IG Report: GSA Failed Obligations to Uphold and Enforce Constitution

Canary. Photo by 4028mdk09.

After a 16-month investigation, a partially redacted report released from the GSA Office of Inspector General (GSAIG) on Wednesday concluded the General Services Administration (GSA) “ignored constitutional implications when deciding to maintain the lease of the Old post Office Building to the Trump International Hotel after Donald Trump became president,” CNN reported.

The GSA is an agency whose mission vision is one of “Effective and efficient government for the American people” and mission values consist of “Service, Accountability, and Innovation.

The agency, started in 1949 started by Truman to “streamline the administrative work of the federal government,” has grown into a behemoth in which “through its two largest offices – the Public Buildings Service and the Federal Acquisition Service – and various staff offices, GSA provides workspace to more than 1 million federal civilian workers, oversees the preservation of more than 480 historic buildings, and facilitates the federal government’s purchase” of goods and services from commercial vendors.

After receiving several complaints “from members of Congress and the public” over the GSA’s management of the lease held between the GSA – who is the landlord of the Old Post Office building – and President Trump, who is the sole “Tenant,” does the Foreign and Presidential Emoluments Clauses in the Constitution “bar President Donald J. Trump’s business interest in the Trump Old Post Office LLC (Tenant)” and does the “President’s business interest in Tenant violate Section 37.19 of the lease.”

However, while the GSAIG says “President Trump’s lease for his DC hotel “raised issues under the Constitution’s Emoluments Clauses that might cause a breach of the lease,” the GSAIG focused more on the “decision-making process.”

This report focuses on GSA’s decision-making process for determining whether the President’s election caused Tenant to be in breach of the lease upon the President’s inauguration. We did not seek to determine whether the President’s interest in the hotel violates either the Emoluments Clauses or Section 37.19 of the lease, or whether any violation caused a breach of the terms and conditions of the lease. Rather, we sought to determine whether there were any improprieties in GSA’s decision-making process regarding these issues.

GSAIG Report; pg 1 – Introduction

According to the background, the report says, in February 2012, the GSA “selected the Trump Old Post Office LLC (Tenant) as the preferred selected developer,” to “restore and redevelop the site into a luxury 260-room hotel. Donald J. Trump (Trump) and Trump Old Post Office Member Corp. (a Delaware corporation wholly owned by Trump) formed Tenant.” (pg. 2)

After receiving a certificate to proceed with construction in August 2014, in September 2016 the GSA “provided a temporary certificate for a soft opening of the hotel,” and on October 26, 2016, twelve days before the November 8, 2016 election, Trump stood in front of the leased OPO building and announced the official opening of the Trump International Hotel DC, saying, “this is the most coveted piece of real estate in Washington, D.C., the best location.” (see video below ~2:04)

Shortly after winning the election the GSA office lawyers contacted the GSA’s Office of General Counsel (OGC) and “began discussing the issues raised under the Constitution’s Emoluments Clauses,” the Foreign Emoluments Clause and the Presidential Emoluments Clause.

Helpful highlights from USA Today’s reporter Brad Heath.

GSA Office of General Counsel – OSG


We found that GSA recognized that the President’s business interest in the OPO lease raised issues under the Constitution’s Emoluments Clauses that might cause a breach of the lease; however, GSA decided not to address those issues in connection with the management of the lease. We also found that the decision to exclude the emoluments issues from GSA’s consideration of the lease was improper because GSA, like all government agencies, has an obligation to uphold and enforce the Constitution; and because the lease, itself, requires that consideration. In addition, we found that GSA’s unwillingness to address the constitutional issues affected its analysis of Section 37.19 of the lease that led to GSA’s conclusion that Tenant’s business structure satisfied the terms and conditions of the lease. As a result, GSA foreclosed an early resolution of these issues, including a possible solution satisfactory to all parties; and the uncertainty over the lease remains unresolved.

We found that when OGC attorneys considered how Section 37.19 should be interpreted, they employed the standard tools attorneys use for interpreting language in contracts, statutes, and other legal documents: the rules that the Supreme Court and lower courts have developed through their decisions in cases. We found that OGC did not, however, analyze the Constitution’s Foreign and Presidential Emoluments Clauses as they affected Section 37.19. As a consequence, OGC left the decision to the contracting officer, who granted Tenant’s request for an Estoppel Certificate that leaves a constitutional cloud over the lease.

Emphasis added.

“Tenant urged “admit” means to allow entry under current dictionary definitions. Consequently, the argument goes, President Trump was “admitted” to the lease before he became an elected official, and therefore, the prohibition does not apply to his business interest in the lease.”

