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Trump Empire faces allegations of Emoluments Clause violations

Associate Editor Blake Drewry provides an in-depth look at the lawsuit filed against President Trump alleging his business profits violate the Emoluments Clause of the U.S. Constitution.

Donald Trump owns many companies.  In fact, Donald Trump owns hundreds of companies.  It is not difficult to believe that the United States has never elected a President with as large, complex, and opaque of a business operation as Trump.  He has an empire.  Finding a developed nation that Trump does not have a personal business interest in seems almost impossible; however, personal interests in foreign governments and their policies may not be such a good thing when you are the leader of the free world.

Three days into Trump’s presidency, a political watchdog group called Citizens for Responsibility and Ethics in Washington (CREW) filed a civil action in the United States District Court for the Southern District of New York, naming the President as the defendant.  The complaint alleges President Trump took office in violation of the Foreign Emoluments Clause of the United States Constitution.

It is not likely that CREW will find success with this lawsuit, but that may not actually signal defeat for the group.

CREW is a non-profit organization which seeks out abuses in campaign finance, ethics, and tax rules and files complaints asking for those abusing the system to be held accountable. CREW, in its own words, “uses aggressive legal action, in-depth research, and bold communications to reduce the influence of money in politics and help foster a government that is ethical and accountable.”   It is not likely that CREW will find success with this lawsuit, but that may not actually signal defeat for the group.

Preventing foreign governments from intervening with American politics was a well-reasoned goal of our founding fathers.  One of the easiest ways to gain favor with a person is to shower them with money or expensive gifts.  In response to the practice of political bribery, the Foreign Emoluments Clause, located in Article 1, section 9, clause 8, was added to our Constitution.  The clause states, “No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.”  The clause itself has seldom been applied, though.

CREW’s complaint against the President states that Trump was in violation of the Emoluments Clause upon taking office, has been in violation ever since, and will be as long as the companies he owns are accepting money from foreign governments or their agents.

According to the Brookings Institution, the theory behind the Emoluments Clause, grounded in both English and American history, is that a person holding a position in the federal government who receives something of value from a foreign government can be “induced to compromise what the Constitution insists be his exclusive loyalty: the best interest of the United States of America.”  Rather than punish such corruption after it has already occurred, the Framers fought the issue head on, writing a strict, no-gift rule right into the Constitution.  Even a strict reading of the text of the Emoluments clause leads to the understanding that it applies to the President.  A more difficult question, though, is what is an “emolument”?

Merriam-Webster defines emolument as “the returns arising from office or employment usually in the form of compensation or perquisites.” The Brookings Institution has found this word to be doubly broad.  First, the Emoluments Clause itself includes the words “of any kind” following “present, emolument, office, or title.”  Second, when the word was placed into the constitution in the late eighteenth century, emolument “was often used as a catch-all for many species of improper remuneration” or payment.  This broad view of the Emoluments Clause is the one CREW is relying on in their lawsuit against President Trump.

CREW’s complaint against the President states Trump was in violation of the Emoluments Clause upon taking office, has been in violation ever since, and will be as long as the companies he owns are accepting money from foreign governments or their agents.  Specifically, CREW claims Trump is violating the Emoluments Clause through leases held by foreign-government-owned entities in his hotels, room reservations, and use of venues by foreign diplomats and agents in his hotels.  CREW also alleges Trump violated the Emoluments Clause by accepting payments from foreign-government-owned broadcasters related to rebroadcasts of Trump’s television show “The Apprentice” and its spin-offs, as well as his owning of property interests and other business dealings involving foreign governments and their respective countries.

Whether these types of transactions are violations of the Emoluments Clause is a major contention.  Trump, much within his character, stated that the lawsuit is “without merit, totally without merit.”  Others in the Trump camp, including his legal team and his son Eric, have declined to comment thus far.  Before his inauguration, Trump’s lawyer Sheri Dillon said the President would be giving up all managerial duties involved with his businesses, leaving management responsibilities with his two oldest sons.  Nonetheless, Trump would not be giving up any ownership.  Dillon says it is incorrect to believe Trump is in violation of the Emoluments Clause simply by receiving payment for services rendered.  It is likely going to prove difficult for CREW to show that day-to-day transactions violate the Emoluments Clause.  It will be more challenging, however, to prove they should even be able to proceed with this lawsuit.

Though CREW is not likely to be successful in its lawsuit against the President, others may be if they decide to bring a similar action.

Commentators on the issue nearly universally agree CREW seems to lack standing.  Standing is “the requirement that the plaintiffs have sustained or will sustain direct injury or harm” and that harm is traceable to the actions of the defendant.  In its complaint, CREW claims it has been significantly injured as a result of the defendant’s refusal to address and remedy his violation of the Emoluments Clause.  CREW states it has been forced to divert nearly all of its attention and money away from other topics and areas in which it would normally focus, and spend it all on the Foreign Emoluments Clause controversy.

The group states that as long as the defendant remains in violation of the Emoluments Clause, it will essentially be forced into litigating the issue and educating the public in regards to the defendant’s violation.  CREW cites Havens Realty Corp v. Coleman, asserting it has standing because it has suffered a “concrete and demonstrable injury to the organization’s activities with the consequent drain on the organization’s resources.” Havens Realty Corp. v. Coleman, 455 U.S. 363, 379 (1982).  Many are not convinced.

