How Donald Trump filled his company coffers with charity money

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Image: Bobby Bank / Wireimage / Getty Images   

Like autumn leaves, sponsored Cadillacs, Ferraris and Maseratis descend on the Trump National Golf Club in Westchester County, New York, in September 2016 for the Eric Trump Foundation golf invitational. Year after year, the formula is consistent: 18 holes of perfectly trimmed fairways with a dose of Trumpian tackiness, including Hooters waitresses and cigar spreads, followed by a clubhouse dinner, dates encouraged. The crowd leans toward real estate insiders, family friends and C-list celebrities, such as former baseball slugger Darryl Strawberry and reality housewife (and bankruptcy-fraud felon) Teresa Giudice.

The real star of the day is Eric Trump, the US president’s second son and now the co-head of the Trump Organization, who has hosted this event for ten years on behalf of the St Jude Children’s Research Hospital in Memphis. To date, he’s directed more than $11 million there, the vast majority of it via this annual golf event. He has also helped raise another $5 million through events with other organisations.

The best part about all this, according to Eric Trump, is the charity’s efficiency: Because he can get his family’s golf course for free and have most of the other costs donated, virtually all the money contributed will go toward helping kids with cancer. “We get to use our assets 100 percent free of charge,” Trump tells Forbes.

That’s not the case. In reviewing filings from the Eric Trump Foundation and other charities, it’s clear that the course wasn’t free—that the Trump Organization received payments for its use, part of more than $1.2 million that has no documented recipients past the Trump Organization. Golf charity experts say the listed expenses defy any reasonable cost justification for a one-day golf tournament.

Additionally, the Donald J Trump Foundation, which has come under previous scrutiny for self-dealing and advancing the interests of its namesake rather than those of charity, apparently used the Eric Trump Foundation to funnel $100,000 in donations into revenue for the Trump Organization.

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The Eric Trump Foundation golf outing brought in millions for St Jude, billings for the Trump Organization
Image: Gant Lamos IV / Getty Images

And while donors to the Eric Trump Foundation were told their money was going to help sick kids, more than $500,000 was re-donated to other charities, many of which were connected to Trump family members or interests, including at least four groups that subsequently paid to hold golf tournaments at Trump courses.

All of this seems to defy federal tax rules and state laws that ban self-dealing and misleading donors. It also raises larger questions about the Trump family dynamics and whether Eric and his brother, Don Jr, can be truly independent of their father.

Especially since the person who specifically commanded that the for-profit Trump Organization start billing hundreds of thousands of dollars to the non-profit Eric Trump Foundation, according to two people directly involved, was none other than US President Donald Trump.

In order to understand the Eric Trump Foundation, you need to understand the Donald J Trump Foundation. The president was never known for giving his foundation much money, and from 2009 to 2014, he didn’t give it anything at all. Outsiders still donated, though, allowing Trump to dole out their money to a smattering of more than 200 charities as if it were his own, with many of the donations helping his business interests.

Eric Trump set out to do things differently. Coming out of Georgetown, he decided he would try to translate the good fortune he had inherited into support for children’s cancer research. Why this cause, especially for a guy who still doesn’t have kids? “It’s a great question—it’s one that I’ve been asked before—and I’m not really sure,” he says. “I think there is something about that innocence that has always affected me.” After visiting various hospitals, he chose to give to strength, St Jude, the world’s best-known paediatric cancer centre.

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Eric Trump set up his foundation as a public charity, a classification that allows it to raise most of its money from outside donors. In 2007, when he was 23, the first Eric Trump golf tournament took place, raising $220,000. A compelling sales pitch evolved—the free golf course and the donated goods and services assured donors that every penny possible went to charity. The Eric Trump Foundation employed no staff until 2015, and its annual expense ratio averaged 13 percent, about half of what most charities pay in overhead. His original seven-person board was made up of personal friends, an innocuous lot who helped sell tournament tickets, which last year ranged from $3,000 for a single all-day ticket to $100,000 for a pair of VIP ¬foursomes.

For the first four years of the golf tournament, from 2007 to 2010, the total expenses averaged about $50,000, according to the tax filings. Not quite the zero-cost advantage that a donor might expect given who owned the club but at least in line with what other charities pay to host outings at Trump courses, according to a review of ten tax filings for other charitable organisations.

