President Trump’s inaugural committee was reportedly charged a rate of $175,000 per day to use event space at the Trump International Hotel in D.C., despite internal objections at the time that the rates were almost $100,000 a day more expensive than they should have been.
A bombshell WNYC/ProPublica investigation published Friday reports that a spokesman confirmed the steep rate paid by the nonprofit inaugural committee, headed by Tom Barrack, which also reportedly spent $1.5 million at a hotel in which Barrack owns a small stake.
If the committee is deemed by auditors or prosecutors to have paid an above-market rate, that could violate tax laws prohibiting self-dealing, according to experts.
Tax law prohibits nonprofits from paying inflated prices to entities that are owned by people who also control or influence the nonprofit’s activities.
“Every legitimate nonprofit is very concerned with this,” said Doug White, a veteran adviser to tax exempt organizations, speaking generally. “You’re benefiting a private person, and you’re using the nonprofit to do it.”…
…The committee paid a total of $700,000 to the Trump International Hotel for event spaces for four days in January 2017. At the time, a consultant working for the inaugural committee expressed her concern over email that the price quoted by the Trump hotel — $175,000 per day for several event spaces — was too high, as ProPublica and WNYC reported in December.
“Please take into consideration that when this is audited it will become public knowledge,” wrote Stephanie Winston Wolkoff, an experienced New York-based event planner, suggesting a fair rate for the event spaces would be at most $85,000 per day, less than half of what was ultimately paid. That fee did not cover catering.
Ari Krupkin, a Washington, D.C.-based event planner, called the fee “more than egregious.”
“It could be a tax law violation,” Brett Kappel, an Akerman LLP attorney specializing in nonprofits told WNYC/ProPublica.
“Those emails would be of great interest to the Internal Revenue Service if they were to conduct an audit. They probably will be of great interest to the U.S. Attorney’s office in the Southern District of New York, which is investigating the inaugural committee.”
Last December, reports emerged that federal prosecutors in New York City’s Southern District were scrutinizing the inaugural committee for Trump’s festivities, investigating whether the committee misspent the $107 million in donated funds and used the event to accept straw donations from Middle Eastern countries.