Does Trump have to sell his DJT stake? We asked a White House ethics lawyer

[Simone Del Rosario]

As President-elect Donald Trump prepares for his next four years in the White House, he has a new potential conflict under his wing of businesses he didn’t have his first time around: Trump Media.

Back in 2017, his real estate empire was the biggest focus of ethics experts.But now he’s billions of dollars richer from the publicly traded company behind Truth Social.

Trading under DJT, Trump Media has seen some wild stock swings this week. 

After jolting high up on Trump’s election victory, the stock fell 20% to start Thursday’s trading day. 

Trump is the company’s majority shareholder with an estimated 57% stake. 

But will he have to divest before taking over the Oval?

Your guess is as good as mine, that’s why we tapped the former Chief White House Ethics lawyer under President George W. Bush, law professor Richard Painter. 

Richard, thank you so much for joining us. This is some unchartered territory, at least when it comes to the president here, what do you anticipate that Donald Trump will need to do with that 57% stake that he has in Trump media?

Richard Painter:

I believe it would be best if President elect Trump were to divest from the Trump media and let the company be sold and owned to and owned entirely by public shareholders, and change his name so it’s not affiliated with the President of the United States. I legally he can keep ownership of the company, but it is problematic to have a president or other powerful politician with a controlling stake in a media company. Having an independent media is very, very important. And furthermore, as president, he will have control over the Federal Communications Commission. He will be able to fire the commissioners of the Federal Communications Commission probably certainly be able to fire the chairman of the commission and determine the policies of the Federal Communications Commission, and it’s clear conflict of interest for the president united states to perform those executive functions while owning a substantial stake in a media company, whether it’s social media or any other

Simone Del Rosario:

Okay, so you hit on a lot of things in there, and I just want to go back and detail specifically a couple of different things. You said that you think it would be best for him to divest, but does he have to, or can he legally keep that stake.

Richard Painter:

There is no requirement that the President divest from his social media company or any other business interest, no legal requirement, so long as he is not receiving payments from foreign governments that would be prohibited under the Emoluments Clause of the Constitution. Every other executive branch official other than the President, the Vice President, is bound by criminal conflict of interest statute that would make it a crime, potentially a felony, to participate in any government matter there’s a direct and predictable effect on their own financial interests. For example, a Federal Communications Commission Commissioner who also had a stake in a media company that would be flat out prohibited under federal law could be a criminal offense, but the President of the United States, who could fire a chairman of the Federal Communications Commission or otherwise shape the policy of the FCC, is not bound by that same criminal statute that being said, every other president, Other than President Trump, has voluntarily refrained from having financial conflicts of interest with their official duties. And just as in 2017 when he took office for the first time, when many of us called for Donald Trump to divest his business holdings that could conflict with official duties, we’re asking for the same here, although his business interests are significantly expanded now, eight years later, not only with truth social, his social media company, but with his family investments in crypto and other ventures.

Simone Del Rosario:

Yeah, Trump is famous for putting his name on things right the Trump Organization, you can see it all around the world. And now to your point that you made earlier, his name is specifically on this company, Trump, Media and Technology Group history would show that he would have no interest in removing his name. Why do you think that he should?

Richard Painter:

Well, let’s get I think there’s serious conflicts of interest here with respect to the role of the executive branch in regulating the media, in particular, social media, the Biden White House already has engaged in a policy I think is very unwise of trying to put pressure on social media companies with respect to their content. I wish the Supreme Court had ruled against the Biden administration in that case, they did not. And now Donald Trump is coming into office, and we have no idea what his administration is going to want to do, putting pressure, not on all the social media companies, including Facebook, owned by Mark Zuckerberg, who apparently is at odds now with President elect Trump, and it’s just a very bad situation. But. To have the president of the United States who is in charge of the executive branch that regulates media and social media, and issues pertaining to media, concentration of power in the media, all these issues dealt with by the Federal Communications Commission, by the Justice Department, by other agencies, to have that same president of the united states also have an enormous stake in a social media company. This is, I think, an untenable conflict of interest.

Simone Del Rosario:

Why is it criminal for cabinet members, but not for the President or the Vice President? Before talking to you, I was looking at, you know, any kind of precedence here, and coming up with a lot of Cabinet members who were divesting their interests in companies recently. In the Trump administration, we had former Secretary of State, Rex Tillerson, who had, you know, hundreds of millions of dollars worth of stock in Exxon Mobil, further back with your when you were with George W Bucha administration. We had Henry Paulson, who was the treasury secretary and former CEO of Goldman Sachs, who had to divest holdings. So why is it criminal if Cabinet members don’t do that? But it’s okay for the vice president and the president to maintain their holdings?

