In July 2017, Free Speech For People launched a campaign to hold state pension funds like CalPERS and the New York State Common Retirement Fund accountable for an investment that was funneling millions in retiree funds to the Trump Organization in violation of the Domestic Emoluments Clause of the Constitution. Now, after months of pressure, the private equity fund that owns Trump SoHo will buy out the Trump Organization’s contract to market and manage the troubled luxury condo/hotel, breaking a chain of illegal payments from state and local pension funds to the President.
This troubling investment first came to light in April 2017, when Reuters reported that CalPERS, New York State Common Retirement Fund, and several other state and local pension funds were paying millions to a private equity fund manager for an underperforming investment in one of Trump’s shadiest real estate deals, the Trump SoHo.
The New York luxury hotel and condo property has been at the center of fraud and money laundering allegations since it was first developed, and when its lackluster financial performance led to bankruptcy, CIM Fund III, a private equity fund where CalPERS, New York State, and nine other state and local pension funds had sunk hundreds of millions of their members’ funds, acquired it through foreclosure.
Under the terms of the foreclosure, the fund manager paid millions to the Trump organization to “market and manage” the Trump SoHo. The investment in Trump SoHo became even more problematic once Trump became President, because the arrangement meant that the fees state pension funds were paying to the fund manager were making their way directly into President Trump’s pockets. The U.S. Constitution prohibits states like California or its pension fund, from making payments to the President under a provision known as the Domestic Emoluments Clause.
Over the past four months, thousands of Californians and New Yorkers from all walks of life have joined the campaign asking CalPERS and the New York State Comptroller to exert pressure on the fund manager, CIM Group LP, to liquidate the Trump SoHo, terminate the arrangement with the Trump Organization to market and manage the Trump SoHo, or divest from the fund altogether. Dedicated individuals made trips to Sacramento to call upon CalPERS’ Board of Directors to protect beneficiaries from this corruption, and at the end of October, Rep. Ted Lieu and 11 of his fellow members of the California congressional delegation urged CalPERS to take immediate action.
Just before Thanksgiving, news broke that CIM Group will buy out the Trump Organization and terminate its agreement with Trump International Hotels Management to market and manage the Trump SoHo years before the contract expires. This is a tremendous outcome that will end the illegal payments from state pension funds to the President, and it shows the power of people to end corruption by shining a light on it.