Good Governance Paper No. 15: Enforcing the Emoluments Clauses

[Editors’ note: This essay is one in a series—the Good Governance Papers—organized by Just Security. In these essays, leading experts explore actionable legislative and administrative proposals to promote non-partisan principles of good government, public integrity, and the rule of law. For more information, you can read the Introduction by the series’ editors.]

The Existing Legal Framework and Recent Violations

The foreign emoluments clause was drafted by the Framers to prevent foreign governments from exerting financial influence on persons holding positions of trust with the U.S. government. Foreign interference in American politics was a serious risk then as it is now. The Constitution Article I, Section 9, Clause 8 thus provides:

“No Title of Nobility shall be granted by the United States: And no Person holding any Office of Profit or Trust under them, shall, without the Consent of the Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.”

As defined in Dr. Samuel Johnson’s 1755 Dictionary, the word “emolument” means “profit” or “advantage.” Simply put, the emoluments clause thus prohibits any profit or advantage from a foreign government or any entity controlled by a foreign government.

The Founders were so afraid of foreign influence that the Constitution in Article II, Section 1 requires that the President be a natural born citizen (Donald Trump talked endlessly about that provision during the Obama presidency). The Founders also weren’t going to allow presidents and other federal officials to make money from dealings with foreign governments.

In the case of President Trump, we often think of hotel rooms rented out to foreign diplomats but the extent of emoluments clause violations could be much greater. Condominiums in Trump buildings are sold to foreign nationals whose source of funding is unknown, President Trump receives payments simply for allowing his name to be used on buildings all over the world and the financial interests behind these buildings are often persons or entities unknown, and the Trump Organization wholly owns dozens of separately organized corporations and LLCs that borrow money from persons and entities unknown. Very little about what goes on in the Trump Organization is on President Trump’s public financial disclosure Form 278.

The list of President Trump’s potential foreign emoluments goes on and on.

One thing we do know about President Trump is that he does relatively little business in the world’s more stable democracies and a lot of business in countries with authoritarian governments or democratic governments gravitating toward authoritarianism: Turkey, Saudi Arabia and other Middle Eastern countries, Russia and other former Soviet Republics, the Philippines, and others. Some of these countries present serious national security challenges to the United States. For a president to receive emoluments from countries whose diplomatic aims differ from our own is one of the situations that the Founders presumably feared most.

Another provision of the Constitution in Article II, Section 1, Clause 7 prohibits the President from receiving emoluments from the United States or from any of the individual states in excess of his salary:

“The President shall, at stated Times, receive for his Services, a Compensation, which shall neither be increased nor diminished during the Period for which he shall have been elected, and he shall not receive within that Period any other Emolument from the United States, or any of them.”

For example, if a state government or the federal government were to patronize a business owned by the president, there would likely be a violation of this domestic emoluments clause just as such patronage from a foreign government would violate the foreign emoluments clause. Think about all of those Secret Service agents staying at $500 a night rooms in Trump resorts at taxpayer expense. That’s probably unconstitutional.

The Enforcement Gap

But how do we enforce these rules? The Constitution is silent on that point. The enforcement problem is even more troubling when prohibited emoluments are accepted by the most powerful person in the U.S. government: the president.

Congress can investigate a president. The House can impeach a president who then can be convicted by the Senate for high crimes and misdemeanors. A large enough emoluments clause violation, particularly of the foreign emoluments clause, could be a serious enough offense to justify impeachment.

But, as a practical matter, investigation of a president for emoluments clause violations won’t occur if the president’s party controls both houses of Congress. Congress did virtually nothing about presidential emoluments in 2017 and 2018. The House also may be reticent to impeach the president for violating the emoluments clause. The November 2019 House articles of impeachment against President Trump did not invoke emoluments or any other financial conflicts of interest, instead focusing on the Ukraine scandal and President Trump’s obstruction of Congress. At best, one might see a congressional investigation when a house of Congress falls into the other party’s hands.

How about the courts? Do federal courts have the power to enforce the emoluments clause against the president? Perhaps, but only if a plaintiff has standing to sue the president for violating the emoluments clause.

In 2017 three separate groups of plaintiffs sued President Trump for his ongoing violations of the foreign and domestic emoluments clauses of the Constitution: (1) a suit in the Southern District of New York by Citizens for Responsibility and Ethics in Washington (CREW), an organization of which I was vice-chair and counsel, joined as plaintiff by businesses that compete with the Trump Organization; (2) a suit in the District of Maryland by the Attorney General of Maryland and the Attorney General of the District of Columbia, joined as plaintiffs by businesses that compete with the Trump Organization; and (3) a suit by virtually all of the Democrats in the House and Senate brought in the United States District Court for the District of Columbia. Federal appeals courts have ruled on standing in all three cases, and of these plaintiffs only the individual businesses competing with the Trump Organization and state attorneys general suing on their behalf have been held to have standing (in the Second Circuit and the Fourth Circuit). Public interest groups such as CREW have been denied standing, as have the Members of Congress, at least if they are in the minority.

In addition to the standing problem, civil suits involve enormous delay, with motions to dismiss sometimes taking years to resolve before there is any discovery. And discovery of relevant documents is necessary to reveal the exact extent of the emoluments involved.

President Trump will no doubt appeal the rulings that support business group’s standing, delaying the possibility of judicial enforcement of the emoluments clause well past his first term in office. If Trump leaves office, these cases may become moot because Trump is being sued in his official capacity not his personal capacity. The relief sought is principally injunctive; the plaintiffs seek an injunction barring the president from receiving future emoluments and requiring the return of emoluments already received. A court may or may not be willing to pursue such remedies after Trump leaves office.