But in 2011, things took a turn. Costs for Eric Trump’s tournament jumped from $46,000 to $142,000, according to the foundation’s IRS filings. Why would the price of the tournament suddenly triple in one year? “In the early years, they weren’t being billed [for the club]—the bills would just disappear,” says Ian Gillule, who served as membership and marketing director at Trump National Westchester during two stints from 2006 to 2015 and witnessed how Donald Trump reacted to the tournament’s economics. “Mr Trump had a cow. He flipped. He was like, ‘We’re donating all of this stuff, and there’s no paper trail? No credit?’ And he went nuts. He said, ‘I don’t care if it’s my son or not—everybody gets billed’.”

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Katrina Kaupp, who served on the board of directors at the Eric Trump Foundation in 2010 and 2011, also remembers Donald Trump insisting the charity start paying its own way, despite Eric’s public claims to the contrary. “We did have to cover the expenses,” she says. “The charity had grown so much that the Trump Organization couldn’t absorb all of those costs anymore.” The Trump Organization declined to answer questions about the payments. But it seems that for the future president, who Forbes estimates is worth $3.5 billion, a freebie to help his son directly fight kids’ cancer took a backseat to -revenue.

“I saw that Eric was getting billed,” Gillule adds. “I would always say, ‘I can’t believe that his dad is billing him for a charitable outing.’ But that’s what they wanted.”

It’s also very consistent. The Donald J Trump Foundation famously acted like an arm of the overall business, using the charity’s money to settle a Trump business lawsuit, make a political donation and even purchase expensive portraits of its namesake. Meanwhile, Trump businesses billed the Trump campaign, fuelled by small outside donors, more than $11 million to use his properties, chefs and private aircraft.

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The Eric Trump Foundation declined to comment on that donation. In effect, though, this manoeuvre would appear to have more in common with a drug cartel’s money-laundering operation than a charity’s best-practices textbook. That $100,000 in outside donations to the Donald J Trump Foundation (remember: Trump himself didn’t give to his own foundation at this time) passed through the Eric Trump Foundation—and wound up in the coffers of Donald Trump’s private businesses.

“His father, Mr Trump, always, until the presidency, had a very, very tight rein on what was going on,” says Gillule, referring to the company’s golf courses. “The buck always stopped with him.”

The costs for Eric’s golf tournament quickly escalated. After returning, in 2012, to a more modest $59,000—while the event brought in a record $2 million—the listed costs exploded to $230,000 in 2013, $242,000 in 2014 and finally $322,000 in 2015 (the most recent on rec¬ord, held just as Trump was ratcheting up his presidential campaign), according to IRS filings. This even though the amount raised at these events, in fact, never reached that 2012 high.

It’s hard to find an explanation for this cost spike. Remember, all those base costs were supposedly free, according to Eric Trump. The golf course? “Always comped,” he says. The merchandise for golfers: “The vast majority of it we got comped.” Drinks: “Things like wine we were normally able to get donated.” And the evening performances from musicians like Dee Snider of Twisted Sister and comedians like Gilbert Gottfried: “They did it for free.” So many sponsors donated, in fact, that the event invitation has carried enough logos to make a Nascar team proud.

Eric Trump maintains that “our ex¬penses on a tournament that made us somewhere in the $2 million range every year was somewhere around 100 grand,” even though his foundation’s tax records show costs soaring to $322,000. When asked for an itemised list of expenses, the Eric Trump Foundation declined to respond.

More than $500,000 was redirected to a variety of other charities, several of which had nothing to do with children’s cancer—but happened to become clients of Trump’s golf courses

Thus it’s hard to figure out what happened to the money. All the listed costs are direct expenses: Items like overhead and salaries appear elsewhere in its IRS filings. Even if the Eric Trump Foundation had to pay the full rate for literally everything, Forbes couldn’t come up with a plausible path to $322,000 given the parameters of the annual event (a golf outing for about 200 and dinner for perhaps 400 more). Neither could golf tournament experts or the former head golf professional at Trump National Westchester. “If you gave me that much money to run a tournament, I couldn’t imagine what we could do,” says Patrick Langan, who worked at the club from 2006 to 2015. “It certainly wasn’t done that way.”

Opaque accounting doesn’t help, as the Eric Trump Foundation began hosting a few other golf events and fundraisers; former board member Kaupp says some were lumped into the cost figures of the Westchester event on the IRS filings. Hundreds of thousands of dollars over this time went directly to the Trump Organization, including one payment of $87,000 to Trump’s golf course in Washington, DC, which hosted a separate event for St Jude.

For his part, Eric Trump offers no indication that the charity is paying for much beyond the day in Westchester. “I’m sure if I hunted, I could find examples of expenses associated with the charity that aren’t due to day-of activities,” he says. “But I would probably have to think pretty long and hard about that.”

It doesn’t seem a coincidence that at the same time the Eric Trump Foundation went from what appeared to be a clean, efficient operation to a seemingly Byzantine one that suddenly found itself saddled with costs, there was a clear shift of control.

