Everything you want to know about Donald Trump’s bankruptcies

31 Aug 2015 | Author: | No comments yet »

3 Money Lessons Donald Trump Can Teach You.

NEW YORK — Donald Trump sells himself as a bold empire builder, the kind of businessman who could force through big changes in Washington as president. However whether or not you’re keen on “the Donald” or hate his guts, there is no denying he is been extraordinarily profitable in enterprise, creating wealth, dropping it, regaining it, dropping it once more, recreating it as soon as extra — OK, you get the image — on a degree that the majority of us can solely dream of. He had bought the building three years earlier on the advice of his father, an accountant who considered distressed real estate a smart long-term bet.

Two others — Trump Plaza and Revel — would also shut down over the next three weeks in a rapid contraction of an industry that had been suffering from increased competition and declining revenues for years. Yet for all his bravado — “I’ve done an amazing job,” the Republican White House hopeful boasted during his announcement speech — a review of the billionaire’s financial filings and recent deals suggests he’s no swashbuckler.

And when somebody has been as profitable as Trump has, it is foolhardy to disregard his success out of hand and never search for insights into how he achieved it. Over the last 12 months, plans to redevelop one of the former casinos as a college campus crumbled and an effort to reopen another stalled amid a protracted fight over energy costs. We requested three of our prime investing and finance specialists to weigh in, they usually gave us perception on the liberty that wealth can present, a reminder that Trump’s success is not precisely what he’d have us assume it’s, and a lesson in utilizing the system to our profit. It was a bedraggled three-story clapboard house that years of neighborhood demolition and neglect had stranded at the edge of several mostly vacant blocks, which together formed an urban badlands reaching all the way to the dunes.

He holds few stocks for someone of his wealth and has grown increasingly dependent on making money by lending out his name to others rather than developing real estate himself. “People think of him as big. This was the South Inlet, a once thriving part of town and now more or less a desolate slum at the northeastern end of Absecon Island, the landmass that is home to Atlantic City and three other municipalities.

But the bankrupt Trump Taj Mahal, which nearly closed last year and faces a possible strike by workers over pension and health benefits, has faced steep losses. People from “offshore,” as locals like to call the mainland, tend to think of the island’s Inlet end as north, because it’s upcoast, but locals call it east. But that’s not his money,” says Don Peebles, a real estate developer who oversees a $5 billion real estate portfolio. “He’s not taking big risks.” Peebles calls Trump a “pioneer,” praising his move into a nearly risk-free business. In the past decade, Trump has struck deals to put his name on at least a dozen properties built and owned by others, including a glass tower reflecting the ocean in Uruguay, a golden-hued skyscraper in Mumbai and a hotel facing the beach in Rio de Janeiro.

Listed here are the small print, in line with The Regulation Dictionary: 1991: Trump’s company filed for Chapter 11 chapter safety when his Taj Mahal on line casino in Atlantic Metropolis was billions of dollars in debt. Three blocks west of Hauke’s place, an immense slab of steel and glass was rising over the badlands: a hotel and casino to be called Revel, destined to be bigger and more opulent than anything Atlantic City had ever seen—two towers, reaching almost fifty stories, nearly four thousand rooms, and parking for more than seven thousand cars. In an industry prone to booms and bust, say branding experts and rival developers, it’s a shrewd shift that only someone with Trump’s name recognition could pull off. Trump’s stake within the firm was decreased to 25%, and he not managed it. 2009: This time it is Trump Leisure Resorts that information for chapter safety after lacking a $53 million bond curiosity reimbursement. Trump is a “genius,” says fellow real estate billionaire Richard LeFrak, adding, “not all of us have the luxury” of getting into such a licensing business.

Unable to find a commercial tenant for his house’s ground floor (the apartments upstairs were designated Section 8, for low-income tenants), he started selling rudimentary takeout to Revel’s construction crews. But it’s not the image that Trump is projecting as a candidate for president, given that his White House campaign is built around his prowess in the boardroom. Their rush-hour bulk orders overwhelmed his staff, but off hours the place was dead: a trickle of casino workers and, in Hauke’s words, “shitbags, crackheads, hustlers, and pimps.” Hauke, a recent graduate of the University of Massachusetts, Amherst, had spent a couple of years in Hoboken and Manhattan working in marketing, but he had no restaurant experience.

