WASHINGTON May 1 U.S. President Donald Trump is
flirting with unparalleled violations of the Constitution by not
divesting himself from a hotel management company that benefits
financially from public pension fund investments, according to
two Democratic U.S. senators.
Reuters exclusively reported on April 26 that public pension
funds in at least seven U.S. states periodically send millions
of dollars to an investment fund that owns the Trump SoHo Hotel
and Condominium in New York City and pays one of Trump's
companies to run it, according to a Reuters review of public
The investments could put Trump at risk of violating an
obscure constitutional clause that prohibits the president from
receiving additional payments beyond his salary from state
governments, say several constitutional lawyers. A separate
constitutional clause bars the president from receiving payments
from foreign governments.
Trump is “setting an extremely dangerous precedent,” said
Ben Cardin, the top Democrat on the Senate Foreign Relations
Committee, on Friday. Senator Richard Blumenthal of Connecticut
expressed similar concerns.
The White House and the Trump Organization did not respond
to calls and emails asking for comment.
At a January news conference where Trump said he would turn
over management of his companies to a trust controlled by his
two elder sons, his lawyer, Sheri Dillon, announced that he
would donate all profits from foreign government payments made
to his hotel to the U.S. Treasury. Dillon said Trump was taking
this step even though the Constitution did not require it.
Trump still earns revenue from the hotel management company
and the other businesses in the Trump Organization. Reuters
asked five Republican lawmakers to comment on the public
investments in the owner of the Trump-operated hotel, but none
Cardin introduced a resolution in March calling on Trump to
convert his assets to "conflict-free holdings," turn over
control of his businesses to trustees with no relationship to
him, or take some other measure to avoid violating the
That resolution focused on payments from foreign
governments, but Cardin said the flow of public U.S. money to
Trump from pension funds was also “disturbing” and “reduced
confidence that President Trump is acting in the public
Blumenthal, who is leading efforts among Senate Democrats to
hold Trump accountable for payments he receives from foreign and
domestic governments, said the public pension fund investments
are “near the top, if not at the top” of the potential domestic
violations he knows about.
Blumenthal added that Trump could “easily cure” the problem
by divesting. Dillon said at the January conference that if
Trump sold his brand he would still be entitled to royalties for
its use, and so divesting would "exacerbate" potential conflicts
The Trump SoHo is owned by a Los Angeles investment group,
the CIM Group, through one of its real estate funds. State- and
city-run pension funds that have invested in the CIM fund pay it
a few million dollars in quarterly fees to manage investments in
its portfolio, which includes the Trump SoHo, according to state
In return for marketing and managing the hotel-condo, CIM
pays Trump International Hotels Management LLC 5.75 percent of
the SoHo's operating revenues annually.
One of the public pension fund managers that invested in the
owner of the Trump SoHo, the Montana Board of Investments, said
Trump should answer any constitutional concerns about the
Since the public pension funds made the investments a decade
ago, “Mr. Trump’s circumstances obviously have changed: our
position is that he or other parties, but not the Board, are
rightfully those to address such concerns,” said David Ewer, the
board’s executive director, in an email to Reuters.
Randi Weingarten, president of the 1.6 million-member
American Federation of Teachers, which regularly meets with
pension trustees to advise them of investment strategies, said
that Trump should “divest from his web of financial ties that
undermine his sworn oath to serve the American people.” AFT
endorsed Trump's opponent, Hillary Clinton, in the presidential
Some retirees were not pleased that their retirement plans
were helping to enrich Trump, even marginally.
“I thought there had to be some arm’s length thing that
keeps our investments out of the president’s businesses,” said
Susan Kraics, 70, a former social worker for a California
juvenile prison system who receives her pension from the
California Public Employees’ Retirement System, the nation’s
biggest pension fund.
(Editing by Jason Szep and Lisa Shumaker)