Then, just days before Trump: The Art of the Deal was to be published, the economy tanked. On October 19, 1987, which became known as Black Monday, the Dow Jones Industrial Average plunged by almost 23 percent. The crisis presented an intriguing opportunity for Trump. The crash accelerated a decline in the price of Resorts stock. While Trump had bought a majority of voting shares, known as Class B, he now offered to buy all of the common shares, known as Class A. This brash, unexpected move would allow Trump to take the company private and, he reasoned, more easily raise money to finish the Taj. In a news release, Trump offered gambling regulators a tough choice: they could support his new direction, or he would walk away and the Taj project would languish. He warned, “Only with the financial backing of the Trump Organization will it be possible to build the Taj Mahal.”
Trump would need to go deeply in debt to build the Taj. In a city of gamblers, Trump would be one of the biggest.
• • •
IN FEBRUARY 1988, TRUMP appeared at a licensing hearing before the state Casino Control Commission. A major issue was whether, in the wake of the market crash, Trump could still get financing. Trump replied that after he took control of the Taj casino, bankers would respond well to his request for a loan. Trump even suggested that the bankers would line up to give him money. There was one thing he would not do, he assured the commission. He would not seek risky, high-interest junk bonds, which had propelled a takeover craze. Junk bonds, Trump testified, “are ridiculous. The funny thing with junk bonds is that junk bonds [are] what really made the companies junk.” Trump said banks were willing to give him loans at prime rate—then 9 percent or less—far below what other developers could hope for: “I mean, the banks call me all the time. ‘Can we loan you money? Can we do this? Can we do that?’ ”
The commission and its lawyers expressed skepticism. How could Trump get such a good deal when others had to pay so much more to borrow? “It’s easier to finance if Donald Trump owns it,” he explained. “With me, they know there’s a certainty they would get their interest.” Trump said he held another appeal for bankers: “I get it done, and everybody is happy and it turns out successfully.”
Michael Vukcevich, the state deputy attorney general, asked Trump, “Is there anything that can go wrong, that you’re aware of?”
“Can go wrong? Yes. We can have a depression,” Trump replied. “The world could collapse. We could have World War Three. I mean, a lot of things can go wrong. I don’t think they will.”
Commissioners pressed Trump about his plans to raise spending on the Taj to $1 billion, with added luxury suites, gourmet restaurants, and opulent fixtures, something the commission referred to as “extras.” “Don’t people have to live within their means?” asked commissioner E. Kenneth Burdge.
Trump said the added costs were insignificant yet necessary to impress customers. “We are probably talking about a difference of fifty million dollars or so,” he said. “I mean, the worst thing to happen with the Taj Mahal is for the building to open and for people to have been disappointed with it. Because word of mouth on something like this, it’s like a Broadway show.” Trump later assured the commission, “My basic attitude has always been that I want to do what is good for Atlantic City.”
This was welcome news for a legion of small-business owners, many of whom considered Trump one of the city’s great benefactors. The Taj would only add more luster to the city’s greatest boom in decades, building a solid foundation for the local contractors, suppliers, and others whose work was integral to casino operations. Marty Rosenberg, who co-owned Atlantic Plate Glass Co., a family-owned company, had great confidence in Trump, who had paid him money he was due from the stalled Resorts construction. Trump’s organization gave the firm as much work as it could handle, including installation of the reflective exterior glass that helped give the Taj its glitz. It was a lucrative time, and laborers worked around the clock. The dollars flowed, and the goal was to open on time. “It was an explosion, absolutely an explosion,” Rosenberg said. “It meant financial stability. It was a boom time.”
• • •
AS TRUMP TRIED TO persuade regulators that he had the money to complete the Taj, trouble arose with one of his existing properties, the Castle casino, the one he had put under Ivana’s control. “Isn’t this the best property in town?” Trump asked a top aide. “What’s wrong? Why isn’t this place working?”