The candidate’s company, the Trump Organization, rejects any suggestion he’s playing it safe. “We have been major buyers of properties,” said the candidate’s son, Eric Trump, who oversees real estate development and acquisitions at the Trump Organization. One of his first customers was a neighborhood junkie known as V8 Man (“All the white kids are junkies,” Hauke said. “The Inlet does it to everybody”), who, on opening night, picked a fight at the counter with a male prostitute and another customer; Hauke smashed a pizza paddle on the counter and used the sharp end to scare him off.

One morning, a neighborhood kid rode by on a bicycle and threw a crude pipe bomb through the window; Hauke chased him in his car and, after cornering him briefly in an abandoned house, hounded him on foot across a vacant tract called Pauline’s Prairie, named after Pauline Hill, a city planner in the sixties who’d had this stretch of the neighborhood bulldozed for urban renewal, which never came. He broke ground on New York’s Trump Tower in 1980, just before New York City’s resurgence from near bankruptcy and the start of the longest bull stock market in history. For somebody who is not a profession politician, this monetary stability provides Trump a measure of freedom to talk his thoughts that we not often see from a presidential candidate. They’d been holding on for years themselves, in the hope of selling to a big casino, and in the interim they’d been gutted by rising property taxes and ongoing decay.

A part of the rationale he can get away with it’s that he does not actually need donors, and he does not have a political fame on the road the identical method profession politicians do. Eric Trump said his father strikes deals with local firms overseas because he needs help with the languages, culture and laws, not out of any reluctance to deploy his own cash. You couldn’t build a house, and the few houses left in the neighborhood—most had been demolished or had burned down, accidentally or not—were old and badly battered by the salt air.

Say what you need about Trump (I am admittedly no fan), however he has definitely confirmed extremely expert at navigating the authorized system and utilizing the assets obtainable to him to realize success. Condo buyers in failed Trump-named properties in Fort Lauderdale, Florida, and Baja, Mexico, have claimed in lawsuits that the billionaire misled them into believing he was more involved in the projects than just lending his name. Selena makes an excellent level concerning the quite a few occasions Trump-run corporations have declared chapter, however I do not know that it is truthful to name these failures, frankly. He’d worked as a baccarat dealer at the Sands, until it closed (it was demolished in 2007), and now taught English as a second language at an elementary school. In a recently released list of assets, he estimated his worth at $8.7 billion — more than double the figure calculated by Forbes magazine, which has been tracking his wealth for three decades.

His property taxes had risen sharply, as the city contended with a steep drop in tax revenues from the casinos. “Get out while you can,” Zarych told Hauke. Trump pegged the biggest line item as “real estate licensing deals, brand and branded developments” worth $3.3 billion — or nearly 40 percent of his net worth. Not each choice — and never each inventory we select to spend money on — will work out, and that is advantageous, as a result of it takes just a few massive winners to make up for the losers. Last year, he bought Ireland’s Doonbeg club on the Atlantic coast and Scotland’s Turnberry Resort, the site of several British Opens and the 17th course in his collection. For common buyers, meaning easy issues like maximizing tax-advantaged funding automobiles, similar to Roth IRAs or 401(okay)s, and utilizing funding losses to offset our positive factors as a way to decrease our tax invoice.

Too typically individuals attempt to get wealthy by means of shortcuts or “cannot miss” investing ideas, somewhat than taking probably the most elementary steps towards investing success. Others aren’t so sure, noting that club membership and play in general have dropped since the financial crisis. “It’s not a booming business, and yet he wants us to believe that his is,” said Ron Whitten, a senior editor at Golf Digest. If Donald Trump is making money on his golf clubs, Whitten said, “he is the only one doing that.” Trump’s licensing business has taken some hits during his presidential campaign, including disparaging remarks about women and immigrants. After he said Mexican immigrants bring drugs and crime to the U.S., and some are rapists, several companies including Macy’s, NASCAR, Univision and NBC cut ties with Trump.

