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The Donald J. Trump Foundation will close and give away all its remaining funds under judicial supervision amid a lawsuit accusing the charity and the Trump family of using it illegally for self-dealing and political gain, the New York attorney general’s office announced Tuesday.
The attorney general, Barbara Underwood, accused the foundation of “a shocking pattern of illegality” that was “willful and repeated” and included unlawfully coordinating with Mr. Trump’s 2016 presidential campaign.
“This amounted to the Trump Foundation functioning as little more than a checkbook to serve Mr. Trump’s business and political interests,” Ms. Underwood said.
The closure of the foundation is a milestone in the investigation. But the broader lawsuit, which also seeks millions in restitution and penalties and a bar on President Trump and his three oldest children from serving on the boards of other New York charities, is proceeding.
Ms. Underwood and a lawyer for the foundation signed the stipulation agreeing to the dissolution. The foundation’s remaining assets are to be redistributed under judicial supervision.
“This is an important victory for the rule of law, making clear that there is one set of rules for everyone,” Ms. Underwood said. “We’ll continue to move our suit forward to ensure that the Trump Foundation and its directors are held to account for their clear and repeated violations of state and federal law.”
Mr. Trump had said after the 2016 election that he would dissolve the foundation to avoid any appearance of conflict of interest. But the attorney general’s office said that such a move would require its approval, given the continuing investigation.
Alan S. Futerfas, a lawyer for the foundation, characterized Ms. Underwood’s announcement as making a “misleading statement.”
“The Foundation has been seeking to dissolve and distribute its remaining assets to worthwhile charitable causes since Donald J. Trump’s victory in the 2016 presidential election,” he said. “Unfortunately, the N.Y.A.G. sought to prevent dissolution for almost two years, thereby depriving those most in need of nearly $1.7 million.
“The N.Y.A.G.’s inaccurate statement of this morning is a further attempt to politicize this matter,” he added.
Ms. Underwood’s office sued the Trump Foundation in June, charging it with “improper and extensive political activity, repeated and willful self-dealing transactions, and failure to follow basic fiduciary obligations or to implement even elementary corporate formalities required by law.”
[Want to know more about the Trump Foundation? Read this explainer.]
Nonprofit foundations are supposed to be devoted to charitable activities, but the attorney general’s office, following a two-year investigation, accused the Trump Foundation of being used to win political favor and even purchase a $10,000 portrait of Mr. Trump that was displayed at one of his golf clubs. The existence of the portrait was first reported by The Washington Post.
The lawsuit accused the foundation of virtually becoming an arm of the Trump campaign, with its campaign manager, Corey Lewandowski, directing the foundation to make disbursements in Iowa only days before the state held its presidential nominating caucuses.
“Is there any way we can make some disbursements [from the proceeds of the fund-raiser] this week while in Iowa? Specifically on Saturday,” Mr. Lewandowski wrote to the foundation’s treasurer in an email disclosed in the lawsuit.
The attorney general’s office is seeking for the Trump Foundation to pay $2.8 million in restitution, which is the amount raised for the foundation at an Iowa fund-raiser in 2016 that Mr. Trump held on the day that he avoided attending a debate with his Republican rivals. The foundation reported $1.7 million in assets in 2017 to the Internal Revenue Service.
Last month, a New York state judge ruled that the lawsuit could proceed, even as Mr. Trump’s lawyers had argued that the court did not have jurisdiction over Mr. Trump, as president, and that the statute of limitations had passed on some of the issues.
“I find I have jurisdiction over Mr. Trump,” Justice Saliann Scarpulla wrote in a 27-page ruling.
Mr. Futerfas had said in a statement then that “all of the money raised by the Foundation went to charitable causes” and that “we remain confident in the ultimate outcome of these proceedings.
“I won’t settle this case!” Mr. Trump posted on Twitter in June, accusing “the sleazy New York Democrats” of targeting him.
The foundation lawsuit follows years of scrutiny of President Trump’s charitable activities and adds to his extensive legal challenges, amid a continuing investigation by special counsel Robert S. Mueller III.