Can a President Trump Keep His Business Intact?

There’s a federal law on the books that could discourage him from holding onto his assets.

In 1974, Nelson Rockefeller, a fabulously wealthy New York Republican, unexpectedly found himself on the verge of being confirmed by the Senate to the office of vice president, which had been vacated by Gerald Ford after he assumed the presidency. Senators had some concerns: Wouldn’t Rockefeller’s capacity to counsel the president on financial regulation, for example, be compromised by his family’s holdings in the Chase Manhattan Bank?

Rockefeller promised the Senate that, as a man of irreproachable integrity, he would never allow his private interests to cloud his official judgment—and in those clubby days of the Senate, such assurances counted for a lot. There was, of course, the sticky matter of the federal conflict-of-interest law, which prohibits “officers” of the United States from participating in any governmental action in which they have a financial interest, and would ostensibly limit the topics on which Rockefeller could advise the president. But after receiving a Justice Department letter affirming that the vice president and the president are exempt from that statute, the Senate felt free to confirm Rockefeller. He became vice president on December 19, 1974.

Fast forward to 2016. A fabulously wealthy New York Republican finds himself unexpectedly close to the presidency. If he were to become president, Donald Trump’s decisions could affect any one of the 268 business ventures worldwide that bear his name. The conflict-of-interest statutes explicitly exempt the president, thus giving the chief executive a free hand—legally, if not ethically—to craft policy to advance his private-sector enterprises. But the conflict-of-interest statutes are not the only federal laws that would discourage an official from manipulating or continuing to hold outside business interests. There is, in fact, another law that seems tailor-made for a President Trump.

Rockefeller and Trump differ in that the Republican nominee is, in part, an international brand. Trump makes money licensing his name to hotels, golf courses, apartment towers, wine, perfume, and other goods worldwide, while Rockefeller’s holdings were far more domestic and far more private. If Trump were to put executive action behind his proposal to disengage the United States from NATO, for example, he might hypothetically be able to secure favors for his company’s hotel-development possibilities from the Russian government. Or if Trump were to restrict Muslims from entering the United States, opponents might boycott one of the golf courses that bears his name, even though the course itself has nothing to do with immigration.

And so in principle anything Trump did in office could affect his brand—whether positively or negatively, wittingly or unwittingly. There’s no evidence to suggest Trump would intentionally use the presidency to secure more wealth for himself. But if he were to maintain his current holdings in the Trump Organization, his ability to make policy in the public interest would be inherently compromised across the board. And the philosophy behind the conflict-of-interest laws is that officials should never be in a position to advance their financial holdings, even if—as Rockefeller argued—they are sufficiently honest to rise above their interests. After all, the democratic electorate can’t ever look into an official’s mind and ensure that his or her decisions are always well motivated.

There is, however, a law outside of the conflict-of-interest statutes that could deter Trump from retaining his business interests while in office—and one that has received insufficient attention. Introduced in the Ethics Reform Act of 1989, it prohibits any senior “noncareer officer” of the government from permitting his or her name to be “used” by any firm that “provides professional services involving a fiduciary relationship.” While the conflict-of-interest statutes exempt the president, the text of the use-of-name law does not, though its use in court would require the repeal of a 25-year-old executive-branch regulation that does exempt the president and vice president. As important, Congress explicitly said this statute was meant to ban the use of an officer’s name not only in traditional fiduciary-based firms, such as law partnerships, but in a range of other ventures including “real estate, consulting and advising, [and] architecture.” The U.S. Office of Government Ethics regulations that apply the law adopted this broad definition.

This is where Trump’s business interests come in: It would appear that many of his organization’s activities fall under those barred by the use-of-name law. On its website, the Trump Organization says that it engages in “real estate sales” and “brokerage” services. Even on a narrow, technical understanding, University of Houston Law professor Teddy Rave told me, “a real-estate broker … can certainly be in a fiduciary relationship with a buyer or seller.” More broadly, the Trump Organization speaks of its “collaborative” relationships and “intimate involvement” with the companies that license Trump’s name; one can, the website boasts, “see the touch of the Trump brand in every aspect of the properties” it works with. That suggests—to use the law’s broad understanding of the kinds of organizations to which an officer of government can’t lend his or her name—that a fair bit of “consulting and advising” might be going on in Trumpworld.