He adds, “Our campaign can’t keep bumper stickers in stock.” Alan Brew, head of consultancy BrandingBusiness, isn’t sure Trump’s brazen say-what-you-will campaign will prove a winner in politics but suspects it will help his business. “He’s getting free exposure,” he said. He bought a food truck, which he named the Mustache Mobile, and developed a line of pizzas and novelty subs that he marketed as “indigenous Atlantic City grub,” as though he’d revived an obscure provincial cuisine. Soon, Tony Boloney’s began winning foodie awards and luring in not just gamblers, night-clubbers, food-truck connoisseurs, politicians, and cops but also a procession of casino magnates and real-estate speculators who were visiting the neighborhood, often on the sly, to size up the distressed property next door.

After a photo op at a famous sub shop called the White House and a visit to the Revel site, he dropped in at Tony Boloney’s and urged Hauke to keep the place going. “Listen, you gotta stick around,” Christie told him. Revel opened in the spring of 2012, with Beyoncé performing a series of concerts in its auditorium. (She also took over the Presidential Suite, relegating Michelle Obama and her daughters to another suite.) The plan had been scaled back—just fourteen hundred rooms, and one tower instead of two. Still, it was an impressive building, with sleek, airy marbled atriums and lobbies that had little in common with the smoky, windowless, carpeted caverns of the older mega-casinos down the boardwalk. Some observers blamed the layout—the hotel-room elevators didn’t access the casino floor, and a long, tortuous trip from the entrance to the check-in desk didn’t take you through it, either—or the fact that Revel prohibited smoking, or that its slot machines didn’t seem to pay out, or that it was stingy with the comps.

Even though occupancy was decent and the night clubs and restaurants were busy, the tables and slots weren’t taking in enough to offset the cost of operating the place—the burden of debt service, high property taxes, bad leases with the tenants, and an expensive arrangement for power and light. From the time Morgan Stanley began searching in vain for equity partners, Revel had been in play, and all along Tony Boloney’s had served as an informal commissary for would-be investors and buyers.

Among those whom Hauke and his staff said they’d seen were Steve Wynn, who had sold the Golden Nugget in 1987 and vowed never to come back; various hedge-funders from New York; and a group of Chinese men—the Export-Import Bank of China was at one point in talks to buy a piece—who took over Hauke’s tables and held meetings for hours, without ordering anything. A mysterious character in tattered clothing and a handlebar mustache had been showing up a few times a year, engaging the staff in conversation about space travel and Elon Musk.

Within weeks, news broke that a little-known Florida developer named Glenn Straub, the owner of Palm Beach Polo Golf and Country Club, had offered ninety million dollars to buy Revel. Straub wanted to put up the aborted second tower and fill it with academics and scientists charged with solving the world’s problems: your Tower of Geniuses.

Over the decades, and with the industrial-era advent of leisure time and disposable income, this forsaken wedge of salt marsh and sand became “the world’s playground”—a crucible of conspicuous consumption and a stage for the aspirations and masquerades of visitors and entrepreneurs. For a while, it was home to some of the world’s grandest hotels (the Marlborough-Blenheim was the largest reinforced-concrete building in the world, and was later imploded in the music video for Bruce Springsteen’s “Atlantic City”), as well as some of its more ardent iniquities and diversions. The archetypal amusement was that of white working-class visitors kicking back in the boardwalk’s famous wicker rolling chairs while black people did the pushing—a “public performance of racial dominance,” notes the historian Bryant Simon, in “Boardwalk of Dreams.” Though the Northside, traditionally a black neighborhood, had been a thriving district, the decline in tourism to the city, after the Second World War, hit it hard.

Legalized gambling was supposed to rescue the city from its obsolescence as a resort and convention town, a condition that came to national attention during the 1964 Democratic Convention there and grew more conspicuous as the decade wore on. But, perhaps predictably, a lot of the money that flowed in flowed right back out—to the casino operators and their financing schemes (“I made a lot of money in Atlantic City,” Donald Trump said at the recent Republican debate. “And I’m very proud of it”) and to their subsequent efforts to lobby for the approval of casino gambling in other states.

