Reuters International

Republican presidential nominee Donald Trump answers questions from veterans as he appears at the "Retired American Warriors" conference during a campaign stop in Herndon, Virginia, U.S., October 3, 2016. REUTERS/Mike Segar


By James Oliphant and Emily Stephenson

WASHINGTON (Reuters) - New York's attorney general ordered Republican presidential candidate Donald Trump's charitable foundation to immediately stop fundraising in the state, warning that a failure to do so would be a "continuing fraud."

For Trump, the cease-and-desist order was the latest in a series of blows that has sent his campaign reeling. The New York businessman and his aides spent much of the weekend pushing back against suggestions that he may not have paid U.S. federal income taxes for almost 20 years.

New York Attorney General Eric Schneiderman's office said the Donald J. Trump Foundation was violating a state law requiring charitable organizations that solicit outside donations to register with the office's Charities Bureau.

The order followed a series of reports in The Washington Post that suggested improprieties by the foundation, including using its funds to settle legal disputes involving Trump businesses.

"The failure immediately to discontinue solicitation and to file information and reports required under Article 7-A with the Charities Bureau shall be deemed to be a continuing fraud upon the people of the state of New York," according to a letter dated on Friday that the office posted online on Monday.

Trump's campaign has suggested that the probe launched by Schneiderman, a Democrat, was politically motivated.

While again putting Trump's campaign on the defensive, the order could also undercut his efforts to make the Clinton Foundation, the family charity of Democratic presidential rival Hillary Clinton, a primary target in his campaign against her.

Trump has sought to paint the Clinton Foundation as a "pay-to-play" operation under which the former secretary of state and her husband, former President Bill Clinton, rewarded big donors to the foundation with access.

The scrutiny of the Trump Foundation came as the Republican candidate was dealing with a torrent of bad news, including his shaky performance in first debate with Clinton on Sept. 26 and the release by the New York Times of tax records that showed Trump taking an almost $1 billion loss in 1995 that may have allowed him to avoid paying federal income taxes for up to 18 years.

In its series on the Trump Foundation, The Washington Post reported that Trump may have violated U.S. Internal Revenue Service rules against “self-dealing” by using foundation money to purchase two portraits of himself, which were then hung at his private golf clubs in New York and Florida.

The newspaper also said that Trump may have improperly used the foundation to settle legal disputes, including one at the his Palm Beach, Florida estate; diverted income from his business to the charity to avoid paying income tax; and donated foundation money to support Florida Attorney General Pam Bondi, a Republican, who was considering launching an investigation into Trump University, Trump’s for-profit education venture. The foundation ended up paying a $2,500 fine to the IRS for that donation.

In response to the Post's reporting, Schneiderman's office began a probe into the Trump Foundation.

The Trump campaign said in a statement on Monday that the charity would cooperate with the investigation.

"While we remain very concerned about the political motives behind AG Schneiderman’s investigation, the Trump Foundation nevertheless intends to cooperate fully with the investigation," said Trump campaign spokeswoman Hope Hicks.

"Because this is an ongoing legal matter, the Trump Foundation will not comment further at this time,” she added.

The New York Attorney General’s Office is the sole regulator of charities in the state. A spokesman for the office said it is not unusual for the regulator to send notices to charities whose filings are overdue or incomplete, but a cease-and-desist letter is more serious.

While letters such as the one the Trump Foundation, which is based in Woodbury, New York, on Long Island, received are not judgements of wrongdoing, they are sent only after the office gets “a clear indication of wrongdoing,” the spokesman said.

Trump established the charitable foundation in 1988, but it runs no programs of its own. Instead, it donates money to other nonprofit groups such as the Police Athletic League for youths. Once the foundation began soliciting money from other donors beyond the Trump family, it was required by New York law to register with the state.

It is a radically different vehicle than the New York City-based Clinton Foundation, which has a $354 million in assets and almost 500 staffers. It has worked to reduce the cost of drugs for people with HIV in developing countries, eradicate childhood obesity in the United States and reduce greenhouse gas emissions, among other things.

Trump has accused Clinton of being corrupted by donors to the Clinton Foundation while she was U.S. secretary of state from 2009 to 2013. Clinton has dismissed Trump’s allegation as a political smear.

There has been no evidence that foreign donors to the foundation obtained favours from the State Department while Clinton headed the agency. While some donors were able to obtain meetings with her or senior State Department officials, sometimes with the help of senior Clinton Foundation officials, Clinton has said the fact that they had donated to the foundation did not play a role in her decision to meet with them.

However, the foundation did not, as promised in an ethics agreement signed by Clinton in order to become secretary of state, annually disclose the names of all its donors nor seek prior approval from the State Department for new donations by foreign governments.

GuideStar, an information service for nonprofits, recently provided side-by-side analyses of both foundations. It awarded the Clinton Foundation its highest marks for transparency, saying the organization had provided reams of data about the efficacy of its global programs.

The Trump Foundation, it said, had not provided enough information for GuideStar to evaluate its effectiveness.

In addition, Charity Navigator, a nonprofit rating service, had given the Clinton Foundation a four-star rating, its highest, for its transparency and financial accountability.

It gave no rating for the Trump Foundation because, the service said, it is a family-focused entity.

(Additional reporting by Emily Flitter; Editing by Caren Bohan and Jonathan Oatis)


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