Probe of Trump's charity could crash 'like a Mack Truck' into his real estate empire

"There seems to be entanglements in terms of people and probably in terms of money," said Mimi Rocah, a former federal prosecutor and NBC News/MSNBC legal analyst.
Then President-elect Donald Trump stands with his children Eric, left, Ivanka and Donald Jr. at Trump Tower in New York on Jan. 11, 2017.
Then President-elect Donald Trump stands with his children Eric, left, Ivanka and Donald Jr. at Trump Tower in New York on Jan. 11, 2017.Timothy A. Clary / AFP - Getty Images file

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By Allan Smith

The Trump Foundation and the Trump Organization shared much more than President Donald Trump's last name.

And that's why, experts said, the New York state investigations into the charity could envelop the president's namesake business.

"Nothing but overlap here. It all was held so tightly by he and his family members," NBC News/MSNBC legal analyst Glenn Kirschner, a former federal prosecutor, told NBC News.

"I don't think there will be any investigative daylight between what the New York state authorities and investigators are looking into with respect to the foundation vs. the organization vs. anything else involving business dealings that have the name 'Trump' attached to them," he said, predicting that the foundation investigation will "crash through (the Trump Organization) like a Mack Truck."

The office of New York Attorney General Barbara Underwood announced last week that the foundation — which Underwood said had exhibited a "shocking pattern" of illegality — agreed to dissolve and give away its assets to other nonprofit organizations within 30 days.

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The deal won't stop the civil lawsuit that Underwood filed in June against the foundation, which was formed in 1987. The AG's office continues to seek nearly $3 million in restitution plus additional fines as part of the suit, as well as a ban on Trump's leading a New York nonprofit for the next decade and placing one-year bans on the charity's other board members, which include the president's adult children.

Daniel Goldman, a former federal prosecutor and NBC News/MSNBC legal analyst, said that because some of the same people alleged by the state attorney general of persistent illegal activity in running the charity are also involved with the president's business, there is reasonable justification in broadening the investigation.

"It is likely that the investigation into the Trump Foundation has sufficiently overlapped with the Trump Organization that (state) investigators would be justified in extending their investigation into the Trump Organization," he said.

The foundation itself had no employees, instead relying on Trump Organization staffers to cut its checks. Prior to taking office in 2017, Trump turned over day-to-day control of his business to his adult sons, Donald Trump Jr. and Eric Trump, and Allen Weisselberg, the Trump Organization's chief financial officer. Both sons were among the charity's board members, while Weisselberg was listed as its treasurer. Weisselberg claimed not to know he was the foundation's treasurer until investigators probing the charity told him.

"There seems to be entanglements in terms of people and probably in terms of money, that's where businesses, frankly, do really start to get in trouble in terms of violating tax laws and regular criminal laws," said Mimi Rocah, a former federal prosecutor and NBC News/MSNBC legal analyst.

The Trump Organization's attorney, Alan Futerfas, said in a statement to NBC News that his clients wanted to dissolve the foundation and that it was a "successful charity, distributing approximately $19 million, including $8.25 million of Trump's personal money, to over 700 different charitable organizations with virtually zero expenses."

Futerfas also accused state prosecutors of playing politics, as did Trump himself in his response to the agreement, which came in the form of a string of tweets slamming Underwood, her predecessor Eric Schneiderman, who resigned earlier this year amid allegations of abusing women, and Attorney Gen.-elect Letitia James.

In the background of the more public-facing attorney general's investigation into the Trump Foundation is an investigation that the state Department of Taxation and Finance is conducting into the charity. While the AG has brought a civil lawsuit, the state tax investigators have the ability to issue a criminal referral.

Such a criminal inquiry could go far beyond the scope of that lawsuit and dip into the president's and his family's tax information. Already, those investigators issued a subpoena to Trump's former longtime lawyer Michael Cohen, who served as a top Trump Organization executive, for documents linked to the foundation. Cohen was sentenced this month to three years in federal prison after pleading guilty to nine federal counts.

Amy Spitalnick, communications director for the state attorney general's office, declined to comment on whether the office received a criminal referral as a result of the tax investigators probe. Representatives for New York Gov. Andrew Cuomo and the state Department of Taxation and Finance did not return requests for comment.

"The intermingling of Trump Foundation and Trump Organization interests and expenditures will implicate both — that's one part of why it's a tax fraud problem," Jed Shugerman, a Fordham law professor who advised unsuccessful Democratic New York attorney general candidate Zephyr Teachout this year, told NBC News. "They were using the Trump Foundation for the business purposes of the Trump Organization. That's the easiest case."

Adding to the fray is James, who before taking office next month, told NBC News in a recent interview that she plans to use "every area of the law to investigate President Trump and his business transactions and that of his family as well."