By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans.
So sorry to report, resisters! There has been much sound and fury following the July 25 federal district court decision to allow a case against Trump to proceed for an alleged violation of the United States Constitution’s emoluments clause, by his continued ownership of the Trump International Hotel in Washington, D.C.
As much as resisters might like to see a way back machine– that would see Trump deposed, and another president installed in his place– alas, last week’s decision allowing an emoluments case to proceed won’t provide the relief you’re looking for.
Nor is the lawsuit– in the unlikely event it proceeds to an anti-Trump conclusion that is sustained on appeal– going to amount to much in legal terms.
If, however, the Democrats win the House in 2018, this case could assume greater political significance.
What is the Emoluments Clause?
I have written about the U.S. Constitution’s Emoluments clause before, so I refer interested readers to these posts and will not recap that discussion here (see US Constitution’s Emoluments Clause: a Nothingburger for Trump ; Law Profs Sue Trump, Alleging Violation of the Emoluments Clause; Senate Democrats Discuss Doubling Down on Losing Strategy of Suing Trump on Emoluments; and Party On! Congressional Democrats Pile On to Another Bogus Emoluments Clause Lawsuit).
Article 1, Section 9 of that document states that “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.”
This clause, on its face, appears to present problems for Trump, given his extensive business empire, which he has not divested himself of during his presidency. One part of that empire is his ownership of the Trump International Hotel in Washington, D.C., which is the focus of the lawsuit discussed here.
Yet the main obstacle, as I noted in that Nothingburger post, remains:
Now, at this point, I should bring up a rather elementary point. Just because something’s unconstitutional, doesn’t mean that any such unconstitutional activity will necessarily be prevented, precluded, or punished.
In the interests of keeping this post short, I won’t repeat the arguments I made there here. But I note that formidable obstacles stand in the way of an expansive interpretation of the emoluments clause that would restrict Trump activities (especially given the membership of the current Supreme Court).
I see no reason to back off on that initial assessment, as to the possible legal consequences of this decision. (The political issues are another matter, and I discuss them further below).
The Recent Federal District Court Decision
This case has survived standard preliminary jurisdictional motions– standing, failure to state a claim– that lead cases to be dismissed before they reach consideration of the merits.
What happens next?
The next phase is discovery– where parties to a lawsuit must produce documents requested by the other side. Now, non-lawyers believe this phase to be all-encompassing and without limitation. But the release of documents in discovery is circumscribed by procedural rules, relevancy standards, and allegations in the pleadings.
Altough many press accounts, such as this one, in The Globe and Mail, ‘Emoluments’ clause of U.S. Constitution could be Trump’s undoing, blithely assert Trump may have to disclose his tax returns as this action proceeds, I believe this suggestion is flat out wrong. As litigator Jim Moody, who was closely involved in the Clinton impeachment action says, “I can say with absolute certainty—there will be no tax returns discovered in this case. If only because tax returns don’t disclose the source of income as being a foreign government—which is the central issue in this case.”
The ultimate disposition of this case cannot be predicted. Yet assuming for the sake of argument, that Trump ultimately prevails, what are the legal consequences?
First, what remedies would be available to plaintiffs? Some of the more hysterical coverage, such as this CNN account, A court case you’ve probably never heard of could become a major problem for President Trump suggest:
…this case will effectively force him to choose between continued ownership of his businesses and his presidency. This might happen if a federal court orders the President to divest his ownership interests in his companies or to stop doing business with foreign governments.”
But if one looks at the latest district court decision, the remedy is explicitly limited to Trump’s ownership stake in the Trump International Hotel.
Second, the case is certain to be appealed. And if it is, an appeals court may very well overturn the lower court’s rulings on jurisdictional matters, especially that the plaintiffs had standing to bring this case. (Two other emoluments cases were dismissed in December, with the court concluding the plaintiffs lacked standing to sue; see this Politico account, Judge dismisses suits claiming Trump violated emoluments clause.) If the appeal shakes out this way, the entire complaint would ultimately be dismissed.
So, at the end of the day, IF Trump ultimately loses, AND the judgement survives appeal, AND given the limited legal remedy that could be awarded, even in a worst case scenario, does this mean Trump would be out of the woods?
Political Implications
No.
Just because this is not a huge legal deal at this point– press accounts notwithstanding– doesn’t mean that the case couldn’t prove to have huge political significance– particularly if Trump loses the lawsuit.
If the Democrats retake the House in November, it is likely they may decide to initiate an impeachment action against Trump. And if they do so, this case could be Article 1 in the articles of impeachment, alleging a constitutional claim: violation of the emoluments clause.
Compare the relative strength of this potential claim to the allegations of perjury in a civil case in the impeachment proceedings against Clinton.
If this scenario comes to pass, Democrats will argue that a constituional violation is much worse than perjury. I leave it to others to debate the relative wrongs alleged here.
The Bottom Line
I still don’t think this emoluments case represents serious potential legal jeopardy for Trump– and certainly doesn’t warrant the hysteria I’ve seen in press coverage. But its political significance looms larger. The degree of severity of that threat hinges on whether the Democrats win a House majority in the November election and decide to pursue impeachment proceedings against Trump.