I would always say, ‘I can’t believe that his dad is billing him for a charitable outing’. But that’s what they wanted.

In 2010, the year the economics of the tournament suddenly pivoted, four of the seven original board members, who were personal friends of Eric, left. They were replaced by 14 new board members, the majority of whom owed all or much of their livelihoods to the Trump Organization. Six of them were effectively full-time employees, including Trump lawyer Michael Cohen and executive vice president Dan Sca¬vi¬no Jr, who both serve in political roles for President Trump. Another owns a company that billed the Trump campaign $16 million. Add in Eric himself, as well as his wife, Lara, and 9 of the 17 Eric Trump Foundation board members had a vested interest in the moneymaking side of the Trump empire. The foundation had become a de facto subsidiary of the Trump Organization.

“They were wearing two hats,” says Langan, the former director of golf, who says he sat in on meetings where he couldn’t tell where the business ended and the charity began. “You’re dealing with people talking about the event and the charity who also at the same time are thinking about it as a corporation and as a business. It’s a for-profit club. You know, they’re trying to make money.”

Until this board turnover, the Eric Trump Foundation pretty much did what it told its donors it would: Send its money to St Jude. But starting in 2011, more than $500,000 was redirected to a variety of other charities, many of which were personal favourites of Trump family members and several of which had nothing to do with children’s cancer—but happened to become clients of Trump’s golf courses.

In 2012, the Eric Trump Foundation sent $5,000 to a charity called Abilis, which provides services to people with disabilities. That same year, Donald Trump’s nephew Fred Trump, whose son has cerebral palsy, hosted the inaugural Golf for Abilis fundraiser at the Trump National Westchester. Over the next five years, Abilis spent an estimated $240,000 hosting tournaments at the property.

In 2013 and 2014, the Eric Trump Foundation paid $15,000 for tables at a gala for the Little Baby Face Foundation, according to a spokesman for the latter foundation. Over the next three years, Little Baby Face spent an estimated $100,000 to hold golf outings on the Trump course. The foundation denies any direct connection between the two transactions.

Janet McHugh, the founder of a small charity named Julie’s Jungle, was delighted to receive $25,000 from the Donald and Eric Trump foundations in 2013—money she figured came from Eric and Donald Trump personally. Two years later, her charity hosted a golf tournament at Trump National Hudson Valley. McHugh says the decision to hold her tournament there was unrelated to the donation. “They didn’t comp us the golf course,” she says. “We paid.”

Altruism as a business-development strategy isn’t necessarily illegal. But a situation in which outside donor money is redeployed away from the core mission in ways that seem to ultimately benefit the family that pays the majority of the board is—at best—an appearance problem.

Other extra expenditures raise eyebrows. In 2013, Eric Trump used his foundation’s money, rather than his own, to pay $1,600 to the American Society for Enology & Viticulture for a copper wine still and an antique bottle washer at a trade event and fundraiser that he was keynoting. Eric runs the family vineyard in Char¬lottes¬ville, Virginia, about an hour down the road from where the event took place. “I have no idea what that is,” says Eric Trump, referring to the payment.

In 2012, the Eric Trump Foundation wrote a cheque for $25,000 to the George Rodrigue Foundation of the Arts. That same year, George Rodrigue, who had said that his famous “blue dog” paintings sometimes sold for about $25,000, created a portrait of Donald Trump for the auction at Eric’s event. That portrait ended up hanging over the couch in Eric Trump’s house.

What does Eric say about the donation? “Let’s follow up later on,” he replies, when asked about it in a phone call, before getting off the line.

Later the next day, after being told Forbes had several other questions, he sent a paragraphs-long text message, which read in part: “I was reflecting on it last night and have to say I was really disappointed when you said the story would be ‘fair’… It seems like there is a motive against either myself or my family. And if that is the case, I would simply rather disengage.” A spokesperson for the Trump Organization similarly declined to respond further to questions about Eric and Donald Trump.

The ultimate tragedy here is that the Eric Trump Foundation has done so much good. Yes, Eric has indulged in the family trait of vainglory, from Eric Trump bobblehead dolls at the tournament to statements that leave the impression he’s giving the money personally, even though tax records suggest he’s donated six figures total, at most. (Trump wouldn’t tell Forbes how much he’s given to his own foundation. “I think it’s totally irrelevant,” he says, citing the fact that “we never charge” for use of the courses.) But in 2015, a new intensive-care unit at St Jude opened with Eric Trump’s name on it, and the foundation’s money has funded research into a rare form of cancer.

