The mogul-turned-president has long relied on loyalists to push the limits in defense of his image, but Roy Cohn, David Pecker and Michael Cohen all wound up out in the cold
For decades, Donald Trump has depended on loyalists to take care of especially sensitive and difficult tasks. These guardians of his image—including the
Red-baiter Roy Cohn, the
tabloid publisher David Pecker and the
lawyer Michael Cohen
—learned a hard lesson from their service. They pledged fealty to Mr. Trump and dedicated themselves to shielding him. For a while, they became wealthier and more powerful through their association with him. But Mr. Trump ultimately offered little back in protection or respect.
Mr. Trump’s first fixer was Cohn, the disgraced former chief counsel to Sen. Joseph McCarthy in the 1950s. In the 1970s, as a lawyer for the powerful, Cohn manipulated the media and the legal system to secure business advantages for Mr. Trump. He cast his client as a fabulously successful developer who transformed his father’s collection of low-end apartment buildings in Brooklyn and Queens into a Manhattan-based empire of luxury condominium towers.
Cohn defined the role of fixer for Mr. Trump, but after Cohn became sick with AIDS in the 1980s, Mr. Trump distanced himself, steering business elsewhere. Weeks after he won the presidency in 2016, Mr. Trump told friends at Mar-a-Lago, his Florida resort, that after hosting the dying Cohn for dinner there, “I had to spend a fortune to fumigate all the dishes and silverware.”
Mr. Trump’s views of media and celebrity were shaped by Cohn and his successors, the men he relied on to project a particular version of himself—one that often bore little resemblance to reality. Their careers with Mr. Trump shed light on his rise in public life and his victory in the 2016 presidential election.
This account is based on court and congressional documents, texts and other communications, along with interviews with people involved in or familiar with the events.
Mr. Pecker’s celebrity gossip and personal-lifestyle empire—primarily the tabloid National Enquirer—promoted Mr. Trump’s political aspirations for almost two decades, starting in 1999.
Donald Trump (left) with his attorney Roy Cohn, Oct. 18, 1984. PHOTO: BETTMANN ARCHIVE/GETTY IMAGES
Michael Cohen, Mr. Trump’s special counsel at the Trump Organization, styled himself as the boss’s loyal problem solver. A personal-injury lawyer and taxi-medallion owner raised on Long Island, Mr. Cohen became Mr. Trump’s armed press attaché in the late 2000s. Over the years, he wore a gun in an ankle holster and used legal threats to suppress bad headlines about his boss.
Together with Mr. Trump, Mr. Cohen and Mr. Pecker worked during the 2016 presidential campaign to “catch and kill” stories about former Playmate of the Year Karen McDougal and former adult-film star Stormy Daniels, who privately alleged that they’d had affairs with the Republican candidate. Both women were paid to keep silent.
Mr. Cohen was charged with campaign-finance violations and is serving three years in prison. Mr. Pecker’s company, American Media Inc., admitted breaking the law while doing Mr. Trump’s bidding and reached an agreement with prosecutors to avoid criminal charges.
Trump didn’t believe he owed his fixers anything.
Mr. Trump’s reward to his fixers was what he offered all those in his service over the decades: exposure to his world, the chance to play a bit part in his story. These operatives were attracted to Mr. Trump’s aura, to the force of the huge personality that led him to the presidency. But when they had fulfilled their missions, they were dispensable. Mr. Trump didn’t believe he owed his fixers anything.
Mr. Pecker was the son of a Bronx bricklayer. He became an accountant and then rose in the publishing world through shrewd power plays. Mr. Pecker forged connections with influential figures, whose foibles were off-limits in his publications and were dubbed by staffers FOPs (Friends of Pecker).
In 1997, while running Hachette Magazines Inc., Mr. Pecker hatched a deal to publish a custom magazine called Trump Style. “Trump Style? That’s like the oxymoron of the century,” Hachette executive Nick Matarazzo said when Mr. Pecker told him of it. When advertisers didn’t bite, Mr. Pecker became enraged.
His relationship with Mr. Trump was a series of chits accrued and favors cashed in. Before Mr. Pecker took over at American Media in 1999, the Enquirer had feasted on stories of Mr. Trump’s affairs and breakups. After Mr. Pecker’s arrival, his gossip empire didn’t print a bad word about Mr. Trump.
As the publisher promoted Mr. Trump’s rise, Mr. Trump fed American Media tips and offered Mr. Pecker business advice. When Mr. Trump spotted an article about the company’s financial troubles, he scrawled over it with a Sharpie: You’ll be on top again in no time. Mr. Pecker framed the note and proudly displayed it in his office.
