Tuesday, October 18, 2016

A People’s History of Donald Trump's Business Busts and Countless Victims

I suggest reading the whole article at the following link, or preferably it at the bookstore. Very scary to think this person could become president of the U.S.


By Kurt Eichenwald On 10/18/16

Dust swirled and jackhammers pounded outside the Bonwit Teller building in Manhattan as undocumented immigrants tore apart the façade. It was June 5, 1980, and a sense of bitterness hung over the work site that afternoon; paychecks were often weeks late, but since the Poles didn’t have legal status in the United States, there was little they could do about it.

The exterior they were destroying was an architectural masterpiece—bronze, platinum, hammered aluminum, glazed ceramic and tinted glass that shimmered like jewelry. Many New Yorkers had hoped the grandest portion would survive; curators from the Metropolitan Museum of Art had asked the developer to carefully remove the two bas-relief sculpture panels so they could be restored and put on public display. But that afternoon, the laborers, acting on orders from the developer, smashed the 50-year-old art deco panels into a rubble of stone, pebble and dirt.

The desecration horrified Manhattan’s art community, but the developer, a brash 34-year-old named Donald Trump, dismissed the criticism—pretending to be his own spokesman, “John Barron,” as he talked to reporters by phone. Saving the panels would have cost him $32,000 each, he said, and delayed work for a few days on his $100 million project, Trump Tower. Besides, he declared, he knew more than the curators—the panels had no artistic merit and little financial value.

This incident from long before Trump became a household name is an ideal exemplar for his business career, in which he has repeatedly left bitterness and ruin in his wake. His destructive behavior—spurred by recklessness, arrogance and an unslakable thirst for vengeance—has victimized cities, businesses, investors, partners, even members of his family.


To anyone who has watched Trump over the past four decades, none of this is a surprise. His presidential campaign is built on the claim that he’s a brilliant businessman worth $10 billion who turns every challenge into success, but Trump is none of those things. Instead, he was born into an exceedingly wealthy family and tried to build upon his father’s success with ever-riskier ventures, and by any rational measure, he failed again and again.


Donald Trump loves to put his name on buildings, but there are no hospital wings named for him. No museums have a piece of artwork with a plaque reading “A Gift of Donald J. Trump.” No buildings at the University of Pennsylvania bear his name, even though he constantly cites his graduation from its Wharton School as a sign of his intelligence. (Contrary to Trump’s suggestion, he attended the school for only two years as an undergraduate and did not obtain a degree from Wharton’s far more prestigious graduate business program.)


Trump regularly cheats at golf, even revising his scorecard after a match to transform defeat into victory, according to two people who have played with him. He persuaded an elderly couple who ran a Florida antique store to let him “try out” two valuable pieces, then refused to return or pay for them, according to someone close to the Trump family. He bought expensive jewelry at Bulgari on Manhattan’s Fifth Avenue, then colluded with the store to have empty boxes supposedly containing his purchase shipped out of state so he could dodge New York sales tax, court records show. After dragging a buddy through years of litigation, Trump told the man he had filed the suit only because he was angry the friend had not given him enough public credit for his success, according to a person who witnessed the conversation.


There are no names attached to those stories because the sources all know the Republican nominee strikes out viciously over any perceived criticism. They all asked to remain anonymous for fear that Trump would drag them to court or try to damage their careers. They know that is one of Trump’s greatest skills : bullying, threatening and suing anyone who criticizes him and cowing most of them into silence.


Trump knew the success of the Taj and the gambling houses he had previously built—the Trump Castle and the Trump Plaza—could mean the difference between Atlantic City’s rebirth or destruction. He also knew that lots of people would suffer along the way. “People will spend a tremendous amount of money in casinos, money that they would normally spend on buying a refrigerator or a new car,” Trump said. “Local businesses will suffer because they’ll lose dollars to the casino.” He was right. As he built his casinos, Atlantic City was ripped apart. Unemployment soared, hundreds of restaurants went out of business, and dry cleaners and specialty shops disappeared.


Three years later, Trump sold stock in his newly formed Trump Hotel and Casino Resorts, which owned all three of his Atlantic City casinos and another casino he had started in Indiana. He insisted the stock trade under the ticker DJT—his initials. As chairman of the company, Trump maintained a 41 percent stake, which was worth about $400 million when the stock hit its all-time high of $29.25 a share—less than a year after going public.

Under Trump’s leadership, however, the company was unprofitable every year, and by the end of his time as chairman, it had lost more than $1 billion. By 2004, the stock was selling for 65 cents a share, and the company fell into bankruptcy; people who had put their faith in the Trump name lost more than 90 percent of their investment. During the same time, those who owned funds based on the Standard & Poor’s 500 index more than doubled their money. Even in the greatest stock market ever, and in a business regularly described as a license to print money, Trump left only wreckage in his wake. And investors in Trump hotels saw nothing but losses.

On the other hand, Trump did just fine for himself. Even as his company’s stock price was collapsing and annual losses were piling up, filings with the Securities and Exchange Commission show that during his years as chairman, more than $60 million poured from the public company into Trump’s pockets.

This is the dirty secret behind Trump’s allegedly miraculous financial recovery. What he told the public was a fable: that he had fought his way back with perseverance and skill. In truth, he did it by snatching huge fistfuls of cash from a company that was wiping out the savings of millions of people.


By then, most of the smart money had given up on Trump. To get a new personal credit line, he could no longer rely on handshake deals or personal guarantees with Chase Manhattan, as he once had. Instead, financial records obtained by Newsweek show, in 2003 he turned to the Cayman Islands’ branch of UBS, the Swiss bank. For that loan, however, he had to put up a large number of assets as security, including a portion of his interest in Trump World Tower, all of his investments in a Paine Webber brokerage account, mortgage notes and numerous other securities and property. Soon almost all financial institutions were passing on his deals, other than Deutsche Bank—and in a few years, he would default on a $640 million construction loan from it. The stock and bond markets, where every investor who had ever placed faith in Trump lost money, were closed to him. A fund financed by the billionaire George Soros agreed to invest in a Trump development once — but only once. A private equity firm, Colony Capital, backed out of a Trump project, forcing the Trump Organization to self-finance. Wall Street and financial institutions worldwide all knew that, as a businessman, Trump was a disaster.

So Trump went in another direction , rebuilding his reputation on television. Beginning in 2004, around when his public company fell into bankruptcy, Trump began playing the role of a successful businessman on the NBC reality show The Apprentice. Unless it read the financial news religiously, the public could not know that this portrayal of Trump was a farce.


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