How Donald Trump Shifted Kids-Cancer Charity Money Into His Business

[Corrupt Trump]

How Donald Trump Shifted Kids-Cancer Charity Money Into His
Business

LIKE AUTUMN LEAVES, sponsored Cadillacs, Ferraris and Maseratis
descend on the Trump National Golf Club in Westchester County, New
York, in September 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 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. He's done a ton of good: 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 organizations.

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% 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.

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 nonprofit Eric Trump Foundation, according to
two people directly involved, was none other than the current
president of the United States, 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 pediatric cancer center.

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%, 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 organizations.

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.' "

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 detailed 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, fueled by
small outside donors, more than $11 million to use his properties,
chefs and private aircraft.

At first the extra bills did not cost the Eric Trump Foundation
anything. Shortly before the spike in costs, the Donald J. Trump
Foundation donated $100,000 to the Eric Trump Foundation--a gift
explicitly made, according to Gillule, to offset the increased
budget. Thus, the Eric Trump donors were still seeing their money
go to work for kids along the same lines as previous years.

The Eric Trump Foundation declined to comment on that donation. In
effect, though, this maneuver 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 record, 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, in speaking with Forbes, maintains that "our expenses
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 itemized list of expenses, the Eric Trump Foundation
declined to respond.

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, D.C., 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.

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. Those 4 were eventually 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 Scavino 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 favorites
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 in total donations 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, for example,
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 Charlottesville, 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 check 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, where he was
photographed sitting beneath it two years later.

Perhaps Eric bought the painting for himself at the auction or on
the aftermarket. Perhaps Rodrigue gave or sold him a copy. 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 organization 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.



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trump-shifted-kids-cancer-charity-money-into-his-business/#
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