Donald Trump Is Once More Walking Away From Failure At A Profit
The US presidents supposed coup is more like a corporate bankruptcy.
At the end of history, Donald Trump appeared to be going bankrupt. As the Cold War came to a bloodless finale on the rubble of the Berlin Wall in 1989, the tycoon was presiding over a dissolving empire. Having entered the club of billionaires a year or so earlier, by August 1990, Trump owed $3.2bn to banks, $69.5m to subcontractors, and was involved in 111 court cases, as his Atlantic City casinos teetered on the brink.
It looked like a long face plant from the penthouse except it wasnt. Seeing how Trump rebounded from that loss sheds light on what he is doing now and prompts the thought: maybe his stubborn refusal to fully acknowledge his election defeat on 3 November his numerous legal challenges and his accusations of fraud is more like a bankruptcy than a coup.
Since the 1970s, bankruptcy law has developed in a contradictory fashion in the US: while laws and norms against individual and national bankruptcy have grown more stringent and punitive, norms and laws governing corporate bankruptcy have become more lenient. Famously, in the US, one cannot default on student loans, but it is common for corporate leaders to walk away from business failure at a profit.
As one researcher at a brokerage described it in 1987: When a company goes into bankruptcy, it enters sort of a state of grace. It pays no interest on all its debt, its contracts are unenforceable.
Donald Trumps Business Failures Were Very Real
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Many of Donald Trumps tweets arent worth paying attention to, but on Tuesday morning he posted a pair that demanded inspection. Like many other people, me included, the President had apparently been reading a story in the Times that punctured the mythology surrounding his business career. Based on Internal Revenue Service transcripts of Trumps tax returns from 1985 to 1994, the Timesreport said that Trumps core businesses racked up losses of more than a billion dollars in a ten-year period. During 1990 and 1991, the story said, Trumps losses were so large that they were more than double those of the nearest taxpayers in the I.R.S. information for those years.
Trump could simply have ignored the report or dismissed it as old news. But, with cable-news networks featuring it prominently, and the Daily News, one of Trumps home-town papers, running the front-page headline BIGGEST LOSER, he did what he usually does and counterattacked. This is what he wrote on Twitter:
These are significant sums, certainly. But, as the Times article points out, depreciation charges arent nearly large enough to create the massive losses that Trumps businesses incurred. Some fraction of Donald Trumps losses can be attributed to depreciation, Susanne Craig, one of the authors of the Times piece, wrote in a , responding to Trump. We found most of it was just bad business.
Inheritance And Further Acquisitions
In 1996, Trump acquired a vacant, 70-story office building at 40 Wall Street in Manhattan, renovated it, and branded it as The Trump Building. In 1998, Conseco and Donald Trump purchased the General Motors Building for $878 million from Corporate Property Investors. The group received a $700 million loan from Lehman Brothers for the purchase and Trump reportedly only committed $15 to $20 million of his own money to the deal. Trump raised the controversial sunken plaza where few pedestrians had ventured, which had been criticized by Huxtable, and installed his name in four-foot gold letters. In 2003, Trump and partners sold the building for $1.4 billion, then the highest price paid for a North American office building, to Macklowe Organization.
After his father died in 1999, Trump and his siblings received equal portions of his father’s estate valued at $250â300 million.
In 2001, Trump completed Trump World Tower, a 72-story residential tower across from the United Nations Headquarters. Trump also began construction on Riverside South, which he dubbed Trump Place, a multi-building development along the Hudson River. He continued to own commercial space in Trump International Hotel and Tower, a 44-story mixed-use tower on Columbus Circle which he acquired in 1996, and also continued to own millions of square feet of other prime Manhattan real estate.
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Donald Trumps Bankruptcies Reveal How Fat Cats Win
Robert Reich says sharp operators like Trump are able to keep their fortunes and spread the pain of a failed business to others.
Donald Trump has declared bankruptcy at least four times. No, that sentence isnt exactly true. Four times during his business career, Trump has availed himself of the protection of the bankruptcy laws so that businesses he owned could continue operating without paying all their debts. The businesses went bankrupt and the people to whom they owed money got screwed. Very likely Trump could have paid the debts from his own multi-billion-dollar fortune, but the deals were structured so that his fortune was not at risk.
This pattern came up early in his candidacy and Trump accurately blew off the suggestion that he had ever gone bankrupt. In fact, this fact is consistent with Trumps claim that he is a sharp businessman who knows how to do a deal, in fact how to do a heads-I-win-tails-you-lose deal so that his fortune was not at risk.
What should we make of this?
In a post on his eponymous blog and an article in Politico, former Labor Secretary Robert Reich suggests what we should make of it. Bankruptcy was designed so a person who couldnt pay his debts could start over, Reich writes. The creditors would get a portion of what they were owed, the debt would be cleared, the bankrupt person could avoid debtors prison and try to make a life despite the blot on his credit record, which would shadow him for years.
