The District of Columbia filed suit against President Donald Trump's inaugural committee and the Trump Organization on Wednesday, charging they misused non-profit funds to enrich the president's family business.
The president's inaugural committee was aware it was being vastly overcharged for services at Trump's Washington, D.C., hotel in 2017, and still shelled out over $1 million at the hotel, including cash for a private party for the Trump's three older children, the lawsuit by Washington, D.C., Attorney General Karl Racine charges.
"District law requires nonprofits to use their funds for their stated public purpose, not to benefit private individuals or companies," Racine said.
The suit cites emails from inauguration event planner Stephanie Winston Wolkoff and Rick Gates, the former deputy chairman of Trump's campaign, warning the inaugural committee that it was being grossly overcharged.
The hotel initially told the committee it would cost $3.6 million to use all event space at the hotel for eight days, including minimum food and beverage charges, the suit says. "This amounted to $450,000 per day for the space" which was "significantly more than the Trump Hotel's internal pricing guidelines for use of this event space," the filing says.
Gates, who was sentenced to jail for tax evasion last year, emailed Ivanka Trump telling her he and Winston Wolkoff had "concerns" about the price. "First, the cost itself seems quite high compared to other property. Second, I am a bit worried about the optics of PIC (the presidential inaugural committee) paying Trump Hotel a high fee and the media making a big story out of it," he wrote.
The attorney general obtained the emails as part of its investigation into the inaugural committee.
Winston Wolkoff met with Trump and his daughter about the high price. "The President-elect acknowledged these concerns and directed that Ivanka Trump would handle this issue," the suit says.
Gates and the hotel worked out a revised deal for close to $1 million over four days, which included paying for event spaces at the hotel on dates there were no events planned, the suit says.
Winston Wolkoff again raised a red flag, noting one of the events the committee was paying for was a private party "for family and close friends," and that in her experience, the maximum the hotel should be charging was $85,000 a day.
The committee wound up spending at least $300,000 on the reception for the Trump children. Gates had told Ivanka Trump in an email her father would not be attending and the party "was more for you, Don and Eric.”
A spokesperson for Trump Hotels called the suit a "PR stunt" in a statement.
"The AG’s claims are false, intentionally misleading and riddled with inaccuracies. The rates charged by the hotel were completely in line with what anyone else would have been charged for an unprecedented event of this enormous magnitude and were reflective of the fact that the hotel had just recently opened, possessed superior facilities and was centrally located," the statement said.
Alan Garten, a lawyer for the Trump Organization, said the company will vigorously defend against the suit, which he said was filled with errors. He said a hotel can negotiate whatever rate it wants to for event spaces, and there are no pricing guidelines for an event like an inauguration.
"It's all part of a negotiation," Garten said.
A spokesman for Tom Barrack, who led the Inaugural Committee, has defended the committee's work on the inauguration. The committee raised a record $107 million to host events celebrating the inauguration. The spokesman, Tommy Davis, declined to comment on the suit.
Winston Wolkoff, a former close friend of and adviser to Melania Trump who was subpoenaed in the A.G.'s investigation and a federal probe into the committee's spending, declined to comment.
The suit seeks to recover the nonprofit funds the A.G. says was "were improperly funneled directly to the Trump family business." The cash would then be directed to "suitable nonprofit entities dedicated to promoting civic engagement," the A.G.'s office said.
The House Intelligence Committee and Manhattan U.S. attorney's office have also interviewed witnesses about inaugural committee spending.
A spokesman for the inaugural committee did not immediately respond to a request for comment.