When American Media was based near Mar-a-Lago, Mr. Pecker would hang around if Mr. Trump was in town so that he could hitch a ride back to New York on the mogul’s jet. Mr. Pecker’s National Enquirer breathlessly promoted Mr. Trump’s 2011 exploratory presidential bid, and his Globe and Star propelled the “birther” conspiracy theory that Mr. Trump used to attack President Barack Obama and raise his own political profile.
Mr. Cohen came to work for Mr. Trump in 2007, after impressing him during a board uprising at a condo building. But the deals he attempted at the Trump Organization fizzled, and the boss came to question his legal skills.
In 2009, Mr. Trump gave company lawyer George Sorial an unpleasant task: persuade Mr. Cohen to resign. He’d had it with Mr. Cohen, who no longer seemed like a good fit. But Mr. Cohen decided to stay, taking a pay cut and doing more thankless work.
One of his duties was telling small-business owners that they could expect severely reduced fees or none at all for the services they provided to Mr. Trump. The boss reveled in hearing these accounts.
‘Wouldn’t that be something?’
—Michael Cohen on a possible Trump presidential run, 2010
Like Mr. Pecker, Mr. Cohen encouraged his boss’s ambitions, positioning himself as a political adviser. In 2010, Mr. Cohen showed Mr. Trump a Time magazine story about a poll testing the mogul’s appeal as a candidate. What if Mr. Trump did run? “Wouldn’t that be something?” Mr. Cohen asked.
Mr. Cohen turned to Mr. Pecker for help. Mr. Cohen and National Enquirer staff produced a series of increasingly obsequious tabloid stories hyping Mr. Trump’s unofficial candidacy and directing readers to Mr. Cohen’s website, ShouldTrumpRun.com.
Mr. Cohen’s tough-guy routine raised some eyebrows. In 2012, he horrified a campaign aide for Mitt Romney, pulling up a pant leg to show off his pistol during a fundraiser before stashing the gun in a car. Another time, he tried to barge past Mr. Trump’s security chief, Keith Schiller, after being informed that the boss was in a meeting. Mr. Schiller threw him to the ground and said, I told you, you’re not going in.
Mr. Trump kept Mr. Cohen around but didn’t seem to respect him. When Jerry Falwell Jr., son of the evangelical leader, told Mr. Trump during the 2016 presidential campaign that he and his wife really liked Mr. Cohen, Mr. Trump responded, Really? Really?
Mr. Cohen played a behind-the-scenes role in Mr. Trump’s presidential bid, to the chagrin of the actual campaign staff. For the launch event, Mr. Cohen proposed bringing an elephant to Trump Tower on Fifth Avenue. After that was rejected, he coordinated with a friend—whom Mr. Trump had nicknamed “The Screamer” for his boisterous voice—to pay 55 actors in cash to attend the event.
Mr. Cohen’s most significant task, along with Mr. Pecker, was to identify potential threats to Mr. Trump’s campaign and squash them. The three men met at Mr. Trump’s office in August 2015, and Mr. Pecker offered to use the Enquirer—in coordination with Mr. Cohen—to intercept harmful stories and ensure they never surfaced.
On June 27, 2016, after Mr. Trump learned that Ms. McDougal was shopping around her story of an alleged affair with him, he phoned Mr. Pecker. Can you make this go away? Mr. Trump asked.
Mr. Pecker bought the story for $150,000, under a contract designed to appear as a content pact guaranteeing the model two magazine covers. In return, Ms. McDougal had to keep quiet. Mr. Pecker and his top editor, Dylan Howard, also helped to broker a deal in which Mr. Cohen paid Stormy Daniels $130,000 through a shell company to buy her silence.
Adult-film actress Stormy Daniels arrives at the U.S. District Court for the Southern District of New York for a hearing related to Michael Cohen, President Trump’s longtime personal attorney and confidante, April 16, 2018. PHOTO: YANA PASKOVA/GETTY IMAGES
The Wall Street Journal later revealed both hush-money deals. After the Daniels agreement became public, Mr. Trump called Mr. Cohen—with Melania Trump on the line. “Michael, did you really pay $130,000 to Stormy Daniels?” Mr. Trump asked. “Why didn’t you tell me about it?”
‘Michael, did you really pay $130,000 to Stormy Daniels?’
—President Trump to Michael Cohen, with Melania Trump on the line
Mr. Cohen, who later said that he had consulted extensively with Mr. Trump about the payment, picked up the cue. Mr. Cohen said he’d planned to tell him after the election but had thought it safer to keep Mr. Trump out of it. He assumed the first lady saw through the lie.
In the predawn hours of April 9, 2018, FBI agents filtered into a side entrance of Manhattan’s Loews Regency Hotel and took the service elevator to room 1728. As Mr. Cohen’s wife sat on a bed, the agents, bearing a warrant, carted away materials relating to the hush-money agreements and Mr. Cohen’s private business affairs.