Neglect of the city has been attributed to a bloated municipal payroll—a budget nearly double what it was ten years ago—and the years of corruption and mismanagement in city government. Some blame the suffocating effect of the casinos, which are boxed off from the city and are designed to keep patrons inside losing money rather than outside spending it. The dividing line between south and north, and between white and black, used to be Atlantic Avenue, the main commercial street, which runs parallel to the sea. It was where South Jersey shopped for wedding dresses and jewelry; now it’s a gantlet of shabby storefronts and fast-food joints, running toward and away from the New Jersey Transit bus terminal. Wood, who is white (his grandfather, a metallurgist, came to town from Lithuania at the end of the nineteenth century and used to scavenge for junk on the beach with a horse-drawn wagon), has noticed an uptick in the number of shopping bags from the outlet mall, a few blocks away.

It’s got everything going for it except the buildings that are on it.” His solution: “Cut holes in the casinos and let out all those people, all that capital.” In order to prevent monopolies, the Casino Control Act stipulated that no one could own more than three casinos. Some favor alternative entertainments (concerts, water parks, polo, legalized marijuana) or the panacean potential of higher education (Stockton University, a state college headquartered offshore, has long wanted an Atlantic City campus). Two competitors, Tropicana (owned by Icahn) and Caesars (controlled by the private-equity firms Apollo Management and TPG Capital), bought out the bankrupt Atlantic Club, closed it, and divvied up the scraps.

First came the casinos on Indian reservations in Connecticut, in the nineties, and then, in recent years, the advance of gaming across state lines, in Pennsylvania, Delaware, Maryland, and upstate New York. (Some industry experts will tell you that Manhattan is destined to have tables, too.) Now there’s talk of casinos in North Jersey, which, along with video-slot parlors at the racetracks (“racinos”), would cannibalize the action in Atlantic City. Presiding over the first bankruptcy for a New Jersey municipality since the Great Depression would not help his Presidential ambitions, and, perhaps more important, it would raise the already high costs of borrowing across a state whose finances are very grim. At night, the blare of piped-in pop warped in the wind, and floodlight spilled out over the dunes, which, post-Sandy, were just a layer of sand atop an armature of giant sandbags. On the façade of the first casino that one saw after pulling off the expressway there was the ghost lettering of the immense sign that once spelled out “Trump Plaza” and, beneath it, a billboard that read “The Center of It All.” (The small print read “Gambling Problem? Call 1-800-Gambler”—advice, maybe, for the city itself.) Visitors regularly stopped to photograph this, to add to their portfolio of what some locals, resenting the attention, considered ruin porn.

She’d come to town three years before, when a friend got her a role in a dinner-theatre company down shore, in Ocean City, and then she found herself auditioning at Harrah’s, which, in those days, used cocktail waitresses as dancers in its TV commercials. “The choreography was difficult,” she recalled. She remembers a weigh-in, and an interview in a bathing suit, and she and the others were required to wear two-and-a-half-inch heels. (When I met her, she had her hair up and was wearing a smart lavender suit.) “I very much enjoyed working for Donald Trump,” Inglin said. “When he was there, it was tip-top.

They were taking away severance, the machines disappearing, equipment rolling past you.” After thirty years, she was fourth in seniority among cocktail waitresses at the Plaza and was making $8.99 an hour, plus benefits. Since the Plaza closed, she has been attending classes at the community college in pursuit of a degree in human services—a growth field in these parts. “We have an addiction problem here,” she said.

Because of the rise in property taxes, the value of the house is well below the value of the mortgage, so he is stuck with it. “If I could get out of my house, I would. In the decades prior to the First World War, Louis Kuehnle, a transplanted New Yorker and powerful Republican known to all as the Commodore, turned the resort into a bustling metropolis and the state party into a patron and beneficiary of the evolving local aptitude for vice. Enoch (Nucky) Johnson, his successor and the basis for the Steve Buscemi character in “Boardwalk Empire,” continued this work and presided over Atlantic City’s glory years, during Prohibition, which, largely thanks to his efforts, never really pertained. Since then, there have been party bosses, governors, and mayors with varying degrees of power and venality, but no kingfish of the stature of the Commodore, Nucky, or Hap. “I’ll give you Atlantic City,” the mayor of Camden said, to F.B.I. agents disguised as Arabs during the Abscam sting. “Without me, you do nothing.” But by then such an offer was beyond the reach of any one man. In city politics, the Democrats held sway. (The electorate is now thirty per cent Hispanic and forty per cent black; Democrats outnumber Republicans nine to one.) The only Republican to rule City Hall in the casino era was James Usry, the city’s first black mayor, who got caught up in a corruption investigation that cost him the 1990 election—until 2013, when, to the great surprise of the city’s political establishment, Don Guardian, a gay white Republican, beat Lorenzo (Rennie) Langford, an African-American, by fewer than four hundred votes.