It’s hard to imagine how the early incarnation of the golf tournament—big hauls, understandable costs—would have any problem continuing to spew out millions for years to come. Last year, the Eric Trump Foundation donated $2.9 million, according to St Jude.

But in December, Eric Trump said he would stop fundraising. Running an event with an increasing commingling of business and philanthropy created the kind of conflict-of-interest (not to mention image) concerns that similarly plagued Ivanka Trump’s aborted attempt to auction off a coffee date on behalf of Eric’s foundation.

More recently, the foundation has rebranded itself as Curetivity. A spokeswoman for the organisation said it would continue hosting golf tournaments to raise money for St Jude. A Curetivity event was held this past May outside Washington, D.C., with Eric Trump in attendance, at the Trump National course.

(This story appears in the 04 August, 2017 issue of Forbes India. You can buy our tablet version from Magzter.com. To visit our Archives, click here.)

[“Source-forbesindia”]

Trump is destroying America’s image around the world

It might seem like a subjective judgment to say that Donald Trump is wrecking America’s image. But a new Pew poll of 37 countries shows that this is measurable reality: Perceptions of the United States have collapsed since President Trump took office.

Pew asked people in countries ranging from Canada to Brazil to Russia whether they had favorable views of the US, and whether they had confidence in the US president to do the right thing in world affairs — questions they had also asked of people in these countries back when Barack Obama was president. The change between the Obama results and this year’s Trump results in Pew’s worldwide average are striking:

(Pew)

When you break down the results by country, things are even more eye-popping. Confidence in the American president has collapsed nearly everywhere:

(Pew)

This negative assessment of Trump, according to Pew, has directly translated into more negative views of the United States as a country.

“In countries where confidence in the U.S. president fell most, America’s overall image has also tended to suffer more,” the report explains. “Since 2002, when Pew Research Center first asked about America’s image abroad, favorable opinion of the U.S. has frequently tracked with confidence in the country’s president.”

Take the US’s neighbors, Canada and Mexico. Trump gets the lowest ratings ever recorded in Pew’s data for any American president in those two countries — and, under his leadership, the US has the lowest marks in its history as well. It’s even worse than the end of the Bush administration, when the US was mired in Iraq and the global economy was taking a bad turn:

(Pew)

“For the first time in 35 years, maybe much longer, a majority of Canadians have an unfavourable view of the US,” Daniel Dale, the Toronto Star’s Washington correspondent, writes.

There are only two exceptions to this trend, where the US does better under Trump than it did under Obama: Russia and Israel. In Israel, confidence in the US president went up by 7 points under Trump; in Russia, it was a whopping 42.

Obama was widely unpopular in Israel, particularly after the Iran deal and high-profile fights over both Iran and the peace process with Israeli Prime Minister Benjamin Netanyahu. Likewise, Obama took a hard line on Russia by the end of his administration, imposing crippling sanctions after Moscow invaded Ukraine. Trump … well, you know what Trump thinks about Russia.

But aside from those two very specific cases, the overall pattern is clear: Donald Trump is tanking America’s image around the world.

[“Source-vox”]

THE WORLD THAT TRUMP AND AILES BUILT

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Roger Ailes died recently, at the age of seventy-seven, during a week when the ground shook beneath a stumbling Donald Trump. The two men were in many things near: in age and appetites, in temper and coarseness. They were also in many things far apart: in intelligence and energy, in talent and purpose. Ailes was formidable, Trump brittle. Ailes’s decline began last summer, when he was forced out of Fox News. Trump’s fall, if he falls, is still to come. And yet at times it has seemed as if the two men were Humpty and Dumpty, tumbling off a wall that they’d built together, to divide one half of the country from the other.

The measure of the world they made lies in its distance from the world into which they were born, when the question of whether democracy could be defended without violating the freedoms on which it rests was a matter of pained debate. Ailes was born in Ohio in May, 1940. Weeks later, President Roosevelt gave a commencement address in Virginia. “Every generation of young men and women in America has questions to ask the world,” he began. “But every now and again in the history of the Republic a different kind of question presents itself—a question that asks, not about the future of an individual or even of a generation, but about the future of the country.” He was arguing against America Firsters, who wanted the United States to be an island, a vision he declared to be a nightmare, “the nightmare of a people lodged in prison, handcuffed, hungry, and fed through the bars from day to day by the contemptuous, unpitying masters of other continents.”