That same morning, other agents arrived at Mr. Pecker’s and Mr. Howard’s residences with warrants authorizing the seizure of their cellphones. Mr. Pecker gave his lawyers a simple instruction after the FBI showed up: “Get me out of this.” The publisher received immunity against federal charges; he told prosecutors that the true intent of the payment to Ms. McDougal was to help Mr. Trump’s presidential campaign by concealing an embarrassing story about the candidate. Prosecutors also declined to charge Mr. Howard, his deputy.
‘One thing I can tell you is that I’m never going to spend one day in jail.’
—Michael Cohen
Mr. Trump predicted that Mr. Cohen wouldn’t turn on him, but the fixer was frantic. “One thing I can tell you is that I’m never going to spend one day in jail. Never,” Mr. Cohen told two lawyers who met with him eight days after the raids. As Mr. Cohen’s legal fees mounted, the Trump Organization resisted paying, and Trump lawyers were lukewarm to inquiries on Mr. Cohen’s behalf about a presidential pardon.
Seeing the writing on the wall, Mr. Cohen broke from Mr. Trump, a man for whom he once had said he’d take a bullet. He pleaded guilty to nine criminal charges, including two campaign-finance related counts related to the hush-money payments, which he accused the president of directing.
Donald J. Trump
✔@realDonaldTrump
I never directed Michael Cohen to break the law. He was a lawyer and he is supposed to know the law. It is called “advice of counsel,” and a lawyer has great liability if a mistake is made. That is why they get paid. Despite that many campaign finance lawyers have strongly……
Mr. Trump had said he didn’t know about the payments and later that he’d learned of them after the fact. After Mr. Cohen’s sentencing, Mr. Trump tweeted, “I never directed Michael Cohen to break the law. He was a lawyer and he is supposed to know the law.”
American Media’s nonprosecution agreement offered a path out of trouble for Mr. Pecker and Mr. Howard. But soon an Enquirer story about an extramarital affair by Amazon Inc. founder Jeff Bezos, who had been at odds with Mr. Trump, fueled speculation that Mr. Pecker was back protecting the president, and federal authorities began investigating again. A spokesman for American Media declined to comment on the ongoing probe.
American Media’s largest financial backer could brook no more scandals. In April 2019, the publisher said that American Media was putting its tabloids, including the Enquirer, up for sale. Nine months later, that sale hasn’t been completed.
Mr. Pecker has ceded his title. His tabloid has become a toxic asset, and his legacy will forever be connected to Mr. Trump’s hush-money scandal.
Much remains mysterious about the Enquirer’s actions, and in particular its connections, if any, with President Trump and the government of Saudi Arabia — a possibility that Bezos alluded to in his blog post. Both the Saudis and Trump are aggrieved at The Post, and Trump wrongly blames Bezos for the newspaper’s accurate but unflattering coverage of him. When the Enquirer’s initial article about Bezos’s extramarital relationship was published, the president gloated in a tweet: “So sorry to hear the news about Jeff Bozo being taken down by a competitor whose reporting, I understand, is far more accurate than the reporting in his lobbyist newspaper, the Amazon Washington Post. Hopefully the paper will soon be placed in better & more responsible hands!”
The president would obviously love to see a sale of The Post to a friendlier owner — perhaps Trump pal David Pecker, the chairman and chief executive of AMI. (One is reminded of autocrats such as Hungary’s Viktor Orban, Russia’s Vladimir Putin, and Turkey’s Recep Tayyip Erdogan, who have benefited from bullying media organizations into submission in their own countries.) The Enquirer was threatening Bezos in order to get him to affirm that its coverage was not “politically motivated or influenced by political forces.” Might the Enquirer have, at a minimum, pursued the story to curry favor with Trump?
.. This is apparently not the first time the publication has been accused of extortionate demands. Other journalists, including Ronan Farrow of the New Yorker, have said they were threatened by the Enquirer’s lawyers while investigating the tabloid’s relationship with Trump. And Bezos wrote that “numerous people have contacted our investigation team about their similar experiences with AMI.” These machinations are now being exposed because of Bezos’s smart and courageous decision to confront the Enquirer rather than give in. “I prefer to stand up, roll this log over, and see what crawls out,
.. I suspect David Pecker will rue the day that his friend Donald Trump became president — if he does not already. And he is not alone.
Paul Manafort had a flourishing business as an international influence-peddler before he became Trump’s campaign chairman. He now faces a long stretch in prison after having been convicted of felony financial charges. Trump’s friend
Roger Stone has now been indicted for the first time after a long career as a political dirty trickster.
Michael Flynn, Trump’s first national security adviser, has gone from well-respected general to felon.
Michael Cohen had a cushy career as Trump’s personal lawyer before his client became president. Now Cohen, too, is a felon. Numerous other Trump associates and family members are facing, at a minimum, hefty legal bills and, at worst, serious legal exposure.
