D.C. Attorney General Karl A. Racine on Wednesday announced a lawsuit against President Trump’s inaugural committee, accusing it of violating its tax-exempt status as a nonprofit by overpaying for event space at the Trump International Hotel.
“District law requires nonprofits to use their funds for their stated public purpose, not to benefit private individuals or companies,” Mr. Racine, a Democrat, said in a press release. “In this case, we are seeking to recover the nonprofit funds that were improperly funneled directly to the Trump family business.”
The lawsuit alleges that the 58th Presidential Inaugural Committee not only was aware it was paying above the market rate for the event space in the Trump hotel but also never considered a less expensive location and paid for event space on days it did not hold events.
It also accuses the committee of throwing a private party for the Trump family costing several hundred thousand dollars, violating prohibitions on tax-exempt organizations using funds for unreasonable expenses or to benefit private interests.
The attorney general’s investigation found that committee event planners notified President-Elect Trump, Ivanka Trump and Rick Gates, the committee’s deputy chairman, that the final price for four days of event space at the Trump hotel was twice the market rate.
However, the committee entered the contract with the hotel at $1.03 million, according to the press release.
Mr. Racine also alleges that the hotel violated its own internal pricing guidelines, which would have lowered the cost of the contract with the inaugural committee.
For example, another nonprofit, the Presidential Inaugural Prayer Breakfast, booked the same event space for $5,000 that the inaugural committee paid $175,000.
The “lawsuit seeks to recover the amount improperly paid to the Trump Hotel, and to direct those funds to suitable nonprofit purposes,” the District’s attorney general said in the press release.
The committee raised an unprecedented $107 million to host events celebrating Mr. Trump’s inauguration in January 2017. But the committee’s spending has drawn mounting scrutiny.
The committee has maintained that its finances were independently audited, and that all money was spent in accordance with the law.
The lawsuit is the latest allegation that Mr. Trump and his family have enriched themselves with public and nonprofit funds spent at Trump-owned properties.
Breaking long-established norms, Mr. Trump opted to keep ownership of his businesses and placed his adult sons in charge of them.
Mr. Gates is a former Trump campaign aide who flipped on the president during the special counsel Robert Mueller’s Russia investigation.
He 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 cooperation that Gates had provided to the Justice Department.
Mr. Racine’s office said investigators did not directly speak with Mr. Gates as they pursued the lawsuit.
⦁ This article is based in part on wire service reports.