The Justice Department announced Tuesday that it has expanded its settlement of President Donald Trump’s lawsuit against his own government. Now the government has ruled out future IRS audits of the president, his family and his business, and announced that it will also use public money to create a nearly $1.8 billion fund to compensate allies the president thinks were wronged by federal prosecution or investigation.
Beyond the stunning scale of this self-dealing, there are other reports of disturbing actions by the administration: The Justice Department prepared to drop fraud charges against an Indian billionaire who offered to invest $10 billion in this country, the New York Times reported last week; another Mar-a-Lago dinner was held in April to promote the president’s crypto venture. Over and over, Trump and others around him use their positions for personal gain in unprecedented ways. The Wall Street Journal reported last month that Trump has promised pardons to anyone who has been within 200 feet of the Oval Office — effectively an invitation to allies to continue breaking the law and monetizing the presidency.
Simply put, under a legal principle called disgorgement, you don’t get to keep what you stole.
There is, however, a way to address widespread theft from the public. Simply put, under a legal principle called disgorgement, you don’t get to keep what you stole.
Even the Trump administration agrees with this point. The Justice Department defended the principle in a case before the Supreme Court last month. Quoting precedents old and new, the government said: “Disgorgement serves the ‘foundational’ equitable principle that no wrongdoer ‘should make a profit out of his own wrong.’ ” This principle can hold the president and any accomplices accountable for corruption — and no pardon can stop that.
Disgorgement has deep roots in moral tradition and American law. The Securities and Exchange Commission’s disgorgement authority, at issue in the Supreme Court this term, lets the government recover the money that fraudsters make through securities fraud (which could include crypto or prediction market scams). The issue before the court is whether the government needs to prove that the wrongdoer hurt specific people. The administration said no, arguing: “Disgorgement is a remedy designed to strip ill-gotten profits from wrongdoers,” so “SEC disgorgement under current law is not conditioned on a showing of pecuniary harm to victims.” In short: Those who profited through fraud have to give up the money, and it goes to the American people.
Other federal tools similarly enable getting stolen money back: the False Claims Act, Foreign Corrupt Practices Act and Foreign Extortion Prevention Act, to name a few. The most powerful of these is likely civil asset forfeiture. Unlike criminal prosecution, which is directed at a person, civil forfeiture involves the government suing the property itself (think: the 747 jet given by the Qatari government, or a specific crypto account).
Government can recover proceeds from third parties, such as family members or shell companies, that received the fruits of corruption without a legitimate claim to them, even if those parties did not participate in the illegal actions.
This distinction is not a legal technicality; it’s why civil asset forfeiture is uniquely resistant to pardons, presidential immunity claims and other defenses that could consume criminal proceedings. The asset forfeiture framework also allows the government to follow money wherever it goes. So government can recover proceeds from third parties, such as family members or shell companies, that received the fruits of corruption without a legitimate claim to them, even if those parties did not participate in the illegal actions. And the government doesn’t need to prove its case by the criminal law standard of “beyond a reasonable doubt”; it simply must show that the preponderance of the evidence supports recovery.
State leaders can act now to recover funds — and, critically, to open the asset investigations that form the backbone of disgorgement actions. A December University of Wisconsin Law School report sets out a comprehensive assessment of state accountability laws that state attorneys general can enforce against federal officials and those who interact with them. Ample state civil laws enable disgorgement. For example, a New York law allows the state attorney general to pursue restitution and disgorgement for repeated fraudulent or illegal acts in the conduct of business. That state’s Martin Act allows a broad range of recovery for securities fraud. More than 30 states have their own false claims acts, many with private recovery provisions. State law enforcement leaders should work together to build these cases, which will take time and expertise that the gutted federal government may lack. State legislatures may even consider updating their laws to ensure that they apply to misconduct by federal officials and create incentives for whistleblowers to come forward.
Asked by The New Yorker earlier this year about allegations of profiteering, a White House official said, “President Trump has always put — and will always put — the best interests of the American people first.” More recently, in response to Wall Street Journal reporting on possible Trump pardons, another White House official said the Journal “should learn to take a joke, however, the President’s pardon power is absolute.” But Trump’s track record of abusing the pardon power suggests that this and other self-enrichment is no laughing matter.
The current Congress has proved unwilling to hold Trump accountable, but members in the minority could use investigative oversight tools to lay out a clear road map for enforcers. Should control of Congress change, lawmakers could subpoena financial records and communications from private parties, hold targeted hearings on specific deals, pass legislation to ensure that federal money can’t be doled out through corrupt slush funds, or replicate what House members sought to do with the Epstein files to demand transparency on a range of information held by the federal government. Although federal laws enabling disgorgement are strong, Congress could also punch them up.
Private litigants can also file suits immediately. The False Claims Act is an obvious tool, as any person with nonpublic knowledge of fraud against the federal government is encouraged to file a lawsuit on the government’s behalf. Civil claims under anti-corruption laws such as RICO, which allow private plaintiffs to recover extensive damages, don’t require any government cooperation.
Of course, the post-2020 effort at using criminal prosecution for accountability failed fairly spectacularly. But an accountability approach centered on recovering money stolen through corruption could garner wide-ranging public appeal in a way that the criminal accountability efforts never did. Hungary’s recent election is illustrative: Opposition candidate Péter Magyar’s focus on the corruption and kleptocracy of the Orbán regime drove overwhelming rejection among voters. Magyar also swiftly announced the creation of a National Asset Recovery and Protection Office with a mission of investigating corrupt deals and recovering the stolen proceeds. As Magyar put it, all that “money that is stolen” actually belongs to pensioners or can help feed hungry children.
So, too, in the U.S.: All the pilfered money actually belongs to the American people. Those seeking payouts from the new Trump fund should not expect to keep that money if their claims cover up evidence of crimes such as attacking the Capitol — that would trigger the False Claims Act and enable disgorgement. Crypto profits built on insider knowledge of a presidential announcement? Claw them back. The foreign government “deals” that blur the line between statecraft and self-enrichment in which the president and his relatives rake in billions? The coerced corporate donations and prediction market winnings? It’s time to get the money back.
Trump’s pardons can’t stop any of this. Nor can the Roberts Court’s broad grant of criminal immunity in Trump v. United States. Those in Trump’s orbit who cross the line should know: Even with a promised pardon, the law can come for what they’ve taken from the American people.
The post Here’s a remedy for Trump’s self-dealing that no pardon can touch appeared first on MS NOW.