Every organization Trump has been associated with — the Trump Organization, the Trump Foundation, the Trump campaign, the Trump administration — is being investigatedby prosecutors and lawmakers. His name, long his biggest asset, has become so toxic that bookings are down at his hotels. And Trump, a.k.a. Individual 1, faces a serious threat of prosecution once he leaves office. Before it is all over, Trump himself may regret the day he became president. His unexpected and undeserved ascent is delivering long overdue accountability for him and his sleazy associates. We have gone from logrolling to having logs rolled over — and it’s about time.
n late 2016, I had lunch with a former high-ranking Trump Organization executive, a person who said he was happy to share dirt on his old boss, but who confessed to not having much dirt to share. This executive wrote a list of people whom I might contact to find out about anything potentially illegal or unethical that Donald Trump may have done. At the bottom of the list was the name Weisselberg. “Allen is the one guy who knows everything,” the person told me. “He’ll never talk to you.” I have had nearly identical conversations with different people who work or have worked for the Trump Organization many times since. They all described his role similarly: Allen Weisselberg, the firm’s longtime chief financial officer, is the center, the person in the company who knows more than anyone.
.. It is safe to say that the entire world of Trump watchers—those journalists, political folks, and advocates who carefully monitor every bit of Trump news—went bonkers. Weisselberg is the man to whom those people most want to speak. He is also the man who has, for decades, been the most circumspect.
.. “I’ve spoken to Allen Weisselberg about how to set the whole thing up,” Cohen explains to Trump.
It is difficult to hear the tape and not wonder how Weisselberg developed this particular expertise and whether he had deployed it before.
More importantly, it offers more justification for Robert Mueller and other federal, state, and local prosecutors to investigate the Trump Organization’s general business practices.
.. Weisselberg’s son Barry works at the Trump-run Wollman Skating Rink, in Central Park; his other son, Jack, works at Ladder Capital, which has been a primary lender to the Trump Organization in recent years, when few other lenders would work with a company that had experienced several bankruptcies.
.. Last month, the New York State Attorney General, Barbara Underwood, sued the Trump Foundation. Weisselberg had been deposed and showed a surprising willingness to give answers that put the President in an unflattering light.
.. In January, 2016, during Trump’s Presidential campaign, his foundation made a series of donations to veterans-advocacy organizations in Iowa that were explicitly designed to gain support for his candidacy.
.. Were Weisselberg eager to protect his longtime boss, he could have answered the questions far more narrowly. It was an early hint that Weisselberg, like Cohen, may not jeopardize his own freedom to defend Trump.
.. There is, for example, a question about where Trump got more than two hundred million dollars in cash to buy and lavishly upgrade a money-losing golf course in Scotland.
In a deal in Azerbaijan, Trump knowingly did business with a family that is widely suspected of laundering money for Iran’s Revolutionary Guard.
The F.B.I. has reportedly investigated the source of funds for a Trump-branded property in Vancouver, Canada; while the Trump hotel in Toronto also has suspicious funding.
Many of the key questions about Donald Trump revolve around his funding sources and his business partners: Did he knowingly receive funds from criminals? Did he launder money for criminals?
Did he receive remuneration to look the other way when his partners broke the law?
Was much of his business built around selling his famous name to make illegitimate projects seem viable?
Was much of his business built around selling his famous name to make illegitimate projects seem viable?
.. Weisselberg is a big fish—perhaps the biggest fish of all. Fearing that Weisselberg might implicate them in a crime, any cronies, dealmakers, attorneys, and others who might want to exchange information for leniency from prosecutors, will now do so.
.. With Cohen and, now, Weisselberg providing information, it is becoming increasingly certain that the American people will—sooner or later—have a far fuller understanding of how Donald Trump conducted business. That is unlikely to go well for him.
He’s long-boasted of how his business acumen makes him fit for president. But, Kurt Eichenwald delves into the history of his deals and finds a catalogue of calamitous ventures
The year was 1993, and his target was Native Americans, particularly those running casinos who, Trump was telling a congressional hearing, were sucking up to criminals.
Trump, who at the time was a major casino operator, appeared before a panel on Native American gaming with a prepared statement that was level-headed and raised regulatory concerns in a mature way. But, in his opening words, Trump announced that his written speech was boring, so he went off-script, even questioning the heritage of some Native American casino operators, saying they “don’t look like Indians” and launching into a tirade about “rampant” criminal activities on reservations.
.. His words were, as is so often the case, incendiary. Lawmakers, latching onto his claim to know more than law enforcement about ongoing criminal activity at Native American casinos, challenged Trump to bring his information to the FBI. One attacked Trump’s argument as the most “irresponsible testimony” he had ever heard.