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I think you meant to write: “last week’s decision allowing an emoluments case to proceed is not the remedy you’re looking for”
Yes, I had just seen that and fixed it– sorry for the confusion. Thanks!
Given that Congress has not acted to declare otherwise, an argument can be made that this Congress does not regard any ‘alleged’ emoluments to be in violation. After all, this Congress has been well aware that President Trump is benefiting from foreign government officers and corporation officials staying at Trump Towers. My view is that if this Congress has not taken up this benefiting as an issue itself, then it has little legal play as a Constitutional violation.
What this groundling doesn’t understand is why divestment is required. Wouldn’t a plain old putting the property in an escrow account be good enough? I read of that being done with stock holdings, even when it constitutes a majority stake in the entity in question.
As for the impeachment game, well, the #Restance would try an impeachment resolution against Trump for walking on the wrong side of K Street. Even if impeachment is achieved, the Senate still has to convict Trump of some crime to remove him. Thus, an impeachment would probably attain the status of a propaganda piece and redound to the discredit of the Congress.
Trump only has to get a plurality of the voting public to identify with him, and he can weather an impeachment. As for a Senate trial, time will tell.
I could put my entire fortune in escrow and triple its value with a few nicely-placed regulation changes that benefit my holdings (as Trump as done numerous times – as also has his corrupt cabinet). I could also encourage my Atty General to go enforce laws that are retarding the growth of my stocks.
We need some laws here. Have you noticed that in the past 75 years, every president who did not enter office wealthy, died very wealthy, or is still very wealthier than when they took office? Clinton and Obama are super examples. We know what presidents are paid by law, so where did all that cash come from??? Of course, much of it is payback for favors granted while in office disguised as book and speaker fees.
Yes to your points, but, the ‘appearance’ of impropriety is the central theme of these laws. It says somewhere, “full faith and credit” in relation to our money. That’s what the system is based on, appearances. So, once enough of the people finally stop worshiping money, the game unravels.
“I could put my entire fortune in escrow and triple its value with a few nicely-placed regulation changes that benefit my holdings”
you say you’re tom on the beach, but you sound a lot like goldman sachs…/s
http://fortune.com/2014/12/09/goldman-sachs-pay-revolving-door/
chose this one for the awesome picture of Lloyd, that gamer
but this one puts the blame where it belongs
https://www.businessinsider.com/wall-street-washington-revolving-door-2011-4
“Have you noticed that in the past 75 years, every president who did not enter office wealthy, died very wealthy, or is still very wealthier than when they took office?”
http://www.taxhistory.org/thp/readings.nsf/ArtWeb/1C91AC0FA1A9E39E85257D1B0041C876?OpenDocument
Tax History: Harry Truman’s Tax Returns Have a Story to Tell
Joseph J. Thorndike
… When Truman took the train home to Independence in January 1953, he took few of the trappings of office with him. In those days, former presidents received nothing in the way of retirement benefits: no Secret Service protection, no administrative support, and certainly no money. Presidential pensions did not exist.
But if President Truman was left to sink or swim, Colonel Truman was entitled to a regular check from the government. In return for his military service during World War I (and subsequent years in the Army Reserve), Truman was guaranteed a pension of $112.56 a month.2
It was something, but not much. The former president experienced a couple of lean years immediately after leaving the White House. In his last full year as president, he had earned $100,539.06, according to his 1952 tax return. (Congress raised the president’s salary in 1949 to $100,000.) The following year, ex-President Truman reported just $34,176.70 in income. In 1954 he earned $13,564.74.
Of course, Truman could have cashed in on his Oval Office experience. “If President Truman is unemployed after he leaves the White House, it won’t be for lack of job offers,” reported the Los Angeles Times in November 1952. Rumors swirled that numerous companies had offered to pay him more than $100,000 to sit on corporate boards, serve in no-show, symbolic positions, or otherwise lend his name to various enterprises.
But Truman considered those options unseemly. “I could never lend myself to any transaction, however respectable, that would commercialize on the prestige and dignity of the office of the presidency,”3 he later wrote.
Initially, at least, Truman turned down offers to appear on the lecture circuit, as well as on several radio and television shows. In particular, he refused a $10,000 offer to appear on TV with his daughter, Margaret Truman, providing piano accompaniment for her well-publicized singing career. “Some screwball made that offer,” the ex-president told reporters.4 …
… Truman’s difficulty in making ends meet was common knowledge in Washington. The ex-president himself was tight-lipped about his financial problems, but he did acknowledge that he could use a secretary to help answer mail. Eventually, Congress agreed to provide some sort of regular pension when it approved the Former Presidents Act in 1958.9 The law, which passed despite some Republican foot-dragging, established a $25,000 annual pension for ex-presidents. It also provided funds for administrative support of their post-presidential offices and a regular annuity for former first ladies.
