Trump inaugural committee sued for 'grossly overpaying' president's Washington hotel

The attorney general of Washington D.C. has filed a lawsuit against Donald Trump’s inaugural committee, alleging an abuse of non-profit funds that ultimately benefited the first family’s private business.

Attorney General Karl Racine said in the lawsuit that the committee was made to “grossly overpay for event space” at the Trump International Hotel in Washington during the president’s inauguration, while failing to seek out cheaper options.

Mr Trump’s inaugural committee funding has been steeped in controversy ever since it was reported to have spent over $100m (£76m) on lavish events — far more than past inaugural budgets — and more than $1m (£761,300) at the Trump hotel.

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"District law requires non-profits to use their funds for their stated public purpose, not to benefit private individuals or companies,” the attorney general said when announcing the lawsuit on Wednesday. “In this case, we are seeking to recover the nonprofit funds that were improperly funnelled directly to the Trump family business.”

Mr Trump's inaugural committee has maintained that its finances were independently audited, and that all money was spent in accordance with the law.

Shape Created with Sketch. Trump Inauguration protests around the World Show all 14 left Created with Sketch. right Created with Sketch. Shape Created with Sketch. Trump Inauguration protests around the World 1/14 Activists from Greenpeace display a message reading "Mr President, walls divide. Build Bridges!" along the Berlin wall in Berlin on January 20, 2017 to coincide with the inauguration of Donald Trump as the 45th president of the United State Getty 2/14 An activist holds up a sign at the "We Stand United" rally on the eve of US President-elect Donald Trump's inauguration outside Trump International Hotel and Tower in New York on January 19, 2017 in New York Getty 3/14 Protesters burn a U.S. flag and a mock flag with pictures of U.S. President-elect Donald Trump outside the U.S. embassy in metro Manila, Philippines Getty 4/14 Filipino protestors hold placcards during a protest rally in front of the US embassy in Manila, Philippines, 20 January 2017. On the eve of President-elect Donald Trump's inaguration as the 45th president of the United States, Filipinos and Fil-Americans held a protest in front of the US embassy in Manila to denounce the incoming US president. Getty 5/14 Hong Kong police officers and security guards look on as an anarchist protester belonging to the Disrupt J20 movement sits after using a heavy duty D-lock and motorcycle lock to chain himself to a railing at the entrance gate to the Consulate General of the United States of America in Hong Kong to protest the inauguration of United States President-elect Donald Trump, Hong Kong, China, 20 January 2017. Two activists were arrested and taken away by Hong Kong police during the demonstration. Getty 6/14 A banner is unfurled on London's Tower Bridge, organised by Bridges Not Walls - a partnership between grassroots activists and campaigners working on a range of issues, formed in the wake of Donald Trump's election, which aims to build bridges to a world free from hatred and oppression. Getty 7/14 Protesters chain themselves to an entry point prior at the inauguration of U.S. President-elect Donald Trump in Washington, DC, U.S. Getty 8/14 Bridges Not Walls banner dropped from Molenbeek bridge in Brussels, Belgium, 20 January 2017, in an Greenpeace action part of protests Wolrd protest in solidarity with people in the US, the day Donald Trump sworn in as the 45th President of the United States. Getty 9/14 A woman holds an anti-U.S. President-elect Donald Trump placard during a rally in Tokyo, Japan, Getty 10/14 A Palestinian protester holds a placard during a demonstration against the construction of Jewish settlements in the occupied West Bank and against US President-elect Donald Trump, on January 20, 2017, near the settlement of Maale Adumim, east of Jerusalem Getty 11/14 Banners on North Bridge in Edinburgh as part of the Bridges Not Walls protest against US President Donald Trump on the day of his inauguration Getty 12/14 Russian artist Vasily Slonov (L) and his assistant carry a life-sized cutout, which is an artwork created by Slonov and titled "Siberian Inauguration", before its presentation on the occasion of the inauguration of U.S. President-elect Donald Trump, in a street in Krasnoyarsk, Russia Getty 13/14 A woman holds a banner during a march to thank outgoing President Barack Obama and reject US President-elect Donald Trump before his inauguration at a park in Tokyo, Japan, 20 January 2017. EPA 14/14 Palestinian demonstrators protesting this week against a promise by Donald Trump to re-locate the US embassy to Jerusalem Reuters 1/14 Activists from Greenpeace display a message reading "Mr President, walls divide. Build Bridges!" along the Berlin wall in Berlin on January 20, 2017 to coincide with the inauguration of Donald Trump as the 45th president of the United State Getty 2/14 An activist holds up a sign at the "We Stand United" rally on the eve of US President-elect Donald Trump's inauguration outside Trump International Hotel and Tower in New York on January 19, 2017 in New York Getty 3/14 Protesters burn a U.S. flag and a mock flag with pictures of U.S. President-elect Donald Trump outside the U.S. embassy in metro Manila, Philippines Getty 4/14 Filipino protestors hold placcards during a protest rally in front of the US embassy in Manila, Philippines, 20 January 2017. On the eve of President-elect Donald Trump's inaguration as the 45th president of the United States, Filipinos and Fil-Americans held a protest in front of the US embassy in Manila to denounce the incoming US president. Getty 5/14 Hong Kong police officers and security guards look on as an anarchist protester belonging to the Disrupt J20 movement sits after using a heavy duty D-lock and motorcycle lock to chain himself to a railing at the entrance gate to the Consulate General of the United States of America in Hong Kong to protest the inauguration of United States President-elect Donald Trump, Hong Kong, China, 20 January 2017. Two activists were arrested and taken away by Hong Kong police during the demonstration. Getty 6/14 A banner is unfurled on London's Tower Bridge, organised by Bridges Not Walls - a partnership between grassroots activists and campaigners working on a range of issues, formed in the wake of Donald Trump's election, which aims to build bridges to a world free from hatred and oppression. Getty 7/14 Protesters chain themselves to an entry point prior at the inauguration of U.S. President-elect Donald Trump in Washington, DC, U.S. Getty 8/14 Bridges Not Walls banner dropped from Molenbeek bridge in Brussels, Belgium, 20 January 2017, in an Greenpeace action part of protests Wolrd protest in solidarity with people in the US, the day Donald Trump sworn in as the 45th President of the United States. Getty 9/14 A woman holds an anti-U.S. President-elect Donald Trump placard during a rally in Tokyo, Japan, Getty 10/14 A Palestinian protester holds a placard during a demonstration against the construction of Jewish settlements in the occupied West Bank and against US President-elect Donald Trump, on January 20, 2017, near the settlement of Maale Adumim, east of Jerusalem Getty 11/14 Banners on North Bridge in Edinburgh as part of the Bridges Not Walls protest against US President Donald Trump on the day of his inauguration Getty 12/14 Russian artist Vasily Slonov (L) and his assistant carry a life-sized cutout, which is an artwork created by Slonov and titled "Siberian Inauguration", before its presentation on the occasion of the inauguration of U.S. President-elect Donald Trump, in a street in Krasnoyarsk, Russia Getty 13/14 A woman holds a banner during a march to thank outgoing President Barack Obama and reject US President-elect Donald Trump before his inauguration at a park in Tokyo, Japan, 20 January 2017. EPA 14/14 Palestinian demonstrators protesting this week against a promise by Donald Trump to re-locate the US embassy to Jerusalem Reuters

