I’ve been working on campaign finance issues for fourteen years. I’ve never seen an illegal inaugural. Until now, potentially.
During an election, a U.S. citizen can give $2,800 to a candidate running for president. But once that candidate wins, a U.S. citizen can give an unlimited amount to an inaugural committee.
Presidential inaugurations are at the very edge of campaign finance regulations. That means most of the typical campaign finance restrictions during an election, including on the size and sources of donations, simply don’t apply to an inaugural committee.
For example, during an election, a U.S. citizen can give $2,800 to a candidate running for president. But once that candidate wins, a U.S. citizen can give an unlimited amount to an inaugural committee to celebrate their candidate’s assumption of power. Here’s another example: Corporations cannot give directly to a federal candidate during an election, but they can give an unlimited amount to an inaugural committee.
Plenty of wealthy people and corporations took advantage of this increased ability to spend in 2017. NBC News found that 14 individual donors to the inaugural, who gave around $350,000 on average, were nominated to be ambassadors by President Trump. Many companies gave at the $1 million mark to the Trump 2017 inaugural. Many of the same companies also gave to Obama’s inaugural. Corporations with regulatory matters pending before the federal government often use such donations to butter up the new guy in charge. It’s a little unnerving from the outside since it looks like currying favor, but generally it’s perfectly legal.
Federal prosecutors in the Southern District of New York are looking into what was going on in the Trump inaugural committee, including asking one of the vendors, a friend of Melania Trump named Stephanie Wolkoff, about the committee’s expenditures according to press reports.
So why are there criminal investigations into the Trump inaugural? Because it looks like the committee may have violated some of the few campaign finance regulations that still apply. For instance, inaugural committees are not allowed to accept money from foreign nationals. As the controlling regulation states:
A foreign national shall not, directly or indirectly, make a donation to an inaugural committee. ...No person shall knowingly accept from a foreign national any donation to an inaugural committee.
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This regulation appears to have been violated at least once by Sam Patten, who acted as a straw donor for a Ukrainian who paid $50,000 for tickets to the 2017 inaugural. (We know about this because of a plea by Mr. Patten.) Then there is the CITGO donation of half a million dollars, which raises another potential foreign donor issue. CITGO is owned by Venezuela. While the FEC doesn’t have a particularly strong record for enforcing election laws, it did recently rouse from its slumber to hit Jeb Bush’s super PAC Right to Rise with a hefty $1.3 million fine for accepting money from a foreign-owned company. And because federal prosecutors already investigating, any alleged malfeasance may actually have some legal consequences.
The other basic requirement for an inaugural committee is transparency. While there are not many restrictions on where the money comes from, there is a requirement to report accurately to the FEC where the money came from 90 days after the inauguration. And here the Trump inaugural committee seems to have failed again. When the committee first filed its report, it had a number of bogus entries, which were fact-checked by a crowd-sourced effort spearheaded by journalist Christina Wilkie.
The most striking “error” filed by the Trump inaugural committee was an alleged donation from Hidden Figures star, and real-life person, Katherine Johnson, which listed NASA as her address. The real Katherine Johnson is 90 and doesn’t, you know, live at NASA. Also, when reporters tracked down the real Katherine Johnson’s family, they said she had not given $25,000 to the Trump fête. Another bogus entry for $400,000 listed an empty lot in New Jersey as the address. Prosecutors may be investigating whether these bogus entries were masking illegal donations.
Then there’s the allegation that the Trump inaugural committee deputy chair Rick Gates was trying to get donors to directly pay vendors, as reported by Pro Publica. This would be another way to short-circuit the required disclosures to the FEC, since the committee only reports money that it received.
On top of all that, there’s the open issue of where the money went. There has been reporting that the Trump Organization was benefiting from the inaugural by overcharging for event space at the direction of Ivanka. That’s just one more potential conflict of interest that could have easily been avoided.
Not only are the feds looking into what happened to the $107 million donated to the Trump inaugural committee, where it really came from and where it was spent, the D.C. attorney general Karl Racine is also checking to see if any local laws were violated.
After these investigations are over, America may discover something nearly unheard of and hard to pull off—an illegal inaugural.