He lives in the same modest split-level that he’s been in for twenty-eight years (“In two years it’ll be paid for”), on a street in the Northside that has been renamed L. We talked in his “man lair,” a furnished subfloor with jazz paraphernalia and a wall of fame: his wife, Nynell, with him and Jay Z and Beyoncé; Stevie Wonder; Janet Jackson; Michael Vick; and Lionel Richie. Langford said, “What Christie thought would be his shining achievement will be the albatross around his neck.” His successor, Guardian, is sixty-two and from North Jersey. Guardian also picked up the support of the state’s Republican establishment and of the unions, in light of his promises to put “cranes in the sky.” Guardian has been frank about the city’s predicament yet optimistic about its prospects. Guardian is routinely unpunctual and speaks off the cuff with enough dash that Chris Filiciello, his chief of staff, usually sticks close to keep watch.

He was the keynote speaker at this year’s annual luncheon of the Metropolitan Business and Citizens Association, a kind of super-charged chamber of commerce. Twenty years ago, they bought an old building near the clubs, next door to a porn shop, and converted the top three floors into a triplex they called Casa Del Cielo, where they live together and preside as ambassadors, of a kind, over various gaudy but charitable entertainments. Past a suite of paintings by Ringo Starr and a library shelved with scrapbooks chronicling Hill and Schultz’s twenty-seven years together, a loggia led to a heated pool, which they once filled with wine corks.

Here and there were garish furnishings salvaged from the casinos: headboards from Trump Plaza, smokestacks and banquettes from the Showboat, chandeliers from the Sands. Brookfield owned the Atlantis in Nassau and the Hard Rock in Las Vegas, and so saw some synergy here, but it couldn’t make a deal with the owners of Revel’s adjacent power plant, which had been built solely for Revel and was charging Revel three million dollars a month for utilities. (The power plant was a separate, independently owned entity, called ACR Energy Partners—an arrangement that has proved poisonous.) In November, Brookfield decided to forfeit its deposit, of eleven million dollars, and walk away. He’d refurbish Bader Field, the defunct downtown airport, and establish an equestrian center for two thousand horses, polo fields, high-speed ferries to Manhattan, a life-extension university, and the world’s biggest indoor water park.

The first time he picked up, at his club, he told me, through bites of an apple, that he had just finished playing a polo match, that he lived and worked on a yacht, that he was debt-free, and that he had two brilliant adult daughters with whom he had failed to spend enough time. In the all but abandoned Revel corporate offices, overlooking a slatey winter sea, two of the remaining Revel employees were waiting for Straub to arrive. In a kitchenette, he made a sandwich for himself and sat down in a conference room with a view down the boardwalk: in the foreground, the empty lot that would one day, he hoped, be home to his water park, and then, stretching south, the casino cordillera—Showboat, Taj, Resorts, Bally’s, Caesars, Trump, Trop. “It’ll be done the right way,” Straub said. “I’ll actually wash the windows here.

He’s a bit of a savant.” Straub comes from Wheeling, West Virginia, where his father had a business providing transportation to the Texas Eastern pipeline and later owned auto-leasing franchises and taxi fleets. “So you worked, and if you didn’t work Dad got the belt out and beat your butt,” Straub said. “Anyway, he died, just when I got my driver’s license.” After high school, Straub and a brother helped run the businesses. In time, they owned a network of sand and gravel quarries and concrete and asphalt plants; highway- and airport-construction contracts made them rich. (In recent years, those long-moribund quarries, in the upper Ohio River Valley, have been found to sit atop vast reserves of oil and gas, extractable by horizontal drill, making Straub even richer.) Straub retired at forty, moving his family (his wife, from whom he divorced in 2007, and two daughters) to Florida. “I lasted six months,” he said.