.. For opponents of Trump’s presidential run, this contretemps about Native Americans might seem like a distant but familiar echo of the racism charges that have dogged his campaign, including his repeated taunting of Senator Elizabeth Warren as “Pocahontas” because she claims native ancestry.
.. Trump, through his offensive tantrum, was throwing away financial opportunities, yet another reminder that, for all his boasting of his acumen and flaunting of his wealth, the self-proclaimed billionaire has often been a lousy businessman.
.. As Trump was denigrating Native Americans before Congress, other casino magnates were striking management agreements with them.
.. in his purposeless, false and inflammatory statements before Congress, Trump alienated politicians from around the country, including some who had the power to influence construction contracts –problems that could have been avoided if he had simply read his prepared speech rather than ad-libbing.
.. Lost contracts, bankruptcies, defaults, deceptions and indifference to investors – Trump’s business career is a long, long list of such troubles
.. arrogance and recklessness of a businessman whose main talent is self-promotion.
.. He is also pretty good at self-deception, and plain old deception.
.. “I’m just telling you, you wouldn’t say that you’re failing,” he said in a 2007 deposition when asked to explain why he would give an upbeat assessment of his business even if it was in trouble. “If somebody said, ‘How you doing?’ You’re going to say you’re doing good.” Perhaps such dissembling is fine in polite cocktail party conversation, but in the business world it’s called lying.
.. And while Trump is quick to boast that his purported billions prove his business acumen, his net worth is almost unknowable given the loose standards and numerous outright misrepresentations he has made over the years. In that 2007 deposition, Trump said he based estimates of his net worth at times on “psychology” and “my own feelings”. But those feelings are often wrong – in 2004, he presented unaudited financials to Deutsche Bank while seeking a loan, claiming he was worth $3.5bn. The bank concluded Trump was, to say the least, puffing; it put his net worth at $788m, records show.
.. He personally guaranteed $40m of the loan to his company, so Deutsche coughed up. He later defaulted on that commitment.
.. Trump’s many misrepresentations of his successes and his failures matter – a lot.
.. He has no voting record and presents few details about specific policies. Instead, he sells himself as qualified to run the country because he is a businessman who knows how to get things done, and his financial dealings are the only part of his background available to assess his competence to lead the country. And while Trump has had a few successes in business, most of his ventures have been disasters.
.. When he was ready for college, Trump wanted to be a movie producer, perhaps the first sign that he was far more interested in the glitz of business than the nuts and bolts.
.. He applied to the University of Southern California to pursue a film career, but when that didn’t work out, he attended Fordham University; two years later, he transferred to the Wharton School of Business at the University of Pennsylvania and got a degree in economics.
.. Almost all of his best-known successes are attributable to family ties or money given to him by his father.
.. The son of wealthy developer Fred Trump, he went to work for his father’s real estate business immediately after graduating from Wharton and found some success by taking advantage of his father’s riches and close ties to the power brokers in the New York Democratic Party, particularly his decades-long friend Abe Beame, the former mayor of the city.
Even with those advantages, a few of Trump’s initial deals for his father were busts, based on the profits.
His first project was revitalising the Swifton Village apartment complex in Cleveland, which his father had purchased for $5.7m in 1962. After Trump finished his work, they sold the complex for $6.75m, which, while appearing to be a small return, was a loss; in constant dollars, the apartment buildings would have had to sell for $7.9m to have earned an actual profit. Still, Trump happily boasted about his supposed success with Swifton Village and about his surging personal wealth.
.. in 1970, he took another shot at joining the entertainment business by investing $70,000, to snag a co-producer’s credit for a Broadway comedy called Paris Is Out! Once again, Trump failed; the play bombed, closing after just 96 performances.
.. The next year, he moved to Manhattan from the outer boroughs, still largely dependent on Daddy. In 1972, Trump’s father brought him into a limited partnership that developed and owned a senior citizen apartment complex in East Orange, New Jersey.
Fred Trump owned 75 per cent, but two years later shrunk his ownership to 27 per cent by turning over the rest of his stake to two entities controlled by his son. Another two years passed, and then Fred Trump named him the beneficiary of a $1m trust that provided him with $1.3m in income (2015 dollars) over the next five years.
.. In 1978, he boosted his son’s fortunes again, hiring him as a consultant to help sell his ownership interest in a real estate partnership to the Grandcor Company and Port Electric Supply Corp. The deal was enormously lucrative for Donald Trump, particularly since it just fell into his lap thanks to his family. Under the deal, Grandcor agreed to pay him an additional $190,000, while Port Electric kicked in $228,500. The payments were made over several years, but the value in present-day dollars on the final sum he received is $10.4m.