However, “in revising the law in 2011, Congress removed the word “admitted” for the expressed purpose “… to conform to the understood policy, intent, and purpose of Congress in the original enactments, with such amendments and corrections as will remove ambiguities, contradictions, and other imperfections ….”

“However, OGC refused to consider any constitutional implications and failed to conduct this inquiry. At the same time, OGC acknowledged in interviews with the OIG that if a constitutional violation is later found, the attorneys would look at Section 37.19 again. The difficulty, of course, is that GSA accepted Tenant’s interpretation of Section 37.19, and the contracting officer has issued his Estoppel Certificate. As a consequence, the constitutional issues are preserved rather than avoided. We found that GSA should have considered the potential impact of the Constitution on how Section 37.19 should be interpreted under the avoidance doctrine before issuing the Estoppel Certificate.”

Revocable Trust, OGC, Contractor Terry, and Redactions

“President Trump was sworn into office on January 20, 2017. After the inauguration, Tenant’s counsel notified Terry that the President had transferred his interest in the Old Post Office to a revocable trust and relinquished his management over that interest, for the period of his presidency; however, he still retained his financial interest in the property.”

“OGC lawyers, Terry, and Banks met with Tenant representatives Donald J. Trump, Jr., Eric Trump, and counsel on January 31, 2017, to discuss Tenant’s new organizational structure.”

“Terry communicated his decision to Tenant on March 23, 2017,” concluding that Tenant satisfied his interpretation of the admitted clause. His decision memorandum to Tenant stated that “most of the review and reporting on Section 37.19 has focused on only a few select words, and reached simplistic ‘black and white’ conclusions regarding the meaning and implications of the clause.”

The GSA response to the report was written by the GSA Office of General (OSG) Counsel and can be seen in the report’s Appendix B.

In June 2017, attorneys general for Maryland and DC filed a lawsuit alleging that “because Trump continues to benefit financially from his hotel, resort and golf properties — in some cases from clients affiliated with foreign governments” … that Trump had committed “unprecedented constitutional violations,” and breaching his Constitutional oath, the Washington Post reported at the time, saying “he has violated anti-corruption clauses in the Constitution by accepting millions in payments and benefits from foreign governments since moving into the White House,”

[Emoluments Lawsuit: AG Karl A. Racine; Office of the Attorney General for DC]

“The hotel plays host to foreign officials and leaders from around the world,” CNN reports (see video below, mark ~1:50). The lawsuit alleges “the president breached the Emolument Clause of the Constitution, which prohibits the president from accepting payments from foreign powers while in office.”

According to BuzzFeed, “Democrats in Congress also sued under the Foreign Emoluments Clause. Judges in those cases have ruled against Trump so far, agreeing that the challengers had standing to sue and, in the case brought by DC and Maryland, siding with their interpretation of “emoluments.” A third lawsuit filed in New York was dismissed.”

The DC and Maryland states’ attorneys signaled their intentions to issue subpoenas for the “financial records for the Trump Organization and the Trump International Hotel in DC,” and for at least 13 business entities “operating under the umbrella of the Trump Organization.”

Trump’s lawyers had argued this “would create onerous burdens,” on Trump’s time because he would “need to review the flurry of discovery requests.”

On Friday, after the federal judge ruled the case against “Trump’s businesses” could move forward, though not on Trump personally yet, and the states’ attorneys were “moving into the discovery phase,” Trump’s personal lawyers appealed to the 4th US Circuit Court to in an attempt to try to “pause evidence collection…according to a new request to stay the case.”

Maryland Attorney General Brian Frosh had some harsh words for the President’s lawyers’ move Friday.

“I think they may have violated Lewis Carroll’s copyright on ‘Alice in Wonderland,’ ” he said.

He added that the President’s lawyers are arguing that the “President’s immune from the requirements of the emoluments clause” of the Constitution, an argument he called “absurd.”

Watch: Dems poised to investigate Trump organization.

“All said, at least five committees in Congress now poised to probe the Trump Organization on everything Trump has touched, including his yet to be released tax returns.”

For further reading,

T-Mobile announced a merger needing Trump administration approval. The next day, 9 executives had reservations at Trump’s hotel; Washington Post.

We’ll try to keep an eye on this. The release of this report and the information it contains could prove to be timely for the Emoluments Clauses cases.

On A Side Note (Opinion)

Road Map?

Trump Old Post Office LLC (Tenant) – Donald J. Trump (Trump) and Trump Old Post Office Member Corp. (a Delaware corporation wholly owned by Trump) formed Tenant.”

“the GSAIG focused more on the “decision-making process.””

They, the GSA and the OGC allowed and accepted Tenant, i.e., Donald Trump, after winning the election, to interpret the meaning and definition of the word “admit,” under the section of the lease for purposes of making the final determination for them.

Read Appendix B, the OGC’s response.

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