Case: The People of the State of New York v. Trump

451130/2018 | New York state supreme court

Filed Date: June 14, 2018

Closed Date: 2019

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Case Summary

On June 14, 2018, the State of New York brought this lawsuit against the Donald Trump Foundation (the Foundation) and its officers, including the founder and president of the Foundation, Donald Trump, in the Supreme Court of the State of New York. The Foundation was a private not-for-profit corporation incorporated in New York in 1987. The plaintiff alleged that Trump used the Foundation to pay off the legal obligations of entities he controlled, to promote Trump hotels, to purchase personal it…

On June 14, 2018, the State of New York brought this lawsuit against the Donald Trump Foundation (the Foundation) and its officers, including the founder and president of the Foundation, Donald Trump, in the Supreme Court of the State of New York. The Foundation was a private not-for-profit corporation incorporated in New York in 1987. The plaintiff alleged that Trump used the Foundation to pay off the legal obligations of entities he controlled, to promote Trump hotels, to purchase personal items, and to support his presidential campaign. Alleged acts included Trump's use of $10,000 of the Foundation's funds to purchase a portrait of himself and payments upwards of $100,000 to charitable organizations to settle claims against the Mar-A-Lago resort and Trump National Golf Club. The plaintiff sought dissolution of the Foundation as well as injunctive and declaratory relief against the defendants. It also sought monetary damages of up to double the amount of benefits improperly obtained by the defendants.

On August 30, 2018, the defendants moved to dismiss the case by arguing that the court lacked jurisdiction over the president and that most of the transactions supporting the claims were barred by the statute of limitations. On November 23, 2018, Judge Saliann Scarpulla denied the defendants’ motion to dismiss. The court held that Trump was not immune from suit under the Supremacy Clause or doctrine of separation of powers as the sitting President of the United States. The court also decided that the defendants’ motion to dismiss on the basis of the statute of limitations was moot. In addition, the court held that the plaintiff adequately stated that the defendants breached fiduciary duties, failed to properly administer foundation assets, and engaged in wrongful party transactions under the relevant New York law. 88 N.Y.S.3d 830.

On December 26, 2018 the defendants appealed the decision to the Appellate Division.

At Judge Salian Scarpulla's urging, and after months of negotiating, the parties reached a resolution on November 7, 2019. The defendants agreed to dissolve the Foundation under judicial supervision and terminate its corporate existence. The Foundation also agreed to distribute $1,782,910.92 to not-for-profit organizations approved by the court. As part of the settlement, defendants certified that they had all completed an in-person, interactive board training session pertaining to charitable organizations. Trump also agreed to reimburse $11,525 to the Foundation for the Foundation's payments for auction items at a charitable benefit.

The settlement also outlined requirements for Trump if he wished to serve as an officer or director of a charitable organization in New York. The requirements were: the organization must (1) engage counsel with expertise in not-for-profit law to advise the organization; (2) engage the services of an accounting firm to monitor the organization; (3) have a majority of board members with no familial or business ties to Trump; (4) agree to not engage in any transactions with Trump, his family members, or any entity owned by Trump or his family; (5) provide the Attorney General with annual reports for five years; (6) enact specific corporate governance procedures; and (7) maintain a working familiarity with the applicable New York rules governing charitable organizations.

The parties left to the court the question of how much Trump should owe in damages for using $2,823,000 in Foundation funds to further Trump's political campaign. Judge Salian Scarpulla, citing the fact the funds did ultimately reach charitable organizations, awarded $2,000,000 in damages. The court did not award punitive damages in light of the fact that Trump agreed to a number of proactive conditions so that this type of conduct would not occur in the future.

The case is closed.

Summary Authors

Sichun Liu (3/9/2019)

Cedar Hobbs (11/10/2019)

People


Judge(s)
Attorney for Plaintiff

Farber, Peggy J (New York)

Fuchs, Yael (New York)

Attorney for Defendant

Brueckner, Richard Frederick (New York)

Futerfas, Alan S. (New York)

Expert/Monitor/Master/Other

Juneja, Aditi (New York)

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Documents in the Clearinghouse

Document

451130/2018

Docket

People v. State of New York

March 7, 2019

March 7, 2019

Docket
1

451130/2018

Verified Petition

People v. State of New York

June 14, 2018

June 14, 2018

Complaint
109

451130/2018

Decision and Order

People v. State of New York

Nov. 23, 2018

Nov. 23, 2018

Order/Opinion
139

451130/2018

Stipulation of Final Settlement

Nov. 7, 2019

Nov. 7, 2019

Order/Opinion

66 Misc.3d 66

138

451130/2018

Decision and Order on Petition

Nov. 7, 2019

Nov. 7, 2019

Order/Opinion

66 Misc.3d 66

Docket

Last updated Aug. 30, 2023, 3:01 p.m.

Docket sheet not available via the Clearinghouse.

Case Details

State / Territory: New York

Case Type(s):

Presidential/Gubernatorial Authority

Key Dates

Filing Date: June 14, 2018

Closing Date: 2019

Case Ongoing: No

Plaintiffs

Plaintiff Description:

State of New York

Plaintiff Type(s):

State Plaintiff

Public Interest Lawyer: Yes

Filed Pro Se: No

Class Action Sought: No

Class Action Outcome: Not sought

Defendants

The Donald Trump Foundation, Private Entity/Person

Donald Trump, Private Entity/Person

Case Details

Causes of Action:

State law

Available Documents:

Trial Court Docket

Complaint (any)

Monetary Relief

Injunctive (or Injunctive-like) Relief

Outcome

Prevailing Party: Plaintiff

Nature of Relief:

Injunction / Injunctive-like Settlement

Damages

Source of Relief:

Settlement

Form of Settlement:

Court Approved Settlement or Consent Decree

Amount Defendant Pays: 2,000,000

Content of Injunction:

Other requirements regarding hiring, promotion, retention

Training