For the Trump Family, Neither Laws Nor Morals Seem to Apply

Richard Nixon famously said, “I am not a crook”. With Donald Trump, we have a president who cannot say that. Neither can his eldest sons and daughter.

After a 20-month investigation, the New York attorney general filed suit in mid-June against the foursome for alleged “persistently illegal conduct” at the president’s personal charity, the Trump Foundation, misappropriating its funds — mostly other people’s money, say tax records — to pay business and personal expenses and even presidential campaign bills. We dutifully say “alleged”, but this case is built on the books and bank records of the “charity” so the defense
will find an alternate truth hard to come by.

The foundation was so questionable a charity that its board of directors hadn’t met in 19 years and its treasurer was surprised to hear that he held that office. Trump himself hasn’t contributed anything to the fund in 10 years.

Charitable foundations are required by law to disperse their funds for the public good. Yet twice, the suit tells us, did Donald Trump use the non-profit foundation’s money to settle legal disputes of his for-profit businesses. The foundation paid $32,000 to a real estate management company covering what the Trump business organization owed, not the charity. And he had the foundation pay a total of $258,000 to settle legal problems of Trump’s businesses — of which $100,000 went to a veterans charity, agreed to by the town of Palm Beach as a settlement of a fine levied on Trump’s Mar-a-Lago club.

The foundation paid $10,000 for a portrait of himself that was found hanging in the bar at Trump’s Doral golf resort. And $20,000 for another larger portrait. There was $5,000 paid to a charity for an ad in its event program that promoted Trump hotels, not the charity. There was $25,000 donated to the reelection campaign of Florida attorney general, Pam Biondi, who would shortly thereafter call off an investigation into Trump’s educational enterprise, Trump U. When that was exposed by The Washington Post, Trump had to reimburse the foundation but got away with only a miniscule fine. The foundation’s largest-ever gift — $264,631 — was to renovate a fountain in New York City, which happened to be in view through the windows of Trump’s Plaza Hotel.

Non-profit organizations such as the Trump Foundation are prohibited from participating in political campaigns. That’s spelled out in documents Donald Trump knowingly and repeatedly signed.

In January 2016 candidate Trump held a fund raiser for veterans that raised millions, much of it deposited with the foundation. But the attorney general’s complaint says that, after that, “the Foundation ceded control over the charitable funds it raised to senior Trump Campaign staff”, where campaign manager Corey Lewandowski decided which veterans organizations should receive money. But he then wanted to divert the charity money to pay expenses of an Iowa campaign rally, and to excuse that misstep, Donald Trump wrote a letter to New York Attorney General Barbara Underwood to try to persuade her that the Iowa fundraiser was a charity event. Underwood wasn’t buying. She called that “false”.

IRS rules also prohibit tax-exempt foundations’ involvement in political campaigns. “This statutory prohibition is absolute”. The suit notes that Mr. Trump himself signed annual IRS filings, under penalty of perjury, warranting that his foundation engaged in no political activity. The New York AG is referring the matter to both the IRS and the Federal Election Commission.

how dare we

How to explain a family that views itself so exempt from ethics and laws that it had the Trump Foundation issue a statement saying the lawsuit is “politics at its very worst”? How can we have elected a president who called the New York attorney general’s office “sleazy New York Democrats” for coming after his sham charity that has used other people’s money not for the general good but as his personal slush fund?

In Donald Trump’s case the explanation is greed undisturbed by any grounding in morals. His lifelong habit was to sue whenever an outcome did not go his way, confident that the legal costs of confronting his wealth would usually deter anyone from fighting back. His conduct across decades shows a mentality that thinks all money should be his. In 2012 the Trump National Golf Club promised $1 million to anyone who shot a hole-in-one at a fund-raising tournament. It happened. The golfer, Martin Greenberg, had to sue for the money and caved to only a settlement for $158,000, and that paid to a foundation he runs, paid not by the golf club but by the Trump Foundation out of its mostly other people’s money.