Fact Checking: Donald Trump Has Filed Bankruptcy Six Times
The Differences Between Bankruptcies: Chapters 7, 11, and 13
Recently, I met a prospective client with over $30,000.00 in medical debt. She lives with her one minor child and her annual household income around $40,000.00. She can pay her basic bills, but the massive medical debt is a different story. The collection phone calls are picking up and her stress level is beginning to affect her health. This same woman filed for Chapter 7 bankruptcy relief 6 years ago following a job loss, meaning that she would not be eligible for another Chapter 7 bankruptcy filing for 2 more years. She looks at me and says If our President can file bankruptcy whenever he gets into a pinch, why do I have to suffer for 2 more years? She recalled a news story saying that President Trump had filed bankruptcy at least four times prior to becoming our U.S. President.
Fact Checking: Has Donald Trump filed for bankruptcy relief 4 or 6 times?
Lets do some fact checking about how many times Donald Trump has filed for bankruptcy protection and why there is some debate over this number. During the 2016 presidential campaign, Hillary Clinton correctly pointed out that Donald Trump had filed bankruptcy 6 times. Here is a quick breakdown of the six Chapter 11 bankruptcy filings by companies owned by Donald Trump. All six of Donald Trumps bankruptcy filings were prior to him becoming our current U.S. President.
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New Report Details Decades Of Presidents Taxes And Financial Failures
On Sunday, The New York Times published a blockbuster report on the Presidents tax returns, revealing details from decades of confidential filings and information related to Trumps businesses. The report paints a picture of a president whose business interests are in financial distress and whose looming money challenges could push him into bankruptcy in the near future. The findings pose a troubling, but important, question to ask:
Is President Trump actually broke?
The explosive reporting by The New York Times is based on a review of two decades of Trumps personal and corporate tax record, ranging from his days as a high-profile real estate developer to the beginning of his tenure as President. In publishing their findings, the Times explained the rationale behind their decision.
We are publishing this report because we believe citizens should understand as much as possible about their leaders and representatives their priorities, their experiences and also their finances. Every president since the mid-1970s has made his tax information public, the Times wrote in an editors note accompanying the report. Mr. Trump, one of the wealthiest presidents in the nations history, has broken with that practice.
The Times added, The records show a significant gap between what Mr. Trump has said to the public and what he has disclosed to federal tax authorities over many years.
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A Small Number Of Personal Funds Was Used
The New York Times came to a different conclusion when reviewing security documents, court documents and regulatory investigations. Trump received millions in salary, bonuses, and other payments after putting up very little cash.
The newspaper stated that Trumps failures were most likely attributable to investors and others who relied on his financial abilities.
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How Trump Leveraged Other Peoples Money To Make Bankruptcy Work For Him: A Timeline
Donald Trump is the self-proclaimed king of debt. Before becoming president, he built his brand and companies with massive amounts of borrowed money.
Allmand Law teamed up with James Publishing to illustrate this timeline by Mother Jones, outlining Trumps Bankruptcies: How Trump Leveraged Other Peoples Money to Make Bankruptcy Work for Him.
In the 1980s, Trump amassed casinos, hotels, an airline, and a 282-foot mega yacht. But his gold-plated bubble popped. By June 1990, Trump was unable to make loan payments on his $3.4 billion in outstanding debts. In total, Trump businesses filed for bankruptcy six times.
In many ways, Trumps path to bankruptcy is just like that of many other business owners. His ambition was bigger than his financial resources. Risky business decisions didnt play out as planned. And his attempts to restructure his debt were unsuccessful. But, in classic Trump form, there are flourishes of scandal.
So how did he rebound and rebuild? Trump, along with his bankruptcy attorneys and financial advisors, used federal bankruptcy laws to their advantage. While investors and creditors lost a lot of their money, Trump was highly compensated for his day-to-day work, earned fees during the property transfers, and slashed his personal debts.
Scion And American Idea Hotels
Early in the Trump presidency, Eric Trump and Donald Trump Jr. announced the creation of two new signature hotel brands, Scion and American Idea, as “the next generation of the company”. After initially announcing as many as thirty potential deals in their pipeline, the ventures were scrapped in early 2019, with only one uncompleted hotel in Mississippi.
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What The F*ck How The Rich Go Bankrupt And Stay Rich
Think bankruptcy and you think losing your home, your car, and your prospects. Bankruptcy is considered to be the ultimate symbol of business and financial failure.
For most of us, thats exactly what it means. But for the rich, it doesnt necessarily mean the end. On the contrary, the rich tend to stay rich even after bankruptcy, in many cases.
