Trump fails to end New York lawsuit over his charity

[November 26, 2018]  By Jonathan Stempel

NEW YORK (Reuters) - A New York state judge rejected U.S. President Donald Trump's request to dismiss a lawsuit in which New York's attorney general accused him of misusing his namesake foundation to advance his 2016 presidential campaign and his businesses.

The decision issued Friday by Justice Saliann Scarpulla of the state supreme court in Manhattan is a rebuke to the Republican president, whose lawyer had accused Attorney General Barbara Underwood, a Democrat, of "pervasive bias" for suing.

Scarpulla said the U.S. Constitution did not immunize Trump from the lawsuit, and Underwood could pursue claims alleging breach of fiduciary duty, improper self-dealing, and misuse of assets belonging to the Donald J. Trump Foundation.

Underwood sued Trump and his adult children Donald Jr., Eric and Ivanka on June 14, after a 21-month probe that she said uncovered "extensive unlawful political coordination" between the foundation and Trump's campaign.

The White House was not immediately available for comment. Alan Futerfas, a lawyer for the defendants, said the decision meant only that the case would go forward.

"As we have maintained throughout, all of the money raised by the Foundation went to charitable causes to assist those most in need. As a result, we remain confident in the ultimate outcome of these proceedings," Futerfas said in an email.

The lawsuit alleged, among other things, that Trump wrongly ceded control to his campaign of about $2.8 million donated to the foundation in a 2016 Iowa fundraiser for military veterans.

Other challenged expenses included $100,000 to settle a dispute involving Trump's Mar-a-Lago resort, and $10,000 for a portrait of Trump that was later hung at one of his golf clubs.

In her 27-page decision, Scarpulla called New York's lawsuit "replete" with allegations that foundation funds were misused, including at Trump's direction.

She also said the state sufficiently alleged that Trump's actions were willful and intentional, citing allegations that he and his campaign arranged for the foundation to cut checks, helping generate "vote-getting publicity that Mr. Trump would have otherwise paid for himself."

President Donald Trump takes questions from the media after speaking via teleconference with troops from Mar-a-Lago estate in Palm Beach, Florida, U.S., November 22, 2018. REUTERS/Eric Thayer

The defendants have been trying to dissolve the foundation, and for this reason Scarpulla refused to issue an injunction barring the Trumps from running it.

Underwood welcomed Scarpulla's decision.

"The Trump Foundation functioned as little more than a checkbook to serve Mr. Trump's business and political interests," Underwood said in a statement. "There are rules that govern private foundations - and we intend to enforce them."

New York's lawsuit sought to dissolve the foundation, recoup $2.8 million and ban the Trumps from leadership roles at charities.

Trump faces many investigations, and many lawsuits by Democratic-led or Democratic-leaning states including New York.

He has used Twitter to call Underwood's lawsuit a concoction by "sleazy New York Democrats," and pledged not to settle.

The case is New York v Trump et al, New York State Supreme Court, New York County, No. 451130/2018.

(Reporting by Jonathan Stempel in New York; Additional reporting by Susan Heavey in Washington, D.C.; Editing by James Dalgleish and Tom Brown)

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