Trump Revealed

by Michael Kranish

  Other problems loomed. Two years after Trump said he had not personally guaranteed loans, documents at the Casino Control Commission revealed he had provided personal backing for $832 million in debt. That meant Trump himself was at risk of going down along with his empire. Over the next several years, Wallach watched as Trump repeatedly faced bankruptcy and the prospect of dissolution of his empire. But by negotiating deals, selling assets, and trading away part of his ownership in the casinos, Trump was able to restructure debts and stay afloat. Wallach worked closely with Trump on real estate transactions for the next twelve years, seeing much that he admired, such as Trump’s willingness to take big risks. He also recalled that Trump sometimes did not perform due diligence and moved “without thinking about the ramifications of his actions.” One day, Trump told a reporter he was worth $1 billion. As Wallach recalled it, Trump rushed back into the office and asked Wallach to generate a financial statement to back up the claim. Wallach took the request to mean he was to generate an informal financial statement that looked as rosy as possible.

  As Trump struggled throughout the early nineties, the commercial real estate market continued to sink. That would provide an extraordinary opportunity to boost Trump’s fortunes.

  • • •

  WALLACH WAS LOOKING FOR bargains when he came across 40 Wall Street, a seventy-two-story art deco icon completed in 1930 that was the second-tallest structure in lower Manhattan, behind only the World Trade Center towers. In decrepit condition, it had been through a succession of owners, but Wallach saw potential in its more than 1 million square feet of rental space, crowned by a pyramid of copper with a green patina. Wallach persuaded Trump to take a three-hour tour. Trump agreed in 1995 to buy the property, taking advantage of depressed real estate prices. Bloomberg Business News reported at the time that the building was 89 percent vacant, that Trump had paid “less than $8 million,” and that a prior owner had figured it needed a $100 million rehabilitation.

  In the following months, a problem arose with a law firm on some upper floors as Trump sought to clear the building for renovations. As Trump told it, he believed the law firm hadn’t been paying the appropriate rent and the matter was in litigation. One day, the lawyers discovered that the heat was off and the elevators had stopped working. Trump arrived to find angry lawyers in the lobby. He told them they would have to walk up sixty flights to get to their offices. Years later, in an interview for this book, Trump recalled the day with an impish smile: “There are those that say that I turned down the heat and that I turned off the elevator. I was in the building because I was very hands-on when I built. I was in the building, I came down, and there were, like, a hundred twenty lawyers standing in the lobby. And I was lucky I was with some very tough construction guys because it was brutal. And I said, ‘Fellas, you got to walk upstairs because the elevators are under repair.’ And so, there is that story. So, who knows?”

  Amid all of Trump’s crises—the corporate bankruptcies and shrinking value of his publicly traded company—the deal for 40 Wall Street was a classic example of Trump tactics and tenacity. Wallach considered the purchase a triumph for himself and Trump. Long after, Trump pointed proudly to the purchase; the building’s value had by then risen by one estimate to at least $500 million: “Some people think that’s the best deal made in New York in many, many years.” The purchase contributed to a long rebound that stabilized the Trump empire. Along with Trump’s many licensing deals and income from The Apprentice, which Trump said amounted to as much as $214 million over fourteen seasons, 40 Wall Street helped Trump reemerge as the mogul he had always portrayed himself as being.

  His reputation was one of his greatest assets, and he protected it fiercely. In 2004, Trump learned that author Robert Slater was researching a book about him. As Slater told it, Trump threatened to sue if the book was published. Trump’s lawyer wrote Slater that a lawsuit would be filed if the author wrote the book without Trump’s cooperation. Then, in what had become a pattern, Trump did an about-face. He called Slater and said he had heard the writer was “an amazing guy” and agreed to cooperate. As Slater wrote in his resulting biography, No Such Thing as Over-Exposure: Inside the Life and Celebrity of Donald Trump, he learned that his subject “wanted to control his image fully by controlling as much as he could what was written about him.” Trump told Slater that if he liked the book, he would buy a lot of copies. That was welcome news to the publisher, which agreed to let Trump see the book ahead of its release. Trump, by Slater’s account, read the book and persuaded the publisher to take out things he did not like, including a story about how Marla Maples learned he was divorcing her by reading it in the New York Post. Trump was also displeased with how he looked on the proposed cover. “The last thing you want to do is make Donald Trump look fat,” Slater said in a 2005 speech, explaining how the cover was changed at the “last minute” to please the subject.