In the building of his casinos, Mr. Trump repeatedly claimed the likes of quality defects as grounds for not paying contractors and suppliers (all the while keeping and installing the work-product). In Atlantic City he tried to take the property of an elderly woman, saying eminent domain is “a necessity for our country”, his necessity being a limousine parking lot for a casino. He hired 200 undocumented Polish immigrants to demolish the building that was to be replaced by Trump Tower in New York. They worked 12-hour shifts with inadequate safety equipment and were paid below standard — when and if paid. When they complained about non-payment, Trump, who had knowingly hired undocumenteds, now threatened to report them to the Immigration and Naturalization Service to have them deported. Something is missing in his psychological makeup. There is no concern for the damage done to those he has cheated and left with nothing.

disappearing act

That fund-raiser for veterans we mentioned? Trump staged the event to duck one of the Republican campaign debates; he was upset with Fox News over questions asked in the first debate. At the podium he proudly pledged a $1 million contribution. Four months later, The Washington Post‘s David Fahrenthold called around and couldn’t find a single veterans charity that had received any money. Only when that story came out did Trump write a check:

“I will say, the press should have been ashamed of themselves. I send people checks of a lot of money…and instead of being like thank you very much Mr. Trump or Trump did a good job…you make me look very bad”.

Trump hoped it would not be noticed that he wrote the checks just the day before.

That episode evidently piqued Fahrenthold’s curiosity. He learned that Donald Trump made something of a habit of appearing at charity events to make the impression that he was a major benefactor of charitable organizations, except that those in attendance at such events noticed that he tended to leave without making or pledging a donation. That fit a pattern of promises never kept. Fahrenthold reported:

“Trump promised to give away the proceeds of Trump University. He promised to donate the salary he earned from ‘The Apprentice’. He promised to give personal donations to the charities chosen by contestants on ‘Celebrity Apprentice’. He promised to donate $250,000 to a charity helping Israeli soldiers and veterans.

The Post could not come up with proof that he followed through on any of these. Asked for details of his giving, candidate Trump demurred, saying that if it became known how much he donated, charities would hound him for more. “I give mostly to a lot of different groups”, Trump said in one interview. “Can you give us any names?” the reporter asked. “No, I don’t want to”, Trump answered. “I’d like to keep it private.” Fahrenthold relates this story:

In 1997, he was “principal for a day” at a public school in an impoverished area of the Bronx. The chess team was holding a bake sale, Hot & Crusty danishes and croissants. They were $5,000 short of what they needed to travel to a tournament. Trump had brought something to wow them.

“He handed them a fake million-dollar bill,” said David MacEnulty, a teacher and the chess team’s coach.
The team’s parent volunteers were thrilled. Then disappointment.

Trump then gave them $200 in real money and drove away in a limousine.

…A woman read about Trump’s gift in The New York Times, called the school and donated the $5,000. “I am ashamed to be the same species as this man,” MacEnulty recalled her saying.

blank checks

Trump refuses to release his tax returns, so Fahrenthold had to spend months of dogged research to find out who had benefited from his professed largesse. He came up with only $7.8 million in charitable gifts since the early 1980s. Most — $5.5 million — went not to charities, but to his own Trump Foundation. It was Fahrenthold’s exposé of how the foundation spent that money that led to the New York attorney general’s investigation and law suit recounted above.

Fahrenthold contacted 420 charities to which a New York philanthropist would be likely to contribute. From 2008 until his story was published in the fall of 2016, Fahrenthold found only one gift — less than $10,000 given to the Police Athletic League. The Post published page after page of his handwritten list (found here, each sheet expandable for reading by a click).

The Trump campaign could only respond with a statement saying that Trump “has personally donated tens of millions of dollars … to charitable causes” but when asked, could not produce any proof. His reporting, which detailed Trump’s claims to be a fraud, earned Fahrenthold a Pulitzer.

school’s out

The exposure of the Trump Foundation’s lawbreaking misuse of other people’s money wasn’t needed to prove this president’s larceny. For that we have Trump “University”, where he was convincingly accused of swindling a few thousand people. Marketing materials had told them they’d be told Trump’s “insider success secrets” by instructors “hand-picked by me”. They would learn “the Trump process for investing in today’s once-in-a-lifetime real estate market” from “…terrific people, terrific brains … the best of the best”.

