The Trump Entrepreneur Initiative
The now-defunct Trump Entrepreneur Initiative was once known as Trump University. The for-profit education company offered courses in real estate, asset management, entrepreneurship, and wealth creation.
The company was not an accredited school and did not offer high school or college credits.
The company was embroiled in an ongoing, high-profile scandal during Trumps presidential campaign, and it continued into his tenure as president.
The Trump Entrepreneur Initiative faced a lawsuit in 2013alleging illegal business practices. The New York state attorney general filed a $40 million civil suit that alleged the corporation made false promises to its students.
A New York judge found Trump personally responsible. In late March 2017, when Trump was serving as president, a judge approved a $25 million settlement for the defrauded students.
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The Bankruptcy Filings Of Donald Trump
SOME THINGS YOU PROBABLY DONT KNOW ABOUT BANKRUPTCY AND DONALD TRUMP
PART ONE OF TWO PARTS
There has been much recent mention in the mainstream news and among other political opponents of Donald Trump, namely Carly Fiorina, of the numerous Bankruptcies that Donald Trump was involved. Although Donald Trump never personally filed Bankruptcy, a number of Corporations in which Donald Trump had majority control and ownership, filed Bankruptcy, specifically Chapter 11 Bankruptcy.
Trump Corporations have filed Bankruptcy four times. Each Bankruptcy involved Trump Resorts, Hotels and Casinos located in the Atlantic City area, in New Jersey. Mr. Trump has, on numerous occasions, defended the Bankruptcies, stating that his Enterprises were victim to the general economic malaise that has befallen New Jersey, and Atlantic City, in particular. Trumps Corporations in Atlantic City are not the only Hotels and Casinos in Atlantic City that experienced severe financial hardship. Trump further defends his position by touting his good timing in removing himself and his business efforts away from Atlantic City, before Atlantic City descended much further into economic disaster.
In addition, Mr. Trump will often mention that although a number of his Atlantic City projects did file Bankruptcy, most have experienced successful restructuring, which is unusual for Corporations that file Chapter 11 Bankruptcy, and he has hundreds of other business ventures that have been successful.
The Backstory On Donald Trump’s Four Bankruptcies
NEW YORK — Donald Trump has never declared bankruptcy, but his businesses have — four times.
The real estate mogul, television star and Republican presidential frontrunner filed for corporate bankruptcy in 1991, 1992, 2004 and 2009. Three of the cases were related to his casino and hotel properties in Atlantic City, N.J.
And even though more than six years have passed since Trump had his last run-in with Chapter 11, it remains a touchy subject. Trump was quick to clarify at the Republican presidential debate hosted by Fox News in August that he had never filed for personal bankruptcy. Instead, he cast his moves as part of his solid business acumen.
“Out of hundreds of deals — hundreds — on four occasions, I’ve taken advantage of the laws of this country, like other people,” he said. “The difference is, when somebody else uses those laws, nobody writes about it. When I use it, it’s like, ‘Oh, Trump, Trump, Trump.’ The fact is, I built a net worth of more than $10 billion. I have a great, great company. I employ thousands of people. And I’m very proud of the job I did.”
A Trump spokesman said many of the filings occurred when Trump was no longer involved in the businesses, blaming them on the declining casino market in Atlantic City. “It’s not fair to judge anyone of his success, and the empire that he’s built, on a particular investment without also looking at all of the great success he’s had,” he said.
1991, Trump Taj Mahal
1992, Plaza Hotel
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Trump And Atlantic City: Making Bank And Bankruptcy
Donald Trump has a long history in Atlantic City. During the big boom period of New Jersey’s gambling capital, Trump built the Taj Mahal and also ran the Trump Plaza Hotel and Casino.
At the time, the Taj Mahal was one of the most impressive casinos on earth. Trump invested $1 billion in the monstrous casino, and it was poised to be the most luxurious casino in the U.S.
Both of Trump’s casinos went bankrupt. And many contractors and employees fell on hard times as a result.
But how much of this has to do with the up-and-down nature of the casino industry, and how much with Trump’s business practices?
Read to get the details below.
Competing Atlantic City Casinos
Although the Trump Taj Mahal was deeply in debt and filed for bankruptcy, thus leading to Trump losing many of his assets, Atlantic City continued to boast huge revenues. By the early 2000s, revenues hit $4 billion.
Trumps reign in Atlantic City came to an end in 2004, when his consolidated company Trump Hotels & Casino Resorts filed for bankruptcy, with Trump resigning as chairman.
Many other Atlantic City casinos’ revenues saw constant growth throughout Trumps public battle against bankruptcy. These revenues would only see a decline following the 2008 recession.
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The 2nd Windfall: ‘the Apprentice’
After the turn of the 21st century, Trump’s starring role in “The Apprentice” was his next big windfall, providing him with $197.3 million from 2000 to 2018, per The Times. This figure expands even further when factoring in endorsements and licensing deals that traded off his “You’re fired!” image.
