Act II, Scene II: Into the Shadows
In advertising, it’s known as “Marlboro Friday,” Apr. 2, 1993.
It was the day cigarette manufacturer Phillip Morris did the unthinkable. It slashed the advertising budget for its iconic Marlboro brand.
Consumers were no longer swayed by traditional symbols like the rugged cowboy who emblazoned cigarette ads.
Advertisers need a new schtick, and they found it.
Over-the-hill actors, musicians and even self-manufactured celebrities like Kim Kardashian could trigger an avalanche of consumer buying by lending their name to a product.
It was the age of celebrity branding. George Clooney, Brad Pitt and Matt Damon hyped Nescafe Nespresso; Jerry Seinfeld shilled for Acura; Jennifer Garner pushed high-interest credit cards. The list went on.
Trump had it, too.
His 1987 book, “Art of the Deal,” had cemented the myth. And, in the world of branding, that was money.
Despite his business failures, his name was still synonymous with quality, wealth and prestige.
To make a buck, he slapped it on almost anything: vodka, steaks, deodorant, water bottles, vitamins, menswear, a board game, pillows, eyeglasses, coffee, lighting fixtures and more.
(By the time he ran for president, 17 of the 19 Trump-branded products had failed. The two survivors were based overseas, in Panama and Turkey, respectively.)
He also licensed his name for hotel towers he no longer could afford to own or develop himself in Chicago, Las Vegas, Washington, D.C., Panama City and Toronto.
Even Batu, the largest city in Russian satellite Azerbaijan, could claim a Trump tower.
(It would ensnarl Trump in allegations of laundering money for Iran’s Revolutionary Guard in the deal.)
While Trump was on the outs with most U.S. banks, European institutions were lending him hundreds of millions of dollars.
Trump acquired a vacant, 70-story office building at 40 Wall Street in Manhattan in 1996, renovated it and slapped his name on it. It became the Trump Building.
Two years later, he was minority partner in an $878 million deal for the General Motors Building. (The group flipped the property for $1.7 billion in 2003)
Lehman Brothers, which infamously collapsed in 2008, triggering a Wall Street meltdown and The Great Recession, financed it with a $700 million loan, according to The Times.
Trump’s fortunes took another turn for both the worse and better in 1999.
After suffering from dementia for six years, Fred Trump died at 92. His wife followed a year later.
Fred and Mary Trump, transferred well over $1 billion in wealth to their children. It should have produced a tax bill of at least $550 million under the 55 percent tax rate then imposed on gifts and inheritances.
The estate touch off a monumental family squabble.
Donald’s brother, Fred Jr., who had died a broken man in 1981 from an alcoholism-induced heart attack, was at the center of the dispute.
Maryanne and brother Robert Trump sued, charging that Donald had exerted “undue influence” over his sick dad to cut Fred Jr.’s children out of the will.
Fred’s estate was finally closed in 2001 by both the Internal Revenue Service and New York State tax authorities, and his wife’s estate was closed in 2004, according to Robert Trump.
The Trumps paid $52.2 million, or about 5 percent in estate taxes, reduced through various schemes, suggesting properties had been grossly undervalued.
(In 2004, Trump’s four surviving children sold the apartments they acquired in 1997 (then valued at $41.4 million) for $737.9 million, The New York Times revealed in 2018)
The proceeds allowed Trump to revive his business career.
In 2001, he completed Trump World Tower, a 72-story residential tower near the United Nations building.
From across the East River, the black glass obelisk looks like tony Manhattan giving the middle finger to low-brow Queens where Trump grew up.
It was a real fuck you to a host of rich neighbors. The tower blocked their expansive and highly valued river and city views.
Oil billionaire David Koch, Victoria Newhouse, wife of the publisher S .I. Newhouse, former Citibank chairman Walter B. Wriston and William H. Donaldson, founding partner of Donaldson, Lufkin & Jenrette Securities, sued in court to no avail.
Trump won city approval of the tower without public hearings or environmental studies. At the time, his pal, Rudy Giuliani, was the mayor.
(Trump bragged during the 2016 primary election about paying for political favors. “I was a businessman. I give to everybody. When they call, I give. And you know what? When I need something from them, two years later, three years later, I call them. They are there for me,” he said.)
