Trump International Hotel, built in the old Pennsylvania Avenue Post Office in Washington, D.C. (W. Scott McGill/Shutterstock)

San Francisco’s pension fund enriches President Trump

Who knew the San Francisco Employees’ Retirement System (SFERS) and 10 other public pension funds across the United States are enriching our president and his family through investments in Trump SoHo Hotel and Condominiums and Trump International Hotels, LLC? The Trumps earn at least $9 million annually from these pension investments.

Pension fund trustees have a “duty of loyalty” fiduciary obligation to invest solely in the interest of exclusively providing benefits to pension plan participants and their beneficiaries, not to enrich the president.

On Nov. 3, Vibeka Mair — a senior reporter for (RI), a subscription news outlet based in London — published an article indicating CalPERS is facing pressure from 12 California U.S. Congress members over investments in the CIM Group Fund III that benefits Trump and his family. At my request, RI moved Mair’s article outside its subscription paywall, making it available freely as an issue of public concern.

Mair’s article discusses, and provides a link to, a Congressional letter dated Oct. 30 and sent to CalPERS that was signed by Ted Lieu, Eric Swalwell, Ro Khanna, Barbara Lee and eight other California members of Congress. Noticeably absent was Rep. Nancy Pelosi.

Mair’s article includes a link to a Reuters article from April 26; Reuters is also headquartered in London. Reuters’ article contains an infographic showing the “payment chain” flowing from various public pension funds to both the Trump SoHo and Trump International Hotels. 

The New York City Trump SoHo project receives $500,000 monthly (as of December 2016) — or $6 million annually — for common operating charges of the hotel’s mostly unsold units. Trump International Hotels received another $3 million in 2015 from the Trump SoHo’s gross operating revenue to manage and market the hotel. Although both the LLC and Soho entities are in a so-called “blind trust” managed by trustees Donald Trump Jr. and his brother Eric, they’re allowed to distribute income to Trump Sr. at his request.

The Trump SoHo Hotel was acquired by the CIM Group’s Fund III in a foreclosure auction on Nov. 20, 2014, bankruptcies and foreclosures being Trump family specialties.

The California congressional members’ letter expressed concerns that CalPERS hasn’t divested from the CIM Fund III, given that Trump SoHo is “an asset beset by allegations of fraud and money laundering from its inception.” The letter notes CalPERS continues paying CIM Group millions in fees, including at least $1.7 million since Trump’s January 2017 inauguration. 

The letter notes Ivanka Trump and Jared Kushner escaped charges of felony fraud in marketing the Trump SoHo Hotel, spared only when the Manhattan district attorney dropped the case after he received an “improper campaign donation” from Trump Sr.’s personal lawyer, Marc Kasowitz, which was eventually returned.

For its part, SFERS has invested $1.23 billion in the CIM Group since 2006, including a $50 million investment in the same CIM Fund III enriching Trump. SFERS paid $10 million in management fees during FY 2016-17 to manage SFERS’ five CIM Group investments, including $650,379 in fees on SFERS’ CIM Fund III investment.

When our Founding Fathers drafted the U.S. Constitution, they were deeply concerned about potential corruption. They adopted two prohibitions on receipt of “emoluments” — benefits, advantages or profit — by federal government officials: The Foreign Emoluments Clause and the Domestic Emoluments Clause, the latter of which applies to all municipalities in any given state, prohibiting enriching federal officials. Our founders intended to restrict the president to his base-pay and sought to eliminate foreign powers and domestic states from meddling in our nation’s affairs.

Neither taxpayers paying the “employer share,” nor employees represented by CalPERS or SFERS paying “employee share,” of pension contributions should be forced to supplement the Trump family’s income via emoluments — or contribute to corruption.

Both CalPERS and SFERS trustees need to divest from the CIM Group Fund III immediately, even if they acquired those investments before Trump was sworn in. Trustees of both retirement systems, and San Francisco’s Board of Supervisors, have ministerial duties to stop public pension funds from enriching “The Donald.”

Patrick Monette-Shaw is a columnist for San Francisco’s Westside Observer newspaper.

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