Contact Your Financial Adviser Money Making MC
29
November 2016
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Trump (The Total Investment & Insurance
Solutions)
The question of whether President-elect
Donald Trump will run afoul of federal conflict-of-interest rules or the
Constitution because of his extensive foreign investments has been the subject
of intense scrutiny among legal and ethics scholars.
Legally, his foreign licensing deals could violate the Constitution. An
example: During his presidential run, Trump's name was used to market a
never-finished luxury hotel in Azerbaijan, built by the billionaire son of the
country's transportation minister. The deal earned Trump more than $2.8 million
between January 2014 and May 2016, according to financial-disclosure filings he
filed as a candidate. (See his 2015 and 2016 reports here.)
If this type of deal occurs during his presidency and fetches anything
above what's considered fair market value, it would almost certainly violate
the Emoluments Clause,
a provision of the Constitution meant to head off conflicts between the
national interest and presidents' self-interest. The clause, in Article 1,
Section 9, of the Constitution, prevents the president from accepting "any
present, Emolument, Office, or Title, of any kind whatever, from any King,
Prince, or foreign State." A more stringent interpretation of the clause — which has never been tested in the
courts — would bar a president from receiving any payment from a foreign
government entity. A violation of the Constitution could result in impeachment
proceedings.
But how will we know if Trump is violating the clause? Because of
limited financial-disclosure requirements, we might not. The Total Investment & Insurance Solutions
There are two reasons for this: One is that the disclosures required
from presidents are limited. The other is that Trump has refused to voluntarily
release his tax returns or other business details, a significant break from
presidential administrations dating back to Jimmy Carter.
"You can't grasp all the potential conflicts and issues that the
Trump empire poses by just looking at a personal financial disclosure,"
said Matthew T. Sanderson, an attorney at Caplin & Drysdale who has served
as legal counsel on three Republican presidential campaigns.
And Trump won't have to file a comprehensive annual report of his
assets, income, gifts and stock portfolio until May 2018, according to U.S. Office of Government
Ethics requirements. (Trump has so far refused to release his
federal or state income tax returns; three pages of his 1995 New York state income tax return obtained by The New York Times showed
he declared $916 million in losses but few other details.)
Trump Organization executives and lawyers did not respond to
ProPublica's requests for comment. The
Total Investment & Insurance Solutions
As a presidential candidate, Trump filed two financial-disclosure
reports detailing his private companies and assets. More than 100 of the
companies listed have licensing or management agreements in other countries,
including China, India, Saudi Arabia and the United Arab Emirates. Among his
most prized assets: 12 U.S. golf courses, three more in Ireland and Scotland,
and two underway in the United Arab Emirates, along with a 30 percent stake in
two office towers in New York and San Francisco.
Trump Organization officials have said the president-elect's business
empire will be overseen by his three
adult children—Donald Jr., Eric and Ivanka. (Former Presidents
Carter, Ronald Reagan, George H.W. Bush, Bill Clinton and George W. Bush all
put their assets into blind trusts during their terms; Obama's portfolio in
Treasury bills and index funds was not seen as a conflict.)
But Trump hasn't heeded calls from ethics and legal experts (and others
including the Wall Street Journal editorial page) who say his
foreign assets should be sold off en masse and his businesses be placed in the
hands of an independent trustee during his presidency. Trump addressed the issue on
Twitter, saying it was "well known that I have interests in
properties all over the world" and arguing that "only the crooked
media makes this a big deal!"
The potential for Trump's decisions as president to impact his business
holdings loom large. "What happens if there are federal activities in the
proximity of these golf courses or hotels that positively or negatively impact
their value," said Lawrence Wright, a professor of economics at New York
University's Stern School of Business and a former federal antitrust regulator.
"He's got a zillion things going on and I don't see how he can effectively
disengage."
Barring more disclosures, an outside review of Trump's business activity
is difficult. In the days following his election, at least five
Trump-affiliated holding companies, most of them long inactive, have been
dissolved in Delaware and New York, ProPublica has found. But it's unclear if
Trump is consolidating his empire before he takes office or simply shuttering
dormant companies. The Total Investment
& Insurance Solutions
And getting an accounting of how much he's profiting, or losing, from
his business dealings is near impossible. Shortly after the election, Trump met with three Indian
business partners who
are building a Trump-branded apartment complex in Pune, just outside of Mumbai.
In his 2015 financial disclosure, Trump noted several foreign licensing deals,
including the one for the 23-story Pune towers. The Total Investment & Insurance Solutions
Trump reported between $100,000 and $1 million in income from the deal
in his 2015 disclosure. The next year, he reported no income from the deal. The
estimated value of the contract in both years, according to the financial
disclosure: between $1,000 and $15,000. (Federal disclosures rules only require
a range of income amounts for things like stock dividends, rent and royalties.)
To put this incongruity in context, Trump's licensing deals typically fetch between $5 million and $10
million.
Meanwhile, a 75-story Mumbai skyscraper currently under construction by the
Lodha Group is also
reported in the filings. The royalty income from that deal reported in 2016 is
in line with previous Trump deals: between $1 million and $5 million. The
Mumbai deal's valuation was one of several listed that was deemed "not
readily ascertainable."
As president, Trump will be required to file both annual and periodic
financial-disclosure reports under the Ethics in Government Act of 1978. But
unlike a balance sheet or an audit, the financial disclosures are limited and
don't provide a complete picture of Trump's businesses. "They are the
very, very tip of the iceberg," said Richard W. Painter, an outspoken
critic of Trump's business conflicts who served as the White House's chief
ethics lawyer under George W. Bush. "They don't get at the second and
third layers." Among the things excluded from the disclosures: tenants in
Trump-owned buildings and their rents, along with debts owed to
government-owned sovereign wealth funds.
The Total Investment & Insurance Solutions
And if he makes any errors in his filings, it's generally up to the
White House counsel's office — a Trump appointee — to decide what action to
take.
Trump will have some additional disclosure requirements as president
that he didn't have as a candidate: He will have to list all gifts he's
received and any transactions within 45 days of a purchase or sale of a stock.
Obama Commerce Secretary Penny Pritzker, a Chicago billionaire who started five
companies and who has served on the boards of several Fortune 500 firms,
routinely files such disclosures; So far in 2016, she has filed 17 of them.
But company liabilities are exempt from federal reporting requirements.
Trump owes Deutsche Bank, his largest lender, roughly $300 million in loans
against his recently opened hotel in Washington, D.C., and a resort in Doral,
Florida. But it's unclear what his companies might owe and to whom. And
presidents aren't subject to federal laws prohibiting members of Congress from
government dealings that overlap with their own financial interests.
The extent of Trump's potential conflicts is unique, but he's one of
many elected officials and executive branch appointees to grapple with such
issues. Hank Paulson was forced to sell off nearly $600 million in Goldman Sachs stock before taking over as
Treasury Secretary in 2006. Lyndon B. Johnson's wife, Lady Bird
Johnson, purchased a radio station, KTBC-AM in Austin, in 1943 and, when her
husband was in the Senate, directly approached an official at Federal Communications
Commission about a regulatory review.The Total Investment & Insurance Solutions
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