President Trump has yet another federal investigation to worry about.
Prosecutors in the US Attorney’s Office for the Southern District of New York (SDNY) are looking into the president’s inaugural committee, the Wall Street Journal’s Rebecca Davis O’Brien, Rebecca Ballhaus, and Aruna Viswanatha reported Thursday.
Investigators are said to be interested in the inaugural committee’s spending, and into potential corruption involving favors for its donors. The Journal team reports that the criminal probe stems at least in part from material found during the FBI’s raids on Michael Cohen’s residence and office in April.
Even before this, multiple outlets reported earlier this year that special counsel Robert Mueller was investigating potential Russia-tied donations to the inaugural committee. But this news is the first confirmation of a broader probe into the inauguration and its money.
The news shouldn’t come as a surprise. There have long been many glaring questions about the money behind Trump’s inauguration and where, exactly, it went.
In a report for ProPublica and WNYC by Ilya Marritz earlier this year, the chair of George W. Bush’s second inauguration, Greg Jenkins, said he was baffled. “They had a third of the staff and a quarter of the events and they raise at least twice as much as we did,” he said. “So there’s the obvious question: Where did it go? I don’t know.”
Tom Barrack planned Trump’s inauguration — with Rick Gates’s help
After Donald Trump unexpectedly won the 2016 presidential election, he was tasked with setting up an inauguration that would be worthy of his name and opulent reputation. The swearing-in event itself and the surrounding security and logistics are paid for by the federal government. But all the big parties and events before and after the swearing-in — the concert on the National Mall beforehand, dinners and events for elite supporters, and the balls on inauguration night — Trump would have to find the cash for himself.
So he’d need money — a lot of money. It’s not unusual for presidents to raise money for this purpose. Most recently, Obama raised about $53 million for his first inauguration and $43 million for his second. Trump decided to follow suit. Rather than fund the inauguration himself, the wealthiest president-elect ever decided to follow his predecessors’ lead and raise the cash from billionaires, wealthy financiers, and corporations.
So a week after the election, Trump named a murderers’ row of uberrich Republicans as “finance vice chairs” for the event. They included casino billionaires Sheldon Adelson and Steve Wynn (the latter of whom was later accused of sexually abusing employees), defense contractor Elliott Broidy (later involved in hush money payments to a Playboy model), and Anthony Scaramucci (later White House communications director for 10 days before resigning over an obscene interview with the New Yorker).
The man in charge of it all, as chair of the inaugural committee, was Tom Barrack. He’s a billionaire real estate investor who’s been a close friend of Trump’s for decades, and his business interests have recently been concentrated in Saudi Arabia, the United Arab Emirates, and Qatar. (The Washington Post’s Michael Kranish and the New York Times’s David Kirkpatrick have both written excellent profiles of him.) His goal, he said, was for the inauguration to have a “soft sensuality” and a “poetic cadence.”
To help with the planning and fundraising, Barrack turned to a Trump campaign aide: Rick Gates, the longtime right-hand man to Paul Manafort. (Barrack had known Manafort since the 1970s and helped convince Trump to bring him on to the campaign.)
Even at the time, the choice raised eyebrows since Manafort had been ousted from the campaign after scandal-laden stories about his work for pro-Russia politicians in Ukraine. But according to a November 2016 report by Michael Isikoff of Yahoo News, Gates became instrumental in fundraising and planning. Isikoff quoted a source calling Gates the “shadow” chair of the inauguration and Barrack’s “chief deputy.”
(Manafort and Gates have both since agreed to plea deals with special counsel Robert Mueller. Both men agreed to cooperate with government investigators, but Mueller’s team concluded that Manafort breached that agreement by lying to them.)
Trump’s inauguration raised an incredible amount of money
In the end, the inauguration crowd wasn’t exactly the largest in history — but the inaugural fundraising certainly was. Barrack, Gates, and the team raked in more than $106 million, an astonishing sum that doubled the previous record (set by Obama in 2009).
The more you gave, the more exclusive events you got access to. Among other perks, it took $1 million to get you into the “Leadership Luncheon” at Trump’s hotel, $500,000 for a dinner with Vice President-elect Mike Pence, and $250,000 for a candlelight dinner at Union Station with the Trumps and Pences, according to a document obtained by the Center for Public Integrity’s Carrie Levine.
You can read through the full donor list at OpenSecrets.org, but among those willing to fork over such sums were:
- Finance industry big shots: Robert Mercer (whom the New Yorker later dubbed “the reclusive hedge-fund tycoon behind the Trump presidency”), Paul Singer (another hedge fund billionaire who funds the Washington Free Beacon website, which, oddly enough, had paid the opposition research firm Fusion GPS to dig up dirt on Trump during the primaries), and Steve Cohen (whose hedge fund group was closed down due to insider trading allegations) all donated $1 million each.
- Corporate America: The inaugural committee raised $2 million from AT&T; $1 million each from Bank of America, Boeing, Dow Chemical, Pfizer, and Qualcomm; and at least $500,000 each from JPMorgan Chase, FedEx, Chevron, Exxon, Fidelity, Intel, Citgo, and BP America.
- Secretive conservative groups: The American Action Network, a dark-money nonprofit that’s spent tens of millions on elections since 2010, gave $1 million. Another million came in from a mysterious shell company called “BH Group, LLC,” and its true source remained mysterious for more than a year. Only this year did journalist Robert Maguire trace that contribution to a group tied to the conservative legal movement and Federalist Society executive Leonard Leo, who’s found a prominent role advising Trump on judicial nominations.
And then there were those donors with major ties to Russia and other foreign countries, who reportedly caught Mueller’s interest.
- ABC News reported that Mueller was questioning witnesses “about millions of dollars in donations to President Donald Trump’s inauguration committee” — specifically about “donors with connections to Russia, Saudi Arabia, the United Arab Emirates and Qatar.”
- The Associated Press reported that Mueller’s investigators interviewed inauguration chair Tom Barrack. The AP’s sources, however, gave conflicting accounts on what Barrack was asked about. One said he was asked only about Paul Manafort and Rick Gates. Another claimed the questioning included “financial matters about the campaign, the transition and Trump’s inauguration in January 2017.”
- In June, another ABC News report stated that Mueller’s investigators wanted to know why several billionaires with “deep ties to Russia” got access to “exclusive, invitation-only receptions” during the inauguration.
What happened to the money?
Beyond the many questions about money collected by the inaugural committee, there have long been many questions about money going out of it.
In Marritz’s great piece on this topic for WNYC and ProPublica, several people involved in previous inaugurations were quoted expressing puzzlement over how Trump’s team could have possibly spent more than $100 million for what they got.
Unlike a campaign, the inaugural committee isn’t legally required to disclose very much about its spending. In its nonprofit tax form, the committee is required to break down its expenses in broad categories and to list its five biggest vendors. But it is not required to explain every line item.
In any case, according to the tax form, about half the money — more than $50 million — went to just two vendors. $25.8 million went to WIS Media Partners, an event production firm started by a now-former adviser to Melania Trump. Another $25 million went to Hargrove Inc. for “event production.” What these firms did with those massive sums of cash is unknown.
That leaves about $50 million remaining. From that, about $10 million in total went to another three vendors, $4.6 million was paid out as salaries, and $5 million was left over and given out as grants. But where tens of millions more went remains a mystery, beyond the broadest of categories given on the disclosure forms.
For now, whether this was sloppy financial mismanagement or something shadier is unclear. But if there is anyone who might know where much of the money went, it’s Rick Gates. And whatever he knows, federal prosecutors now know too.