## Facts

- The New York Attorney General (plaintiff) brought a special proceeding against The Donald J. Trump Foundation (the foundation) and its directors, including Donald J. Trump and several family members (defendants).
- The foundation was incorporated in New York as a private, nonprofit, charitable, tax-exempt corporation and had no employees.
- The foundation’s day-to-day operations were delegated entirely to employees of a related for-profit business enterprise associated with Donald Trump, which also managed numerous for-profit entities.
- Although the foundation had a board of directors, the directors allegedly did not meet and provided no oversight for approximately 19 years.
- Without board meetings and oversight, the foundation lacked basic governance controls and did not have stated policies or procedures, including protective measures required by New York law.
- In this environment, the Attorney General alleged (and defendants stipulated as accurate for purposes of relief) that foundation assets were used for unlawful, non-charitable purposes, including:
  - Paying debts or obligations of other for-profit entities tied to Donald Trump’s business operations;
  - Paying personal expenses incurred by Donald Trump and his family members;
  - Supporting political activity, including activity connected to Donald Trump’s 2016 presidential campaign and a $25,000 expenditure tied to Pamela Bondi’s 2013 campaign for Florida attorney general.
- A major focus of the requested monetary relief concerned donations raised in the foundation’s name for veterans’ charities in connection with a January 2016 fundraiser. The Attorney General alleged that the campaign, not the foundation, controlled the donations and directed the timing and manner of grants to veterans’ charities to serve campaign-related objectives, including public credit for donations that were actually made by the public.
- The Attorney General sought judicial dissolution of the foundation and monetary relief against the directors for breaches of fiduciary duty and waste.
- The foundation and the individual defendants stipulated that the Attorney General’s factual allegations were accurate, and—at the court’s request—the parties negotiated a settlement framework providing for dissolution and additional remedies.
- The court considered whether to approve and implement the proposed settlement and what final monetary and non-monetary relief to order based on the stipulated misconduct.

## Issues

1. Whether, given the stipulated misuse of charitable assets and lack of board oversight, judicial dissolution of the foundation under New York not-for-profit law was an appropriate remedy.
2. Whether the court should order restitution and reimbursement payments based on the foundation’s use of charitable funds for non-charitable, including political, purposes—particularly the handling of $2.8 million raised for veterans’ charities.
3. Whether remedial conditions, including in-person fiduciary-duty training and restrictions relating to future service with New York charitable organizations, were warranted to address the governance failures.

## Decision

- The court approved and ordered judicial dissolution of The Donald J. Trump Foundation and supervised the wind-up and distribution of its remaining assets.
- The court directed that the foundation’s remaining assets be distributed to specified charitable recipients as part of the dissolution plan.
- The court ordered Donald J. Trump to reimburse the foundation $11,545 for misused foundation funds (which the settlement framework required him to repay).
- The court ordered Donald J. Trump to pay $2.8 million in restitution, to be distributed to charitable organizations, based on misuse of donations raised in the foundation’s name for veterans’ charities in connection with the 2016 fundraiser.
- The court required the individual defendants to attend in-person training on fiduciary duties as a condition related to future service as directors of New York charitable entities.

## Legal Principles

- The New York Attorney General has statutory authority to supervise charitable assets and enforce fiduciary obligations of charitable fiduciaries, including seeking dissolution and monetary relief for misuse of charitable property.
- Directors of New York not-for-profit corporations owe fiduciary duties of care and loyalty and must exercise active oversight; long-term failure to meet or implement basic governance controls can constitute a serious breach.
- Charitable assets must be used for lawful charitable purposes; using a charity’s funds for private benefit, business obligations of insiders, or political activity can support restitution, reimbursement, and court-ordered governance remedies.
- Judicial dissolution under New York not-for-profit law is available where a charitable corporation’s administration and conduct show persistent misuse of assets or inability to operate consistent with its charitable mission.
- Courts may order remedial measures—such as training and conditions on future charitable service—when necessary to address proven governance failures and protect charitable assets.

## Conclusion

In *New York v. Trump*, the court resolved the Attorney General’s enforcement proceeding through a court-approved dissolution of The Donald J. Trump Foundation, supervised charitable distributions, and ordered monetary relief and governance remedies after defendants stipulated that the foundation operated without board oversight for years and used charitable funds for non-charitable purposes, including political activity and other expenditures benefitting private interests.


New York v. Trump, Index No. 451130 (2019)