Legal Ethics Forum

A question for the IRS and the FEC: Is Trump using his campaign to enrich his businesses or is it the other way around?

A lot of the news stories assume that Trump is enriching himself when his campaign pays his businesses for goods and services.  For example: 

“[The Trump campaign] paid more than $500,000 in August to companies the brash businessman owns, according to campaign finance reports released late Tuesday. The chief beneficiaries were Trump’s aviation company and his office headquarters in Manhattan: TAG Air was paid nearly $320,000 for operating the campaign jet and Trump Tower collected nearly $170,000 in rent for the month of August. Another $23,000 went to smaller Trump properties and businesses.”

http://www.huffingtonpost.com/entry/trump-campaign-payments_us_57e214c5e4b0e80b1b9f21f8

It is possible that these transactions are slanted in favor of the Trump businesses (e.g. the campaign is paying too much), but this would presumably be taxable income to the Trump businesses and thus to Trump.   Also, a lot of the campaign’s money comes from Trump himself.  It is not clear why he would want to dip into the campaign till to generate taxable income for his businesses at above market prices and then turn around and put after-tax dollars into the campaign from his own pocket (note:  I am assuming a lot here because without seeing his tax returns, nothing about his taxes can be verified).

But what if it is the other way around?   What if some Trump businesses charge too little for goods and services they provide to the campaign?  What if other Trump businesses are helping the campaign but don’t show up on campaign disclosure forms because they don’t charge the campaign anything at all?   I don’t know if this is happening but if it is, it is happening with pre-tax dollars that are not disclosed as campaign contributions.

A lot of rich people would like to run for public office and deduct the cost of a campaign, but the tax code does not allow that.   It is the same if you use your own business to support your campaign and reduce its taxable income in the process.  There is a difference between a business entity’s deductible business expense and a non-deductible expense that is really a campaign contribution.   And the latter should also be disclosed to the Federal Election Commission.

I am all in favor of tax deductions and tax credits for campaign contributions -- but for small donors and for limited amounts ($100 or $200) -- not just for billionaires.

All candidates haul in massive contributions while campaign finance reform is nowhere in sight

Trump has other ethics issues that Norm Eisen and I discuss today in a Washington Post op-ed, and I have already discussed the Clinton Foundation in a New York Times op-ed. 

https://www.washingtonpost.com/opinions/a-trump-presidency-would-be-ethically-compromised/2016/09/20/0b01a492-7e9c-11e6-8d13-d7c704ef9fd9_story.html?utm_term=.f4c5a7f08056

http://www.nytimes.com/2016/08/31/opinion/the-real-clinton-foundation-revelation.html?_r=0

But when it comes to campaign cash, both candidates are tainted along with almost everyone else running for office.   Meanwhile both parties shove campaign finance reform down to the bottom of their priorities list.  Campaign contributors like it that way, but ordinary voters may feel otherwise. 

https://www.washingtonpost.com/news/post-politics/wp/2016/09/20/hillary-clintons-main-super-pac-has-raised-132-million-a-third-came-from-six-wealthy-allies/

http://www.cnn.com/2016/08/03/politics/election-2016-donald-trump-fundraising/

Noisy Withdrawal Versus Subsidized Silence

A student in my professional responsibility class raised an interesting (to me at least) question a couple of nights ago while we covered entity representation and "noisy" withdrawals.  Assuming that a lawyer for a corporation has grounds to disclose client wrongdoing under an exception to confidentiality, may the lawyer forgo this option in exchange for a payment from the client - something along the lines of a severance package with a confidentiality agreement.  Would it make a difference if the lawyer or the client was the one who first raised the issue of such a payment? 

Matching Jackets and the Dignity of the Court

In light of the ABA's adoption of the anti-discrimination amendment to Rule 8.4 and the fact that the Court will soon decide whether fashion designs can be copyrighted, it may be a good time for the Court to review its apparel requirements for attorneys observing oral arguments.

According to the Court’s website, male members of the Supreme Court Bar are required to “wear a coat and a tie” when observing oral arguments. Female members “shall wear comparable attire (suit, dress, or dress slacks with matching jacket).” The website does not explain why a woman’s dress slacks must “match” her jacket or why the requirement is waived for men. Nor does the Court’s information page define “matching.” My research has disclosed two competing definitions of “matching.” One definition merely requires that the pants and jacket share a color. The competing definition requires not only a shared color but also requires that the individual components of an outfit consist of the same fabric. Now, I readily admit the limited value of these definitions since my fashion consultants purchase most of their wardrobe with “Kohl’s Cash.”

Maybe the matching requirement in some obscure way helps preserve the dignity of the Court. Or maybe women have always been held to a different and usually higher standard than men in their professional lives. But my guess is that the Court simply does not realize that the apparel requirement appears on its website.

Richard Zitrin, "Persky's Move: A Reaction to the Reactionary"

Richard Zitrin comments on the move to recall Judge Aaron Persky (Santa Clara County Superior Court) because of his sentencing decision in a case of sexual assault. 

Download TMC 2016 - 30 Persky's Move - A Reaction to the Reactionary 160901[1]