The Donald J. Trump Foundation, Explained

Why has President Trump’s charity faced years of legal scrutiny? And what does the New York attorney general’s lawsuit against it mean?

During a campaign event in Sioux City, Iowa in January 2016, Mr. Trump presented a check to a veterans group.CreditPatrick Semansky/Associated Press

On Thursday, the New York State attorney general sued the Donald J. Trump Foundation, charging it with “improper and extensive political activity, repeated and willful self-dealing transactions, and failure to follow basic fiduciary obligations or to implement even elementary corporate formalities required by law.”

The lawsuit follows years of scrutiny of President Trump’s charitable activities and adds to the president’s extensive legal challenges, amid a continuing investigation by special counsel Robert S. Mueller III.

What is the Trump Foundation?

Mr. Trump established the Donald J. Trump Foundation in 1987, when he was a New York City real estate mogul, with the stated mission of collecting and maintaining money “exclusively for charitable, religious, scientific, literary or educational purposes,” either directly or by donating to other organizations. It is a private, nonprofit corporation. In its most recent I.R.S. filing, reporting as of Dec. 31, 2016, it had approximately $1 million in assets.

Mr. Trump served as the foundation’s president from its start until Jan. 23, 2017, three days after he was inaugurated as president. Mr. Trump’s daughter Ivanka Trump also stepped down from her position on the foundation’s board of directors. His sons, Eric Trump and Donald Trump Jr., are still members of the board.


What does this mean for Mr. Trump?

The suit seeks to bar Mr. Trump from serving on the leadership of any charitable organization operating in New York for 10 years, and to bar his eldest children, Eric Trump, Donald Trump Jr. and Ivanka Trump, for one year.

If successful, it would force Mr. Trump and the three children to pay $2.8 million in restitution and damages. It would also force Mr. Trump to repay the foundation for up to double the amount of benefits he obtained after July 1, 2014 — a sum of millions. And it would dissolve the Trump foundation and require it to cooperate with the attorney general’s office in disbursing any remaining funds it possesses.

(Mr. Trump had already announced his intention to dissolve the foundation, and he has already paid more than $330,000 in reimbursements and penalty taxes since 2016.)

DealBook Briefing: CBS’s Revolt Against Shari Redstone Is at a Crossroads

• Something else we haven’t thought of. Stay tuned.

The bigger picture: Jim Stewart notes that the battle casts a spotlight on dual-class stock structures:

Should CBS ultimately prevail in what would be a highly unusual attempt to dilute a controlling shareholder, a bevy of dual-class companies will no doubt be scrambling to rewrite their bylaws. The conflict is magnified in this instance because Ms. Redstone is the controlling shareholder in both parties to the proposed merger.


Today’s DealBook Briefing was written by Andrew Ross Sorkin on the road and Michael J. de la Merced in London.



Michael Cohen, center.

Hector Retamal/Agence France-Presse — Getty Images

Cover-up fears led to the leaking of Michael Cohen’s records

Who was the source behind documents showing that AT&T and Novartis had paid President Trump’s personal lawyer? A law enforcement official worried that two “suspicious activity reports” regarding Mr. Cohen were missing from a Treasury database. Here’s what he told Ronan Farrow of The New Yorker:

“That system is a safeguard for the bank. It’s a stockpile of information. When something’s not there that should be, I immediately became concerned.”

More on Mr. Cohen: President Trump disclosed paying Mr. Cohen over $100,000, raising questions about whether he should have said so last year. The head of a Qatari investment fund said Mr. Cohen had demanded $1 million in exchange for access.


Steven Mnuchin, Wilbur Ross, Bob Lighthizer and Peter Navarro.

Leah Millis/Reuters

Trump officials’ trade divide

It seems to be getting more personal: Peter Navarro, a hard-line trade adviser, reportedly bickered with Steven Mnuchin over the China negotiations. (Mr. Navarro briefly appeared unlikely to participate in a meeting with Beijing’s top economic negotiator, Liu He.)

More officials have voiced concern about easing sanctions on ZTE, including the F.B.I.’s director, Christopher Wray. Meanwhile, the U.S.’s top trade negotiator, Bob Lighthizer, reportedly told Democrats that he is pessimistic about reaching a Nafta deal this week. And the U.S. is starting to discover how hard it is to wean companies off Chinese imports. (The reverse is true, too.)

Meanwhile, European leaders appear more united in their negotiations with the administration over Iran sanctions, with a top official, Donald Tusk, tweeting, “With friends like that, who needs enemies.” Their challenge: Companies like Total are already preparing to withdraw from Iranian deals.