A year later, Trump acquired the former Hotel Delmonico in Manhattan, converted it to luxury condos and rebranded it Trump Park Avenue.
During his construction spree, $350 million in cheap Chinese steel and aluminum was used to build The Trump International Hotel Las Vegas in 2008 and the Trump International Hotel & Tower Chicago in 2009.
What’s more, the foreign purchase was hidden through “various corporate entities, including holding companies registered in the British Virgin Islands,” according to a Newsweek expose published in 2016.
“The report… showed us yet again that all Trump does is run his mouth and pad his pockets,” the AFL-CIO said in an angry statement.
It wasn’t Trump’s only foreign adventure.
Somewhere along the way, in a mystery still to be solved, Trump tapped into a vast ocean of dark money coursing around the world, looking for places to land.
The sources were shrouded by faceless limited liability companies in far-flung locations.
In 2008, Donald Trump Jr. lifted a tiny corner of the veil.
“Russians make up a pretty disproportionate cross-section of a lot of our assets,” he said during a New York conference.
Whether it was in Dubai, New York’s Trump SoHo hotel, or anywhere else, “We see a lot of money pouring in from Russia.”
The revelation made sense. Trump was doing business with European banks suspected of laundering money for Russian oligarchs.
Money from individuals tied to Russian President Vladimir Putin and the FSB, Russia’s secret service, was pouring into real estate around the world.
At the same time, The Trump Organization’s all-cash transactions with secretive corporations were off the charts.
An estimated 70 percent of his company’s property sales were to limited-liability corporations (LLCs), according to USAToday.
Beginning in the 1980s, shell companies bought more than 1,300 condos, owned or licensed by Trump in all-cash transactions worth an estimated $1.5 billion.
They amounted to 21 percent of The Trump Organization’s condo sales in the United States, according to an investigation by BuzzFeed.
Trump was living large, and in 1999, he plunged into another distressed market–golf courses.
Developers had binged on them during the ’80s. More than 4,000 were built in the United States, alone, during a boom in the sport.
But an oversaturated market, combined with a decline in golfers and rounds played, triggered a shakeout. An estimated 800 golf courses went out of business in the decade before Trump’s first deal.
If Fred had been alive, he might have put his foot down. Cohn, who often steered Donald clear of trouble, wasn’t around to advise him, either. He’d died of AIDs in 1986.
Michael Cohen, his new consiglieri, was no Cohn. The mob lawyer could always talk frankly to his protégé. Cohen was just another “yes” man.
Trump was clearly unrestrained.
A golfer since college days, he went on a spending spree not seen since the heady days of his casino fiasco.
In 1999, Trump opened his first golf course, the Trump International Golf Club in West Palm Beach, near his Mar a Lago estate.
When the financial crisis hit in 2007 and 2008, he began building or scooping up properties around the world.
He’d raked in $427.4 million from “The Apprentice” and licensing and endorsements and used the money to finance many of his deals, according to The New York Times.
By 2016, he’s spent $400 million to buy or develop 17 golf courses worldwide.
The spree did not go unnoticed. Controversy erupted, again-and-again, over the source of his money.
At least 14 transactions were all-cash deals, according to reports.
In Scotland, he was under fire for allegedly laundering Russian money to build or buy golf courses at Menie estate in Aberdeenshire in 2012 and Turnberry golf resort in Ayrshire in 2014.
Trump had paid cash, a reported $60 million, for Turnberry.
Then, he sunk as much as $200 million into renovations and new construction, adding a new course, rehabbing an old one and fixing up the lodgings.
Scottish Greens co-leader Patrick Harvie charged that “Trump’s known sources of income don’t explain where the money came from for these huge cash transactions.”
“There are reasonable grounds for suspecting that his lawfully obtained income was insufficient,” he said.
Golf courses are a low-margin business even in the best of times. Expensive to build and expensive to maintain, they demand high fees from members to stay afloat.
Not surprisingly Trump’s courses gushed losses.
Turnberry, alone, lost an estimated $23 million in 2016, according to The Post. The finances were just as bad at other courses.
Most of Trump’s core enterprises — from golf courses to his Washington hotel — were losing millions, if not tens of millions of dollars year-after-year, according to The Times.
Behind the façade of success, Trump was teetering on financial ruin, again.