Sheri Dillon, Partner at Morgan Lewis — specializing in IRS audits and bankruptcy
Morgan Lewis & Blockius LLP is a multinational firm of over 2,000 employees with offices in NYC, Europe, Asia and the Middle East
Morgan Lewis announced in 2012 that it was opening new offices in Moscow and Almaty, Kazakhstan, and in 2016 was named “Russia Law Firm of the Year”
Contact Sheri Dillon: 202-739-5749
EDITOR’S NOTE: [from the Morgan Lewis & Blockius website]
Sheri A. Dillon focuses on federal tax controversy matters, guiding clients through IRS examinations and appeals, the administrative claims process, and litigation. Sheri also counsels clients on a variety of tax-planning matters that involve acquisitions, dispositions, combinations, and debt restructuring and reorganizations, with a special focus on partnership transactions and closely held businesses.
Sheri has tax litigation experience and has appeared before the US Tax Court, US district and appellate courts, and the US Court of Federal Claims. She represents corporate taxpayers, Tax Equity and Fiscal Responsibility Act (TEFRA) partnerships, partners, and global, high-wealth taxpayers in the financial services, private equity, real estate, energy, manufacturing, and consumer products industries.
Additionally, Sheri has experience with IRS audit and appeals matters, including challenges that involve the economic substance, substance-over-form, and business purpose doctrines; taxation of partnerships and partners; taxation of financial products; income tax accounting issues; cancellation of indebtedness income; debt-equity classification; charitable contribution deductions; tax-free reorganizations; and valuation.
The lawyer Trump put in charge of handling his conflicts of interest is a tax expert who has spent more than a decade working for him.
An award announcement said the firm “offers top-level advice in regards to the energy sector” and praised its representation of an investment fund backed by the Russian and Chinese governments.
Transcript from Press Conference January 11, 2017
DILLON: Good morning. It’s my honor and privilege to be here today at President-elect Trump’s request.
He’s asked me, as you just heard, to speak about the conflicts of interest and the steps he’s taking. As you know, the business empire built by President-elect Trump over the years is massive, not dissimilar to the fortunes of Nelson Rockefeller when he became vice president. But at that time, no one was so concerned.
President-elect Trump wants the American public to rest assured that all of his efforts are directed to pursuing the people’s business and not his own. To that end, as he explained a few moments ago, he directed me and my colleagues at the law firm Morgan Lewis and Bockius to design a structure for his business empire that will completely isolate him from the management of the company.
He further instructed that we build in protections that will assure the American people the decisions he makes and the actions that he takes as president are for their benefit and not to support his financial interests.
DILLON: As he said, he’s voluntarily taking this on. The conflicts of interest laws simply do not apply to the president or the vice president and they are not required to separate themselves from their financial assets. The primary conflicts of interest statutes and some have questioned it, is Section 18 USC 208 and it’s simply inapplicable by its terms. And this is not just our interpretation. It’s Congress itself who have made this clear in 1989 when it amended Section 18 USC 202 to state that, except as otherwise provided, the terms office and employee in section 208 shall not include the president.
Even so, President-elect Trump wants there to be no doubt in the minds of the American public that he is completely isolating himself from his business interests. He instructed us to take all steps realistically possible to make it clear that he is not exploiting the office of the presidency for his personal benefit. He also sought the guidance of individuals who are familiar with and have worked extensively in the fields of government ethics and constitutional law.
Critical to the Morgan Lewis team is Fred Fielding, standing here to our side and with us today and many of you have known him. He has served several presidents over the years including serving as counsel to Presidents Ronald Reagan and George W. Bush as well as serving on President George H.W. Bush’s Commission on Federal Ethics Law Reform and he also held the position of vice chair of the Ethics Resource Center.
Mr. Fielding has been extensively involved with and approved this plan. He’s here today to support the plan and he will continue to provide guidance as the plan is implemented and as Eric, Don, along with others, take over management of the Trump organization.