A reminder: ZTE’s punishment was for violating Iran sanctions — one reason Bloomberg Opinion argues it’s too important to bargain away.

The political flyaround

• The Senate voted to block the repeal of net neutrality, but the House is unlikely to follow. (NYT)

• Robert Mueller’s team said it wouldn’t try to indict President Trump, according to Rudy Giuliani. The secret origins of the F.B.I.’s Russia investigation. The Senate Judiciary Committee released documents on that 2016 Russia meeting in Trump Tower.

• Britain has a new compromise idea on the E.U. customs union. (Bloomberg)

• How Crown Prince Mohammed bin Salman and his brothers profited from state-linked business, including a deal with Airbus. (WSJ)


Mark Zuckerberg

Jason Henry for The New York Times

Mark Zuckerberg is going to Brussels

He’ll testify before the European Parliament, a reflection of global concerns over privacy — but don’t expect a replay of the congressional hearings. This will be behind closed doors, with transcripts published afterward.

Meanwhile, Ireland’s data protection commissioner, Helen Dixon, and her 140 employees are preparing to oversee tech giants. How much can they do? (A separate data question: Did some of Cambridge Analytica’s Facebook haul end up in Russia?)

Elsewhere in tech: Apple is reportedly considering a Northern Virginia outpost. Silicon Valley’s grow-at-all-costs ethos now shapes non-tech companies like MoviePass. What Brian Chen found by downloading his Google data. The killing of a young female passenger has prompted Didi Chuxing to overhaul its service. Tencent and Ant Financial showed the financial might of Chinese internet titans. The S.E.C. ran a fake I.C.O.


Bobby Yip/Reuters

The deals flyaround

• WeWork has expanded its education arm by acquiring MissionU. (Axios)

• The investment vehicle run by the owner of the Houston Rockets has agreed to buy the food delivery start-up Waitr for $300 million. (Bloomberg)

• Takeda Pharmaceuticals’s C.E.O. said higher R.&D. costs and a squeeze from governments and insurers drove his deal for Shire. CVC Capital Partners has halted talks to buy the Italian drug maker Recordati.

• TPG has reportedly reinvested in the security software maker Tanium at a $5 billion valuation. (Reuters)

• Your next hedge fund’s name may well involve booze or Nantucket. (Bloomberg)


Arnd Wiegmann/Reuters

Steve Jurvetson’s board seat at Tesla is under pressure

The venture capitalist isn’t up for re-election, but the proxy adviser Glass, Lewis said it was concerned by “the fairly extraordinary length” of his leave of absence as a director. He stepped back amid a sexual misconduct investigation at his former investment firm, DFJ. The complaint: That reduces oversight of Elon Musk.

Elsewhere in workplace misconduct: A lawyer ridiculed Steve Wynn’s claim that he can’t have ogled dancers because he’s legally blind. Walt Disney may reportedly allow back John Lasseter, the senior animation executive accused of misconduct. The L.A. Times suspended its Beijing bureau chief, Jonathan Kaiman, amid allegations of sexual misconduct.

Why an investment firm is teaming up with a labor union

The $50 billion GCM Grosvenor is expected to announce this morning that its infrastructure business will team up with North America’s Building Trades Unions to make sure that “responsible contractors,” including union members, will be part of the process for its investments.

Sean McGarvey, the union’s president, said, “GCM Grosvenor’s responsible contractor policy is as good as any we have seen for workers and communities, if not better.”


Rupert and Lachlan Murdoch.

Drew Angerer/Getty Images

Revolving door

Lachlan Murdoch is in line to be C.E.O. of a vastly smaller “new Fox” if the Disney deal goes through. (NYT)

Joe Sullivan, the Uber cybersecurity executive ousted reportedly for helping cover up a data breach, will become CloudFlare’s chief security officer. (CNBC)

• Bain Capital Ventures hired Sarah Smith, an early employee at Facebook and the answer site Quora, as its first female partner. (Bain Capital Ventures)

Kenneth Muller, a private equity specialist, has left Morrison & Foerster for Kirkland & Ellis. (American Lawyer)

The speed read

• A Canadian-American council recommended steps to improve access to capital for female entrepreneurs. (Investissement Québec)

• A British retailer was accused of levying a “fat tax” by charging more for larger clothing sizes. (NYT)

• Sinclair continues to circle Sean Hannity. (Politico)

• Stan Lee has sued Pow! Entertainment, which he helped found, for $1 billion, alleging fraud. (Hollywood Reporter)

• The Robin Hood Foundation won’t say what its latest gala raised. (Bloomberg)

• Are you apologizing incorrectly? (Bloomberg Opinion)

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Top Porsche Official Targeted in German Police Raid Tied to Diesel Scheme

Spokesmen for Porsche and Volkswagen also declined to identify the suspects, and did not announce any changes to the Porsche board. A Volkswagen spokesman said that no one on the company’s management board was among the suspects. That would appear to rule out Oliver Blume, Porsche’s chief executive and a member of both companies’ boards.