  • • •

  AT EVERY STAGE OF his career, Trump tried to punish those who questioned the image he wanted the world to see. Legal threats were as much a part of Trump’s business tactics as brash talk, publicity stunts, and the renegotiation of deals. “I’ll sue” became the watchwords of his business, just as “You’re fired” became the mantra of his television image. Over three decades, Trump and his companies filed more than 1,900 lawsuits and were named as defendants in 1,450 others, according to a USA Today analysis. Some of his legal maneuvering was an outgrowth of complex business deals. But some of it was focused on going after those who questioned his wealth or even his taste. He once filed a $500 million defamation complaint against a Chicago Tribune critic who described Trump Tower’s main hall as “a kitschy shopping atrium of blinding flamboyance.” A judge dismissed the complaint. Fortune claimed in an article that Trump had once threatened “to sue the ass off” the magazine if one of its writers wrote anything negative about Trump’s cash flow.

  One of the most revealing lawsuits resulted from an enduring question about Trump: What was he really worth? Timothy O’Brien, a New York Times business reporter with a long-standing interest in Trump, coauthored a story in 2004 headlined, “Is Trump Headed for a Fall?” Trump seemed ascendant then, winning national celebrity among a new generation through The Apprentice. In one episode of the show, he took contestants to what he called Atlantic City’s “number one hotel,” the Trump Taj Mahal. O’Brien wasn’t so sure about that, writing, “In reality, the Taj Mahal needs all the help it can get—as does the rest of Mr. Trump’s increasingly troubled gambling empire. His casino holdings are mired in nearly $2 billion of bond debt that they are struggling to repay. They are aging and overshadowed by flashier competitors, and their revenue and profits have been slumping over the last year.” Were Trump’s claims based on real numbers, O’Brien wondered, or merely hype from a salesman extraordinaire? Was Trump a success or not?

  In December 2004, nine months after his article appeared in the Times, O’Brien received a book contract, and Trump agreed to a series of interviews. The men spent hours together in New York, at Trump’s Mar-a-Lago estate, and aboard Trump’s private jet en route to Los Angeles. O’Brien also spoke with Trump’s chief financial officer, Allen Weisselberg, along with other current and former Trump employees, and he examined scores of financial documents laid out for him on a massive conference table at Trump Tower. TrumpNation: The Art of Being The Donald, published in the fall of 2005, made light of Trump’s showmanship, contradictions, and public persona, but it wasn’t the ribbing that bothered Trump. It was a short section in the 276-page book that focused on his net worth. O’Brien wrote about a weekend meeting in early 2005 at which the subject of Trump’s net worth came up.

  “I would say six [billion],” Trump told O’Brien. “Five to six. Five to six.” The exchange perplexed O’Brien. Only a few months earlier, Trump had said the answer was “four billion to five billion dollars.” That same day, Trump gave O’Brien a formulation that suggested that Trump’s casino holdings were equal to about 2
percent of his wealth. If true, that meant Trump’s net worth was about $1.7 billion. About that same time, a brochure for Trump’s Palm Beach club said he was worth $9.5 billion. O’Brien wondered, Was it $1.7 billion, or $9.5 billion, or somewhere in between? Could it be less? Baffled by Trump’s varied estimates and skeptical about the informal accounting that Trump’s people provided him, O’Brien reached out to three “people with direct knowledge of Donald’s finances.” They told him Trump’s net worth was “somewhere between $150 million and $250 million.”

  A week before TrumpNation was published, Trump and his team saw a copy, and they learned that the New York Times intended to publish an article adapted from the book. On October 20, 2005, Trump’s in-house lawyer fired off a letter to O’Brien’s editor, accusing O’Brien of writing “false, defamatory and libelous statements about Mr. Trump.” The letter described TrumpNation as a “false, malicious and libelous book” and asked the Times to provide a prepublication copy of its article “so we can clear up some of the gross misrepresentations and inaccuracies. . . . Mr. Trump’s net worth is many billions of dollars,” the letter said. The Times was undaunted. On Sunday, October 23, 2005, the newspaper published an article under the headline “What’s He Really Worth?” The story began, “For decades, Donald Trump, America’s most effervescent rich guy, has made his wealth a matter of public discourse. But sometimes his riches are hard to find.” Three months later, Trump sued O’Brien and his publishers, Warner Book Group and Warner Books, for $5 billion.

