‘They broke the law’: What you need to know about the Ivanka - Trump hotel inauguration lawsuit

Questions about the legality of Trump profiting from hotels and resorts have overshadowed his presidency – and authorities are now taking action

Ivanka Trump was indignant this week when it emerged she had been deposed in a lawsuit brought against one of her father’s hotels for allegedly overcharging his presidential inauguration committee when it reserved event space in January 2017.

The case, which has been brought by authorities in the District of Columbia, specifically accuses the 58th Presidential Inaugural Committee – created to arrange events around Donald Trump’s swearing-in – of illegally wasting nonprofit funds by “grossly overpaying” the Trump hotel and organisation for event space.

Citing emails between various members of the organisations involved at the time, the case claims that the committee was overcharged by hundreds of thousands of dollars compared to the hotel’s usual pricing guidelines – and that the inaugural committee ultimately paid the Trump Hotel “at least $1,033,757” for the events it held there during inauguration week. For this, it holds the committee, the hotel, and the Trump Organisation legally responsible.

Calling the suit “a politically motivated demonstration of vindictiveness & waste of taxpayer dollars”, Ms Trump on Thursday tweeted a screenshot of an email she sent in December 2016 along with a statement.

“I spent 5+ hours in a deposition with the Democratic D.C. AG’s office,” she wrote, “where they questioned the rates charged by the Trump Hotel at the inauguration. I shared with them an email from 4 years ago where I sent instructions to the hotel to charge ‘a fair market rate’ (see below) which the hotel then did.”

The District of Columbia’s attorney general, Karl Racine, fired back at Ms Trump that same evening over her insistence that nothing untoward went on with the hire.

“With all due respect to Ivanka Trump,” he told MSNBC’s Rachel Maddow, “what she put out today was highly misleading and at best only a part of the story.”

Referring to the email she shared, he challenged her for pointing to the email calling for a “market rate” and not subsequent emails from other people involved that specifically raised the alarm about high prices. He went on to describe just how much the inauguration committee was ultimately charged.

“If I could give you one example that I think really tells you exactly what was going on: on one of the days of the inaugural committee, it paid $175,000 for full use of the hotel’s event space, including use of a large ballroom for a half-day, which was double-booked by a different not-for-profit – the Presidential Inaugural Prayer Breakfast not-for-profit.

“That not-for-profit paid $5,000 for that same ballroom. $175,000 charged to the inauguration committee for that ballroom, $5,000 to another not-for-profit. Doesn’t sound like market rate to me.”

This is the discrepancy on which the case rests. Detailing extended exchanges between various players at the committee and the hotel – among them Rick Gates, a Trump campaign adviser sentenced to jail in 2019 after Robert Mueller’s Russia investigation – the attorney general lays out what he says is a situation where the committee and hotel “knew, and continue to know” that the charges “were unreasonable and for prohibited private purposes”.

Spelling out several occasions on which it claims concerns about high costs were shared with Ms Trump herself – and one on which the then-president-elect allegedly “directed that Ivanka Trump would handle this issue” – it also alleges that the Trump hotel persuaded the committee not to cancel the event after staff became uncomfortable with the high price and potential perceived conflict of interests that the it entailed.

The legal problem about high pricing stems from the presidential inauguration committee’s status as a nonprofit. As the case says, because of this status, it was “prohibited from allowing its funds to be spent in any way that was generally wasteful or violated the prohibition on private inurement”.

Ultimately, the District asks that the Trump Hotel and Trump Organisation give up the amount the committee paid so that it can be “restored to a proper public purpose” – that is, given to “another nonprofit entity dedicated to promoting civic engagement of the citizens of the United States of America”, as the inauguration committee was nominally meant to be.

The Trump Hotel on Pennsylvania Avenue has been a running controversy for the whole of the Trump presidency, with critics of the administration arguing that foreign delegations keen to curry favour with the president stay there as a way of funnelling money his way – potentially violating the US Constitution’s emoluments clause.