Trump rejects new lawsuit over foreign payments to his firms

By Jonathan Stempel

NEW YORK (Reuters) - President Donald Trump on Monday dismissed allegations in a new lawsuit by prominent constitutional and ethics lawyers that he is violating the U.S. Constitution by letting his hotels and other businesses accept payments from foreign governments.

Trump told reporters at the White House that the lawsuit filed earlier in the day by Citizens for Responsibility and Ethics in Washington was "without merit."

The nonprofit watchdog said Trump is "submerged in conflicts of interest" from his ties to countries such as China, India and potentially Russia, and that payments for such things as hotel rooms and office leases posed conflicts of interest for him.

Its lawsuit seeks to stop Trump from accepting any improper payments, saying a constitutional provision known as the "emoluments" clause bans them.

As the Constitution's framers were aware, "private financial interests can subtly sway even the most virtuous leaders, and entanglements between American officials and foreign powers could pose a creeping, insidious threat to the Republic," CREW said in its complaint.

The lawsuit was filed in U.S. District Court in Manhattan.

It is part of a wave of expected litigation from liberal advocacy groups against Trump, a Republican who took office on Friday.

PASSING CONTROL

On Jan. 11, Trump said he would retain ownership of his global business empire while president, but hand off day-to-day control to his oldest sons, Eric and Donald Jr..

Sheri Dillon, a Trump adviser and partner at the law firm Morgan Lewis & Bockius, said at the time the emoluments clause applies to gifts, rather than ordinary business payments such as hotel bills.

She also said that profit generated by Trump's hotels from foreign governments would be donated to the U.S. Treasury.

But CREW said Trump's refusal to cede ownership or set up a blind trust, as urged by the U.S. Office of Government Ethics, leaves him "poised" to violate the Constitution repeatedly while in the White House.

The emoluments clause forbids Trump and other U.S. officeholders from accepting various gifts from foreign governments without congressional approval.

U.S. District Judge Ronnie Abrams, an appointee of former Democratic President Barack Obama, will preside over CREW's lawsuit.

Jay Wexler, a professor at Boston University School of Law, said "the substantive claim is certainly reasonable," but that courts such as Abrams' may decide not to get involved.

"Either it will find that the plaintiff lacks standing, or alternatively that the claim presents a political question and that it should not weigh in on the merits," Wexler said.

Natalie Gewargis, a spokeswoman for Morgan Lewis, which represents Trump on ethics matters, said: "We do not comment on our clients or the work we do for them."

HOTELS STAYS, "APPRENTICE" RIGHTS

CREW's lawsuit challenges such payments for such things as office space leased by the state-owned Industrial and Commercial Bank of China at Trump Tower in New York, rounds at Trump's golf courses, and the rights to rebroadcast or create new versions of Trump's reality TV show "The Apprentice."

China, India, Indonesia, Turkey and the United Kingdom are among the countries with which Trump's companies do or plan to do business, and Trump had been trying to do business with Russia for at least three decades, the complaint said.

Meanwhile, payments for a Washington hotel booking next month by the Embassy of Kuwait for its "National Day" celebration are expected to "go directly to defendant while he is president," the complaint added.

To show it has standing to sue, CREW claimed it has been "significantly injured" by having to divert resources to the lawsuit, and field hundreds of media questions about Trump's businesses.

Among the lawyers who worked on the complaint were constitutional scholars Laurence Tribe of Harvard University, and Erwin Chemerinsky, dean of the University of California at Irvine's law school.

Others include two former top White House ethics lawyers: Norman Eisen, who advised Obama; and Richard Painter, who advised the Republican George W. Bush.

(Reporting by Jonathan Stempel in New York; Additional reporting by Steve Holland in Washington, D.C.; Editing by Frances Kerry and Jonathan Oatis)