Newspaper ads and mailed invitations over Trump’s signature offered free 90-minute workshop sessions held in 700 locations across the country. Their goal was to persuade attendees to sign up for three-day workshops with a $1,495 tuition that would be “all you need” to go forth on the road to riches. Well, not quite, as it turned out, because at this second tier, the playbook for the “mentors” — who were paid commissions, not a salary — was to “set the hook” in their pupils to sell them third-level programs costing from $9,995 to $34,995.

And sell they did. Court disclosures show that 80,000 attended the 90-minute sessions, close to 9,200 continued to the $1,495 three-day course, and some 800 took the bait for the up to $35,000 package.

Lawsuits were brought on both coasts — for $40 million in restitution by the New York attorney general, and in San Diego, where the presiding judge decided that, while some may have gotten more out of the courses than others, all were so uniformly bilked by content that did not live up to misleading advertisements that he allowed a class action with some 7,000 plaintiffs to go forward.

The president hired by Trump to run the university said in a pretrial deposition that “none of our instructors … were handpicked by Donald Trump” and that the course curriculum was written by an outside firm that develops materials for adult education courses as its business.

Trump himself was deposed. He could not explain some of the techniques that the marketing brochures pledged to teach, such as Trump’s “foreclosure system” which the course writers had seemingly invented. Trump said he had personally approved the marketing materials but he had never reviewed the curriculum — the contents of the courses that supposedly divulged his proprietary arts of the deal. He was not even interested in what was being taught in his name. And the instructors were not successful real estate experts; they came from sales backgrounds. A couple of them had filed for personal bankruptcy.

Trump told the reporter from Time that “all money that I made was going to go to charity”. Court testimony and evidence say that checks or wire transfers totaling $5 million were sent him from the university because he wanted to make the charitable contributions from his personal accounts. From Fahrenthold’s empty lists, we know that didn’t happen; the man has no shame.

The case was about to go to trial in August 2016, less than three months before the election. Trump settled for $25 million to head off what would have been a media fandango. So he got away with it –at a discount, with an alleged $15 million that stayed in his pocket, never returned to students.

the art of the con

Time magazine interviewed a fellow named Bob Guillo who had gone for the whole Trump Gold Elite package:

“He’s the biggest phony in the world, yet people as gullible as me think he’s the greatest guy in the world. When I watch him on TV, … I think, ‘How can people believe in him?’ And I think, ‘Well, Bob, you believed in him in 2009. You gave him $35,000.’”

By the People, For the People? But We Don’t Seem to be Getting the Breaks

We like to boast that we are a free people, and for the most part we are. But the pithy warning that “eternal vigilance is the price of liberty” may not have been passed on to new generations all that successfully because they don’t seem to notice the many ways congress, the courts, the president are finding ways to put the cuffs on individual freedom and hand the keys to corporations.

Donald Trump won the presidency with pledges to help working-class Americans
You’d think there’s a finger on the scale.
— the “forgotten men and women” who have seen themselves stranded economically while the wealthy reap all the gains — yet we watch the paradox of the many actions of the Trump administration, the Republican-controlled Congress and the Supreme Court that steadily squeeze the rights and future of we the people. Here’s a rundown:

you’re on your own

In May the conservatives on the Supreme Court ruled 5-4 that companies can require employees to submit to arbitration in wage disputes and can deny their right to band together in class action suits. The latter ban on its own would have left employees to take on corporations as individuals, one-by-one, having to bear unaffordable legal expenses singly instead of as a group. The former, forced arbitration, could affect some 25 million workers under contract and an untold number of current employees whom corporations might now require to sign away their rights if they want to keep their jobs. New hires can expect to be forced to sign agreements restricting them to arbitration as a condition of employment.

Trump appointee Justice Neil Gorsuch wrote the majority opinion, in which he says the Court is following a prior federal law that favors arbitration for its “speed, simplicity and inexpensiveness”. It is up to legislatures to make changes, he says. In her dissent, Justice Ruth Bader Ginsburg pointed out what an oppressive problem arbitration has become for the individual, writing that in 1992 only 2% of non-unionized employers imposed mandatory arbitration on workers; that has become 54% today.

