Jed Shugerman co-authored an opinion piece in the New York Daily News, advocating for the New York Attorney General to dissolve the Trump Organization.
It’s time to dissolve the Trump Organization. New York Attorney General Eric Schneiderman has the legal authority to file a lawsuit for “judicial dissolution” of the company in New York court. With the firing by President Trump last week of the top federal prosecutor in Manhattan, U.S. Attorney Preet Bharara, it’s all the more critical for Schneiderman to stand up for the rule of law.
The Trump Organization is the nerve center for a network of about 500 distinct but affiliated Trump companies that have been created to own or operate specific business projects. Since the election, the Trump Organization has also become the nerve center for an unprecedented scheme of corruption reaching from Trump Tower directly into the Oval Office.
Trump is using the Trump Organization as a key part of a scheme to profit from his presidency at public expense.
Bharara may have been investigating this corruption when President Trump asked him to resign on Friday. After Bharara refused, Trump fired him. Bharara then tweeted: “now I know what the Moreland Commission must have felt like” — a reference to an anti-corruption commission that New York’s governor shut down under suspicious circumstances.
We don’t know for sure whether Bharara was investigating Trump himself, or the Trump Organization. We do know that Bharara was prosecuting an Iranian businessman who ran a sanctions-evasion scheme out of Trump Towers Istanbul, and that early last week new revelations emerged implicating the Trump Organization in potential Iran sanctions violations from a failed project in Azerbaijan.
With Bharara out, the federal Department of Justice faces difficult conflicts in investigating the President and his businesses. But Attorney General Schneiderman doesn’t have those conflicts — he doesn’t work for the President.
Under Section 1101 of New York’s Business CorporationLaw, the attorney general can sue to dissolve a corporation if “the corporation has exceeded the authority conferred upon it by law, or has violated any provision of law whereby it has forfeited its charter, or carried on, conducted or transacted its business in a persistently fraudulent or illegal manner, or by the abuse of its powers contrary to the public policy of the state has become liable to be dissolved.”
The Trump Organization has become thoroughly enmeshed in a scheme to funnel money from the public treasury, corporations, foreign governments and lobbyists into the President’s pockets, violating at least twodifferent provisions of the U.S. Constitution.
For example, his Department of Defense is planning to rent an expensive floor in Trump Tower. Meanwhile, the Trump Organization profits as diplomatic, corporate, and lobbyist business flows into the Trump International Hotel in Washington, D.C. — in a federally-owned building, no less.
The Trump Organization is reveling in this ability to profit from the presidency using taxpayer dollars. As Eric Trump explained, “The stars have all aligned. I think our brand is the hottest it has ever been.”
The most striking example may be Trump’s Mar-A-Lago Club in Palm Beach, Florida, which the White House now officially promotes as the “Winter White House.” Three weeks before the inauguration, Mar-A-Lago doubled its initiation fee from $100,000 to $200,000. (The facilities haven’t become twice as luxurious.)
In February, President Trump hosted the Prime Minister of Japan at Mar-A-Lago. Payments made to the resort by U.S. government staff (including the Secret Service) for lodging or food while on official travel flow into President Trump’s pocket. And he’s now using foreign visitors as promotional meet-and-greet opportunities for his customers. At one point, he led Japan’s Prime Minister into a wedding reception to meet the newlyweds, explaining, “‘They’ve been members of this club for a long time. . . . They’ve paid me a fortune.'”
Despite every opportunity, neither Mr. Trump nor the Trump Organization has done anything remotely adequate to address the serious concerns this behavior raises. Instead, Mr. Trump transferred his ownership stakes in various Trump business entities to “The Donald J. Trump Revocable Trust.”
This trust, of which Mr. Trump’s son and the Trump Organization’s chief financial officer are trustees, exists “to hold assets for the ‘exclusive benefit’ of the president.” President Trump can also revoke this trust by himself at any time, rendering this legal dodge meaningless. In short, President Trump may not be signing the checks going out, but he’s still cashing the checks coming in.
The Trump Organization’s grifts are matters of national significance now. But they’re also matters of special significance to New York state, which empowers The Trump Organization, Inc., to exist in the first place through its corporate charter.
Judicial dissolution of a corporation should not be undertaken lightly. But this is not an ordinary case. Attorney General Schneiderman should open an investigation into the extent to which the Trump Organization, Inc., or other companies in the Trump empire, are exceeding or abusing their legal authority.
Of course, corporate dissolution is not the end of the story. If the U.S. House of Representatives concludes that that the Trump Organization has been involved in impeachable violations committed by the President, then the President would still need to be held accountable for those violations, independently from New York state proceedings to revoke the company’s corporate charter.
Dissolving the Trump Organization would not require office buildings, hotels, or golf courses in New York or elsewhere to close, or put innocent people out of work. Working with a court-appointed receiver, the attorney general can develop a plan to ensure that these businesses can continue to operate and pay their staff and vendors while dissolution is pending in court, and allow for successful operation afterwards.
Unwinding the Trump Organization’s corporate takeover of the White House will not be easy. But Attorney General Schneiderman can take the first step.