I’m gonna detail some of the extraordinary steps now that the president-elect is taking. First, President-elect Trump’s investments and business assets commonly known as the — as the Trump Organization, comprising hundreds of entities which, again, if you all go and take a look at his financial disclosure statement, the pages and pages and pages of entities have all been or will be conveyed to a trust prior to January 20th. Here is just some of the paperwork that’s taking care of those actions.
Second, through the trust agreement, he has relinquished leadership and management of the Trump Organization to his sons Don and Eric and a longtime Trump executive, Allen Weisselberg. Together, Don, Eric and Allen will have the authority to manage the Trump Organization and will make decisions for the duration of the presidency without any involvement whatsoever by President-elect Trump.
Further, at the president-elect’s direction, the trust agreement provides — that to ensure the Trump Organization continues to operate in accordance with the highest and legal ethics standards, an ethics adviser will be appointed to the management team. The written approval of the ethics adviser will be required for new deals, actions, and transactions that could potentially raise ethics or conflicts of interest concerns.
President-elect Trump as well as Don, Eric and Allen are committed to ensuring that the activities of the Trump organization are beyond reproach and cannot be perceived to be exploitive of the office of the presidency. President-elect Trump will resign from all officer and other positions he holds with the Trump Organization entities.
Further, in addition, his daughter Ivanka will have no further involvement with or management authority whatsoever with the Trump Organization. As she and Jared move their family to D.C., Ivanka will focused on settling her children into their new homes and their new schools.
The president-elect has also already disposed of all of his investments in publicly traded or easily liquidated investments. As a result, the trust will have two types of assets; first, it will hold liquid assets. Cash, cash equivalents and treasuries and perhaps some positions in a government approved diversified portfolio, one that is consistent with the regulations from the Office of Government Ethics.
Second, the trust is going to hold his preexisting illiquid, but very valuable business assets, the ones that everyone here is familiar with. Trump owned, operated and branded golf clubs, commercial rental property, resorts, hotels, rights to royalties from preexisting licenses of Trump-Marks Productions and Goods. Things like Trump Tower, Mar-a-Lago, all of his other business assets, 40 Wall Street will all be in the trust.
Through instructions in the trust agreement, President-elect trust — President-elect Trump first ordered that all pending deals be terminated. This impacted more than 30 deals, many of which were set to close by the end of 2016. As you can well imagine, that caused an immediate financial loss of millions of dollars, not just for President-elect Trump, but also for Don, Ivanka and Eric.
DILLON: The trust agreement as directed by President Trump imposes severe restrictions on new deals. No new foreign deals will be made whatsoever during the duration of President Trump’s presidency. New domestic deals will be allowed, but they will go through a vigorous vetting process.
The president-elect will have no role in deciding whether the Trump Organization engages in any new deal and he will only know of a deal if he reads it in the paper or sees it on TV. Because any new deal could — and I emphasize could — be perceived as causing a conflict or as exploiting the office of the presidency, new deals must be vetted with the ethics adviser, whose role will be to analyze any potential transactions for conflicts and ethics issues.
The ethics adviser will be a recognized expert in the field of government experts. Again, his role will be to scrutinize the new deals and the actions, and any new deal must receive written approval.
To further reinforce the wall that we are building between President-elect Trump and the Trump Organization, President-elect Trump has ordered, through his trust agreement, to sharply limit his information rights. Reports will only be available and reflect profit and loss on the company as a whole. There will be no separate business by business accounting.
Another step that President-elect Trump has taken is he created a new position at the Trump Organization; the position of chief compliance counsel, whose responsibility will be to ensure that the Trump businesses, again, are operating at the highest levels of integrity and not taking any actions that could be perceived as exploiting the office of the presidency.
He has also directed that no communications of the Trump Organization, including social media accounts, will reference or be tied to President-elect Trump’s role as president of the United States or the office of the presidency.
In sum, all of these actions — complete relinquishment of management, no foreign deals, ethics adviser approval of deals, sharply limited information rights — will sever President-elect Trump’s presidency from the Trump Organization.
Some have asked questions. Why not divest? Why not just sell everything? Form of blind trust. And I’d like to turn to addressing some of those questions now.
