What’s the Difference Between Donald Trump and Patricia Driscoll?
Today’s WaPo has two big stories on misappropriation of charitable funds. In the one you haven’t heard about, alleged ninja (and ex-girlfriend of the racecar driver Kurt Busch) Patricia Driscoll is under indictment for diverting money from a veteran’s organization to her own uses. The Donald, of course, is reported to have used money from his family foundation to satisfy personal legal claims against Trump.
For most tax-code purposes, these two are the same offense. Once money is transferred to a charitable organization, it belongs to the firm, and can only be used for charitable purposes. That’s true regardless of whether the money is later used for the personal use of the very person who donated it. Diverting money from a charity to personal use can subject both the recipient and the charity managers who authorized the transfer to penalties (and can sometimes cost the charity its tax exemption). Further, the person who gets the money should report those funds as income; if they failed to do so, they can owe penalties and interest, although there is a fairly short statute of limitations in instances where no fraud is involved.
So why isn’t Donald doing a perp walk, too? As in most things crim law, the answer is mens rea. Tax evasion requires a showing that the taxpayer knew that she owed taxes and failed to pay them. Similarly, to be guilty of criminal tax fraud, a defendant has to know that the statements she made to the government were false.
In Driscoll’s case, the facts alleged make a pretty strong prima facie case that Driscoll knew she was cheating the government. She is reported to have used charity money for lots of things that obviously aren’t charitable, like costs for her private security business. And she allegedly covered it up with fake donors and fake donations; covering your trail is classic evidence of knowledge of guilt.
The Trump story might be a bit more innocuous. Trump’s campaign has claimed (in response to an earlier, different misuse of the Foundation’s money) that there was a bookkeeper in the Trump organization who decided which bank account to cut checks from. I would guess the story we’ll hear now (if we hear anything) is that Trump never even knew the suits were settled with Foundation money. If true, that is dumber than dumb, but it isn’t tax fraud or evasion.
If I were an IRS criminal investigator, I’d still have some more questions. We have an organization that, reportedly, has for decades exploited every conceivable tax advantage. It has counsel extensive and sophisticated enough to file tax returns totaling thousands of pages. And it just overlooked one of the most basic principles in the tax law of charity?
There’s another spin on all that, of course. We have a huge multi-national organization, focused on real estate and IP licensing. Why should it pay attention to a tiny footnote to its operations?
Could be, but I’d still want a word with that bookkeeper.