There has been a lot of discussion whether there was any quid pro quo associated with donations to the Clinton Family Foundation while Hillary Clinton was Secretary of State. The Merriam-Webster Dictionary defines the term as “something that is given to you or done for you in return for something you have given to or done for someone else.”
To date, there is no evidence the State Department granted any value that would not have otherwise been available to the donor. In some cases, a donor’s request was denied based on the substance of the inquiry and departmental policy. At best, a donor’s contribution may have increased the probability the department would consider the request. If one stretches the definition of quid pro quo to include this kind of access or consideration, every politician and businessperson in America is technically guilt of similar transgressions. Every loyalty program offered by airlines and hotels is a quid pro quo.
The American justice system would be inundated with nuisance law suits if the exchange of value was broadly defined as questionable political or commercial behavior. Perhaps this is why the Supreme Court unanimously overturned former Virginia Governor Bob McDonnell’s corruption conviction earlier this year. Chief Justice John Roberts wrote the decision which included the following:
Officials might wonder whether they could respond to even the most commonplace requests for assistance, and citizens with legitimate concerns might shrink from participating in democratic discourse.
So how do we distinguish between preferential treatment in the course of doing business versus potentially criminal behavior associated with the exchange of goods and services? One red flag might be whether there is another violation of laws or regulations by the individual who initiates the exchange. This is where Donald Trump enters the discussion.
Consider the following.
- Since 2008, more than 20 individuals previously enrolled in Trump University in Florida filed suit alleging fraud totaling over $500,000 in payments to the unaccredited entity.
- In 2010, Pam Bondi was elected State Attorney General in Florida.
- In 2013, Bondi announced she was considering joining the New York attorney general’s class action suit against Trump University.
- Three days later, Trump’s charitable foundation made a $25,000 donation to Bondi’s re-election campaign. NOTE: The IRS charged the foundation with several violations including illegal political activity and failure to report the donation. The Trump foundation was fined $2,500 for violations of Section 501(c)(3) of the IRS code which governs charitable foundations.
- Following the donation, Attorney General Bondi declined to pursue charges against the Trump Institute, a Florida affiliate of Trump University.
- A follow-up report in the Washington Post revealed the foundation listed the $25,000 as a donation to a non-existent non-profit in Kansas.
- The Trump foundation attributed the donation to a clerical error and paid the fine. Bondi’s campaign treasurer claimed he had unsuccessfully tried to return the donation.
You might be asking, “Shouldn’t you have titled this post ‘A REAL Case of Quid Pro Quo’?” No, and here is why! Based on a 2016 survey of 391 lawyers, class action defense attorney Carlton Fields reported a routine class action suit costs the defendant an average of $8.5 million in legal fees. As the complexity of the class action increases, legal costs can exceed $1.0 billion. Including the IRS fine, avoiding a Florida class action suit cost the Trump Foundation a total of $27,500. Taking the lowest cost of a class action defense in the Fields survey ($300,000), this represents a 1091 percent return on investment in three days.
There is one other consideration. Although Trump started the foundation with royalties from The Art of the Deal, it has been reported he has not made additional contributions from personal resources for several years. Therefore, the illegal contribution and fine were paid with other people’s money. In other words, Trump’s personal return of investment is actually infinite (potential legal defense fees divided by ZERO).
I wonder if this episode will appear in the next edition of The Art of the Deal.
UPDATE: After being exposed, Trump paid the fine out of personal funds and reimbursed his foundation for the $25,000 illegal contribution. One more example of Trump settling without admitting he did anything wrong and blaming staff for a clerical error.
For what it’s worth.
Dr. ESP