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Trump Foundation Folds

STEVE INSKEEP, HOST:

The foundation that bears the name of President Trump is going out of business. The president is dissolving his Trump Foundation. That is the result of a lawsuit by the New York state attorney general who said the foundation's operations mainly benefited the guy whose name was on it. A reporter who's done some of the most extensive reporting on Trump's foundation is David Fahrenthold of The Washington Post, and he's on the line. Good morning.

DAVID FAHRENTHOLD: Morning.

INSKEEP: How did the foundation misuse its resources?

FAHRENTHOLD: In a variety of ways, but the most important way was that they ignored this sort of basic precept of charity law, which is that even if your name is on the foundation, the money in a tax exempt charity is not yours. You have to use it to help the charity's aims, not to help your own aims. And Trump repeatedly used the money in his foundation as sort of a checkbook for himself. He used it to pay off legal settlements for his for-profit businesses. He used it to buy a portrait of himself for $10,000 and then hang it on the wall of his - at one of his golf clubs. And he also in the 2016 campaign basically made his charity into an arm of the campaign, gathering money and then giving it away at campaign stops in Iowa and New Hampshire.

INSKEEP: I suppose that some of your reporting has also suggested that there were questions about where the money came from, right? The implication was Donald Trump is giving his own money to the foundation for charity. But he was actually collecting money from others and then claiming credit for the donation.

FAHRENTHOLD: That's absolutely right. He exploited - I mean, Donald Trump exploits honor systems in a variety of ways. But in this case, he exploited the honor system that surrounds rich people's charity. And so in any other case, if you got money from the David A. Fahrenthold Foundation, you would assume it was my money. But Trump gave away money from the Trump Foundation, and people who got it assumed it was his. But often, it wasn't. Much of the money came from Vince and Linda McMahon, the wrestling moguls, one of whom is now the small business administrator under Trump. But he also did some amazing things where he worked really hard to gather other people's money and then give it away under his own name. He went to a tremendous amount of effort, which you'd think was unusual for a guy who was that rich, just to get money from somebody else so he could give it away from his foundation.

INSKEEP: Was any of this a crime?

FAHRENTHOLD: Well, the lawsuit from the New York attorney general is a civil lawsuit. Trump has not been accused of any crimes. There's also a separate investigation by the New York Tax Department looking at Trump's charity. And there's a possibility that the tax foundation - tax department could bring criminal charges. But so far, there's been no accusation that he committed a crime.

INSKEEP: OK, so we have this civil lawsuit. And as a result of the civil lawsuit, according to the New York state attorney general, the foundation has signed a consent decree that they will dissolve. What does the foundation and what does the president gain by dissolving the foundation?

FAHRENTHOLD: Well, this is one of the demands that the New York attorney general had made when she sued Trump back in June. And so in doing this, Trump takes one thing off the table, settles one of the outstanding issues in that lawsuit. There's about $1.7 million left in the foundation. That money will be given away to other charities that are approved by the New York AG and by the judge. So what Trump does by doing this is he narrows the scope of the case against him. There's still an ongoing lawsuit in which the New York AG is asking Trump to pay millions of dollars in restitution and penalties. And she's also asking the judge to ban him from serving on the board of any New York state charity for the next 10 years.

INSKEEP: So he's giving up $1.7 dollars, giving up the Trump Foundation and could still be on the hook for more payments depending on the results of the suit.

FAHRENTHOLD: Yeah, he could be on the hook for a lot more depending how the suit goes.

INSKEEP: What is the next step in that lawsuit then?

FAHRENTHOLD: Well, Trump just lost an effort to have it dismissed. And so now the next step is for him to file a formal response. And it's a New York state lawsuit. It's in Manhattan state court. So in January, we'll see his argument. I think that we will see an effort and the judge has been very clear about this. She wants them to settle. She wants Trump to agree to some sort of penalty. And so I think we'll see how willing Trump is to settle other parts of this lawsuit.

INSKEEP: David Fahrenthold of The Washington Post, thanks for the update, really appreciate it.

FAHRENTHOLD: Thank you.

INSKEEP: He's talking with us a short time after we learned that the Trump Foundation has agreed to dissolve. Transcript provided by NPR, Copyright NPR.