Presidential inaugural committee 'blatantly' enriched Trump family: D.C. attorney general

The District of Columbia is suing U.S. President Donald Trump's inaugural committee and two companies that control the Trump International Hotel in the nation's capital, accusing them of throwing parties for the Trump family with non-profit funds, and overpaying for event space at the hotel.

The city's attorney general, Karl Racine, said the inaugural committee had been "blatantly and unlawfully abusing non-profit funds to enrich the Trump family." The lawsuit, announced Wednesday, alleges that the committee abused non-profit funds and co-ordinated with the Trump family to "grossly overpay for event space" in the hotel.

The committee has maintained that its finances were independently audited, and that all money was spent in accordance with the law.

It was the latest allegation that Trump and his family have used public and non-profit funds spent at Trump-owned properties to enrich themselves — part of the peril of Trump not fully withdrawing from his businesses while he is president. Trump has maintained ownership but turned the reins over to his adult sons, who have bristled at the charge that they are profiting off their father's presidency.

The suit alleges the committee co-ordinated with the hotel's management and members of Trump's family to arrange the events and that committee staffers knew they were paying prices that were "grossly above market rate" but didn't consider less expensive alternatives.

The committee raised an unprecedented $107 million US to host events celebrating Trump's inauguration in January 2017. But the committee's spending has drawn mounting scrutiny.

"District law requires non-profits to use their funds for their stated public purpose, not to benefit private individuals or companies," Racine said. "In this case, we are seeking to recover the non-profit funds that were improperly funnelled directly to the Trump family business."

Gates 'worried about the optics'

Prosecutors found that Rick Gates, a former Trump campaign aide who flipped on the president during the special counsel's Russia investigation, personally managed discussions with the hotel about using the space, including ballrooms and meeting rooms. One of the event's planners raised concerns about pricing with Trump, Gates and Ivanka Trump, according to the lawsuit. Ivanka Trump is the president's daughter and a senior White House adviser.

Those concerns included a written warning that the price proposal was at least twice the market rate. But Gates went through with it anyway, at a cost of $1.03 million, the suit says.

In one instance, Gates contacted Ivanka Trump and told her that he was "a bit worried about the optics" of the committee paying such a high fee, Racine said.

Stephanie Winston Wolkoff, a former adviser to first lady Melania Trump who played a leading role organizing the inaugural parties, had also told Trump, when he was president-elect, and Ivanka Trump that she was uneasy with the offer, Racine said. Winston Wolkoff later followed up with an email to Gates and Ivanka Trump warning that the hotel's proposal was at least twice the market rate, Racine said.

Prosecutors say the committee could have hosted inaugural events at other venues either for free or for reduced costs but didn't consider those options.

Gates pleaded guilty to charges tied to his lucrative political consulting work in Ukraine and was sentenced last month to 45 days in prison, a punishment that a judge said reflected the extensive co-operation Gates had provided to the Justice Department. Racine's office said investigators did not directly speak with Gates as they pursued the suit.

A lawyer who represented Gates for the criminal proceedings didn't immediately return a message seeking comment. The White House didn't immediately return a message nor did the Trump Organization.

The suit contends that the hotel went against industry practice and refused to discount the space, and double-booked its largest ballroom with a different organization that was still affiliated with the inauguration, the Presidential Inaugural Prayer Breakfast. Both organizations were non-profits, but the breakfast paid $5,000 for the ballroom. The committee, however, paid $175,000, the suit claims.

Prosecutors say the committee also used non-profit funds to throw a private party on Jan. 17, 2017, the night of the inauguration, for Trump's family — a $300,000 affair. The reception was for three of Trump's children — Donald Jr., Ivanka and Eric.

"There will be an after party at the OPO [Trump Hotel] following the inaugural balls on Friday. DJT is not expected to attend but was more for you, Don and Eric," Gates wrote in an email to Ivanka Trump, according to the suit. DJT is a reference to Donald J. Trump.

Event staff within the inaugural committee recognized this would not be a proper use of committee funds and had tried to cancel this event, according to the suit, but Gates and the Trump family went ahead anyway.

Racine said his office focused on the inaugural committee and the companies that profited because investigators believe that's the best option for them to possibly recover the funds.

Racine had been sending subpoenas for months related to the investigation. The inaugural committee was also being investigated by New York and state authorities in New Jersey, who are looking into, among other things, whether foreigners illegally contributed to the inaugural events.