Joshua Matz // 5/25/17 //
Yesterday we learned that the Trump Organization has deemed it “impractical” to identify all payments that its hotels receive from foreign governments. Instead of asking guests a few simple questions, the Trump Organization will rely on estimates and assumptions about payments from foreign powers at its properties. It will use those figures—in unclear ways—to calculate total profits from foreign governments. And from time to time, it will write a check for this amount to the U.S. Treasury.
If the Trump Organization thinks that will solve Trump’s breach of the Foreign Emoluments Clause, it is mistaken. This plan responds to only a fraction of Trump’s emoluments and presents (those given by foreign powers to Trump through hotel rentals). And it is inadequate as a safeguard against emolument violations even in that limited context. The Constitution requires that Trump actually stop receiving foreign presents and emoluments, not that he forge an appearance of avoiding some of them.
The scope and danger of Trump’s constitutional violations are, by now, well known. Yet even with advance warning and the best lawyers his money can buy, Trump has never fielded a good defense to claims that he’s violating the Foreign Emoluments Clause. In fairness to his lawyers, that’s because there isn’t a good defense to be had: he’s violating the Clause in nearly every conceivable way (short of accepting an office in Vladimir Putin’s government).
Instead, Trump has relied on the worst kind of parlor tricks. He held a fancy press conference awash in manila folders; his lawyers quietly issued a “white paper” that was really just a white wash; and he promised that he’ll donate back to the U.S. Treasury all profits that his hotels earn from foreign governments.
This last promise received a lot of attention. But make no mistake: it has always been a mere fig leaf, offered by a master showman. Given that many of his hotels truly are emolument magnets, Trump decided to strategically embrace that reality. He then used a flashy promise to create the illusion that he was addressing all the worst violations by supposedly resolving just this one. Pretty clever.
But not clever enough.
Even focusing solely on hotels and similar properties, this plan has been problem-ridden since it was announced in January. For instance, from the start, it was unclear how the Trump Organization would define “profit”—which really does matter when your defense is that you’re receiving only “fair market value” from foreign powers. As Larry Tribe and I have noted, this is a treacherous issue:
In general, fair market value is understood as the price at which an asset will trade between a willing buyer and a willing seller when all of its attributes are known equally to both . . . What about a scenario where rental prices remain the same for everyone but many rooms that would have gone unoccupied are booked by foreign powers seeking to influence Trump, thereby [increasing] the profitability of his hotels? And if Trump’s new job does allow the business to raise prices at all Trump hotels—partly because foreign leaders are willing to pay more money, or rent more rooms, to curry favor with the President—is Trump allowed to reap the benefits of that spike in the “fair market value” of his business?
These questions are just the start of any meaningful inquiry into whether Trump is turning over foreign profits from his hotels.
In addition, Trump’s promise raised a different kind of uncertainty: how would the Trump Organization identify all entities that qualify as “foreign” for purposes of the Foreign Emoluments Clause? This includes not only foreign governments, but also their agents and corporations they own or control. Given that the President is legally required to comply with the Clause, the burden has always been on him (and his company) to do so effectively and comprehensively.
Well, now we have answers to questions about profit and identifying foreign visitors. With respect to “profit,” the Trump Organization refuses to show its work, instead asserting that the accounting rules are totally clear—even as many experts have pointed out obvious room for manipulation, confusion, or evasion. And when it comes to identifying foreign money, the Trump Organization has basically promised that it’ll take its best crack at a guesstimate of some kind, whose inputs and parameters remain underspecified.
At bottom, it would be nothing short of astonishing if this ad hoc scheme successfully cured Trump’s violation. Certainly, the plan is shoddy enough to raise a presumption of inadequacy.
This might seem pretty bad. But it gets a lot worse if you zoom out and survey the broader emolumental landscape.
Hotel payments, after all, are merely part of a large network of illegal emoluments and presents centered around the Trump Organization. And as a quick Google search confirms, the Constitution does not prohibit only “any present, Emolument, Office, or Title, of any kind whatever, through his hotels, from any King, Prince, or foreign State.” Instead—true to its exceptionally broad anti-corruption purpose—the Foreign Emoluments Clause reaches a wide array of “commercial, regulatory, licensing and investigatory contexts in which foreign powers can (and will) give the Trump Organization special treatment in hopes of influencing the President.”
Thus, as co-authors and I warned several months ago, a fixation on Trump’s hotels is arbitrary: “Since the whole Trump Organization is permeated with foreign money—and subject to an endless variety of potential advantages in foreign lands—a serious plan would have accounted for the whole empire, not just its hotels.”
Trump, of course, has not offered a serious plan. Instead, focusing on a single source of constitutional violations and ignoring most others, he grandly promised to pay back profits from his hotels. The implicit suggestion was that this gesture solved the basic problem, and that his other reforms solved the rest (hint: they didn’t).
So what are we left with? Let’s review: Trump is violating the Foreign Emoluments Clause in many different ways. He proposed “fix” allows most of those violations to continue unabated, but includes a promise that he’ll do something about his hotels. Except we’ve learned that even this part of his plan relies on obfuscation and estimation to an unsettling degree, thanks to policies adopted by the Trump Organization (now managed by his two adult sons).
I’d imagine that this scheme is the brainchild of the Trump Organization, not lawyers at the White House Counsel or DOJ. As a result, I can’t help but wonder: at what point might one conclude that the Trump Organization is actively (and perhaps unlawfully) conspiring to facilitate and conceal unconstitutional conduct?
Ultimately, as Representative Elijah E. Cummings explained in a letter to the Trump Organization, “If President Trump believes that identifying all of the prohibited foreign emoluments he is currently receiving would be too challenging or would harm his business ventures, his options are to divest his ownership or submit a proposal to Congress to ask for our consent.” It really is that simple: either the President must stop receiving illegal emoluments or he must ask Congress to authorize them.
The Constitution allows nothing less.
Postscript: If you’re interested in catching up on the Emoluments Clause litigation pending before Judge Abrams in Manhattan, check out the Second Amended Complaint in CREW et al. v Trump.
Disclaimer: I am not neutral. I've worked closely with many of the lawyers bringing the CREW case and I've co-authored articles about the case with several of them.