One reason was the construction of a fourteen-story addition to the hotel, a tower that was well under way by early 1988 and already straining the Castle’s bottom line. Ivana had insisted on the $40 million addition with ninety-seven luxury suites to attract high rollers, and Trump had agreed, against the advice of his other executives. Now the Castle was in the red and would end up with a net loss that year for the first time. Ivana’s clashes with other Trump executives had escalated. One former Trump aide said Ivana resented having to report to Hyde, as well as the close relationship between Hyde and Trump. Trump’s executives, meanwhile, continued to fume that Ivana was siphoning gamblers from the company’s other properties in Atlantic City instead of attracting new customers.
At the same time, some of those executives felt sympathy for Ivana, having learned that Trump was having an affair with Marla Maples, an actress and model in New York. In the end, Trump removed Ivana from the casino and dispatched her back to New York to run his newly acquired Plaza Hotel. It was a bittersweet moment for Ivana. At a good-bye ceremony at the Castle, she sobbed as she thanked her colleagues and told them she’d miss them. Then her husband addressed the employees: “Look at this. I had to buy a $350 million hotel just to get her out of here and look at how she’s crying. Now that’s why I’m sending her back to New York. I don’t need this, some woman crying. I need somebody strong in here to take care of this place.”
• • •
TRUMP FACED NEW QUESTIONS about his plans to take Resorts private and gain control of the Taj. At a hearing in mid-February 1988, Casino Control commissioner Valerie Armstrong expressed frustration, saying Trump’s testimony about his Resorts takeover was “laced with hyperbole, contradictions, and generalities that make it difficult to evaluate” his fitness for licensing as the company’s owner. She wondered whether Trump had a hand in driving Resorts’ stock price down so he could take the company private.
“While it might be possible to conclude that the events of the past eight months resulted from happenstance, impulse, fate, and/or events beyond Trump’s or Resorts’ control, it is also just as easy, perhaps easier, to conclude that many of the events leading to Mr. Trump’s current [takeover] proposal have been carefully staged, manipulated, and orchestrated,” Armstrong said at the hearing. But she eventually joined the rest of the commission in backing Trump after he provided assurances about his plans.
A few weeks later, just as Trump’s plan to take Resorts private was set to go through, Merv Griffin, the television host and producer, made a competing, top-dollar offer. Griffin said he would pay $245 million for Resorts if Trump would vote for Griffin’s takeover and cancel Trump’s services agreement. Trump declined, and the two fought a highly publicized battle for weeks. In May, they agreed to a complicated settlement that split the company and its assets. Griffin got the existing Resorts casinos in Atlantic City as well as one in the Bahamas. Trump received a substantial payment to release Resorts from his services agreement. More important, Trump got the Taj.
“Our compromise, which gave me $12 million and the unfinished Taj Mahal, turned out to be one of the best deals I ever made,” Trump wrote in Trump: The Art of the Comeback. “At the time, I thought his chances of making Resorts successful were about as good as [Griffin’s] chances of getting [actress] Sharon Stone pregnant.” Within days, Trump formed a company, Trump Taj Mahal Funding, to seek money for the construction. All the promises that Trump had made to the commission about bankers practically banging on his door with hundreds of millions of dollars couldn’t be fulfilled. He could not line up loans at th
e prime rate as he had expected. He seemed to have only one option: the junk bonds that he had so stridently derided. A company that used junk bonds was junk, he had said. Now he saw them as his only solution. As he put it decades later, “I was able to put a tremendous amount of junk bonds on properties that I had in Atlantic City, and, therefore, take out money. . . . In fact, I wanted X dollars, and they said, ‘How about if we give you twice as much?’ I said, ‘I’ll take it,’ but I also knew that if you do that, there’ll be problems down the road. But I was able to take a lot of money out of Atlantic City.”
