Take a penny, take a penny (replay)

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Sean Rameswaram: Welcome to Today Explained. I'm Sean Rameswaram.

Noel King: And I'm Noel King.

Sean Rameswaram: Today, the Trump Foundation is shutting down. The New York Attorney General accused the charity of a "shocking pattern of illegality" that was "willful and repeated." David Fahrenthold from the Washington Post joins us to share a series of increasingly unbelievable stories about the charity's shenanigans.

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Sean Rameswaram: David, thanks for being here.

David Fahrenthold: Thanks for having me.

Sean Rameswaram: Most reporting and politics and otherwise, you get a lot of tips and most tips don't pan out. You check something out and it turns out that the person who gave you the tip didn't really understand the full details of the situation or what you thought was really illegal is actually quite legal and very common.

Noel King: That's right. But the Trump Foundation reporting was different because the success rate was like 100%. Every time somebody called with a crazy story about something that happened, or every time you found something weird that looked strange in the documents, every time you thought there was something there, there was.

Sean Rameswaram: I've never had that kind of experience before. A person called me one time out of the blue and said that they knew this story from the mid-90s where Trump had once barged into somebody else's charity event and stolen a seat on the stage and sat on the stage as if he had given the charity money during a charity event, even though he'd given them nothing.

Noel King: And you thought at the time, well, that's ridiculous. There's no way that actually happened. Or if it did happen, there's no way I can prove it.

Sean Rameswaram: And the four phone calls later, I was talking to somebody who was on the stage and watched that very thing happen.

Noel King: After years and years of controversy, the Trump Foundation is shutting down. Barbara Underwood, the New York Attorney General, accused the charity of a, quote, shocking pattern of illegality that was, quote, willful and repeated.

Sean Rameswaram: She said yesterday that this was an important victory for the rule of law, making clear that there is one set of rules for everyone. Another lawsuit that might bar President Trump and his three oldest kids from serving on the boards of any New York charities ever again is still pending.

Noel King: Back in the summer after Underwood first sued the Trump Foundation, I spoke with David Fahrenthold from the Washington Post. Our conversation quickly turned from the news to a series of increasingly unbelievable stories about the foundation.

David Fahrenthold: He started actually back in the 80s when he said he would give away the proceeds of the art of the deal. One of the interesting things about Trump is like he has this sort of two-sided personality before he became president.

Sean Rameswaram: One side was, I am so rich. I'm the richest person you've ever met. The first line of the book, The Art of the Deal, is like, chapter one, I don't do it for the money. I've got enough, much more than I'll ever need.

Noel King: So that's one side of Trump's personality. He's so rich. He lives in this gold-plated palace. He doesn't need any money.

Sean Rameswaram: The other side of his personality is he wants your money right now for any manner of things, right? While he's telling you he's so rich, he's also trying to sell you a university and some cufflinks and a tie and a fragrance and a steak.

Noel King: When it comes to great steaks, I've just raised the steaks.

David Fahrenthold: He's hustling to get your money. And so to try to solve that kind of cognitive dissonance, why does this guy doesn't need so much money, doesn't need any money, why is he so desperate to get my money? He always would say, well, this money isn't for me, it's for charity.

Sean Rameswaram: And so that was what he said about the art of the deal. The money was for charity. And so he started his foundation then.

Noel King: In the beginning, the money did come from him. It wasn't very much money compared to other people who claim to be billionaires, but the money came from him.

David Fahrenthold: Over time, though, he stopped giving money to his foundation. And most of the money actually came from Vince McMahon and Linda McMahon, who's now the small business administrator.

Noel King: Yeah, and Vince McMahon famous for being a wrestling mogul. And not for being very charitable either.

Sean Rameswaram: Vince McMahon, if you look at Vince McMahon's own foundation, he doesn't give as much money to it as he gave to Trump's foundation.

Noel King: We've never been able to figure out why, out of the blue, Vince and Linda McMahon gave $5 million to the Trump Foundation in 07 and 09. Trump was giving away Vince McMahon's money for like the next seven years.

David Fahrenthold: Weird. Yeah. Okay. So in New York in June, the sitting attorney general filed a lawsuit against the foundation, Donald Trump and his three oldest children.

Sean Rameswaram: Could you tell us a bit about what that lawsuit's about?

