A New York hotel deal shows how some public pension funds help to enrich Trump

Public pension funds in at least seven U.S. states have invested millions of dollars in an investment fund that owns a New York hotel and pays one of President Donald Trump's companies to run it.
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Public pension funds in at least seven U.S. states have invested millions of dollars in an investment fund that owns a New York hotel and pays one of President Donald Trump’s companies to run it, according to a Reuters review of public records. That arrangement could put Trump at risk of violating an obscure constitutional clause, some legal experts say.

The Trump SoHo Hotel and Condominium in Manhattan is an upscale 46-story property owned by a Los Angeles investment group, the CIM Group, through one of its real estate funds. (Read the most recent amendment to the Trump SoHo’s offering plan here.)

The possible problem for Trump lies in the fact that state- and city-run pension funds have invested in the CIM fund and pay it a few million dollars in quarterly fees to manage their investments in its portfolio, which includes the Trump SoHo, according to state investment records.

In return for marketing and managing the hotel-condo, CIM pays Trump International Hotels Management 5.75 percent of the SoHo’s operating revenues annually.

That payment chain merits closer scrutiny because it could put Trump at risk of falling foul of a little-known constitutional rule prohibiting the flow of money from states to the pockets of a sitting president, five ethics and constitutional law experts interviewed by Reuters said. (Graphic on Trump SoHo payment chain.)

No other public pension fund investments in Trump-affiliated businesses have been reported.

The White House referred comment to the Trump Organization, the parent conglomerate for Trump’s businesses, which did not respond to repeated calls and emails for comment.

While Trump turned over management of the Trump Organization in January to a trust controlled by his two elder sons, he still earns revenue from the SoHo. That’s because he still owns the businesses in the Trump Organization, including Trump International Hotels Management.

Article II of the U.S. Constitution bars the president from receiving additional payments beyond his salary from state governments. This so-called “domestic emoluments clause” prohibits “any other emolument from the United States, or any of them.”

This clause and a “foreign emoluments clause” prohibiting similar payments from foreign governments have been thrust to the fore because of Trump’s vast, complicated network of businesses, which ethics experts say has created unprecedented conflicts of interest.

A group of constitutional and ethics experts have filed a lawsuit alleging Trump was violating both clauses by letting his hotels and other businesses accept payments from public officials. Trump said the suit was without merit. The lawsuit does not refer to the CIM fund.

The group’s April complaint cited dozens of violations, including foreign government leases and purchases at Trump’s properties in the United States, which have resulted in unknown amounts being paid to Trump since he was inaugurated.

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