Richard Painter:

The problem is that the criminal conflict of interest statute 18, United States Code 208, applies to every executive branch officer other than the President and the Vice President. That’s the way the statute is drafted. The statute also does not apply to members of Congress who are infamous for buying and selling stocks while working on legislation that affects their underlying financial holdings. The President, the Vice President, and members of Congress, the elected officials, do not have to comply with the financial conflict of interest statute because that’s the way it was drafted by Congress, of course. And I think this is a big problem, every other president has voluntarily refrained from having conflicts of interest in the Bush administration, President George W Bush sold off financial interest that could conflict with his official duties because the people in his cabinet were bound by criminal conflict of interest statute, and the feeling in the Bush White House was that the President should adhere to the same standards as everybody else, Hank Paulson, the Treasury Secretary, I worked with him when he came in out of Goldman Sachs, and I helped arrange for $600 million where the Goldman Sachs stock to be sold. He indeed even avoided a capital gains tax on that. There’s a certificate of divestiture that one can get from the Office of Government ethic saying, well, the ethics lawyer told me I had to sell it so you don’t have to pay the capital gains tax. You roll over the proceeds, the 600 million, in this case, into other conflict free assets, such as mutual funds or Treasury securities or whatever it is, and then only pay the tax when you sell the rollover property, maybe years down the road, if ever so, divestment has been the approach for every Cabinet member. If Elon Musk comes into the cabinet or into any government position, he will have to either recuse from matters that affect his financial holdings, or he will have to sell off those financial holdings. Elon Musk, for example, could not become the chairman of the Federal Communications Commission and regulate social media, and get involved in regulating social media while holding on to his interest in Acts. It would be one or the other, because the criminal conflict of interest statute would apply to him. Well, the problem is that statute doesn’t apply to the President. It should, but every other president has understood the seriousness of this issue and has avoided financial conflicts of interest, and I’m calling upon President elect Trump to do the same.

Simone Del Rosario:

It’s very interesting. I want to talk on Elon Musk for a little bit, because it’s not just that he has x obviously, the company that makes him rich, Tesla, so you’re saying that he wouldn’t be able to be involved in policies that would affect the electric vehicle market. Or could he in an advisor role if it weren’t a cabinet position.

Richard Painter:

Elon Musk could not be a federal government employee of any type, this statute applies to every federal employee, including special government employees only work part time. So Elon Musk would be bound by the criminal conflict of interest statute. The only way for him to avoid that would be to be a government contractor, like with the defense companies or contractors, and have a consulting firm that was a contractor for the government. That is a loophole, and we have a lot of financial conflict or conflicts of interest embedded in our government contractors, whether the military contracting companies or others, and perhaps Elon Musk may choose to take advantage of that loophole and simply become a contractor, but if he. He starts to have an office in the in the White House or in an agency, or he’s given a title that implies that he’s an appointee of the President. Well, then he’s inside the government, and he would be bound by that criminal conflict of interest statute, whether it is matters that pertain to social media and his ownership and X or electric vehicles transportation and his ownership interest in Tesla Elon Musk would have to decide whether to recuse from any and all those matters or divest his financial interest. And if he doesn’t want to do that, he’s going to have to stay out of the government.

Simone Del Rosario:

Can he work for the government for free? Is that a way around?

Richard Painter:

No. It doesn’t matter whether you get paid or not. If you are working for the government and you’re pointed by the by the president or by anyone else in the government to government position, you are bound by the criminal conflict of interest statute whether or not you get paid. But if you’re a government contractor, contracting with the government, a consulting firm, a defense contractor, I mean, that is a context in which that could work. But it has to be very clear, you are a contractor. You’re not being appointed by the President, and I don’t know whether that relationship would be commensurate with Elon Musk, I won’t say ego, but self assess this sense of self esteem.

Simone Del Rosario:

Yeah, it’ll be interesting to see how the two of them navigate their relationship over the next four plus years. He was certainly pivotal in Trump’s re election. Let’s get back to dj t is there a middle ground between doing nothing and divesting? Could Trump put his shares, put his stake in a trust? Well, there

Richard Painter:

always is a middle ground for the President and the Vice President, because the criminal conflict of interest statute does not apply to that. So they can come up with all sorts of arrangements to make it look like they’re voiding the conflicts of interest. Donald Trump in 2017 said there was turning management of his businesses over to Assange. He had a big press conference, he’s standing there with a bunch of brown paper envelopes in front of him and saying, Well, these are the documents that convey the properties to my sons. Well, he didn’t convey ownership to his sons, just the management of the properties. If he were cabinet member, that wouldn’t fly. That wouldn’t solve the conflict of interest problem, but he’s the President of the United States, so the statute doesn’t apply to him anyway. So the brown paper envelopes could have been stuffed with toilet paper for all I know, it wouldn’t matter, because you know he’s the president, and he can say the statute doesn’t apply to me, and G I say I’ve got a blind trust here, when it’s not so blind, I gotta say it’s ridiculous to argue you got a blonde trust when you know exactly what you put in it. And there’s a point I made 2017 you can’t put the Trump Tower in a blonde trust and then pretend you don’t own the Trump Tower. It’s sitting right there in fifth 1000. It says Trump Tower on it. It’s gonna be the same thing for DJT media company or any of his other holdings. So the question is, does he really want to avoid conflicts of interest, or doesn’t he? And I’m asking the President Elect, once again, as I did eight years ago, to observe the conflict of interest statutes that apply to everybody’s working for him, but technically don’t apply to him.

Simone Del Rosario: 

Professor Richard painter, former chief White House Ethics lawyer, we really appreciate your thoughts Today.

Richard Painter: 

Well, thank you very much for having me.