Trump still filed two corporate bankruptcies during this era in 2004 and 2009 but his assets’ struggles were largely hidden behind the opaque wall of the Trump Organization as Deutsche Bank grew to become his main lender, loaning him $2 billion over the next two decades, per The Times.
Instances of deceptive accounting have arisen in lawsuit claims or in reporting similar to The Times’, such as the Washington Post reporter David Fahrenthold’s Pulitzer-winning work on the Trump Foundation. Fahrenthold reported that the foundation, ostensibly a charity, ran on few of Trump’s own dollars and that Trump had used funds from it to settle legal disputes.
The Times concluded in its recent analysis that Trump had largely spent on golf courses in recent years that these assets lose millions, or tens of millions, a year and that his revenue from “The Apprentice” and licensing deals had been withering away.
Since 2000, The Times found, Trump has lost $315.6 million from his 15 golf courses in the US, Scotland, and Ireland, including $162.3 million in losses on his National Doral golf resort in Miami from 2012 to 2018 and $63.6 million on his three European golf courses.
Trump Plaza’s First Years
Trump Plaza cost $210 million to build. When it opened on May 15th, 1984, it was the largest casino in Atlantic City.
While it had a rather strong beginning, by 1990 Trump Plaza was having serious financial problems. In part, this was due to competition from none other than Trump’s Taj Mahal.
After seeking a backer for years, the Trump Plaza closed in 2014, laying off around 1,000 employees.
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Trump Ice Natural Spring Water
Trump Ice was a bottled water brand. The winner of The Apprentice Season 2, Kelly Perdew, served as executive vice president of the organization.
The companys website no longer exists, and the product can no longer be found in national grocery chains or stores but some can still be found on eBay and other auction sites.
The company was used as a gimmick in the shows first season when contestants marketed and sold the product.
Admirably Tough Or Downright Slimy Your Call
Donald Trump has ticked off a whole lot of different groups during his outspoken and unconventional run for the presidency. Few small business owners are among them.
Back during the primaries when he was an unlikely challenger to a slew of other more mainstream Republican candidates, Trump managed to attract the support of a whopping 41 percent of small business owners despite the crowded field. Even after a year of gaffes and controversy, more recentpolls suggest small business owners remain among Trumps most stalwart supporters.
But there are some interesting and very vocal exceptions the many small business owners Donald Trump has stiffed in his long career as a real estate tycoon.
Recently several media outlets have dug up a handful of business owners with worrying tales to tell of Trumps bullying, unfairness, and failure to pay. And while their numbers arent huge, there are enough of them to suggest a pattern of behavior that raises questions about whether pre-politics Trump was much of a friend to small business in practice. Here are a few of their stories:
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Fourth Time’s A Charm: How Donald Trump Made Bankruptcy Work For Him
Trump Plaza, Atlantic City. Image via Flickr.
Here at FORBES, we’ve been tracking Donald Trump‘s wealth since the inaugural Forbes 400 rich list in 1982. Today, we value him at $2.7 billion, although he claims he’s worth far more. One question we’re often asked when talk turns to Trump’s fortune: how can a man who has been bankrupt so many times remain a multi-billionaire? How is he worth more now, post-bankruptcies? We spoke to bankruptcy lawyers and casino industry experts — some of whom have had firsthand involvement in Chapter 11 cases connected to Trump — in an attempt to explain how he has survived corporate bankruptcies and thrived in the aftermath.
1. It’s nothing personal…
First things first: Donald Trump has filed for corporate bankruptcy four times, in 1991, 1992, 2004 and 2009. All of these bankruptcies were connected to over-leveraged casino and hotel properties in Atlantic City, all of which are now operated under the banner of Trump Entertainment Resorts. He has never filed for personal bankruptcy — an important distinction when considering his ability to emerge relatively unscathed, at least financially.
“Corporations, limited partnerships, and LLCs in which he had an ownership interest or companies that had his name attached have filed for bankruptcy,” said Michael Viscount of Atlantic City law firm
In Presidential Bid)
2. …it’s just business.
3. It’s better than the alternative.
4. He’s leveraged his persona.
6. He’s not the one to blame.
Trump And Unpaid Contractors
You have to be very rough and very tough with most contractors, or theyll take the shirt right off your back. — Donald Trump: The Art of the Deal
“Atlantic City fueled a lot of growth for me”
– Donald Trump, to New York Times
At the opening of Trumps Taj Mahal in 1990, he owed $70 million to various contractors. While the casino was not a complete failure, it did not make the kind of money it needed. By 2016, the casino had closed completely bankrupt.