How the use-of-name law would translate to Trump Organization activities isn’t precisely clear. It could mean merely that the company can't invoke "Trump" in its own title if he becomes president. But it might also mean that it can't “use” the Trump name by licensing it to any other entity, which would mean that everything from Trump golf courses to Trump hotels couldn't bear his moniker. That would be the more accurate interpretation, says Kathleen Clark, a professor at Washington University Law in St. Louis, Missouri. Congress’s “endorsement of a broad reading of the statute” was “intended to prevent … outsiders from ingratiating themselves with government officials by providing excessive outside compensation,” she told me. And that would apply to any business licensing Trump’s name.

Trump could honor the name law by doing what every president since the 1970s has done voluntarily: sell off his assets, in particular his interests in his brand, and replace them with holdings in a blind trust, the contents of which would remain unknown to him; or he could replace them with Treasury bills and index funds whose value he couldn’t affect in any direct way, as President Obama has done.

Trump, for his part, has shown no indication he plans to sell off his assets, and his camp has resisted, in particular, suggestions that he set up a blind trust. Trump’s solution is to have his children run the company. Yet it would appear that a sell-off is the only way he could adhere to the use-of-name statute as Congress understood it: as an instrument for preventing an officer, including the president, from being in a position where others could advance his or her financial interests in return for favorable policy decisions.

And Congress always intended for the name ban to apply to the president. In 1989, there was concern that outgoing President Ronald Reagan might have been vulnerable to an investigation because of a spate of conflict-of-interest controversies involving his aides. That’s when Congress amended the conflict-of-interest statutes to say that their use of the term “officer” would no longer include the president or vice president. Prior to that, even the 1974 Justice Department letter clearing the way for Rockefeller never tried to argue that the vice president isn’t a government officer. And so it’s crucial that in the very same 1989 bill in which it explicitly excluded the president and vice president in the conflict-of-interest statutes, Congress pointedly did not do so with the name ban.

If he refused to divest himself from his own business, Trump would seem to be vulnerable under the name law regardless of how ethically he were to behave as president. The prohibition would seem to stand whether or not he chose to brazenly advance his business interests while in office. Yet there is one thing standing in the way of him being prosecuted: In 1991, the Office of Government Ethics wrote a regulation exempting the president and vice president from the category of “officer” for purposes of the name ban, even though Congress said no such thing in the actual statute. But while this regulation exempting the president would—as long as it exists—be as binding on the courts as any statute, its status as far as the other two branches are concerned is not that of statutory law. The Office of Government Ethics could repeal it at any time.

By its own lights, the office would have every reason to do so. In 1991, when it brought in the regulation exempting the president from the use-of-name ban, officials likely could not have predicted a chief executive who earns massive sums of money from selling his name worldwide. The examples that the office invokes to explain its name-use regulations talk of small-scale real-estate agencies or family accounting firms, neither of which could possibly generate the wealth Trump gleans from his name-selling. The Office of Government Ethics’ stated vision is to achieve “a high level of public confidence in the integrity of executive branch programs and operations,” and a President Trump’s interests in his brand would massively conflict with that goal. Not only that, but the office has officially stated that the president should observe the main conflict-of-interest law as a matter of policy, even though he is not bound to do so by law. Because Congress didn’t exempt the president from the name law, the office could certainly give it legal effect.

If it were to do so, a President Trump would be left two possible courses of action. He could comply with the law and sell off his interests in his own name in an arm’s-length transaction. Or he could flout it. In which case, he could be prosecuted, and the penalty under the name-ban law would be his forfeiting all the compensation he receives from licensing his own name.

And, of course, presidents who flout the law—especially laws that have to do with corruption—always leave themselves open to that ultimate remedy: impeachment.