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Court Greenlights Lawsuit Alleging Trump’s Inaugural Committee Funneled Money to His Personal Businesses


US President-elect Donald Trump along with his children Eric(L) Ivanka and Donald Jr. arrive for a press conference January 11, 2017 at Trump Tower in New York. Trump held his first news conference in nearly six months Wednesday, amid explosive allegations over his ties to Russia, a little more than a week before his inauguration. / AFP / Timothy A. CLARY

A judge in Washington, D.C. on Wednesday rejected a bid to dismiss a lawsuit filed against Donald Trump’s Presidential Inaugural Committee (PIC). The lawsuit claims that the Committee and the Trump Organization abused non-profit funds to enrich the president’s family.

The complaint, filed by D.C. Attorney General Karl A. Racine (D) in January, alleged that the non-profit PIC violated the law by wasting approximately $1 million of charitable funds in overpayment for the use of event space at the president’s D.C. hotel.

“The Trump Entities, for-profit companies that conduct business with an aim toward maximizing revenue, were aware at their highest levels of the PIC’s nonprofit status,” Racine’s office claimed. “Nonetheless they entered into this private inurement transaction with the PIC, charging the nonprofit rates not only above market for the use of event space, but also well above the Trump Hotel’s own pricing guidelines. The Trump Entities even insisted the PIC pay these exorbitant rates in full when the Hotel could not provide the full event space on at least one day. In doing so, the Trump Entities contributed to waste and unconscionably benefited from nonprofit funds required to be used for the public good.”

The PIC raised a record $107 million to host events celebrating the inauguration of President Trump.

The AG’s Office is seeking to recover the nonprofit funds that were allegedly funneled to the Trump family entities. Racine said the money would then be used to fund other non-profits dedicated to the promotion of civic engagement.

In a motion to dismiss the complaint, the Trump entities argued that even if the facts alleged in the complaint were true, it still would not amount to a violation of the District’s Nonprofit Act. They also contend that the AG failed to allege that the entities were continuing to violate the law.

In a 22-page order, Superior Court Judge Jose M. Lopez rejected the arguments from the Trump entities, reasoning that the complaint properly alleged that the PIC had acted contrary to law, and that the court had jurisdiction over the matter because the defendants transacted business within the District of Columbia.

“While the Court has not granted temporary injunctive relief in this matter,” Lopez wrote, “it would cause an injustice if nonprofit corporations were allowed to escape oversight simply because it was not actively acting contrary to its nonprofit purposes or abusing the authority conferred upon it by law.”

Read the full order below:

DC Court Order on Trump Inaugural Committee Lawsuit by Law&Crime on Scribd

[image via TIMOTHY A. CLARY/AFP via Getty Images]

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Jerry Lambe is a journalist at Law&Crime. He is a graduate of Georgetown University and New York Law School and previously worked in financial securities compliance and Civil Rights employment law.