Over the past few weeks, the Times has published a series of detailed reports about Donald Trump’s financial affairs, including a mammoth exposé of his tax records. The latest installment is devoted to a single ill-starred venture—the Trump International Hotel & Tower, in Chicago—and, in some ways, it is the most revealing of all. With its publication coming just days before the election, it provides another reminder, at once painful and comical, that Trump may well be the most successful con artist in American history.
To be sure, that is a bold claim to make in a nation that has long specialized in producing sharpies and mountebanks. In nominating Trump for the top slot, however, there are a number of unmatched achievements to point to. Unlike many shysters, he has managed to remain within the letter of the law—or, at least, he has not faced any criminal prosecutions. Second, as the latest Times story makes clear, he has enlisted some of the supposedly most astute financial minds in the country to back his ventures. Third, and most obviously, he has parlayed the fiction that he is a sterling businessman into a scandalous Presidency, which hopefully will be confined to a single term after the votes are counted.
The Chicago story began almost twenty years ago, when Trump announced plans to build a skyscraper on the site of the decrepit Chicago Sun-Times Building, where Mike Royko and Ann Landers once penned their columns. (What did Royko think of Trump? “I finally decided that he was totally loathsome when, in addition to his other flaws, he turned out to be a cheapo,” the columnist wrote in a 1991 piece about Trump’s first divorce.) Trump originally claimed that the new building would be a hundred and fifty stories high. After 9/11, he scaled it back to a modest ninety stories. In addition to an upscale hotel, the plan included luxury condos and retail outlets.
The principal financier of the project was Deutsche Bank, which was then trying to establish itself as a top player on Wall Street. Many U.S. banks had been burned by their experiences with Trump during the nineteen-nineties, when two of his debt-laden properties had filed for bankruptcy, leaving their creditors with heavy losses. Deutsche extended a construction loan of six hundred and forty million dollars, some of which it chopped into pieces and sold to other banks, many of them foreign. Trump was then starring in “The Apprentice,” a top-rated reality show, and memories were short. A big hedge-fund manager, Fortress Investments, also came in on the deal. According to the Times, it extended a loan of a hundred and thirty million dollars, some of which it sold to other private-equity firms and hedge funds, including Dune Capital Management, a firm co-founded by Steven Mnuchin, who would go on to be Trump’s Treasury Secretary.
Did Mnuchin or any of these other financial geniuses take the time to call up some of the bankers who had been left holding the bag in the nineteen-nineties? The Times story doesn’t say. In any case, Trump’s new creditors soon met a fate that was similar to what their predecessors had faced. In 2008, some of the loans on the Chicago project came due, but many of the condo units still hadn’t been completed, and the project was way behind its financial projections. The bankers found themselves stuck with a debtor who couldn’t meet his payments and who had no compunction about using his stretched finances as leverage. Trump demanded an extension to the loans, which Deutsche refused. Then he sued the bank, accusing it of “predatory lending practices.” (He also sued Fortress.)
As the saying goes, if you owe the bank a hundred dollars, it is your problem, but if you owe a million dollars, it is the bank’s problem. Trump owed hundreds of millions, and he had played this game before. In the nineties, Trump’s creditors, when faced with the prospect of endless legal battles and maybe losing the entirety of the money they had lent, agreed to write off huge chunks of his loans. Deutsche and Fortress ultimately did the same thing. “Mr. Trump was let off the hook for about $270 million,” the Times story says. “It was the type of generous financial break that few American companies or individuals could ever expect to receive, especially without filing for bankruptcy protection.”
You can say that again. According to the Times story, Fortress was repaid forty-eight million dollars, or roughly a sixth of what it had expected to receive after interest payments. Deutsche’s corporate-loan division also suffered a big loss. But, in a remarkable turnaround, another arm of the bank—the wealth-management division—subsequently lent Trump hundreds of millions of dollars more. These new loans went to the Chicago building; the Doral golf resort, in Miami; and the Trump International Hotel in Washington, D.C., which Trump built on the site of the Old Post Office Building. “At the end of 2018, Mr. Trump and his companies owed the bank $330 million,” the Times says.
The saga doesn’t end there. In the nineties, according to another scoop in the Times, Trump exploited his huge losses to take a gargantuan tax writeoff, which enabled him to pay virtually nothing in federal income taxes during the subsequent decade. After the Chicago debacle, he again turned the situation to his advantage. Under the tax laws, if somebody forgives a loan that you owe them, the I.R.S. treats the sum as income, and you have to pay tax on it. Unless you are Trump. By exploiting other loopholes in the tax code and utilizing offsetting losses from elsewhere in the Trump organization, he “managed to avoid paying income taxes on nearly all of it,” the Times story says.
It’s a remarkable tale, but not at all surprising when you take into account its subject. After all, this is the financial Houdini who rebounded from the wreckage of his early-nineties bust; the former proprietor of the shameless scam that was Trump University; the self-proclaimed billionaire who got other people to finance his charitable foundation; the man whose chronic self-dealing as President has extended to such lengths that his Mar-a-Lago resort, in Florida, once charged the U.S. government three dollars for water that was served to him.
You hadn’t heard that last detail? It comes from David Fahrenthold, the Washington Post reporter who won a Pulitzer Prize, in 2017, for his reporting on Trump’s unique brand of philanthropy. In a report published on Tuesday, Fahrenthold revealed that since Trump came to office his properties have charged the federal government at least $2.5 million for hosting Trump events. This total includes seven thousand dollars for a 2017 dinner at Mar-a-Lago with Xi Jinping, the Chinese leader; six thousand dollars for flowers at Mar-a-Lago during a 2018 visit by Shinzo Abe, the former Prime Minister of Japan; and—yes—three dollars for water served during a press briefing with Trump and Abe at the same event. “The price was $3 each, including service charge,” Fahrenthold’s story notes. “Taxpayers had effectively paid Trump’s company to serve him water.”
Mike Royko wouldn’t have been surprised.