David Fahrenthold: The lawsuit began, this investigation that began in 2016 as a result of some coverage in the Post. The end result was that they declared Donald Trump had run his foundation in a, quote, persistently illegal manner.

Noel King: It basically went through the all-you-can-eat buffet of things you can do wrong with a foundation.

Sean Rameswaram: Can you take us to that buffet?

David Fahrenthold: Right. So one of the sort of most bedrock rules about foundations is that even if your name is on the foundation, even if you are the president of the board, the money in the foundation is not your money.

Noel King: And it can't be spent to benefit you. The president of the foundation can't use the charity's money to buy things for himself or for his business.

Sean Rameswaram: That's kind of like, you know, charity 101. but repeatedly the Trump Foundation, the charity, used its money to buy things for Donald Trump.

Noel King: There are a couple of cases in which Trump's for-profit clubs had been sued by various people, and as part of the settlements of those lawsuits, the for-profit businesses agreed to make donations to charity.

Sean Rameswaram: And Trump instead used his charity, which is, again, legally separate. Those are, you know, opposite ends of the earth legally. They're not related at all.

David Fahrenthold: He used his charity to pay the settlement in lieu of his business. So basically his businesses saved $250,000, I believe, because his charity spent the money instead.

Noel King: I feel like an eight-year-old Girl Scout would know that it was wrong to, like, take money for cookies and pay off some personal debt to the bully on the block with it.

Sean Rameswaram: How is it that the Trump Foundation thought they could get away with something like that?

David Fahrenthold: I think the answer was they just didn't ask anybody.

Noel King: Now, that's not—ignorance of the law is obviously not a moral excuse. I don't think it's really a legal excuse either.

Sean Rameswaram: You know, everybody else who runs a little tiny nonprofit spends a lot of time with lawyers and follows the rules. And they just didn't.

Noel King: Getting back to the buffet, what else was on the menu?

David Fahrenthold: Well, they also – charities are prohibited from making campaign contributions. And in that case, Trump used his foundation to make a $25,000 contribution to Pam Bondi, the attorney general of Florida, around the time when she was considering whether to join a broader lawsuit against Trump University.

Sean Rameswaram: Nice. And even more amazingly sort of as we go down the buffet the next steam tray in the buffet is you not allowed to lie to the IRS.

Noel King: Again, something an eight-year-old would probably know.

David Fahrenthold: So the year that he gave the donation to Pam Bondi political group which was prohibited the filing that he sent to the IRS the next year should have listed that.

Sean Rameswaram: You know, the IRS says if you make a prohibited contribution, you're supposed to check this box on the form, tell us you did it, pay a fine.

Noel King: Instead, and mysteriously, and this is all attributed by the Trump people to a series of unrelated paperwork errors, what he sent to the IRS the next year did not list that he had made an illegal campaign contribution.

Sean Rameswaram: It did not list any gift to Pam Bondi's group. Instead, what was listed was a $25,000 donation to another group that had a similar name, a real nonprofit that had a name that was similar to Pam Bondi's group.

Noel King: Pam Bondi's group was called And Justice for All. They listed to the IRS a gift to a group called Justice for All in, I think, Kansas of the same amount, $25,000.

David Fahrenthold: They didn't give money to a group in Kansas.

Noel King: So this error, this sort of series of paperwork errors resulted in them giving the IRS a report that was wrong and had the effect of covering up a donation that was itself prohibited.

Sean Rameswaram: Going down the buffet here, the next one is you're not allowed to involve your nonprofit in a political campaign.

Noel King: And so the New York AG lays out how in the same way that the Trump Foundation had been sort of seen by Trump as kind of an adjunct to his businesses, when he gets into politics, he tends to treat it as an adjunct to his campaign.

David Fahrenthold: So in the beginning of 2016, Trump has this feud with Fox News going where he boycotts a Fox News Republican debate in Iowa right before the Iowa caucuses.

Noel King: And instead he has his own sort of televised fundraiser, kind of counter programs the debate. And he raises $6 million for veterans.

Sean Rameswaram: And it turned out that he used the Trump Foundation as kind of the funnel for those donations.

Noel King: So he takes them in during this event that the AG charges was a political event.

