One day before inauguration, ownership at Trump National in Bedminster changed

One day before he was sworn into office as the as the most powerful man in the free world, President Donald Trump made changes to the ownership at his Bedminster golf course.

On Jan. 19, 2017, "a change occurred" in the membership interest of Lamington Farm Club, LLC, which does business as Trump National Golf Club - Bedminster, according to a public legal notice published in the Courier News around the time of the changes.

Lamington Farm Club LLC is a holder of a golf facility liquor license at Trump National Golf Club, located at 900 Lamington Road in Bedminster. The Alcoholic Beverage Control, or ABC, requires that the public be notified of any changes in the corporate structure of facilities with liquor licenses.

The changes made to the ownership at Trump National create a web of corporations and limited liability companies, some with similar sounding names.

Unlike former presidents Jimmy Carter, Ronald Reagan, George H.W Bush Bill Clinton, and George W. Bush, who all placed their assets in blind trusts when they were elected, what Trump did in Bedminster reflected what he did with most of his business interests — placing them under the Donald J. Trump Revocable Trust and making his son, Donald Trump Jr., the trustee.

Matteo Gatti, an associate professor of law at Rutgers University, said that any argument suggesting this form of organization constitutes as divestment is "laughable" because Trump  put his son in charge of the Donald J. Trump Revocable Trust.

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"Everybody knew that all he did was just a pure formality that meant nothing on a substance level, but there's nothing particularly sketchy about this organization," Gatti said. "LLCs are a perfectly fine way to do it."

The breakdown of ownership, according to the legal notice, is as follows:

• LFB Acquisition LLC, a Delaware limited liability company, is a member and owner of 100 percent of Lamington Farm Club, LLC.
• DJT Holdings LLC, a Delaware limited liability company, is a member and owner of 99 percent of LFB Acquisition LLC.
• LFB Acquisition Member Corp., a Delaware corporation, is the managing member and owner of one percent of LFB Acquisition LLC.
• DJT Holdings Managing Member LLC, a Delaware limited liability company, is a member and owner of 100 percent of LFB Acquisition Member Corp. and a member and owner of one percent of DJT Holdings LLC.
• The Donald J. Trump Revocable Trust dated April 7, 2014, is a member and owner of 99 percent of DJT Holdings LLC and a member and owner of 100 percent of DJT Holdings Managing Member LLC.

The trustees of The Donald J. Trump Revocable Trust are Donald Trump Jr. and Allen Weisselberg, the chief financial officer of the Trump Organization.

According to liquor license renewal documents filed with the ABC in May and June of 2016 as well as September 2015, Donald Trump was the operator of Lamington Farm Club LLC.

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Although the web of LLCs may be confusing to someone not versed in tax code, the structure of the LLCs is not uncommon and perfectly legal, according to business law professors.

"There's nothing striking here," Gatti said in reference to the organization at Trump National. "LLCs are a perfectly legitimate way to do business."

Gatti teaches law students about business organizations, corporate finance, mergers and acquisitions. He has worked in corporate law firms in Russia, Italy and New York.

He said that LLCs are so prevalent nowadays that almost every business utilizes them.

"Everybody uses them from the deli around the corner to private equity firms, to some extent, use a mix of LLCs and limited partnerships, law firms, dental offices," Gatti said. "It's a pretty simple and handy way of doing business these days."

LLCs started to become popular in the 1990s, according to another law professor.

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"Limited liability companies – or LLCs – have been very popular since the mid 1990s, and since the turn of this century have been the 'go to' entity for small businesses," according to Stephen Lubben, the Harvey Washington Wiley Chair in Corporate Governance & Business Ethics at Seton Hall University. "An LLC is designed to combined the best features of a corporation and a partnership. The owners get protection from their creditors, as in a corporation, while getting the flexibility of a partnership."

LLCs are taxed like partnerships, which means they do not pay separate taxes, unlike corporations, Lubben said. Instead, the income simply “flows through” to the owner’s personal tax return. In addition, in the recently passed tax bill, these sorts of “pass through” entities received even more favorable tax treatment, he said.

Lubben said that one reason a business may use multiple LLCs and corporations, as in the case with Trump National, "is to make it harder for an unpaid creditor to reach back to the ultimate owner, or otherwise terminate the LLC and get at its assets." 

"An LLC with a single owner is especially “fragile” if the owner files for bankruptcy, because the trustee can grab the assets the LLC owns and add them to the bankruptcy estate," Lubben said, "and we know that the president has some past experience with bankruptcy in his businesses, so he might be particularly sensitive to that risk."

Gatti said that every business, at a certain level, will "end up structuring things this way."

The trust created last year is also revocable, which means that Trump, as the donor or grantor, can change the provisions of it at any time he wishes. The president can also withdraw cash from them at any time.

According to a USA TODAY analysis, President Trump’s companies sold more than $35 million in real estate in 2017, mostly to secretive shell companies that obscure buyers’ identities, continuing a dramatic shift in his customers' behavior that began during the election.

"It's a total travesty what he's doing here, he's not divesting anything," Gatti said. 

According to financial disclosure forms submitted in June 2017, Trump is the member and president of both DJT Holdings LLC and DJT Holdings Managing Member LLC. He is also president of LFB Acquisition LLC and president, director and chairman of LFB Acquistion Member Corp.

The financial disclosure also shows that Trump is the president of Lamington Farm Club LLC, known as Trump National Golf Club in Bedminster.

When Trump was elected president, his aides at the time announced that as president, Trump would step back from the management of his businesses, but that he still intended to retain an ownership stake in his vast real estate and branding empire.

Trump’s sons, Donald Trump Jr. and Eric Trump, took over the reigns of the Trump Organization, and are now running the company along with Weisselberg. Trump said at the time that he will not make any corporate decisions during his time in the White House, according to his aides.

Around the same time in January 2017, the federal government's top ethics official joined a chorus of ethics watchdogs denouncing the incoming president's plan to retain his financial interest in his businesses.

"The plan the president has announced doesn't meet the standards that the best of his nominees are meeting and that every president in the past four decades has met," Walter Shaub, the head of the Office of Government Ethics, told reporters at a news conference.

Shaub, who has since resigned, called Trump's pledge to step away from management of his company "meaningless from a conflicts of interest perspective."

Staff Writer Nick Muscavage: 908-243-6615; ngmuscavage@gannettnj.com