Inaugural 'overpay' cited in D.C. lawsuit

FILE - In this March 11, 2019 file photo, the Trump International Hotel is seen in Washington. District of Columbia Attorney General is suing President Donald Trump's inaugural committee and two companies that control the Trump International Hotel in D.C., accusing the groups of abusing nonprofit funds to benefit Trump's family. (AP Photo/Mark Tenally)
FILE - In this March 11, 2019 file photo, the Trump International Hotel is seen in Washington. District of Columbia Attorney General is suing President Donald Trump's inaugural committee and two companies that control the Trump International Hotel in D.C., accusing the groups of abusing nonprofit funds to benefit Trump's family. (AP Photo/Mark Tenally)

WASHINGTON -- Donald Trump's inaugural committee spent more than $1 million to book a ballroom at the Trump International Hotel in the nation's capital as part of a scheme to "grossly overpay" for party space and enrich the president's own family in the process, according to a lawsuit filed Wednesday.

The District of Columbia's attorney general, Karl Racine, said the committee misused nonprofit funds and coordinated with the hotel's management and members of the Trump family to arrange the events. He said one of the event's planners raised concerns about pricing with Trump, the president's daughter Ivanka Trump and Rick Gates, a top campaign official at the time.

"District law requires nonprofits to use their funds for their stated public purpose, not to benefit private individuals or companies," Racine said. "In this case, we are seeking to recover the nonprofit funds that were improperly funneled directly to the Trump family business."

It was the latest allegation that Trump and his family have used public and nonprofit funds spent at Trump-owned properties to enrich themselves. Trump has maintained ownership of his businesses but turned the reins over to his sons.

The committee has maintained that its finances were independently audited and that all money was spent in accordance with the law. The committee raised an unprecedented $107 million to host events celebrating Trump's inauguration in January 2017. But the committee's spending has drawn mounting scrutiny.

The inaugural committee said Wednesday that it cooperated with the investigation and that Racine's office hadn't contacted its lawyers to interview any employees. A spokesman for the committee also said the group had not been contacted by the attorney general's office since last summer and suggested the timing of the suit was politically motivated, as the Senate impeachment trial of the president on charges of abuse of power and obstruction of Congress was underway.

Prosecutors found that Gates, a former Trump campaign aide, personally managed discussions with the hotel about using the space, including ballrooms and meeting rooms. In one instance, Gates contacted Ivanka Trump and told her that he was "a bit worried about the optics" of the committee paying such a high fee, Racine said.

Stephanie Winston Wolkoff, a former adviser to first lady Melania Trump, who played a leading role organizing the inaugural parties, had also told Trump, when he was president-elect, and Ivanka Trump that she was uneasy with the offer, Racine said. Winston Wolkoff later followed up with an email to Gates and Ivanka Trump warning that the hotel's proposal was at least twice the market rate, Racine said.

But Gates went through with it anyway, at a cost of $1.03 million, the suit says.

Prosecutors say the committee could have hosted inaugural events at other venues either for free or for reduced costs but didn't consider those options.

Gates 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 Gates had provided to the Justice Department. Racine's office said investigators did not directly speak with Gates in as they pursued the suit.

The suit contends that the hotel went against industry practice and refused to discount the space, and double-booked its largest ballroom with a different organization that was still affiliated with the inauguration, the Presidential Inaugural Prayer Breakfast. Both organizations were nonprofits, but the breakfast paid $5,000 for the ballroom. The committee, however, paid $175,000, the suit claims.

Information for this article was contributed by Eric Tucker of The Associated Press.

A Section on 01/23/2020

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