Encouraging Progress in Prying Open Trump's Finances

"If the ruling stands, it could result in an unprecedented level of public disclosure about Trump's businesses, something he has fiercely resisted." (Photo: Gage Skidmore/flickr)

Encouraging Progress in Prying Open Trump's Finances

A judge has defined the Constitution’s anti-corruption clauses for the first time. And it’s not good news for the president

Given the controversy-every-news-cycle of the Trump administration, it can be hard to recognize when something truly important happens. Such an event occurred July 25, when a federal district court ruled that a suit could move forward alleging President Trump is violating the Constitution because of the money he earns from his Washington, D.C., hotel.

If the ruling stands, it could result in an unprecedented level of public disclosure about Trump's businesses, something he has fiercely resisted.

The decision marks the first time a federal court has interpreted whether and how the Constitution's anti-corruption clauses apply to the president. The reason why no court considered the question in the nearly 230 years of the republic is that there was no need to. Every president since John F. Kennedy has put their assets into some form of a blind trust.

But Trump has a propensity for venturing into uncharted constitutional territory. Although a tax partner from a major law firm was trotted out at Trump's first press conference as president-electto announce his assets were being placed in a trust, later filings showed he can withdraw money from the trust at any time for any reason. In other words, the trust is paper-thin. "Has he put [his business] out of his control and out of his personal benefit? The answer is no," Beth Shapiro Kaufman, a lawyer who worked for the Treasury Department's Office of Tax Policy for six years, told The Washington Post.

At issue are what is known as "the Foreign and Domestic Emoluments Clauses" of the Constitution.

The foreign emoluments clause, which does not specifically name the president, says that no government official "shall, without the Consent of Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince or foreign State."

The domestic emoluments clause says the president will be compensated while in office, the compensation can't change during the president's term, and "he shall not receive within that Period any other Emolument from the United States, or any of them."

The first chapter of this litigation, brought by District of Columbia and Maryland, consisted of two parts. The first was whether these plaintiffs had any right to sue to begin with.

Their argument was Trump has an unfair competitive advantage because officials may patronize his D.C. hotel to curry his favor. Taxpayers in both jurisdictions could be damaged since each government has stakes in convention centers that compete with Trump's hotel for meeting business. In addition, other local competitors, such as the Ritz-Carlton, may lose business because of the president's continued interest in the D.C. property.

For instance, the plaintiffs claimed that both the governments of Bahrain and Kuwait moved events booked at other D.C. venues to Trump's establishment after he was elected. And, the plaintiffs alleged, officials from the state of Maine (including Gov. Paul LePage) used Trump's hotel when visiting Washington on official business. As the Center for Responsive Politics has been cataloging, lots of politicians and their related committees have shown up at Trump-owned properties, totaling $3.2 million so far this year alone.

Without ruling on the merits of the claims, Judge Peter Messitte found in March they were sufficient. Trump's D.C. hotel, the judge ruled, "has had and almost certainly will continue to have an unlawful effect on competition," the judge wrote. D.C. and Maryland are "quite plausibly trying to protect a large segment of their commercial residents and hospitality industry employees from economic harm."

Even this decision was of note. Other attempts to sue Trump under the emoluments clause have failed because judges have found that the plaintiffs lack standing. That's what happened when Citizens for Responsibility and Ethics in Washington (CREW) sued in New York. And another suit over emoluments, brought by 30 Democratic Senators and 166 House members in D.C. federal court, is awaiting a ruling on standing. However, courts are often reluctant to grant standing to members of Congress if Congress itself could resolve a legal dispute by acting.

In his most recent decision, Messitte had to decide just what "emoluments" mean. Not surprisingly, Trump's Justice Department defenders argued for a narrow construction of the term. They said the prohibitions against emoluments weren't designed to prohibit the president from conducting private business, and in any case, the Founders intended emoluments to mean only outright bribes -- an explicit quid pro quo for presidential action.

Trump's lawyers warned that the plaintiffs' definition of emoluments could lead to "absurd consequences," such as a federal official violating the foreign emoluments clause if they hold stock in a company that derived some of its earnings from a foreign government.

The judge bought none of it. He said the Founders intended the emoluments clauses to "function as broad anti-corruption provisions." Messitte wrote:

The Court finds the President is subject to both Emoluments Clauses of the Constitution and that the term 'emolument' in both Clauses extends to any profit, gain, or advantage of more than de minimis value, received by him, directly or indirectly, from foreign, the federal, or domestic governments. This includes profits from private transactions, even those involving services given at fair market value. [ital. added]

As of this writing, Trump's taxpayer-funded lawyers have not said whether they will appeal the decision and make anew their argument that it's perfectly acceptable for someone in the Oval Office to profit from governments scrambling to patronize his business to cultivate his favor. However, should the case proceed, one can expect some presidential Twitter storms about a "PARTISAN WITCH HUNT!"

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