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Jared Kushner and the laws governing personal profit

Whether elected or appointed, federal employees are expected to put the public's interest ahead of their own financial interests.

Legal analysis

Whether elected or appointed, federal employees are expected to put the public's interest ahead of their own financial interests.

There are laws to ensure that, but how do they work?

In 2017, a founder of a large private equity firm met with senior adviser Jared Kushner, according to The New York Times. In November, after the meeting, that firm reportedly lent $184 million to Kushner Companies to refinance the mortgage on a building in Chicago. Citigroup made a larger loan, lending the firm and one of its partners $325 million to help finance office buildings in Brooklyn. That loan came after Kushner met in the White House with Citigroup CEO Michael Corbat, The Times reported.

A spokesperson for Kushner's attorney told NBC News: "Kushner has met with hundreds of business people during the campaign, transition and in the administration to hear ideas about improving the American economy. He has had no role in the Kushner Companies since joining the government and has taken no part of any business, loans or projects with or for the companies after that. He has followed the ethics advice he has received for all of his work which include the separation from his business and recusals when appropriate."

Certain federal officials must publicly file annual statements that disclose their income, assets, debts and affiliations. These financial reporting duties are designed to lay bare financial conflicts of interest, and deter any temptation to conceal the same.

It's not necessarily a crime for an executive branch official to have business relationships, stocks, property or financial interests in the United States or abroad. Nor is it inherently criminal to have a potential conflict between those financial interests and the public interest.

The federal conflict of interest law is violated when an executive branch employee participates personally and substantially in a particular matter knowing that he (or someone close to him) has a financial interest.

The Supreme Court has long indicated that conflict of interest laws target participation that objectively arouses suspicion, and do not require the government to prove specific corrupt intent. The financial interest is the mere possibility of gain or loss, and not the asset or interest itself. Section 208 is designed to be broad in scope.

On the other hand, the statute requires a specific showing beyond the existence of financial interests. Merely having a vast business empire, including debts, investments, credit default swaps or other interests does not automatically criminalize Kushner's presence in the White House.

The investigators will look at his participation in particular matters, and whether those matters affect his business interests. If he did participate, that participation must be personal and substantial, and he must know his participation would have a direct and predictable effect on those interests.

The possibility of a benefit or detriment must be real, not speculative. Of course, there must be limits on what kind of "particular matter" an interested official is barred from participation in. Kushner could hypothetically participate in the consideration of broad policy options that affect a large and diverse group, even if those might also ultimately affect his interests.

The Office of Government Ethics has used as examples of benign matters health and safety regulations applicable to all employers, or comprehensive legislative proposal for health care reform. If an executive branch official has interests in the health care industry, he might still be able to participate in these matters. On the other hand, if a real estate tycoon like Kushner advocates the interests of a discrete and identifiable class of persons, like his own New York real estate holdings, then he might run afoul of Section 208.

Section 208 is not a crime of financial interest, it's a crime of participation. But that participation requirement is easy to satisfy when your holdings are vast, and your executive branch assignments are expansive and nebulous: An executive branch employee could run afoul of Section 208 without even specifically intending to violate federal law.

Danny Cevallos is an MSNBC legal analyst. Follow @CevallosLaw on Twitter.