Roosevelt had been trying to gain support for entry into the war in Europe, but he knew that it was possible to push too hard. In 1917, to marshal support for another war, Woodrow Wilson had created a propaganda department, a fiction manufactory that stirred up so much hysteria and so much hatred of Germany that Americans took to calling hamburgers “Salisbury steaks” and lynched a German immigrant. John Dewey called this kind of thing the “conscription of thought.” It was a horse’s bit crammed into the people’s mouth. The bitterness of that experience determined a new generation of journalists to avoid all manner of distortion and error. In 1923, when Henry Luce and Briton Hadden founded Time (their first name for it was Facts), the magazine hired a small army of women to check every fact. (“Add Fact Checking to your list of chores,” the founder of The New Yorker instructed an editor, not long afterward.) In 1929, Luce hired as an editor of his new magazine, Fortune, a poet named Archibald MacLeish. He had fought in the First World War, then lived in Paris, where he wrote poems about places where lay “upon the darkening plain / The dead against the dead and on the silent ground / The silent slain—.” He worked at Fortune until 1938. F.D.R. appointed him Librarian of Congress in 1939.

“Democracy is never a thing done,” MacLeish said. “Democracy is always something that a nation must be doing.” He believed that writers had an obligation to fight against fascism in the battle for public opinion, a battle that grew more urgent after the publication, in 1940, of “The Strategy of Terror,” by Edmond Taylor, the Paris bureau chief for the Chicago Tribune. Taylor reported firsthand on the propaganda campaign waged by Nazi agents to divide the French people, by leaving them uncertain about what to believe, or whether to believe anything at all. (In “Mein Kampf,” Hitler had written that most people “are more easily victimized by a large than by a small lie, since they sometimes tell petty lies themselves but would be ashamed to tell big ones.”) Taylor called propaganda “the invisible front.” Roosevelt decided that he could delay his assault on that front no longer. In October, 1941, he issued an executive order establishing a new government information agency, the Office of Facts and Figures. He appointed MacLeish to head it.

“The duty of government is to provide a basis for judgment,” MacLeish insisted, “and when it goes beyond that, it goes beyond the prime scope of its duty.” Under his leadership, the office mainly printed pamphlets, including “Divide and Conquer,” which explained how foreign agents weaken a nation’s resolve by undermining confidence in institutions like elections and the press, and by raising fears of internal enemies, like immigrants and Jews. Still, some reporters suspected that the agency was nothing more than a propaganda machine, the wartime conversion of fact to fiction. MacLeish was worried, too. In April, 1942, he spoke at a meeting of the Associated Press. To counter the strategy of terror, he proposed a new strategy:

That strategy, I think, is neither difficult to find nor difficult to name. It is the strategy which is appropriate to our cause and to our purpose—the strategy of truth—the strategy which opposes to the frauds and the deceits by which our enemies have confused and conquered other peoples, the simple and clarifying truths by which a nation such as ours must guide itself. But the strategy of truth is not, because it deals in truth, devoid of strategy. It is not enough, in this war of hoaxes and delusions and perpetuated lies, to be merely honest. It is necessary also to be wise.

 

Critics called MacLeish naïve: winning a war requires deception. F.D.R., to some degree, agreed. In June, 1942, he replaced the Office of Facts and Figures with the Office of War Information. MacLeish left, and the agency drifted. Much of the staff resigned in protest. When a former advertising director for Coca-Cola was hired, a departing writer made a mock poster that read, “Step right up and get your four delicious freedoms. It’s a refreshing war.” In 1946, the year that Donald Trump was born, MacLeish published a poem called “Brave New World,” about Americans’ retreat from the world: “Freedom that was a thing to use / They’ve made a thing to save / And staked it in and fenced it round / Like a dead man’s grave.”

A lifetime later, Barack Obama greeted Roger Ailes at the White House. “I see the most powerful man in the world is here,” Obama said. “Don’t believe what you read, Mr. President,” Ailes answered. “I started those rumors myself.” Other rumors that Ailes helped start include Trump’s charge that Obama is not an American. Also: science is a hoax, history is a conspiracy, and the news is fake. It’s not always possible to sort out fact from fiction, but to believe that everything is a lie is to know nothing. Ailes won’t be remembered as the man who got Trump elected President; he will be remembered as a television producer who understood better than anyone how to divide a people. And Trump’s Presidency, long after it ends, will stand as a monument to the error of a strategy of terror.

[“Source-ndtv”]

Trump tweets “money is beginning to pour in” to NATO

U.S. President Donald Trump said on Saturday that NATO alliance allies are already stepping up their contributions to the organisation, two days after the president scolded members for not spending enough on defence.

“Many NATO countries have agreed to step up payments considerably, as they should. Money is beginning to pour in -NATO will be much stronger,” Trump tweeted from Sicily where he is attending a Group of Seven meeting.

[“Source-ndtv”]