Wolkoff, an event planner working to help organize the event, also expressed uneasiness about the price tag. She shared her concerns directly with Trump and his daughter at a meeting on Dec. 16, 2016, Racine said. In an email the next day, she complained to Ivanka Trump and Gates.

“These are events in PE’s 1 / 8the President-elect 3 / 8 honor at his hotel and one of them is with and for family and close friends,” Winston Wolkoff wrote. “Please take into consideration that when this is audited it will become public knowledge that locations were also gifted and costs underwritten to lower rental fees.” She suggested fees of $85,000 a day.

For Inauguration Day on Jan. 20, the hotel booked the committee for the afternoon at a rate of $175,000, according to Racine. But another nonprofit, the Presidential Inaugural Prayer Breakfast, had already booked the ballroom for the morning. It paid $5,000.

With assistance from Caleb Melby.