Updated at 6:17 p.m. ET
The District of Columbia is suing President Trump's inaugural committee, the Trump Organization and the Trump International Hotel in Washington, accusing them of "grossly overpaying" for event space at the hotel to enrich the president's family during the 2017 inauguration.
The funds to rent the hotel space came from the inaugural committee. As a nonprofit, the committee was not legally allowed to use "any portion of its funds to be spent in a way that are designed to benefit private persons or companies," according to the lawsuit. The committee spent more than a million dollars to rent the hotel space, a cost that D.C. Attorney General Karl Racine says is far above market rate.
"We are seeking to recover the nonprofit funds that were improperly funneled directly to the Trump family business," Racine said in a statement about the lawsuit filed Wednesday. He wants those funds, if they are recovered, to be funneled to a nonprofit promoting U.S. civic engagement.
A Trump Hotels spokesperson denied there was anything inappropriate about the contract and said the timing of the complaint "reeks of politics."
"The AG's claims are false, intentionally misleading and riddled with inaccuracies," the spokesperson said in an emailed statement to NPR. "The rates charged by the hotel were completely in line with what anyone else would have been charged for an unprecedented event of this enormous magnitude and were reflective of the fact that [the] hotel had just recently opened, possessed superior facilities and was centrally located on Pennsylvania Avenue."
A spokesperson for the Presidential Inaugural Committee also denied wrongdoing, saying "the facts will show that the PIC operated in compliance with the law and this suit is without merit."
But the Democratic attorney general says the inaugural committee paid many times over market value. The complaint filed in D.C. Superior Court states that another nonprofit, the Prayer Breakfast, paid just $5,000 to rent the ballroom on the morning of Trump's inauguration. That afternoon, the inaugural committee reportedly paid $175,000 to rent the same room.
Nonprofit money was also used to "pay for a private after-hours party for the Trump family and roughly 1,200 guests at the Hotel," Racine says, despite concerns raised by inaugural committee staff that the use of funds was inappropriate.
The inaugural committee was also involved in booking the majority of the rooms at the hotel, according to the complaint. The lawsuit states that it would be standard practice for the hotel to provide free or reduced-priced event space to a group that booked a large block of rooms.
The amount that Racine says the nonprofit paid the hotel, $1.03 million, is actually far less than the hotel initially asked for. According to the complaint, the Trump hotel gave the inaugural committee an initial quote of $3.6 million for the use of all event space for eight days.
Members of the Trump family were involved in coordinating the costly rental, Racine adds.
Trump's inaugural committee raised a record $107 million for official events, as The Wall Street Journal reported in 2018, and spent almost all of that money. That's about double what President Barack Obama raised and spent on his 2009 inauguration, according to the newspaper.
The Trump International Hotel has been at the center of many questions about whether the president is improperly profiting from his position. Critics of the president say it is inappropriate for him to profit from state and foreign guests staying at the hotel.
Last year, an internal federal government watchdog said officials who leased the Old Post Office Building for the Trump International Hotel "improperly ignored the Constitution's anti-corruption clauses when they continued to lease the government property to President Trump even after he won the White House," as NPR reported.