  As the lawsuit progressed, O’Brien’s lawyers summoned Trump to a law office in midtown Manhattan to answer a litany of questions in a deposition about his claim that O’Brien’s book had defamed him. O’Brien’s lawyer, Andrew Ceresney, who later became director of the enforcement division of the Securities and Exchange Commission, focused on the uncertainties surrounding Trump’s worth and how he calculated it. Under oath, Trump acknowledged that his calculation depended not only on traditional measures such as his balance sheets, stock holdings, and other tangible assets, but also on how he felt at a given moment.

  “Now, Mr. Trump, have you always been completely truthful in your public statements about your net worth of properties?” Ceresney asked.

  “I try,” Trump said.

  “Have you ever not been truthful?”

  “My net worth fluctuates, and it goes up and down with markets and with attitudes and with my feelings, even my own feelings, but I try.”

  Asked to elaborate, Trump did: “Yes, even my own feelings, as to where the world is, where the world is going, and that can change rapidly from day to day. . . . So, yeah, even my own feelings affects my value to myself.”

  Ceresney brought up a Playboy interview with Trump in March 1990. The article was built around the notion that Trump was, as Playboy put it, a “billion-dollar baby.” “Vision is my best asset,” the article quoted Trump as saying. “I know what sells and I know what people want.” The Playboy interviewer noted that Forbes reported that Trump was worth $1.5 billion, while “you say $3.7 billion. What’s the right figure?”

  “I don’t say anything,” Trump told Playboy. “Business Week and Fortune have numbers much higher than Forbes’s.”

  So Playboy got it wrong? O’Brien’s lawyer asked.

  “I certainly . . . I don’t even know where it came from.” Trump denied that he had confirmed he was a billionaire: “I don’t say anything,” Trump told the lawyer. “People can form their own opinion.”

  • • •

  TRUMP’S NET WORTH CAME up again and again during the deposition. At one point, Trump was handed a “statement of financial condition” from 2004 that he had submitted to North Fork Bank as part of an application for a line of credit. O’Brien’s attorney said that North Fork had analyzed Trump’s statement and other material provided by Trump’s organization and “concluded in their estimation that your net worth was actually $1.2 billion instead of $3.5 billion as you claimed. Are you aware of that?”

  Trump said North Fork must have missed some assets: “They couldn’t have included everything.” Trump was asked to look at a net worth report by Deutsche Bank. That number was even smaller: $788 million. “Well, it’s incorrect,” Trump said, adding that banks don’t conduct thorough appraisals. “They have no idea what land in Palm Beach is worth. They have no idea what land in Westchester is worth. . . . They have no idea what most of these assets are worth.”

  “Didn’t you tell Mr. O’Brien you were worth six billion dollars?” Ceresney asked Trump, noting that one financial statement showed a worth of $3.5 billion.

  “This doesn’t include the value of branding,” Trump said, adding that “the value of the brand is very valuable.” In accounting practice, brands, even the most well-known ones, are considered a hard-to-measure “intangible asset.” Trump was in effect putting a value on his brand that ranged as high as $2.5 billion.

  • • •

  ON MARCH 20, 2009, the court dismissed Trump’s suit against O’Brien, saying there was no evidence of malice in the low estimates of Trump’s net worth. Trump wasn’t finished. On December 16, 2009, he filed an appeal, which gave voice to an underlying logic of his career and his claims: “Critical to Trump’s success in business is the fact that he is widely recognized by both the financial community and the public as a skilled, successful businessman, who has financial resources totaling billions of dollars. In the high risk, high reward real estate industry, Trump’s ability to close deals and secure financing for his projects depends on investors trusting his reputation and net worth.”