Under arbitration a person with a complaint goes, along with the corporation’s representative, before a single individual, usually, from a firm that specializes in judging disputes. The arbitrator hears both sides and renders a binding decision. So much simpler and economical than a court trial. Problem is, a corporation typically hires a single arbitration firm to handle all its disputes. If that firm decides against the corporation more than a token number of times, it is sure to lose the corporation as a client. A “Frontline” documentary on PBS showed the example of First USA, a company that handles credit card transactions. (In their case not the wage disputes of the Court’s ruling, but it’s the same dynamic.) First USA had won 19,618 cases in arbitration. How many cases did card users win? 87. That’s how the Court has stacked the deck against American workers.

ball and chain

Doubling down against employees is the proliferation of non-compete clauses in hiring contracts. Once applied only to highest value employees privy to a company’s proprietary knowledge, they have spread as low as fast-food chains to keep workers manacled to their jobs like indentured servants, unable to accept higher paying offers from fast-food competitors even though no business secrets are at issue. Some 30 million workers are now covered by non-competes says the Treasury Department — 1 of every 5 of us — and 14% of them earn less than $40,000 a year. Some contracts range far beyond the job description itself, blocking an employee from taking a job in any other field for which his or her skills might apply. What has happened to laws that once voided business contracts that sought to “deprive of livelihood”? And where is the justice of a company preventing a former employee from taking a job with competitors without paying the employee for not doing so? Non-compete clauses without compensation should be unenforceable.

California stands out as one state that makes non-compete clauses moot. A few states are following suit. But a practice that puts America’s workers in leg irons needs a national crackdown. The Obama administration had pushed Congress to limit the practice. At its simplest a law could establish a pay threshold below which a worker surely has nothing to do with corporate secrets. It’s an ideal cause for Trump to take up: helping the forgotten worker get a leg up in life.

businesses need protection, too

The Consumer Finance Protection Bureau was one piece of the enormous 2010 financial reform law known as Dodd-Frank. Its purpose was to act as a counterweight to the power of vast corporations, to protect the public from unfair practices by banks and credit card companies; mortgage, auto, and payday lenders; and financial grifters in general. Republicans hate the CFPB. They call it government overreach with too much power over business, a “protection racket” says National Review that shakes down corporations for millions, is accountable to no one, and has a degree of independence they say is unconstitutional. This is as was intended: To keep CFPB free of political influence it is funded by the Federal Reserve, there is no congressional oversight, and its director cannot be removed by even the president, except for cause.

Under Obama appointee Richard Cordray, the agency had collected $12 billion from multiple financial companies as penalties for wronging consumers, most notably Wells Fargo for having staff create more than two million accounts in customers’ names without their knowledge and then charging them fees. But as the brainchild of one of President Trump’s most nettlesome critics, Elizabeth Warren, the CFPB was certainly a target for the president when Cordray quit to run for governor of Ohio.

The law stipulates that the deputy director “shall…serve as acting Director in the absence or unavailability of the Director” but Trump brushed aside the deputy and told his budget director Mick Mulvaney to take over. Mulvaney had called the bureau a “joke…in a sick, sad kind of way”. He would be “like a mosquito in a nudist colony”, said legislative affairs director Marc Short. A federal court has allowed the executive branch to usurp control of the bureau in keeping with the 1998 Federal Vacancies Reform Act, but the move contravenes the Dodd-Frank law, and the matter is still before the courts.

Meanwhile, there is a time limit that ends June 22 for how long a government official can serve in a dual role. But in the brief time allotted him, Mulvaney has worked at flank speed to reverse what Cordray set in motion. Immediately on taking over he froze enforcement proceedings and rule-making; halted hiring; stopped the collection of monitoring data from banks; and shifted the emphasis to first evaluating the cost of a proposed action before deciding to enforce. For Mulvaney, in a Wall Street Journal opinion piece, the CFPB’s protection is not just for consumers. Rather it is for…

“those who use credit cards and those who provide credit; those who take out loans and those who make them; those who buy cars and those who sell them.”

How did that turn out?
 Barely 48 hours after taking over, he had the CFPB cancel an $8 million fine against an Ohio mortgage company that the courts agreed had misled more than 100,000 customers.

 In January he dropped a case against four lending companies preying on an Indian tribe with interest charges that annualized to 950%.