The suit alleges that the committee knew it was overpaying, but didn’t consider less expensive alternatives.

Prosecutors found that Rick Gates, a former Trump campaign aide who flipped on the president during the special counsel’s Russia investigation, personally managed discussions with the hotel about using the space, including ballrooms and meeting rooms.

One of the event’s planners raised concerns about pricing with Mr Trump, Mr Gates and Ivanka Trump, according to the lawsuit. Ms Trump is the president’s daughter and a senior White House adviser.

Those concerns included a written warning that the price proposal was at least twice the market rate. But Gates went through with it anyway, at a cost of $1.03m (£763,448), the suit says.

Mr Gates pleaded guilty to charges tied to his lucrative political consulting work in Ukraine and was sentenced last month to 45 days in prison, a punishment that a judge said reflected the extensive cooperation Mr Gates had provided to the Justice Department.

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A lawyer who represented Mr Gates for the criminal proceedings didn’t immediately return a message seeking comment. The White House didn’t immediately return a message, nor did the Trump Organisation.

The suit contends that the hotel went against industry practice and refused to discount the space, and double-booked its largest ballroom with a different organisation that was still affiliated with the inauguration, the Presidential Inaugural Prayer Breakfast. Both organisations were nonprofits, but the breakfast paid $5,000 (£3,806) for the ballroom. The committee, however, paid $175,000 (£133,214), the suit claims.

Prosecutors say the committee also used nonprofit funds to throw a private party on Jan. 17, 2017, the night off the inauguration, for Mr Trump’s family — a $300,000 (£228,000) affair. The reception was for three of Trump’s children — Donald, Jr, Ivanka, and Eric.