  O’Brien’s lawyers responded by spelling out what they claimed to be long-simmering doubts about Trump’s claims to great wealth: “Given the vast uncertainty and exaggeration surrounding Trump’s private holdings and debt—much of which Trump has fostered himself and which has been the subject of numerous press reports—it is likely that no statement about Trump’s net worth could be defamatory. Indeed, in his deposition, Trump indicated that his net worth fluctuated by the day based on his ‘own feelings,’ demonstrating some of the inherent difficulties in estimating it.”

  Trump’s appeal failed. In 2011, New Jersey Superior Court Appeals Division Judge Edith K. Payne delivered an opinion that echoed and summarized some of O’Brien’s findings: “The largest portion of Mr. Trump’s fortune, according to three people who had had direct knowledge of his holdings, apparently comes from his lucrative [family] inheritance. These people estimated that Mr. Trump’s wealth, presuming that it is not encumbered by heavy debt, may amount to about $200 million to $300 million. That is an enviably large sum of money by most people’s standards but far short of the billionaire’s club.”

  Trump believed he should have won, but he said later that wasn’t the point. In an interview for this book, he said he wanted to strike back at O’Brien, whom he called a “low-life sleazebag. . . . I liked it because I cost him a lot of time and a lot of energy and a lot of money. I didn’t read [O’Brien’s book], to be honest with you. . . . I never read it. I saw some of the things they said. I said, ‘Go sue him, it will cost him a lot of money.’ ”

  Trump said he might bring other lawsuits, including against media organizations and against those responsible for this book: “I sued in that case because it was so disgraceful. Now, libel suits are very hard and I may look at that, frankly, if I get elected, because it’s very unfair that somebody could write whatever they want to write and get away with it. And I will be bringing more libel suits—maybe against you folks. I don’t want to threaten, but I find that the press is unbelievably dishonest.”

  • • •

  TRUMP’S LAWSUIT AGAINST O’BRIEN was over. But the turmoil in Trump’s empire continued. Trump’s public casino company, which had filed for bankruptcy in 2004 and reemerged as Trump Entertainment Resorts, was again struggling with debt. In 2009, Trump was at odds with bondholders who wanted the company to file for bankruptcy again. Rather than fight, Trump resigned. “The company has re
presented for quite some time substantially less than one percent of my net worth, and my investment in it is worthless to me now,” he said at the time. In the bankruptcy proceedings, Trump found himself at odds with Carl Icahn, a man Trump had long called his friend. The billionaire investor had a long history with Trump, watching boxing matches and flying alongside him in helicopters during Trump’s early, energetic years in Atlantic City. In the early 1990s, Icahn had championed the deal that helped Trump retain some ownership during his Taj Mahal casino’s first brush with bankruptcy.

  Now Icahn openly sided with the Trump doubters. Trump Entertainment Resorts was struggling, and it attempted to restructure through bankruptcy. As part of those efforts, Trump allied himself with a hedge fund that sought to buy the company. The hedge fund pledged to give Trump a 10 percent stake if he let the company continue to use his name. Icahn backed a competing deal that would wrest total control of the company, questioning whether Trump’s brand signified quality and success. “If the name is so powerful,” Icahn said in 2010, “then how come they went bankrupt three times?”

  The hedge fund beat out Icahn and took over the company, giving Trump his 10 percent stake, and the casinos exited bankruptcy. But the problems were far from over. In 2011, Trump Entertainment Resorts sold Trump Castle casino (later renamed Trump Marina) for $38 million, one-thirteenth of what Trump’s company had paid for it fifteen years earlier. Trump said he got out of Atlantic City at the right time. Trump Entertainment Resorts, which owned Trump Plaza Hotel & Casino and Trump Taj Mahal, filed for bankruptcy again in September 2014. The Plaza closed around the same time, one of four of the city’s twelve casinos to close that year. As a result of bankruptcy proceedings for Trump Entertainment Resorts, Icahn reemerged as a corporate suitor, and in 2016, he won control of the company, with the Taj as its primary asset. Though Icahn became a political supporter of Trump, he continued to express doubts about Trump’s success in the business world: “I’m not here to say Donald’s a great businessman. But I will say he’s a great consensus builder, and that’s what Congress needs at this time.”