Erik Jenson, a law professor at Case Western Reserve University in Cleveland, said in an interview with the Washington Post that “just complaining about a bad government does not give rise to standing or you or I would have standing to challenge just about anything that goes on.”  Josh Blackman, a professor at South Texas College of Law, also in an interview with the Washington Post, believes that any injury that CREW is attempting to assert is “self-inflicted” and “does not find support in the Supreme Court’s case law.”  Directing attention away from matters it would ordinarily focus on and towards something else seems to be a choice CREW can choose to make or not make.  Though CREW is not likely to be successful in its lawsuit against the President, others may be if they decide to bring a similar action.

For foreign diplomats, Trump Hotel is the “place to be” according to Jonathan O’Connel and Mary Jordan of the Washington Post.  In an article they posted in November 2016, the two Washington Post writers claim that when Trump’s chances at winning the presidency seemed slim, there was speculation that Trump’s many hotels would suffer as a result of his defeat.  Now that he has won the presidency, though, foreign diplomats are more eager than ever to stay at one of the President’s many hotels.

When asked by the Washington Post about their stay, several foreign diplomats, who remained anonymous, exclaimed it would be foolish for them not to stay at a Trump hotel.  Staying at one of the President’s hotels could only garner favor for them, and the reluctance to stay at his hotels before his victory was due to fear of backlash from a Clinton administration.  For a foreign diplomat hoping to meet with our new President, it would make little sense to stay with one of his competitors.  This eagerness for the President’s favor, not just the value of money, seems to be the real issue conflicting President Trump and the Emoluments clause.

Of all the lawsuits being brought against Trump, an Emoluments violation stemming from a little known clause in the corner of the Constitution could be the one to truly expose him.

Many diplomats may feel the temptation to stay at a Trump hotel or do business with a Trump company solely for the purpose of engaging with the President.  This may give surrounding hotels, specifically the Four Seasons in Georgetown and the W Hotel in D.C, standing to sue the President in precisely the same way CREW has.  In previous years, the Four Seasons hosted the Kuwaiti Embassy’s National Day celebration.  The hotel planned on hosting them again in 2017, but the Kuwaiti Embassy decided to have the event at Trump’s hotel instead.  The Four Seasons would have made tens of thousands of dollars on the single event, but is now one of many D.C. hotels that are losing business due to Trump’s recent elevation in status.

Another option would be for Washington D.C. itself to sue the President.  Erwin Chemerinsky, dean of the University of California at Irvine School of Law, told the Washington Post, “If D.C. can allege that it has lost economically because of the benefits derived from the Trump violation of the Emoluments Clause, then D.C. could sue . . . And the way to do that would be to show that foreign governments are sending business to the Trump hotel [in D.C.] that would otherwise go to D.C.’s hotels.”

While a successful Emoluments claim against the President remains a very distant possibility, complete success in the courtroom may not be an ultimate goal.  If a lawsuit were to proceed far enough that it could potentially unearth President Trump’s tax returns, watch groups could use that opportunity to delve into the President’s conflicts of interest.  Of all the lawsuits being brought against Trump, an Emoluments violation stemming from a little known clause in the corner of the Constitution could be the one to truly expose him.

In the months that followed the filing of the lawsuit, two plaintiffs joined CREW in their lawsuit, an insignificant portion of Trump’s 2005 tax return was leaked, Democratic attorneys general challenged Trump’s Muslim travel ban and won, and, now, attorneys general from D.C. and Maryland have filed a lawsuit similar to the one filed by CREW back in the January.

Like CREW’s lawsuit against the President, the likely goal of this suit is to reveal Trump’s international business dealings through the release of his tax returns.

Karl A. Racine, D.C. attorney general, and Brian E. Frosh, Maryland attorney general, claim in the most recent lawsuit that Trump’s decision to maintain ownership of his businesses while he is in the White House is a flagrant violation of the Constitution’s foreign emoluments clause.  The lawsuit alleges that Trump International Hotel’s close proximity to the White House is harming both D.C. and Maryland.  As was explained above, this claim rests on the idea that business is being drawn away from other establishments and to the benefit of Trump.

Specifically, this lawsuit is claiming that the taxpayer-owned Walter E. Washington Convention Center is losing business to Trump’s hotels in D.C. and Maryland.  As stated above, foreign diplomats are sending their business to Trump’s hotels in order to gain favor with the President.  The lawsuit names 10 countries it claims Trump has profited from since taking office.

Like CREW’s lawsuit against the President, the likely goal of this suit is to reveal Trump’s international business dealings through the release of his tax returns.  Whether the decision to bring this action is purely political, driven by a duty to protect the public, or a combination of the two is debatable.  What is clear is that these lawsuits could provide the Supreme Court with the opportunity to finally draw a bright-line rule as to what an emolument is and what constitutes a violation of the emoluments clause.

Blake Drewry
About Blake Drewry (13 Articles)
Blake Drewry is a third year law student and serves as an Associate Editor for the Campbell Law Observer. Originally from Courtland, Virginia, Blake received his undergraduate degree from East Carolina University where he majored in Political Science and Philosophy. His legal interests include local government law, land use and zoning law, and sports law. The summer after his 1L year, he worked for the General Counsel at the North Carolina Department of Agriculture. This past summer he worked at the Federal Public Defender’s Office for the Eastern District of North Carolina.