Trump’s bankruptcy meant that several contractors were never paid for their work and materials. Below are some claims for unpaid debts to contractors:
- $2 million to Robert Morrison of the Molded Fiber Glass Co. for creating onion domes
- undisclosed amount to Michael MacLeod, sculptor of elephant statues
- $1.2 million for the paving stones leading up to the Taj to Mario Paone
- $1.1 million to Marty Rosenberg for floor-to-ceiling curtain walls of glass
- $3.9 million owed to John Millar, marble supplier
- more than $500,000 owed to landscaper Herman Caucci
- $580,000 owed to Frank Lundy for overseeing construction clean-up
- $232,000, George Jenkins, the bathroom partition man who had to lay off his brother
The contractor who made the Taj’s eye-catching onion domes claimed $2 million in losses. The contractor who supplied the Carrara marble from Italy ended up filing for personal bankruptcy. The contractor who put in the bathroom partitions had to lay off his brother.
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They Will See How Great It Will Become 2009
When Donald Trump has been pressed on his casinos performance during his presidential campaign, he has repeatedly said he left Atlantic City at the right time.
Atlantic City is a disaster, and I did great in Atlantic City, he said during a Republican Party debate last September, according to a transcript. I knew when to get out. My timing was great. And I got a lot of credit for it.
That would suggest Mr. Trump willingly left sometime around 2006, the year that revenues peaked in Atlantic City and that Pennsylvania allowed its first casino to open, a development that marked the start of a rapid downward spiral in the city. The drop-off was exacerbated by the recession that began in 2008.
But in early 2009, as Trump casinos lurched toward bankruptcy for the fourth time, Mr. Trump was still trying to hang on. At loggerheads with board members who had been selected by bondholders after the 2004 bankruptcy, he offered to buy all or a part of the casino company bearing his name. He was rebuffed, and he quit the board soon after.
Testifying in bankruptcy court in Camden, N.J., Mr. Trump argued that the company could not use his name, since shortly before filing the bankruptcy it had stopped paying him the $166,000 a month he received under the services agreement. He testified that his brand was worth $3 billion. He also testified that he was personally negotiating the settlement of a lawsuit in Florida that would yield more than $100 million for the company.
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How Is Donald Trump Able To File For Bankruptcy So Many Times
Prior to the 2016 presidential election, when people discussed then-candidate Donald Trump, they often focused on his personal finances and how he had run his businesses. One of the common refrains had to do with his bankruptcies. According to pundits and critics, Trump had been unsuccessful in business, having to file bankruptcy several times in order to get by. Some people may have seen those stories and read the reports only to wonder how a person can declare bankruptcy so many times. For someone with the wealth of Donald Trump, how is it possible to keep declaring bankruptcy?
Donald Trump and personal bankrtupcyTo understand Donald Trump and bankruptcy, one must first understand the distinction between personal finances and business finances. Businesses are separate entities according to the law. In particular, corporations have their own legal personhood. They are specifically created so that people can avoid personal financial liability if things happen to go wrong. With this in mind, Donald Trump has actually never declared personal bankruptcy. In each instance, his bankruptcy has been a result of a business failure rather than a personal failure.
There have been many other business bankruptcies. Most of those have involved casinos. While Trump has tried hard in the casino business, he has had a number of failures there. On top of that, his Trump Plaza Hotel had to declare bankruptcy in order to seek ample protections.
Trumps Rebound Story Meets Mounting Bankruptcies
It wont exactly be an October surprise, but it could still be a shock: a wave of business failures hitting during the campaign season.
Local business site Yelp found that 55 percent of the firms that closed during the worst of the pandemic beginning in March are now permanently shuttered. | Eric Gay/AP Photo
09/03/2020 04:30 AM EDT
While President Donald Trump prepares to promote an economic rebound, a wave of business failures is set to tell another story.
Economic-relief money drying up in August and September will mark a final blow for some firms that had managed to hang on so far with government aid which now appears unlikely to be renewed for weeks, if ever. Cold weather and flu season could end outdoor dining, halt other indoor activities and contribute to Covid-19 outbreaks at workplaces. And economists expect weak demand and tight credit especially for smaller businesses to add to the tens of thousands of firms that have already collapsed amid the Covid-19 pandemic, while restraining entrepreneurs hoping to replace them.
All of it could complicate Trumps narrative of a robust American comeback. The president has been plotting a hopeful message since the depths of the pandemic this spring, but its increasingly at odds with the mounting toll of corporate bankruptcies and deepening wounds for small businesses still bleeding from the spring shutdowns.
POLITICO Dispatch: September 3
By BEN WHITE
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Used Law To Protect Interests
Critics have cited the Trump corporate bankruptcies as examples of his recklessness and inability to manage, but the real estate developer, casino operator, and former reality-television star says his use of federal law to protect his interests illustrates his sharp business acumen.
Trump said in August 2015:
“I have used the laws of this country just like the greatest people that you read about every day in business have used the laws of this country, the chapter laws, to do a great job for my company, my employees, myself and my family.