David Fahrenthold: And then the next few days, and I saw some of this in Iowa, when the Trump for president campaign would have a rally in Sioux City or in Waterloo, Iowa or whatever, he'd stand up on the stage during the rally and bring out like a giant golf tournament check from the Trump Foundation and give some of the money he'd raised away to local veterans groups or anything else.

Sean Rameswaram: So he was using the Trump Foundation's money and its name and its checks to burnish his reputation in the middle of a presidential campaign rally.

Noel King: So pretty conspicuously political.

David Fahrenthold: The oversized check said the Donald J. Trump Foundation on the top in the pay or line on the bottom. They actually said make America great again.

Sean Rameswaram: So, yeah, it's hard to imagine a more deeply intertwined charity and campaign.

Noel King: Might one of those giant checks be presented as evidence in a courtroom one day?

David Fahrenthold: You know, I've been looking for one of those. And if anybody has one, let me know because I would love to see it. Those are collector's items now.

Sean Rameswaram: Have we reached the end of the buffet or does this thing keep going until the end of time?

Noel King: The only things that are left are smaller, but they're sort of interesting in showing how the lines were blurred.

David Fahrenthold: So there were things like he used money from his charity to buy a portrait of himself. Actually, it happened twice.

Sean Rameswaram: He twice bought giant portraits of himself with money from the charity.

Noel King: What do they look like?

David Fahrenthold: One of them we located, they're not that attractive. It's like a bad Andy Warhol.

Sean Rameswaram: People realize that if you're going to have an event at Mar-a-Lago, a charity event that included an auction, you should include a giant portrait of Donald Trump because either somebody else will buy it or if not, he's going to buy it.

Noel King: He's not going to let a giant portrait of himself go unsold in his own home. It's genius. It's really genius.

David Fahrenthold: I'm surprised people didn't think of it.

Sean Rameswaram: So he did it twice. One time he paid $10,000. One time he paid $20,000.

Noel King: And he paid for those portraits with his charity's money.

Sean Rameswaram: The problem is that now those portraits are the property of the charity. and they have to be used for charitable purposes.

Noel King: So we asked them, well, hey, where are those portraits now? Have you, you know, what, are they in a children's hospital? Are they hanging like in a food bank? What, you know, what charity is being benefited by these giant portraits of Donald Trump?

David Fahrenthold: One of them is six feet tall. One of them we never found, but the other one we found with the help of a Univision reporter down in Florida, we found it hanging on the wall of the sports bar in Donald Trump's golf club down at Doral outside Miami.

Sean Rameswaram: So that is like the definition of using your charity's assets for commercial gain. I mean, it's pretty shocking. It's audacious. It's flagrant.

Noel King: How, even if he didn't run for president, how did nobody notice or care? He's one of the most well-known figures in the country just making a mockery of the law?

David Fahrenthold: One thing that surprised me in all this was how little enforcement there is by the IRS of these rules.

Sean Rameswaram: You know, anybody who has a small charity, a small family foundation, my in-laws have one, they live in fear of the IRS.

Noel King: They want to make sure that the IRS comes knocking. They have every single thing locked down.

Sean Rameswaram: And your in-laws not reality TV stars, just to be clear. No, no, not yet at least. Not like names not on hotels, golf clubs.

Noel King: Small amount of money given to charities in Montana. They make sure that they do it all right because they don't want to be audited.

Sean Rameswaram: And they live in fear of the IRS. As does everybody.

Noel King: And what Trump had figured out was that it's a self-reported honor system.

David Fahrenthold: And so every year when you file your charity tax returns, there's a little box or a series of boxes that say, did you break the law this year?

Sean Rameswaram: And you're supposed to check yes if you did.

Noel King: He never did.

David Fahrenthold: And I think they just – if you don't say yes to the did you break the law question and you don't have that much money, which Trump's foundation never had that much money in it, you're just likely to sort of skate beneath the radar.

Sean Rameswaram: And I think in much the same way that the Paul Manafort case last week showed like how little enforcement there is of white collar crime in this country, the Trump Foundation was just an example of how possible it is to get away with pretty egregious violations of charity law without anybody ever noticing.

Noel King: Just to be clear here, there's all of these – there's this laundry list of violations and there's proof.

Sean Rameswaram: And yet the person whose name is on the foundation is the president of the United States.