Through the years, he has been proudly litigious. “If you check me out, I’m pretty good at protecting our rights in the court system,” Straub told me. He squeezed mayonnaise from a packet. “Bring this ocean liner in, and I don’t know if you’ve been around Ripley’s down in Orlando, the whole building shaking and everything else. I’m gonna teach my kids, or my kids’ kids, what World War II was all about, and the Holocaust, and Zeros coming in from Japan, and so when you go inside this thing, this ship, it’s gonna make you feel like you’re being bombed, like Pearl Harbor when the damned Zeros came in, took out our whole fleet in the Pacific.

Amid innumerable motions, hearings, and rulings, attorneys representing bank lenders, unsecured creditors, jilted tenants, other prospective buyers, the power company, and the gutted estate argued for and against his offer, sometimes changing sides as the circumstances evolved. Moskovitz read aloud, “Sometimes the judge has to protect the debtor from himself.” In the back of the courtroom, a lanky man in a yellow sweater, his graying hair perfectly in place and his eyes darting around, fidgeted with his fingers as though he were handling invisible chopsticks.

But his quest had morphed into something else, and so now he just lurked, waiting for the court, or perhaps the entropy of Atlantic City, to scuttle Straub’s bid. Quietly casting himself as the new white knight, he’d submitted an offer, but so far it had gone unacknowledged. “Straub is done,” Crandon told me later. “We’ve put in a better offer. We’re sitting back, taking our time.” He added, “Straub thinks he’s the only guy in town.” The town, and the sellers, seemed to think so, too. At the beginning of April, the presiding judge, Gloria Burns, who said she would not let the case delay her impending retirement, abruptly ruled in favor of Straub. In April, the day after Straub took ownership of Revel, he called Crandon and—according to Crandon, anyway; Straub denies it—offered to flip the property to him for a hundred million dollars.

Crandon, who is fifty-three, grew up in Delaware, but his parents were from New Jersey, and as a kid he worked at a service station his grandfather owned on the Black Horse Pike. His father-in-law is Theodor Cranendonk, a wealthy Dutch oil trader who was once imprisoned in Italy on charges of delivering thirty bazookas to the Mafia. (“It was all made up,” Crandon says.

Crandon’s group and the Chinese were betting that Macau, the Asian gambling mecca, was tapped out, amid a Chinese government crackdown on corruption and gambling, and that travellers from mainland China would soon be including South Jersey on their U.S. itineraries. Atlantic City, born in proximity to the population and early industrial wealth of Philadelphia, would now reach halfway around the world for money and the guests from whom to separate it. The city’s fire marshal deemed the building unsafe, and the city rescinded Straub’s certificate of occupancy and began fining him five thousand dollars a day.

He told reporters, as he unsuccessfully challenged the plant’s owners in court, “We’ll erase them off the map.” He brought in a fleet of diesel generators and parked them outside the casino. The Showboat’s owner, at the moment, was Stockton University, the state college, which, a few months earlier, had bought it to establish a long-desired Atlantic City campus. The university had paid just ten dollars a square foot. “You can’t even buy tile at Home Depot for ten dollars a square foot!” Herman Saatkamp, Stockton’s president, told me. But the campus plan had suddenly fallen apart, when Trump Entertainment, owners of the Taj Mahal, next door, unexpectedly opted to enforce an old covenant mandating that the Showboat be a casino-hotel, and nothing else.

Santayana: “Skepticism is the chastity of the intellect, and it is shameful to surrender it too soon.” Throughout the spring, Crandon pressed for a deal while Straub held out for more. There were stories of Straub stiffing a local law firm, and of his filling a truck with Revel fixtures and tools, bound for Florida. (He denies wrongdoing in both cases.) His deal to buy the Showboat foundered, and a court gave Stockton the go-ahead to seek another buyer. As weeks passed, Crandon made promises that he’d soon hold the keys to Revel, and then the deal would recede again: Zeno’s paradox down the shore.

Crandon sent photos of Tara Lordi in Shanghai with a Chinese man, whom he still, vestigially, called “my partner”: “2 days after that photo, Chinese canceled our deal.” Crandon vowed revenge: “We will keep it in litigation for years.

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