.. Despite having no real success of his own, by the late 1970s, Trump was swaggering through Manhattan, gaining a reputation as a crass self-promoter. He hung out in the fancy nightspot Le Club, where he was chums with prominent New Yorkers like Roy Cohn, the one-time aide to Senator Joe McCarthy who was one of the city’s most feared and politically connected attorneys. Cohn became one of the developer’s lifelong mentors, encouraging the pugilistic personality that showed itself all the way back in second grade, when Trump punched his music teacher.
.. Soon Trump gained the public recognition he craved. Through a wholly owned corporation called Wembley Realty, Trump struck a partnership with a subsidiary of Hyatt Hotels. That partnership, Regency Lexington, purchased the struggling Commodore Hotel for redevelopment into the Grand Hyatt New York, a deal Trump crowed about when he announced he was running for president.
He failed to mention that this deal was once again largely attributable to Daddy, who co-guaranteed with Hyatt a construction loan for $70m and arranged a credit line for his boy with Chase Manhattan Bank.
.. The credit line was a favour to the Trump family, which had brought huge profits to the bank; according to regulatory records, the revolving loan was set up without even requiring a written agreement. Topping off the freebies and special deals that flowed Trump’s way, the city tossed in a 40-year tax abatement. Trump’s “success” with the Hyatt was simply the result of money from his dad, his dad’s bank, Hyatt and the taxpayers of New York City.
.. Despite the outward signs of success, Trump’s personal finances were a disaster. In 1978, the year his father set up that sweet credit line at Chase, Donald’s tax returns showed personal losses of $406,386 – $1.5m in present-day dollars. Things grew worse in 1979, when he reported an income of negative $3.4m, $11.2m in constant dollars. All of this traced back to big losses in three real estate partnerships and interest he owed Chase. With Trump sucking wind and rapidly drawing down his line of credit, he turned again to Daddy, who in 1980 agreed to lend him $7.5m.
.. All of these names and numbers can grow confusing for voters with little exposure to the business world. So to sum it all up, Trump is rich because he was born rich – and without his father repeatedly bailing him out, he would have likely filed for personal bankruptcy before he was 35. As his personal finances were falling apart, Trump got a big idea for how to make money: casinos.
.. At the time, Trump was deep into plans to turn Bonwit Teller’s flagship department store into Trump Tower – a transformation achieved with the help of Roy Cohn, who fought in the courts to win Trump a huge tax abatement. Still, Trump jumped on the casino idea and had a lawyer reach out to the owners to negotiate a lease deal.
.. Trump wanted to build a 39-story, 612-room hotel and casino, but the banks refused to finance his adventure. So, instead, he struck a partnership with Harrah’s Entertainment in which the global gaming company and subsidiary of Holiday Inn Inc put up all the money in exchange for Trump developing the property. In 1984, Harrah’s at Trump Plaza opened, and Trump seethed. He had wanted his name to be the marquee brand, even though Harrah’s had an international reputation in casinos and he had none. He even delayed building a garage because his name was not being used prominently enough in the marketing.
..According to court papers, Harrah’s spent $9.3m promoting the Trump name, giving the New York developer a reputation in the casino business he’d never had before. And Harrah’s quickly learned the price – now, with Trump able to argue he knew casinos, financing opportunities that did not exist before opened up, and he was able to use Harrah’s promotion of him as a lever against the entertainment company. Soon after that first casino opened, Trump took advantage of his new credibility with financial backers interested in the gaming business to purchase the nearly completed Hilton Atlantic City Hotel for just $320m; he renamed it Trump Castle. The business plan was ludicrous: Trump had not only doubled down his bet on Atlantic City casinos but was now operating two businesses in direct competition with each other. When Trump Castle opened in 1985, Harrah’s decided to ditch Trump and sold its interest in their joint venture to him for $220m.
.. Still, he wanted more in Atlantic City – specifically, the Taj Mahal, the largest casino complex ever, which Resorts International was building. This made the Casino Control Commission nervous because it could have meant that the financial security of Atlantic City would be riding on the back of one man.
.. his argument went, he was Donald Trump. He would contain costs, he said, because banks would be practically throwing money at him, and at prime rates. He would be on a solid financial foundation because the banks loved him so much, unlike lots of other companies and casinos that used below-investment-grade, high-interest junk bonds for their financing. “I’m talking about banking institutions, not these junk bonds, which are ridiculous,” he testified.
.. But Trump’s braggadocio proved empty. No financial institution gave him anything. Instead, he financed the deal with $675m in junk bonds, agreeing to pay an astonishing 14 percent interest, about 50 percent more than he had projected.
That pushed Trump’s total debt for his three casinos to $1.2bn. For the renamed Trump Taj Mahal to break even, it would have to pull in as much as $1.3m a day in revenue, more than any casino ever.