But the presence of criminal suspects in high-level positions suggests that Volkswagen has not entirely rid itself of those who may have played roles in the scandal.

Engineering a Deception: What Led to Volkswagen’s Diesel Scandal

In September 2015, Volkswagen was accused of evading emissions standards in the U.S. The scandal has hit the company hard.

The scope of the raid on Wednesday, which involved 33 prosecutors and 160 police officers, indicated that the German authorities were still devoting substantial resources to the inquiry despite not yet filing criminal charges in the matter.

Volkswagen is likely to face additional unfavorable revelations as prosecutors complete their inquiry, probably toward the end of the year, and begin to make arrests. The negative publicity will complicate Mr. Diess’s efforts to lead Europe’s biggest carmaker as it tries to move past the scandal and to navigate a shift in the industry toward electric-powered and autonomous vehicles.

Mr. Diess, a former BMW executive, was named chief executive of Volkswagen last week after spending almost three years as head of the division that manufactures Volkswagen-brand cars. He is regarded as less burdened by the scandal because he joined Volkswagen only two months before the cheating was revealed.

The raids on Wednesday, which were prompted by suspicions of illegal manipulation of vehicle emissions and false advertising, were a reminder that the cheating scandal could continue to damage Volkswagen’s reputation.

The Stuttgart prosecutors said in a statement that they had searched 10 buildings in the state of Baden-Württemberg, which includes Stuttgart, and the state of Bavaria. Several Munich prosecutors also took part in the raids. A spokesman for the Stuttgart prosecutors declined to say whether any of the buildings were private homes.

Raids on the offices of German carmakers over suspected emissions cheating have become almost commonplace, casting a cloud over the country’s most important industry.

Last month, officials searched BMW offices in Munich as part of an inquiry related to diesel emissions. The Munich prosecutors said they were investigating whether software in some diesel BMWs functioned like a so-called defeat device, the illegal technology at the heart of the Volkswagen scandal.

The term refers to software that detects when a car is undergoing an emissions test. Under such circumstances, the software increases pollution controls to make the car compliant. Under normal use, the car pollutes much more than allowed.

BMW said that the software had been installed by mistake.

Prosecutors also searched Volkswagen headquarters in Wolfsburg last month. The company previously admitted that about 14,000 diesel Porsche Cayenne S.U.V.s sold in the United States had defeat devices. Porsche has sought to distance itself from the scandal, denying that its managers were aware of illegal software in the engines, which were supplied by Audi.

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China’s Communists Rewrite the Rules for Foreign Businesses

But Cummins’s Chinese partner then rewrote the business’s articles of association to give the party more power, Ms. Hu said. The American manager “has begun to understand it,” she added.

The Communist Party’s rise in the Chinese offices and factories of foreign companies is yet another challenge for multinationals doing business in the country, which has the world’s second-largest economy, trailing only that of the United States. President Trump’s protectionism has put American companies in particular in the middle of a brewing fight between Beijing and Washington.

Foreign companies face growing pressure to share sensitive technology. The Chinese authorities have stepped up efforts to foster a new generation of homegrown competitors meant to someday replace foreign companies.


A joint venture between Honda and the Chinese automaker Dongfeng builds Civics at this plant in Wuhan, China. Honda changed its legal documents to give the Communist Party a greater role in its Chinese factories.

Agence France-Presse — Getty Images

Should a trade dispute between China and the United States worsen, Beijing could be moved to intensify the party’s role in foreign business even further, creating yet another headache for businesses operating in China.

The party’s expanding presence in business is part of a broader push by Xi Jinping, China’s president and the party’s top leader, to make it stronger. He has reshaped education to include more Communist Party mythology and increased the party’s role in China’s military. Mr. Xi’s take on Communism — called “Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era” — has been unveiled with great fanfare across the country.