In November 1988, Trump agreed to a deal with Merrill Lynch Capital Markets, which agreed to issue and sell $675 million in junk bonds, set to pay an interest rate of 14 percent, 5 percent above prime. That would give Trump the money he needed to build the Taj, but he would have to pay about $95 million a year in interest, not counting the debt from his other casinos and holdings. Undeterred by the burden, Trump wanted his trophy, and his costs kept escalating. “The Taj was going to be the biggest and the best and greatest,” recalled Paul Rubeli, former chief of gaming operations for the Tropicana in Atlantic City. “As Donald would say, ‘It was going to be huge.’ ” Trump’s Taj Mahal was going to be bigger and costlier than anything its original developer had envisioned. The complex would include 1,250 hotel rooms, feature a 120,000-square-foot casino, and employ about 5,800, a major boost to the local economy.
Trump charged ahead despite growing concerns about Atlantic City. In July 1989, Roffman, the market analyst, issued another gloomy report for investors. Its headline: “Atlantic City, New Jersey—Top Heavy in Debt—Houses of Cards.” Roffman’s message was stark. Five years earlier, the city’s nine casinos had recorded almost $169 million in profit on winnings of almost $1.8 billion. By 1988, total profit had dwindled to under $15 million, even though winnings had soared to $2.7 billion. The problem was debt. “The Taj itself looks like a big gamble,” Roffman wrote.
In the midst of his dealmaking, Trump took a moment to call Roffman. “Marvin, didn’t I do a fantastic deal?” Trump asked, as the analyst recalled.
“I think you made a mistake, Donald,” Roffman said. “Why own three casinos?”
Trump brushed it off. “This is going to be a monster property.”
8
* * *
Cold Winds
The morning of October 10, 1989, dawned bright and sunny, a perfect day for flying. That seemed like good fortune for Stephen Hyde, Trump’s confidant and president of his Atlantic City operations, even if the boss was grumpy about the Manhattan news conference where Hyde and two other top casino officials would join Trump. At first, Trump had dismissed the importance of Héctor “Macho Man” Camacho’s upcoming boxing match against Vinny Pazienza at the Atlantic City convention center. “It’s not going to be a big fight. The public doesn’t care about this. I’m not coming,” Trump said. “I can’t be attending every shitty little press conference. It’s not dignified.” Hyde, however, persuaded Trump that an appearance by the boss himself was especially important for this, the first fight promoted by a subsidiary called Trump Sports and Entertainment. Trump agreed and went all in, arranging a media spectacle to hype the match.
The trio of Trump executives from Atlantic City buckled into the Sikorsky helicopter for the trip to Manhattan. Hyde had much on his mind, and not just about the upcoming opening of the Taj. The forty-three-year-old was considering how much longer he would stay with Trump. The stress of the work and its impact on his family had been intense. He had to put up with Trump’s tirades while shielding others from the boss’s wrath. Hyde had recently talked with a friend about leaving in a couple of years, moving to the West, the land of his childhood.
The second executive in the helicopter was Mark Grossinger Etess, thirty-eight, a descendant of the family that built Grossinger’s resort in the Catskill Mountains north of New York City. His job in the Trump empire was crucial; as president and chief operating officer of the Taj casino and hotel, Etess was under great pressure to make sure its opening went perfectly. The third man, Jonathan Benanav, thirty-three, had a compelling family history. His grandmother had died in a Nazi concentration camp and his father barely escaped, hiding in the Romanian woods for six months before being liberated by Russian troops. His father left with six hundred Jews on a boat to Turkey. He met a woman on the refugee vessel and, three days later, married her. He became an officer in the Israeli army, and later they moved to the United States, where he and his wife raised their children, including Jonathan. Now Jonathan was executive vice president of Trump Plaza Hotel & Casino. He had recently bought his girlfriend an engagement ring, but had not yet given it to her. The trio had little to contribute at the promotion for the fight, other than a few words of predictable hype. But they went, expecting to smile for the cameras, meet briefly with Trump, and return to Atlantic City by early afternoon.
The press conference at the Plaza Hotel went according to script and attracted little coverage, but the three executives got delayed by their meeting with the boss at Trump Tower. They missed their ride back to Atlantic City on the Sikorsky. Hyde found a substitute flight via a charter company he had never before used. The helicopter, too, was a new experience, an Agusta, manufactured in Italy, instead of the usual Sikorsky. It was known as a comfortable, safe chopper, and Hyde, Benanav, and Etess made their way to a heliport on East Sixtieth Street for a 1:00 p.m. flight.
