U.S. judge in Trump Foundation case rebuffs political bias defense

(Reuters) - A New York judge said on Thursday she would not entertain arguments that political bias was behind a lawsuit alleging President Donald Trump unlawfully used his personal charity to help his 2016 election campaign and benefit his businesses.

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New York Supreme Court Justice Saliann Scarpulla cut off a lawyer for Trump when he started to question the motives of the New York attorney general’s office, which filed its suit in June seeking to dissolve the charity and recoup $2.8 million in funds.

“I know you all are arguing about political bias,” Scarpulla said at a hearing to air legal arguments on a motion to dismiss the case submitted by Trump’s lawyers in August. “I don’t want to get involved with that.”

Scarpulla noted that Trump’s lawyer, Alan Futerfas, had not challenged the financial transfers at the heart of the case and that she was required to assume the claims made by the attorney general were true at this stage prior to evidence being shared.

“The allegations are what they are. Until you deny them I accept them,” the judge said. She did not rule on Thursday.

Attorney General Barbara Underwood’s lawsuit claims to have uncovered unlawful political coordination by the Donald J. Trump Foundation with Trump’s White House campaigns, and “repeated and willful self-dealing” to benefit the president.

Futerfas, who represents the charity, Trump and his children, argued in his motion to dismiss that Underwood’s complaint was part of her office’s mission to “lead the resistance” against the Republican president. Underwood is a Democrat.

Underwood’s office has denied the allegations of political bias, calling them an “attempt at distraction” in a court filing earlier this month. It said the lawsuit was filed because of “persistent illegality” on the part of the foundation and its directors.

The suit includes an allegation that Trump wrongly ceded control of some $2.8 million donated to the foundation in a 2016 Iowa fundraiser for military veterans to Trump’s campaign staff. It further says the staff wrongly disbursed grants at campaign rallies for Trump’s political benefit.

Futerfas spent much of the hearing arguing against the assertion the $2.8 million constituted a transaction as defined by the state laws under which the attorney general based its case. He argued that the foundation simply passed on funds to charities in a way that honored the donors’ wishes.

“The key is what is the donor intent,” Futerfas said. “The money went directly where they wanted it to go. They haven’t identified one penny that went from the foundation back to the campaign.”

Yael Fuchs of the New York attorney general’s office argued that the $2.8 million was an “effective transfer” from the foundation to the campaign, which benefitted from the publicity generated by the donations.

Trump “completely conflated the identity of the foundation with the identity of the campaign,” Fuchs said.

Reporting by Nathan Layne in New York; Editing by Michael Perry and Tom Brown