Were Watching Trumps 7th Bankruptcy Unfold
As a businessman, Donald Trump ran 6 businesses that declared bankruptcy because they couldnt pay their bills. As the president running for a second term, Trump is repeating some of the mistakes he made as a businessman and risking the downfall of yet another venture: his own political operation.
In the 1980s, Trump was a swashbuckling real-estate investor who bet big on the rise of Atlantic City after New Jersey legalized gambling there. He acquired three casinos that by 1991 couldnt pay their debts. The Taj Mahal declared bankruptcy in 1991, the Trump Plaza and the Trump Castle in 1992. Lenders restructured the debt rather than liquidate and Trump put his casino holdings into a new company that went bankrupt in 2004. The company that emerged from that restructuring declared bankruptcy in 2009. Trumps 6th bankruptcy was the Plaza Hotel, which he bought in 1988. It went bankrupt by 1992.
Trumps surprise victory in 2016 paralleled the arrival of the brash upstart in Atlantic City more than 30 years earlier. But in the fourth year of his presidency, the Trump operation is once again reeling. Voters give him poor marks for handling the coronavirus crisis, underscored by an outbreak at the White House that infected Trump himself. Democrat Joe Biden is beating Trump is most swing states and an Election Day blowout is possible. Trump has suggested he wont leave office if he loses, threatening a constitutional crisis and his own political legacy.
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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:
It Will Be The Best 1996
Donald Trump has said that his brushes with financial disaster in the early 1990s reminded him of a lesson his father had taught him: Do not leave yourself on the hook for loans.
My father knew, like I knew, you dont personally guarantee, Mr. Trump is quoted saying in TrumpNation: The Art of Being the Donald, by Timothy L. OBrien, a former reporter for The Times. Ive told people I didnt follow my own advice.
His agreements with lenders and the two casino bankruptcies in those years still left Mr. Trump personally responsible for more than $100 million in debt, and his agreements had only delayed the day of reckoning to June 30, 1995.
He dealt with that danger by first shifting much of his personal debt onto his casinos, then onto a new group: .
Step 1 came in 1993, when his company sold more junk bonds, adding another $100 million in debt to the Trump Plaza casino. More than half of the new money went to pay off Mr. Trumps unrelated personal loans.
Then, in June 1995, with the risk of being forced into bankruptcy just weeks away, Mr. Trump shifted ownership of the Plaza casino to a new, publicly traded company: Trump Hotels and Casino Resorts. In the initial public offering, 10 million shares were sold at $14. At the same time, the company also sold another $155 million in junk bonds, at a 15.5 percent interest rate.
Indeed, the company posted losses of $66 million in 1996, $42 million in 1997 and $40 million in 1998. Those losses would continue.
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Allegations Of Business Links To Organized Crime
Trump maintained a connection with organized crime members to supply the concrete for Trump Tower. According to former New York mobster Michael Franzese, “the mob controlled all the concrete business in the city of New York,” and that while Trump was not “in bed with the mob … he certainly had a deal with us. … he didn’t have a choice.”Mafia-connected union boss John Cody supplied Trump with concrete in exchange for giving his mistress a high-level apartment with a pool, which required extra structural reinforcement. Trump admitted in 2014 that he had “had no choice” but to work with “concrete guys who are mobbed up.” He further stated that “I don’t like getting close to people like that, but they respected me.”
Trump’s lawyer Roy Cohn represented several mobsters in the past such as Carmine Galante, John Gotti, Anthony Salerno, possibly also representing Paul Castellano and Vincent Gigante. Cohn allegedly used his underworld connection to help Trump build Trump Tower.
Journalists David Cay Johnston and Wayne Barrett, the latter of whom wrote an unauthorized 1992 Trump biography, have claimed that Trump and his companies did business with New York and Philadelphia families linked to the Italian-American Mafia. A reporter for The Washington Post writes, “he was never accused of illegality, and observers of the time say that working with the mob-related figures and politicos came with the territory.”
Refusing To Pay Workers And Contractors
Where and when: various, 1980spresent
The dirt: Contractors, waiters, dishwashers, and plumbers who have worked at Trump projects say that his company stiffed them for work, refusing to pay for services rendered. USA Today did a lengthy review, finding that some of those contracts were for hundreds of thousands of dollars, many owed to small businesses that failed or struggled to continue because of unpaid bills.
The upshot: Trump has offered various excuses, including shoddy workmanship, but the scale of the problemhundreds of allegationsmakes that hard to credit. In some cases, even the lawyers Trump has hired to defend him have sued him for failing to pony up their fees. In one lawsuit, a Trump employee admitted in court that a painter was stiffed because managers determined they had already paid enough. The cases are damaging because they show Trump not driving a hard bargain with other businesses, but harming ordinary, hard-working Americans. More recently, several contractors filed $5 million in liens against Trumps new hotel in Washington, alleging he has not paid them for services rendered.
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