The District of Columbia is suing President Donald Trump's inaugural committee and two companies that control the Trump International Hotel in the nation's capital, accusing them of throwing parties for the Trump family with nonprofit funds and overpaying for event space at the hotel.
The city's attorney general, Karl Racine, announced the lawsuit Wednesday. According to his office, the inaugural committee abused non-profit funds, and to coordinated with the Trump family to "grossly overpay for event space" in the hotel.
The committee has maintained that its finances were independently audited and that all money was spent in accordance with the law.
The suit alleges that the committee knew it was overpaying, but didn't consider less expensive alternatives.
The committee raised an unprecedented $107 million to host events celebrating Trump's inauguration in January 2017. But the committee's spending has drawn mounting scrutiny.
"District law requires nonprofits to use their funds for their stated public purpose, not to benefit private individuals or companies," Racine said. "In this case, we are seeking to recover the nonprofit funds that were improperly funneled directly to the Trump family business."
Prosecutors found that Rick Gates, a former Trump campaign aide who flipped on the president during the special counsel's Russia investigation, personally managed discussions with the hotel about using the space, including ballrooms and meeting rooms. One of the event's planners raised concerns about pricing with Trump, Gates and Ivanka Trump, according to the lawsuit. Ivanka Trump is the president's daughter and a senior White House adviser.
Those concerns included a written warning that the price proposal was at least twice the market rate. But Gates went through with it anyway, at a cost of $1.03 million, the suit says.
Gates pleaded guilty to charges tied to his lucrative political consulting work in Ukraine and was sentenced last month to 45 days in prison, a punishment that a judge said reflected the extensive cooperation Gates had provided to the Justice Department.
A lawyer who represented Gates for the criminal proceedings didn't immediately return a message seeking comment. The White House didn't immediately return a message nor did the Trump Organization.
The suit contends that the hotel went against industry practice and refused to discount the space, and double-booked its largest ballroom with a different organization that was still affiliated with the inauguration, the Presidential Inaugural Prayer Breakfast. Both organizations were nonprofits, but the breakfast paid $5,000 for the ballroom. The committee, however, paid $175,000, the suit claims.
Prosecutors say the committee also used nonprofit funds to throw a private party on Jan. 17, 2017, the night off the inauguration, for Trump's family — a $300,000 affair. The reception was for three of Trump's children — Donald, Jr., Ivanka, and Eric.
"There will be an after-party at the OPO [Trump Hotel] following the inaugural balls on Friday. DJT is not expected to attend but was more for you, Don and Eric," Gates wrote in an email to Ivanka Trump, according to the suit. DJT was a reference to Donald J. Trump.
Event staff within the inaugural committee recognized this would not be a proper use of committee funds and had tried to cancel this event, according to the suit, but Gates and the Trump family went ahead anyway.
Racine had been sending subpoenas for months related to the investigation. The inaugural committee was also being investigated by New York and state authorities in New Jersey, who are looking into, among other things, whether foreigners illegally contributed to the inaugural events.