How can the “emoluments clause” apply to that Hotel, unless it is were the personal property of the president rather than, given the judge-made law that corporations are persons in their own right, being owned by a corporation as surely is the case?
The dividends accrue to DJ Trump as an individual.
Mere ownership as a corporate form doesn’t sanitize bribes, otherwise lowlife politicians
would form foundations, shake the tin cup hard at their donors and collect fat foundation
board salaries, like, um, err,,,,,,,
i could certainly get behind a peabody/sherman administration, comes to that. but i don’t think the resistance would support them.
How is it possible to consider the receipts of a hotel as “emoluments” to someone with an ownership position somewhere in the intentionally convoluted line of corporate “owners” of the corporation “owning” that hotel?
Thank you. You have posed the question very well.
Follow the money…
It’s not just profits, but it’s the balance sheet effects.
A bigger example of possible corruption and quid pro quo might possibly be the Kushner family. In early 2017 Softbank received a $45 billion investment commitment from the government of Saudi Arabia, and since then has invested over $700 million in private tech companies which the Kushner family’s Thrive Capital also own a stake in.
Softbank’s investments since October include Mapbox ( $164 million ), Compass ( $450 million ), and Lemonade ( $120 million ). Thrive Capital has a venture stake in Mapbox, Compass, and Lemonade. Interestingly, Saudi Arabia appeared to be doing some local fundraising at the same time that these investments were being made.
Softbank made additional large investments in the firms WeWork ( $4.4 billion ), and Kabbage ( $250 Million ). Shortly after these investments, Thrive Capital sold its majority stakes in the Flatiron School to WeWork, and in Orchard to Kabbage, all for undisclosed sums of money.
While Saudi Arabia is an ally, it is not out of the questions that large investments like these might influence decisions which are important to them like providing U.S. intelligence to identify locals who are disloyal to the Saudi king, increased military assistance to help the Saudi’s war in Yemen, the re-imposition of U.S. sanctions against Iran, and a Congressional Bill to facilitate the listing of Aramco’s upcoming IPO on U.S. exchanges.
Since Jared is married to Ivanka, this means a member of the Trump family is entitled to at least half of a member of the Kushner family’s stake in Thrive Capital.
So if Clinton had won would you support this case against her for foundational ties?
https://theintercept.com/2016/08/25/why-did-the-saudi-regime-and-other-gulf-tyrannies-donate-millions-to-the-clinton-foundation/
seems to me like…
While Saudi Arabia is an ally, it is not out of the questions that large investments like these might influence decisions which are important to them like providing U.S. intelligence to identify locals who are disloyal to the Saudi king, increased military assistance to help the Saudi’s war in Yemen, the re-imposition of U.S. sanctions against Iran, and a Congressional Bill to facilitate the listing of Aramco’s upcoming IPO on U.S. exchanges.
this would apply, no?
the Clinton Foundation was a major issue of corruption in her campaign.
It was outrageous she was in office, while raising hundreds of millions through the foundation.
Why is no one discussing emoluments violations related to Bill Clinton getting paid huge sums for short speeches while Hillary was Sec State, after which she would magically approve some weapons sale or something? Is that not accepting gifts? Or is the ‘speech’ enough of a trade that it’s considered a legitimate transaction? And if that’s enough window-dressing to make it legit, how come a foreign king staying in Trump’s hotel isn’t enough transaction to make the payment for the stay legal?
Our political parties have sunk to the “any stick to beat a dog” stage of disputation.
Considering the endless Russia hysteria, that would be the case.
@Whip
July 30, 2018 at 4:47 pm
——
“Why is no one discussing emoluments violations related to Bill Clinton…”
Because the emoluments clause applies to the President, not to a former president, and it’s not Melania who is getting the “emoluments”.
As to whether the trade you describe is corruption is a separate issue and I would say that it is.
apparently grifts are not covered in the emoluments clause
it was.
I recall reading somewhere on this blog that the use of public office for private gain meets the very definition of corruption, yet the President is exempt from conflict of interest rules. We need some new laws. Which we are never going to get, because–correct me if I’m wrong–the use of public office for private gain is now the main reason people run for public office.
FWIW, the president is exempt because POTUS writes the rules.
Is it corrupt for the SecDef to own 200,000 shares in Lochkeed?
Well Potus writes those rules.
But if POTUS or VPOTUS has 2,000,000 shares in Halliburton and then
manages to get them billions in no-bid contracts, it’s solely up to
Congress and the voters.
Whatever. Seriously, how the Hades is this even a concern?
President Trump could be caught selling gold bars from Putin on eBay, and because of the opposition’s feckless Russia! Russia! Russia! any impeachments would be tainted. It is jut like the Republican Party impeachment trial of President Clinton. It was so obviously a political attack that even being actually guilty of anything made the trial a joke.
Doing any reading about the Founders and their concerns about even the fricking appearances of corruption is not only interesting but it comparing their concerns with our current massive corruption makes them extremely prescient. Most of Congress gets very financially comfortable after even a single term as a Representative. It obviously involves corruption, but no one dares speaks the name because it succeeds so well.