 Claiming it’s no more than simple reorganization, Mulvaney dismantled the group that went after predatory student loan collecting, merging its personnel into the agency’s office of financial education. That has caused consumer advocates to fear that enforcement would evaporate, replaced by simply publishing advice to students about their rights. Americans are strapped by $1.5 trillion in student debt and the agency had clawed back about $750 million from lenders under Cordray. Now, the concern is that a major enforcement case against Navient, the country’s largest student debt collector, for steering low income kids into high-cost programs, will be snuffed.

 Mulvaney has shut down public access to a database where consumers can register complaints against banks, credit card processors, etc. Since its inception in 2011, it has attracted 1.5 million consumer complaints. Businesses say the gripes shouldn’t be made public because haven’t been verified by some arbiter, presumably themselves. Holding up a copy of the Dodd-Frank law at a banking industry conference, Mulvaney said, “I don’t see anything in here that says I have to run a Yelp for financial services sponsored by the federal government”. Corporations, through advertising and public relations, have the money and access to present themselves as public benefactors. Mulvaney has chosen to shut off an avenue where the public can make their voices heard and warn others in a searchable database. Now, only companies will have access to what consumers have to say about them.

A case against Wells Fargo begun under Cordray that led to a $1 billion fine did go forward in April, though, possibly because it had been much in the headlines.

Mulvaney has gone before Congress to ask that Dodd-Frank be revised to place the CFPB under the executive branch, with oversight by Congress, which would destroy the autonomy of its deliberate design and make its consumer protections subject to whichever way the political winds blow.

left behind

Before Mulvaney’s arrival, the bureau had taken years to develop rules to rein in the usurious practices of payday lenders. Issuing some $46 billion in loans a year from more storefronts than there are McDonald’s, they collect $7 billion from 12 million Americans whose paychecks fall short of living expenses and who have no other credit sources. They turn to the “short-term” lenders, as the industry prefers to characterize itself, who often lend on terms that assure borrowers will fail. Many can only pay back a portion of their debt, and the pileup of interest charges — often the equivalent of 300% to 400% a year — plunges them ever deeper into a debt than far exceeds the original loan. Fifteen states already ban payday lenders. For the rest, the new rule would require lenders to run a credit check to ascertain ability to repay. And it limits rollovers, by which people take out new loans to pay for the old.

As you might expect, given our theme, One of Mulvaney’s first acts was to roll back the new rules, allowing predatory practices to roll on.

As director of the other consumer protection unit, part of the Federal Trade Commission, the president has just chosen Andrew Smith, a lawyer who in 2012 defended a payday lending company founded by a convicted racketeer in a case prosecuted by the FTC itself that resulted in a court-ordered settlement of $1.3 billion. More recently, he has represented Facebook, Uber, and Equifax — all with pending matters before the FTC.

skin in the game

In April, the Senate overturned an Obama-years rule set by the Consumer Finance Protection Bureau that prevented auto loan lenders from discriminating against minorities by charging them higher rates. The House passed the rollback in May, freeing banks to use discriminatory pricing based on race or ethnicity.

work ethic

Republicans in the House could vote for a new farm bill that would impose work requirements for recipients of food stamps, dropping maybe two million from the program according to the liberal-leaning Center for Budget and Policy Priorities. Trump has said, “We can lift our citizens from welfare to work, from dependence to independence, and from poverty to prosperity.” There is no evidence to support that cheerful a prognosis. Reform under President Clinton cut welfare recipients from 68% of the poor to 23% (and benefits have declined by a fifth since), but those taken off the rolls found themselves stuck in the low-pay labor market. Still, in an economy where there are now more job openings than workers to fill them, says the Wall Street Journal, nudging the able-bodied to take a job and perhaps get off taxpayer food subsidies is not unreasonable.

Very different is the Trump administration’s allowing the states to attach a work requirement in return for receiving Medicaid benefits. What’s the connection? Do they expect the newly-employed to be able to afford health insurance on their own, in which case it would be work in return for loss of Medicaid? Hundreds of thousands of poor Americans are expected to lose their health insurance as states perform the triage of deciding who among the non-working aren’t too old, or not too ill, or not trying hard enough to find a job and thus should be stripped of Medicaid.

At one end is Bernie Sanders promoting Medicare for All without concern for how we can possibly pay for it. At the other extreme are states looking for a way to save money by casting their poorest adrift. The partisan divide cannot get any wider than that.