Noel King: That's true. That is true.

David Fahrenthold: And so one thing that's really fascinating is the, one of the penalties that's being pursued against Trump by the New York AG in the lawsuit against the Trump Foundation is that he would be banned from serving on the board of any New York charity for 10 years.

Sean Rameswaram: Which is something that they often use, like, you know, in cases where people have like flagrantly, you know, used their charity as a scam.

Noel King: Charity swindlers that the kind of penalty they use against

David Fahrenthold: I don't know if the judge is going to allow that but if they do we have a situation where Donald Trump is the most powerful man in the world the head of the United States the leader of the free world

Sean Rameswaram: And at the same time, he would be prohibited, legally prohibited from joining the board of the Staten Island Little League.

Noel King: After the break, story time with David.

Sean Rameswaram: This is Today Explained.

Noel King: As we approach the end of the year, it's a good time to remind you that Headlong Surviving Y2K is a podcast about one of the most epic New Year's Eves ever, 1999, when everyone thought technology was going to bring about Armageddon.

Sean Rameswaram: That didn't happen, but in Surviving Y2K, the people behind the podcast Missing Richard Simmons take listeners back to all of the hysteria at the turn of the century when the world was bracing for disaster.

Noel King: But yes, nothing really happened. You get to hear about an evangelical family preparing for the apocalypse.

Sean Rameswaram: You get to hear from the coders who fixed the millennium bug.

Noel King: Surviving Y2K follows all these stories through New Year's Eve 1999 and reveals what really happened at midnight in addition to nothing.

Sean Rameswaram: Headlong Surviving Y2K. Find it wherever you find your podcasts.

Noel King: I'll tell you, you didn't ask, but I'll tell you my favorite story about the portrait.

Sean Rameswaram: It illustrates the sort of depth of ignorance.

Noel King: So after we discovered this portrait that the charity had bought hanging on the wall of Trump's sports bar, you know, it seems like a pretty obvious case where it's what they call self-dealing.

Sean Rameswaram: That he had used his charity to purchase for $10,000 a portrait of himself.

Noel King: And then he hung that portrait of himself as decoration on the wall of his sports bar.

Sean Rameswaram: So he was using his charity's asset to benefit his for-profit business.

Noel King: Right. And after that story ran, this guy Boris Epstein, who is a spokesman for the Trump campaign now is a commentator on Sinclair TV, he called and said, okay, well, this is the logic.

Sean Rameswaram: It may sound and now I know it looks like the Trump charity did a favor for the Trump business by buying art to hang on the wall of the sports bar but really it's the other way around the Trump business is doing the charity a favor by storing its art collection on the wall of the sports bar so it's not a favor it's a favor from the business to the charity not the other way around so I you have to check these things out

Noel King: So I called the um I called a couple of tax law experts to ask about you know is this storage uh argument does it hold water and uh one of them said it's very difficult to make an irs auditor laugh but this would do it wow uh okay um oh sorry irene wants to know if um something about a seven dollar boy scout registration.

Sean Rameswaram: Oh, yeah. It's another story if you want to hear it.

Noel King: We'll take all of them. We love stories.

Sean Rameswaram: It's just like a fireside chat with me, all my stories about the Trump Foundation.

Noel King: It's like an amazing reporting adventure as well as an amazing story about Donald Trump.

Sean Rameswaram: Okay, we'll bring the fire up now.

Noel King: Exactly. Crackling in the background.

Sean Rameswaram: We could tell, we got Trump's Foundation's tax returns going back to the 80s, and you could see all the individual gifts he'd given out in that period into which charities he'd given them.

Noel King: And one of the smallest one was a gift in 1989 Trump gave a $7 donation out of the Trump Foundation to the Boy Scouts, the Boy Scouts of America.

Sean Rameswaram: And so I'm going down the list and that's the smallest donation the Trump Foundation ever gave out and I was going down the list and thought well there's got to be an amazing story there but I don't know what it is you know it's so long ago how could I and it's such a small amount no one will probably remember this so I called the Boy Scouts and they wouldn't comment I called Trump they wouldn't comment and I'm sort of stuck

Noel King: Like, you know, I know there's a story here, but I feel like this is like disappeared into the midst of history.