Unbeknownst to the three Trump executives, one of the helicopter’s rotor blades had a nearly undetectable two-inch scrape, which had grown like an untreated wound.
• • •
NORMA FOERDERER, TRUMP’S LONGTIME aide, rushed into the boss’s office on the twenty-sixth floor of Trump Tower. The helicopter that carried the three executives had gone down. Agonizing minutes went by. Then a New Jersey police official called with the news: no survivors. Three of Trump’s most trusted aides, including the ones most responsible for opening the Taj, had perished, along with the crew of two. Trump would later learn that the scrape on one of the rotor blades had expanded during the flight, the result of metal fatigue. Over the pinelands of New Jersey, at an altitude of twenty-two hundred feet, a portion of the blade broke, the helicopter’s aerodynamics went askew, and the aircraft split apart in midair, raining wreckage on the Garden State Parkway.
Trump was devastated. He asked if the families had been informed. As an aide watched, Trump sat in his office overlooking Central Park and called the families of the three men. “I have terrible news,” he said into the phone, again and again. As word spread through the office, aides in the anterooms burst into tears, wailing loudly. Trump said years later that he learned what it is like when the military informs “the soldiers’ families when they’re gone. It’s a very tough thing to do. I mean, the response was, like, horrible.”
A few hours later, Trump took a call from John “Jack” O’Donnell, president of the Trump Plaza Hotel & Casino. O’Donnell already held a key position in Trump’s life and business, and now his role grew exponentially. A tragic twist had saved his life. O’Donnell would normally have been on that helicopter trip. He had been close friends with Hyde and Etess and accompanied them to press conferences like today’s. Compounding his grief, O’Donnell felt responsible for Benanav’s being on the helicopter: he had asked his young associate to go to the press conference in his stead because O’Donnell was competing in a triathlon in Hawaii. For many years, O’Donnell would feel guilty that it was Benanav and not he who had died that day. But there was little time to think of all that; O’Donnell’s job now was to commiserate with Trump and get back to Atlantic City as quickly as possible.
“Jack, this is awful,” Trump told O’Donnell. “This is the most awful thing. We’ve been sitting here praying it wasn’t true. I still can’t believe it.” The two talked again a few hours later, and Trump seemed even more shaken. Trump saw no choice but to board a helicopter to go to Atlantic City. The thought of retracing the flight taken by his executi
ves left him rambling and musing about life. He seemed in disbelief. “I’m getting on a helicopter in an hour and I’m going down to see the families,” Trump told O’Donnell. “A helicopter. Isn’t it crazy? I guess life goes on. . . . You have to keep getting on planes, getting on the helicopters.” O’Donnell later said Trump sounded, uncharacteristically, as if he was seeking reassurance: “For the first time since I had known him, I heard fear and uncertainty in his voice.”
The Taj opening was looming and Trump’s key executives were dead. O’Donnell temporarily picked up much of the responsibility. Now he saw Trump from a closer vantage. Privately, he was developing concerns about his boss.
• • •
THE DAY AFTER THE crash, Trump met with more than a hundred of his managers in an Atlantic City conference room. The loss of his three executives, and especially his friend Hyde, was sinking in. “I had my upper management wiped out,” Trump recalled. (Thirty-five years after the crash, he still considered the loss of the three men one of the most important and difficult days of his life aside from the deaths of his parents and his brother Fred Jr.) As he sought to steady himself in the days after the accident, he offered an idea that was classic Trump. He would build a monument to them, “something just incredible.”
Trump could not stop thinking about the crash. He wondered aloud to O’Donnell if the executives had been murdered by competitors. Then he dismissed his thoughts of sabotage after realizing that the three had booked an alternative flight at the last minute. A federal investigation concluded that the crash was accidental, caused by a “manufacturing-induced scratch in the spar of the blade.” Something happened in the factory to make a barely detectable mark that led years later to catastrophe.
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