Disaster hit fast. As had been predicted by some Wall Street analysts, Trump’s voracious appetite cannibalised his other casinos – it was as if Trump had tipped the Atlantic City boardwalk and slid all his customers at the Trump Castle and Trump Plaza down to the Taj. Revenues for the two smaller casinos plummeted a combined $58m that first year.
.. Trump introduced the airline with his usual style – by insulting the competition. At an elegant event at Logan Airport in Boston, Trump took the stage and suggested that the other airline with a northeastern shuttle, Pan Am, flew unsafe planes. Pan Am didn’t have enough cash, he said, and so it couldn’t spend as much as the Trump Shuttle on maintenance. “I’m not criticising Pan Am,” Trump told the assembled crowd. “I’m just speaking facts.” But Trump offered no proof, and others in the airline industry seethed; talking about possible crashes was bad for everyone’s business.
.. He was spending $1m to update each of the planes, which were individually worth only $4m. With those changes, he boasted, he would increase the shuttle’s market share from 55 to 75 percent. But just like with casinos, Trump was in a business he knew nothing about.
.. Customers on a one-hour flight from Washington to New York didn’t want luxury; they wanted reliability and competitive prices. Trump Shuttle never turned a profit. But it didn’t have much of a chance; even as he was preening about his successes, Trump’s businesses were falling apart and would soon bring the shuttle crashing down.
.. At 1:40pm on 10 October, 1989, the four-blade rotor and tail rotor broke off of a helicopter flying above the pine woodlands near Forked River, New Jersey. The craft plunged 2,800 feet to the ground, killing all five passengers. Among them were three of Trump’s top casino executives.
.. With the best managers of his casinos dead, Trump for the first time took responsibility for running the day-to-day operations in Atlantic City. His mercurial and belligerent style made a quick impact – some top executives walked, unwilling to put up with his eccentricities, while Trump booted others. The casinos were struggling so badly that Trump was sweating whether a few big winners might pull him under.
.. executives at the casino were humiliated, since Trump was signalling that he was frightened customers might win.
.. By early 1990, as financial prospects at the casinos worsened, Trump began badmouthing the executives who had died, laying blame on them, although the cause of his problems was the precarious, debt-laden business structure he had built.
.. By June 1990, Trump was on the verge of missing a $43m interest payment to the investors in the Taj’s junk bonds. Facing ruin, he met with his bankers, who had almost no recourse – they had been as reckless as Trump. By lending him billions – with loans for his real estate, his casinos, his airline and other businesses – they could fail if Trump went down. So the banks agreed to lend him tens of millions more in exchange for Trump temporarily ceding control over his multi billion-dollar empire and accepting a budget of $450,000 a month for personal expenditures. In August, New Jersey regulators prepared a report totaling Trump’s debt at $3.4bn, writing that “a complete financial collapse of the Trump Organisation was not out of the question.”
.. By December, Trump was on the verge of missing an interest payment on the debt of Trump Castle, and there was no room left to manoeuvre with the banks this time. So, just as he had in the past, Trump turned to Dad for help, according to New Jersey state regulatory records. On December 17, 1990, Fred Trump handed a certified cheque for $3.35m payable to the Trump Castle to his attorney, Howard Snyder. Snyder travelled to the Castle and opened an account in the name of Fred Trump. The cheque was deposited into that account and a blackjack dealer paid out $3.35m to Snyder in gray $5,000 chips. Snyder put the chips in a small case and left; no gambling took place. The next day, a similar “loan” was made – except by wire transfer rather than by cheque – for an additional $150,000. This surreptitious, and unreported, loan allowed Donald Trump to make that interest payment.
.. Trump’s casino empire was doomed. A little more than a year after the opening of the Taj, that casino was in bankruptcy court, and was soon followed there by the Plaza and the Castle. Under the reorganisation, Trump turned over half his interest in the businesses in exchange for lower rates of interest, as well as a deferral of payments and an agreement to wait at least five years before pursuing Trump for the personal guarantees he had made on some of the debt.
.. In 2004, Trump Hotels & Casino Resorts – the new name for Trump’s casino holdings – filed for bankruptcy, and Trump was forced to relinquish his post as chief executive. The name of the company was then changed to Trump Entertainment Resorts; it filed for bankruptcy in 2009, four days after Trump resigned from the board.
.. In his books and public statements, Trump holds up this bankruptcy as yet more proof of his business genius; after all, his logic goes, he climbed out of a hole so deep few others could have done it. He even brags now about how deep that hole was. Trump falsely claimed in two of his books that he owed $9.2bn, rather than the actual number, $3.4bn, making his recovery seem far more impressive.