Sean Rameswaram: And I'll never know why he gave a $7 gift to the Boy Scouts.

Noel King: Yeah. And so I just put it out on Twitter one day.

Sean Rameswaram: You know, look at this. Isn't this crazy? We'll never know the answer to this.

Noel King: But it looks like Trump gave the $7 donation to the Boy Scouts.

Sean Rameswaram: And then I like went home, actually went home for the day, like, you know, frustrated that I wasn't going to be able to answer this.

Noel King: And then at home could watch the um watching twitter was like watching one of those spy movies where like the supercomputer is chasing the hacker around you know and like you know the so it started from like france to jibouti he's in budapest right you know like that like and it was the what i was watching was readers trying to figure this question out uh and one of the one of the people thought well the boy scouts sell this like shitty popcorn and make people make your parents buy it and so maybe it was the popcorn how much of the popcorn cost in 1989 and so so they they at trails and popcorn which is the popcorn company which yeah and so their social media intern i'm sure never always ever mentioned that boy scouts popcorn on twitter before that person gets back to us and says no uh it costs five dollars to buy a tin of popcorn in 1989 couldn't be that so then somebody goes and finds a reader looks at you know google has digitized not just old news stories but old newspapers in general so just ads are searchable to and they found this ad from a newspaper in the fall of 1989 in like Schenectady someplace in New York that was in New York City and it said you know Boy Scouts sign up now you know enrollment for the year is just $7 and so that's the year Donald Trump Jr. was old enough to join the Boy Scouts and so it appears that that was you know Donald Trump had just written this book saying that he had more money than he knew what to do with and he used the charity's money to buy his son's membership fee in the Boy Scouts

Sean Rameswaram: Holy shit So, I mean, that tells you anything, right?

Noel King: That to me was a sign that from the very beginning, they hadn't understood the rules, or they've been ignoring the rules, and they just considered that Boy Scouts are a non-profit. We have to pay a non-profit. Seven dollars.

Sean Rameswaram: Like, make sure the charity pays. Make sure it not my own money

Noel King: I ask you to reaffirm the scout oath with your scout master On my honor I will do my best to do my duty to God and my country and to obey the scout law to help other people at all times to keep myself physically strong mentally awake and morally straight

Sean Rameswaram: I'll tell you one other story that I think really sums up to me like the way I was talking about Trump sort of the what this shows about the moral obligation he felt to help other people with his money.

Noel King: The most amazing example of that is so there's a thing called the Palm Beach Police Foundation.

Sean Rameswaram: It has one of the biggest social events at Mar-a-Lago every year. Hundreds of people come from the Palm Beach Policeman's Ball.

Noel King: Now Palm Beach is a small place with not that many police officers and they are very well supported by this organization.

Sean Rameswaram: So they have this huge thing and they give away a lot of money for police scholarships and other things.

Noel King: Okay. It's an important customer. The point of this is it's an important customer for Trump.

Sean Rameswaram: Every year they come to the Mar-a-Lago, and they can spend like $270,000 in a night at Mar-a-Lago to pay for catering and everything else.

Noel King: So this is a customer Trump wants to make happy.

Sean Rameswaram: And one year he decides that he wants to give a big donation to the Palm Beach Police Foundation.

Noel King: Okay. He doesn't do it with his own money out of his own pocket, and he doesn't even do it with the Trump Foundation's money.

Sean Rameswaram: What he does is he calls the widow of a friend of Trump's who has died, a Hollywood producer named Charles Evans.

Noel King: Trump calls his widow and says, look, I know you care about the Palm Beach Police. I am taking up collections for the Palm Beach Police Foundation. I'm gathering money for them. Will your husband's late husband's foundation give some money to me, and then I'll give it to the Palm Beach Police Foundation.

Sean Rameswaram: They say, great. They give him some money. He takes their money. I forget now how much it was, but it was in the hundreds of thousands of dollars.

Noel King: The Charles Evans Foundation, the foundation of this person who's now dead, gives money to Trump's foundation. Trump takes just that amount of money. He doesn't add a dollar of his own, gives it to the Palm Beach Police Foundation as a gift from the Donald J. Trump Foundation without mentioning the other guy.

