Yesterday, Reuters reported that seven pensions are paying millions in management fees to a real estate investment firm CIM, which then immediately pays millions in management fees to Trump. I blogged about it yesterday. We are finding more and more evidence that the word “emolument” was used regularly by lawyers to describe private payments and benefits, not just salaries or office-related payments.
There are two legal questions about whether these are emoluments from the state to Trump:
- Are the public employee pensions extension of the state?
For the two biggest pensions, the answer is clearly yes as a matter of law. CalPERS is the creation of California law, as codified in the California Public Employees’ Retirement Law, Section 20002, which states: “The Public Employees’ Retirement System created by Chapter 700 of the Statutes of 1931, as amended, is continued in existence under this part. This system is a unit of the Government Operations Agency” (emphasis added).
The New York State Common Retirement Fund, supervised by the State Comptroller, is treated explicitly by the federal courts as a state entity covered by state sovereign immunity. See McGinty v. New York, 251 F.3d 84, 100 (2d Cir. 2001). For more on the structure of NYS CRF:
2. Do the pensions have enough control or accountability over CIM, the real estate firm, to make CIM’s payments to Trump a legal extension of the state pensions? My sense is that an emolument does not depend upon the intent or control of the state entity, but merely that state payments are going to the person in the office of the president, in either a personal or official capacity. But given that the state pensions constitute a majority of CIM’s capital investment, and given how this issue is analogous to corporate law’s 5% or 10% threshold for legal control, I think one can argue confidently that the state pensions are paying Trump and have the power to stop. But this issue needs to be fleshed out by the experts, and I certainly am not an expert in this field.