Trump Organization, inaugural committee must pay DC attorney general $750K over claims of misspent nonprofit funds - CNBC

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President Donald Trump and First Lady Melania Trump dance at the Freedom Ball on January 20, 2017 in Washington, D.C.

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Former President Donald Trump's 2017 inaugural committee and his company have agreed to pay the District of Columbia $750,000 to resolve allegations that those entities and the Trump hotel there illegally misused nonprofit funds to enrich the Trump family, D.C.'s attorney general said Tuesday.

The Trump Organization and the committee admitted no wrongdoing in the settlement. But the deal is the latest legal black eye for the former president.

The settlement comes more than two years after a judge in New York ordered Donald Trump to pay $2 million to settle a lawsuit by that state's then attorney general alleging he used his Trump Foundation charity to benefit his 2016 campaign for the White House, as well as other unlawful activity. The foundation agreed to dissolve itself before that order.

Trump faces a pending criminal investigation in Georgia over allegations that he illegally interfered in the 2020 presidential election there, and a civil probe in New York, whose current attorney general, Letitia James, has said there is evidence the Trump Organization illegally manipulated the stated value of real estate assets for financial benefit.

"No one is above the law — not even a president," said D.C. Attorney General Karl Racine in a statement Tuesday announcing the settlement of a lawsuit he filed against the Trump entities in 2020. It alleged more than $1 million in improper payments to the Trump International Hotel in Washington.

"After he was elected, one of the first actions Donald Trump took was illegally using his own inauguration to enrich his family. We refused to let that corruption stand," Racine said.

The District of Columbia alleged in its lawsuit that the Trump Presidential Inaugural Committee, which is a nonprofit corporation, coordinated with members of Trump's family "to grossly overpay for event space" at the Trump hotel during his 2017 inauguration as president, the AG's office noted at the time.

"Although the Inaugural Committee was aware that it was paying far above market rates, it never considered less expensive alternatives, and even paid for space on days when it did not hold events," the office said.

"The Committee also improperly used non-profit funds to throw a private party for the Trump family costing several hundred thousand dollars."

Trump's adult children, Donald Trump Jr. and Ivanka Trump, were questioned under oath by lawyers for Racine as part of the lawsuit, as was Rick Gates, deputy chairman of the inaugural committee.

Gates in a December 2016 email told Ivanka Trump that he was worried about "the optics" of the Presidential Inaugural Committee being asked to pay $3.6 million for room rental and minimum food and beverage costs.

"The cost itself seems quite high compared to other property buyouts for the week," Gates told her in that email, which was included in court documents as part of the lawsuit.

The settlement money from the Trump entities will be split between two nonpartisan nonprofit organizations in Washington, Mikva Challenge DC and DC Action.

Racine's office said those groups "promote civic engagement, democracy, and youth leadership in the District."

Thomas Barrack, a billionaire friend of Donald Trump who chaired the former president's inaugural fund, exits following his arraignment hearing at the Brooklyn Federal Courthouse in Brooklyn, New York, U.S., July 26, 2021.

Brendan McDermid | Reuters

Trump in a statement said, "Given the impending sale of The Trump International Hotel, Washington D.C., and with absolutely no admission of liability or guilt, we have reached a settlement to end all litigation with Democrat Attorney General Racine."

Trump added: "As crime rates are soaring in our Nation's Capital, it is necessary that the Attorney General focus on those issues rather than a further leg of the greatest Witch-Hunt in political history. This was yet another example of weaponizing Law Enforcement against the Republican Party and, in particular, the former President of the United States. So bad for our Country!"

Lee Blalack, the inaugural committee's lawyer, in a statement, said, "As the settlement states, the [committee] continues to dispute all of the Attorney General's claims and remains confident that had this case gone to trial, the PIC would have prevailed based on the evidence."

"While the Attorney General sought no monetary damages from the [Presidential Inaugural Committee] , the PIC and its insurer determined that settlement was prudent simply to avoid the significant costs of litigating these baseless allegations through trial," Blalack said.

"Indeed, it would have required the PIC's insurer to spend double the amount of this insurance settlement just to try this case to verdict, and thus this modest settlement payment only makes common sense. Now more than five years after completing its 2017 inaugural responsibilities, the PIC, which today exists exclusively to respond to this litigation, can finally wind down its affairs."