How Federal Ethics Laws Will Apply to a Trump Presidency
“It is unprecedented in modern history to have the level of complexity of global substantial business relationships that the president-elect has, and the litigation that inevitably follows any complex global business venture,” said Norman L. Eisen, a former special counsel for ethics and government reform under President Obama, who supported Mr. Trump’s opponent, Hillary Clinton. “It will be complicated, but not insurmountable.”
Mr. Trump faces potential conflicts on multiple fronts. He has income streams that could be affected by taxation policies he may try to get through Congress. His companies have hundreds of millions of dollars of debt from banks regulated by the federal government. In one case, Mr. Trump is a part owner of an office building in Manhattan that carries a $950 million loan from lenders that include the Bank of China.
A key source of his revenue is the licensing of the Trump name, both domestically and abroad, and the value of that brand could be helped, or harmed, by actions he takes or does not take.
The Trump Organization said it had begun the process of “vetting various structures,” with a goal of quickly transferring the businesses to three of Mr. Trump’s children — Donald Jr., Ivanka and Eric — along with executives. “This is a top priority at the Organization and the structure that is ultimately selected will comply with all applicable rules and regulations,” Amanda Miller, a marketing executive for the company, wrote in an email.
During a debate in January, Mr. Trump said he would put his holdings in a blind trust, an arrangement in which a public official lets a financial manager control his wealth and does not know exactly how the money is invested. But in the next breath, he acknowledged the problem with that strategy: “Well, I don’t know if it’s a blind trust if Ivanka, Don and Eric run it.”
In an interview, Alan Garten, a lawyer for the Trump Organization, spoke of the difficulty of the task. “There has been a huge event — a historic event — that has occurred,” he said. “There is no question that makes my job more complicated.”
Under federal laws, executive branch employees must comply with conflict-of-interest rules that guard against being influenced by personal investments, and they must curb payments from sources outside the government. As a result, employees may have to recuse themselves from working on matters where they may have conflicts, holding certain properties or accepting money. For example, when Henry Paulson, the former Goldman Sachs executive, became Treasury secretary in 2006, he pledged to sell about $470 million in company stock to comply with conflict-of-interest rules.
But the president and vice president were exempted from such laws, on the theory that they needed to be able to carry out their constitutional duties without restraint. So President Trump will be able to take actions pertaining to another country even if he has business interests there.
Federal laws like those against bribery and receiving benefits from foreign countries still apply to the president. Enforcement would fall to the Justice Department or to Congress, which could pursue criminal or impeachment proceedings if evidence suggests laws were broken.
Mr. Trump will be required next year to file an updated personal financial disclosure listing his holdings, similar to the forms he has filed the past couple of years as a candidate. But Mr. Trump will not be required to make public his income tax returns, which he declined to do during the campaign, citing a continuing audit by the Internal Revenue Service, an agency he will now control. If he did release them, the tax returns could provide transparency into his international business dealings and other potential conflicts that may arise.
As president, Mr. Trump will have no protection from lawsuits related to his life outside the White House, a result of the 1997 Supreme Court ruling that President Clinton could be sued by Ms. Jones in a sexual harassment case that dated to his time as Arkansas’s governor. That litigation, which ended in an $850,000 settlement but no admission of wrongdoing, preoccupied Mr. Clinton in his second term and indirectly led to his impeachment.
That ruling could set a trap for Mr. Trump — who has been accused by several women of unwanted advances, though none are currently suing him — and present a strategy for his political opponents to hamper his administration with litigation, legal experts said.
“I anticipate that is going to be one of the first line of attacks against President Trump,” said Richard W. Painter, the chief White House ethics lawyer under President George W. Bush from 2005 to 2007, who endorsed Mrs. Clinton. “It is potentially very destructive for the country as it was with Clinton.”
On Thursday, as Mr. Trump was in Washington meeting with President Obama and congressional leaders, his lawyers were in court in San Diego for a lengthy hearing related to the Trump University lawsuit, in which former students allege they were cheated out of thousands of dollars in tuition through deceptive promises and high-pressure sales tactics.
Mr. Trump has rejected the allegations. But on Thursday, one of his lawyers, Daniel Petrocelli, told the judge, Gonzalo P. Curiel — whom Mr. Trump accused of bias because of his Mexican heritage — that he was open to discussing a settlement in the case.
Mr. Petrocelli also said he might request to delay the trial to next year, saying more time was necessary because “we’re in uncharted territories” in light of Mr. Trump’s election, The Associated Press reported. Trump University is also the subject of a lawsuit by the New York attorney general. That case will also continue.
Mr. Trump and his businesses are enmeshed in myriad other litigation. Mr. Trump has been engaged in a lengthy dispute with Palm Beach County over jetliners flying over his Mar-a-Lago resort on the way to and from the nearby airport. In a lawsuit, he claimed that the noise, vibrations and emissions from the aircraft are disruptive to guests and damaging the property, including the Dorian stone and antique Cuban roof tiles.
And in Washington, Mr. Trump has sued two celebrity chefs, Geoffrey Zakarian and José Andrés, after they backed out of restaurant deals at his new hotel development at the Old Post Office Pavilion after he made incendiary comments last year about Mexican immigrants.
The Old Post Office project itself is a potential conflict. The Trump Organization signed a 60-year deal with the federal government to redevelop and manage the building as a hotel — meaning that he will be, in a sense, his own landlord.
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