Sean Rameswaram: And as a result, not only does the Palm Beach Police Foundation have its event at Mar-a-Lago and pay Donald Trump all this money, they give Trump that year, they give him this giant crystal palm tree, like a four-foot tall palm tree that is the award for the biggest philanthropist of the year.

Noel King: So Trump is honored for his philanthropy and paid for the room by this charity, and he's given them nothing.

Sean Rameswaram: Amazing. Again, that's the honor system. Nobody would even suspect that somebody like Donald Trump, a billionaire, would do something like that.

Noel King: Partly because it would be easier for a billionaire just to write a check, right?

Sean Rameswaram: This actually took a lot of work and planning, and he actually went to an effort of time.

Noel King: He used this time to avoid having to spend any money of his own.

Sean Rameswaram: That, to me, really sums up his approach to philanthropy. If in any way possible to give other people's money, he will.

Noel King: It's like you almost have to respect how conniving that is.

Sean Rameswaram: It's incredible. Like I said, it's time consuming. That's what struck me, right?

Noel King: Billionaires would write a check just to, you know, not have to spend any time thinking about something.

Sean Rameswaram: But it's time consuming to do that. But he was willing to go to that length just to avoid giving any money.

Noel King: I'm sure you know about this, but you know in the 80s, Spy Magazine.

Sean Rameswaram: Oh, yeah, the checks. They printed a bunch of checks for these increasingly lower dollar amounts to see and sent them to famous people to see who would cash them.

Noel King: And they kept going lower and lower and lower once you cashed a check.

Sean Rameswaram: And it got to the point where Donald Trump was the only person left and they got to like 13 cents and he cashed the check.

Noel King: It doesn't change, I don't think.

Sean Rameswaram: One thing that I learned out of all this is sort of a broader lesson about the president.

Noel King: And I think it was novel to say this in 2016, maybe not so novel to say in 2018, is that he has always looked for honor systems that he can exploit.

Sean Rameswaram: You know, there's places where people abide by the rules or abide by the law, not because the police arrest you the second you break the law, but because there's an honor system there and nobody would want to be seen as having broken the law.

Noel King: Everybody follows the rule because that's what everybody else does.

Sean Rameswaram: And he gains a significant, although sometimes temporary, advantage by violating that and doing a thing that other people would find unthinkable and then sort of waiting for the cops to catch up to him.

Noel King: In this case, the way he dealt with his foundation, particularly the way he dealt with it in Palm Beach Society, where if you have a foundation with your name on it, right?

Sean Rameswaram: The David A. Fahrenthold Foundation, if such a thing existed, people assume that if you are giving them a check from the David A. Fahrenthold Foundation, it's your money, right?

Noel King: Because who would ever set up a charity with their name on it and give away somebody else's money?

Sean Rameswaram: But he did.

Noel King: That's exactly what he's doing.

Sean Rameswaram: Nobody suspected because they always thought, I guess I got a check from Donald Trump. The same thing with the IRS.

Noel King: People follow the charity rules not because they believe the IRS will come and arrest them the next year, but because everybody else does it and they're afraid to be the one that steps out of line.

Sean Rameswaram: He was not afraid to be the one that stepped out of line and, you know, didn't follow any of the rules.

Noel King: And it worked for a long period of time.

Sean Rameswaram: You make Donald Trump sound sort of like the guy who walks up to the take a penny, leave a penny, and then just takes all the pennies and walks out.

Noel King: It's like I just made 12 cents.

Sean Rameswaram: We've all thought about doing that, but nobody does.

Noel King: And it just, I think maybe it's emboldening. Once you do it a few times, you realize that, you know, there's a lot to be gained there.

Sean Rameswaram: David Fahrenthold covers the business of Donald Trump for The Washington Post.

Noel King: I'm Sean Rameswaram.

Sean Rameswaram: This is Today Explained.

Noel King: Irene Noguchi is our executive producer.

Sean Rameswaram: Bridget McCarthy is our editor.

Noel King: Noam Hasenfeld and Luke Vanderpult produce.

Sean Rameswaram: Afim Shapiro is our engineer.

Noel King: And the charitable Breakmaster Cylinder makes music for us.

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Noel King: Consider rating the show on Apple Podcasts or Stitcher or wherever you listen.

Sean Rameswaram: Some of you have, but most of you haven't. It helps other people discover us.

Noel King: Thank you. Thank you.