Selling, first and foremost, would not eliminate possibilities of conflicts of interest. In fact, it would exacerbate them. The Trump brand is key to the value of the Trump Organization’s assets. If President-elect Trump sold his brand, he would be entitled to royalties for the use of it, and this would result in the trust retaining an interest in the brand without the ability to assure that it does not exploit the office of the presidency.
Further, whatever price was paid would be subject to criticism and scrutiny. Was it too high, is there pay for play, was it too much pay to curry favor with the president-elect. And selling his assets without the rights to the brand would greatly diminish the value of the assets and create a fire sale.
President-elect Trump should not be expected to destroy the company he built. This plan offers a suitable alternative to address the concerns of the American people, and selling the entire Trump Organization isn’t even feasible.
Some people have suggested that the president-elect sell the business to his adult children. This would require massive third-party debt sourced with multiple lenders, whose motives and willingness to participate would be questioned and undoubtedly investigated. And if the president-elect were to finance the sale himself, he would retain the financial interests in the assets that he owns now.
Some people have suggested that the Trump — that President-elect Trump could bundle the assets and turn the Trump Organization into a public company. Anyone who has ever gone through this extraordinarily cumbersome and complicated process knows that it is a non-starter. It is not realistic and it would be inappropriate for the Trump Organization.
Some people have suggested a blind trust, but you cannot have a totally blind trust with operating businesses. President Trump can’t unknow he owns Trump Tower and the press will make sure that any new developments at the Trump Organization are well publicized.DILLON: Further, it would be impossible to find an institutional trustee that would be competent to run the Trump Organization. The approach that he is taking allows Don and Eric to preserve this great company and its iconic assets. And this approach is best from a conflicts and ethics perspective. It creates a complete separation from President-elect Trump — it separates him and prevents him from participating in the business and poses strict limits on what the trustees can do and requires the assent of any ethics adviser to a new deal.
I’m going to turn to one last topic today that has been of interest lately called emoluments. That’s a word I think we’ve all become familiar with and perhaps had not heard before.
And we’re gonna describe some other actions that President-elect Trump is taking to avoid even the appearance of a conflict.
Emoluments comes from the Constitution. The Constitution says “officials may not accept gifts, titles of nobility, or emoluments from foreign governments with respect to their office, and that no benefit should be derived by holding in office.”
The so-called Emoluments Clause has never been interpreted, however, to apply to fair value exchanges that have absolutely nothing to do with an office holder.
No one would have thought when the Constitution was written that paying your hotel bill was an emolument. Instead, it would have been thought of as a value-for-value exchange; not a gift, not a title, and not an emolument.
But since President-elect Trump has been elected, some people want to define emoluments to cover routine business transactions like paying for hotel rooms. They suggest that the Constitution prohibits the businesses from even arm’s-length transactions that the president-elect has absolutely nothing to do with and isn’t even aware of.
These people are wrong. This is not what the Constitution says. Paying for a hotel room is not a gift or a present and it has nothing to do with an office. It’s not an emolument.
The Constitution does not require President-elect Trump to do anything here. But, just like with conflicts of interests, he wants to do more than what the Constitution requires.
So, President-elect Trump has decided, and we are announcing today, that he is going to voluntarily donate all profits from foreign government payments made to his hotel to the United States Treasury. This way, it is the American people who will profit.
In sum, I and president-elect’s (sic) other advisers at Morgan Lewis have determined the approach we’ve outlined today will avoid potential conflicts of interests or concerns regarding exploitation of the office of the presidency without imposing unnecessary and unreasonable loses on the president-elect and his family.
We believe this structure and these steps will serve to accomplish the president-elect’s desire to be isolated from his business interests and give the American people confidence that his sole business and interest is in making America great again, bringing back jobs to this country, securing our borders and rebuilding our infrastructure.
The American people were well — well aware of President-elect Trump’s business empire and financial interests when they voted. Many people voted for him precisely because of his business success.
President-elect Trump wants to bring this success to all Americans. Thank you.