The Department of Justice (DOJ) litigated all three of these cases on behalf of President Trump, defending his businesses’ right to receive benefits from foreign governments, from the states and from the federal government in violation of the Constitution. The Department defended Trump because he had been sued in his official capacity in all three cases. These legal services – DOJ defending Trump Organization emoluments at taxpayer expense – might themselves be a violation of the domestic emoluments clause (financial benefits to the president in excess of his salary). But given the difficulties of enforcing the emoluments clause anyway, such personal presidential use of DOJ has perhaps become par for the course.

When one considers that the purpose of the emoluments clauses – particularly the foreign emoluments clause – is to prevent public corruption, it is clear that DOJ should be on the other side. DOJ should be investigating and sometimes suing to enforce the emoluments clause rather than siding with the president or other federal officials in trying to impede enforcement.

With a Congressional mandate, DOJ can be required to do just that.

Congress thus should pass a new law – which I will call the Emoluments Act of 2021 – providing that:

1. Knowing receipt by a federal official or a business entity controlled by a federal official of prohibited foreign government emoluments in excess of $50,000 in any 12-month period is a felony with a statute of limitations that tolls until the federal official leaves office; and

2. Regardless of whether the federal official has the state of mind required for criminal prosecution under (1), prohibited foreign government emoluments received by a federal official as well as prohibited emoluments received by the president from the states or the United States government shall be forfeited to the United States government, and DOJ shall sue to recover such amounts as soon as practical after receiving notice of such emoluments.

Although these criminal and civil statutes should track as closely as possible the language and the intent of the framers in the emoluments clause of the Constitution, the statutory language should be independent of constitutional interpretation with Congress specifically defining an “emolument” as any “profit or advantage” received by the federal official or by an entity controlled by the federal official from a foreign government or from an entity controlled by a foreign government such as a bank, state owned company or sovereign wealth fund. The definition of “emolument” should include earned income, payments in business transactions, capital investments in businesses controlled by the federal official, loans, leases and investment income. The statute should include enumerated exceptions, including the de minimus gifts from foreign governments already permitted under the Foreign Gifts and Decorations Act, investment income from ownership of publicly traded foreign government securities, and routine transactions by a federal official as a consumer (for example redemption of frequent flier miles on a state-owned airline). By codifying the foreign emoluments prohibition for federal officials Congress will take the matter out of the realm of constitutional interpretation into the much easier realm of statutory interpretation. Such a statute will also provide what the Constitution does not provide – a specific remedy for receipt of prohibited foreign emoluments.

DOJ’s public integrity section should be charged with enforcing the criminal provisions of this Emoluments Act and the civil division with enforcing the civil remedies.  In both criminal and civil investigations DOJ should be required to report to Congress on an annual basis information about cases in which the Justice Department believed there was a prima facie case that the Emoluments Act of 2021 had been violated.

This proposed statute should close a loophole in the constitutional prohibition on foreign emoluments and – for the president – on domestic emoluments. The prohibition is effective only if there is enforcement. Existing enforcement mechanisms have failed, as least in the case of the president, and Congress should mandate that the DOJ fulfill this role as part of its mission to uphold and enforce the Constitution and laws of the United States.

Recommended statutory language:

Section 101
(a) Except as permitted by subsection (b) hereof, whoever, being an elected official or an officer or employee of the United States Government, or of any independent agency of the United States, a Federal Reserve bank director, officer, or employee, or an officer or employee of the District of Columbia, knowingly receives emoluments from a foreign government or an entity controlled by a foreign government that exceed $50,000 within any twelve month period shall be subject to the penalties set forth in section 216 of this title. For purposes of this section an “emolument” shall be defined as any profit or financial advantage received by the federal official or by an entity controlled or beneficially owned by the federal official from a foreign government or from an entity controlled by a foreign government such as a bank, state owned company or sovereign wealth fund. The definition of “emolument” should include but not be limited to earned income, payments in business transactions, capital investments in businesses controlled by the employee or elected official, loans, leases and investment income.

(b) The following shall be exempt from paragraph (a) above: (i) de minimus gifts from foreign governments permitted under the Foreign Gifts and Decorations Act, (ii) investment income from ownership of publicly traded government securities, (iii) routine transactions by a federal official as a consumer (for example redemption of frequent flier miles on a state-owned airline), (iv) professional licenses, copyrights, trademarks and patents available on the same terms as available to the general public.

Section 102. The President of the United States, in addition to being subject to paragraph 101 above shall hold in constructive trust for the U.S. Government any emoluments received by the President from the United States or from any of the states in excess of the salary set by Congress for the President. For purposes of this Section an emolument shall have the same meaning as set forth in Section 101(a) above subject to the same exemptions as set forth in Section 101(b) above.

Section 103. Regardless of whether a federal employee or elected official has the state of mind for criminal prosecution under Section 101 above, prohibited foreign government emoluments received by a federal employee or elected official as well as prohibited emoluments received by the President of the United States from the U.S. Government or from any of the states shall be forfeited to the U.S. Government, and the Department of Justice shall bring an action in the federal courts to recover such amounts as soon as practical after receiving notice of such prohibited emoluments. 

About the Author(s)

Richard Painter

S. Walter Richey Professor of Corporate Law at the University of Minnesota Law School Follow him on Twitter at (@RWPUSA).