.. When challenged on the misrepresentation during a 2007 deposition, Trump blamed the error on Meredith McIver, a longtime employee who helped write that book. Trump testified that he recognised the mistake shortly after the first book mentioning it was published; he never explained why he allowed it to appear again in the paperback edition and even in his next book. McIver went on to garner some national recognition as a Trump scapegoat – nine years later, when Trump’s wife, Melania, delivered a speech at the Republican National Convention that was partially plagiarised from Michelle Obama, the campaign blamed McIver. But despite all this supposed sloppiness, Trump has never directed his trademark phrase “You’re fired!” at this loyal employee.
.. In 2008, he defaulted on a $640m construction loan for Trump International Hotel & Tower in Chicago, and the primary lender, Deutsche Bank, sued him. Trump counter-sued, howling that the bank had damaged his reputation.
.. Trump has also based huge projects on temporary business trends. For example, for a few years during the George W Bush administration, wealthy expatriates from around the Middle East flocked to Dubai. In response, Trump launched work on a 62-story luxury hotel and apartment complex on an artificial island shaped like a palm tree. But, as was predictable from the start, there were only so many rich people willing to travel to the United Arab Emirates, so the flood of wealthy foreigners into the country slowed. The Trump Organisation was forced to walk away from the project, flushing its investments in it.
Beginning in 2006, Trump decided to take a new direction and basically cut back on building in favour of selling his name. This led to what might be called his nonsense deals, with Trump slapping his name on everything but the sidewalk, hoping people would buy products just because of his brand.
.. Trump hosted a glitzy event in 2006 touting Trump Mortgage, then proclaimed he had nothing to do with managing the firm when it collapsed 18 months later. He tried again, rechristening the failed entity as Trump Financial. It also failed.
That same year, he opened GoTrump.com, an online travel service that never amounted to more than a vanity site; the URL now sends searchers straight to the Trump campaign website.
.. Also in 2006, Trump unveiled Trump Vodka, predicting that the T&T (Trump and Tonic) would become the most requested drink in America (he also marketed it to his friends in Russia, land of some of the world’s greatest vodkas); within a few years, the company closed because of poor sales.
.. In 2007, Trump Steaks arrived. After two months of being primarily available for sale at Sharper Image, that endeavour ended; the head of Sharper Image said barely any steaks sold... Amusing as those fiascoes are for those of us who didn’t lose money on them, the most painful debacles to witness were many involving licensing agreements Trump sold to people in fields related to real estate. There is the now-infamous Trump University, where students who paid hefty fees were supposed to learn how to make fortunes in that industry by being trained by experts handpicked by Trump; many students have sued, saying the enterprise was a scam in which Trump allowed his name to be used but had nothing else to do with it, despite his claims to the contrary in the marketing for the “school”.
.. Particularly damning was the testimony of former employee Ronald Schnackenberg, who recalled being chastised by Trump University officials for failing to push a near-destitute couple into paying $35,000 for classes by using their disability income and a home equity loan.
Around the country, buyers were led to believe they were purchasing apartments in buildings overseen by Trump, although his only involvement in many cases was getting paid for the use of his brand.
.. In 2010, lenders foreclosed on the $355m project. Even though Trump’s name was listed on the condominium’s website as the developer, he immediately distanced himself, saying he had only licensed his name.
.. A similarly sordid tale unfolded for Trump Ocean Resort Baja Mexico, a 525-unit luxury vacation home complex that Trump proclaimed was going to be “very, very special”. His name and image were all over the property, and he even personally appeared in the marketing video discussing how investors would be “following” him if they bought into the building. Scores of buyers ponied up deposits in 2006, but by 2009 the project was still just a hole in the ground. That year, the developers notified condo buyers their $32m in deposits had been spent, no bank financing could be obtained, and they were walking away from the project. Scores of lawsuits claimed the buyers were deceived into believing Trump was the developer. Trump walked away from the deal, saying that if the condo buyers had any questions, they needed to contact the developer – and that wasn’t him, contrary to what the marketing material implied.
.. The same story has played out again and again. In Fort Lauderdale, Florida, people who thought they were buying into a Trump property lost their deposits of at least $100,000, with Trump saying it was not his responsibility because he had only licensed his name
.. Investors in another failed Floridian property, Trump Tower Tampa, put up millions in the project in 2005 believing the building was being constructed by him. Instead, they discovered it was all a sham in 2007, inadvertently from Trump, when he sued the builder for failing to pay his license fees. The investors lost their money, and finally got to hear Trump respond to allegations that he had defrauded them when they sued him. In a deposition, lawyers for the Tampa buyers asked him if he would be responsible for any shoddy construction; Trump responded that he had “no liability” because it was only a name-licensing deal. As for the investors, some of whom surrendered their life savings for what they thought was a chance to live in a Trump property, Trump said they at least dodged the collapse of the real estate market by not buying the apartments earlier.
“They were better off losing their deposit,” he said.
So said the man who now proclaims that Americans can trust him, that he cares only about their needs and their country, that he is on the side of the little guy.