In the business realm, dozens of Chinese state-controlled companies have changed their articles of incorporation to give the party a greater role, including the publicly traded units of some of the world’s biggest companies, like Sinopec, ICBC and China Railway Group. The insurance giant China Pacific Insurance, for example, recently amended its articles of association to say that in key corporate decisions, “the board of directors shall first seek for the opinion of the leading party group of the company.”

“We’ve never seen the party so forcefully articulate its own goals,” said Jude Blanchette, a senior adviser and China head at Crumpton Group. “Companies are now trying to coordinate with the party in a way that doesn’t sacrifice their own shareholder interest.”

The Communist Party has long been part of doing business in China. While party committees are a fixture in many foreign-managed workplaces, they were seen by foreign executives for years as more like social clubs. They would meet to read party announcements, recruit new members, make sure dues were collected and generally keep an eye on operations.

But on at least three occasions in recent months, foreign executives have been approached by their Chinese joint venture partners demanding that they involve internal party committees in strategic decisions, say lawyers and business executives.

“Infiltration by party operatives into the executive circle of foreign-invested enterprises is not extensively apparent at this time but things are certainly going in that direction,” said James Zimmerman, a lawyer in Beijing whose clients include American multinational corporations.

He said several of his clients in joint ventures had received explicit requests to give their internal party organizations a greater say in the company’s operations. At some companies, the requested language requires a board of directors to consult with the committee before making business decisions.

Foreign business associations in China have spoken out. In November, the Delegation of German Industry and Commerce said it was concerned about “proactive calls on foreign-invested companies to promote the development of the Communist Party of China within companies.” The European Chamber of Commerce has called such incidents a “great concern” that would represent “a significant change from the legal framework under which joint ventures were negotiated and under which they have been operating successfully for decades.”

The creeping influence of the party in foreign offices and factories is a sensitive subject in a country where the party seems ready to punish anyone who questions its widening influence. Many companies are loath to discuss the issue.

Cummins, for example, declined to comment on the changes to its joint venture’s articles of incorporation that gave the party greater power. Cummins had not “experienced any challenges or impact due to the structure we have in place and the role of the Chinese Communist Party,” a spokesman said.

Cummins’s Chinese partner, Dongfeng Motor Group, has recently taken steps to intensify the party’s activities at its other joint ventures, according to an article last year from Xinhua, China’s official news agency. They include ventures with Peugeot Citroën, the French automaker; Honda, of Japan; and Dana, the American auto parts maker.

Dongfeng’s other partners, like Peugeot and Dana, did not respond to repeated requests for comment. A Honda spokesman declined to comment about its partnership with Dongfeng.

However, the Honda spokesman confirmed that the party claimed a more assertive role in another joint venture with a different Chinese company, GAC Group.

GAC, an automaker owned by Guangzhou Automobile Group, is pushing its joint ventures to change their articles of association to give the party a greater role, a spokeswoman said. In addition to Honda, it has joint ventures with Toyota and Mitsubishi, both of which declined to comment.

In November, at the most important Communist Party meeting, which takes place every five years, Mr. Xi called on officials to strengthen the party in “government, the military, society and schools, north, south, east and west.” The message was quick to reach party members lower down in the ranks.

Soon after Mr. Xi’s speech, party officials in the central province of Hunan issued a notice to members instructing them to write the party into legal documents for private and state-owned companies alike. The document was accidentally made public when a local state-owned newspaper published it, but it was quickly taken down.

Over the past year, the state-owned oil giant Sinopec has begun to ask its foreign joint venture partners to legally require “party-building work,” according to one executive with direct knowledge of the requests who was not authorized to speak publicly. Party building is an amorphous term that can mean general recruiting and educating but can also refer to more direct, specific activity. The foreign executive told Sinopec that putting the party in the joint venture’s legal documents would pose major problems for the head office overseas.

Sinopec did not respond to several requests for comment.

Dongfeng Motors, Cummins’s partner and one of China’s biggest carmakers, has long had strong Communist Party ties.

Instructors at Communist Party schools have used Dongfeng’s joint venture with Nissan as a model of how the party can be involved with business, according to the book “The Party” by Richard McGregor. When the partnership was negotiated, Dongfeng insisted that the new company give the chief party representative a senior management role, with a salary and compensation for expenses.

Today, Dongfeng’s Communist Party committees are working to expand their influence further. In other Dongfeng joint ventures, committees have tried to make the party more relevant for employees by holding social events.

In 2016, a group of employees from Dongfeng-Cummins traveled to the site of the Communist Party’s first base, according to Dongfeng’s website. On a rainy day, the group dressed in Red Army outfits, huddled together to hold a red flag with the hammer and sickle and smiled for the camera.

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