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  • Donald Trump is being sued by Maryland and the District of Columbia for 'unprecedented' corruption involving his company.  (Photo by Drew Angerer/Getty Images)

    Donald Trump was sued by the state of New York for ‘unprecedented’ corruption involving his company. He’s been forced to pay $350 million in fines. (Photo by Drew Angerer/Getty Images)\

    Donald Trump’s reputation as a business executive is largely attributed to a book and a television show. Both are fiction.

    In reality, Trump’s business career was reckless and marred by one bad decision after another. Thousands of people were devastated by a string of bankruptcies that may be unprecedented in history.

    Trump had learned from his father about the advantages of buying distressed properties. Banks were all too willing to write new loans to erase nonperforming debts on their books, and the price was always some fraction of the property’s real value.

    Nonperforming debts are anathema to banks. Once a loan defaults, the bank has to set aside cash in reserve to cover the entire loan amount, taking precious dollars out of circulation that otherwise could be loaned out to make money.

    From a bank’s standpoint, Donald was a godsend — a fool and his money. Did they play him, did they play off his ego to unload non-performing assets to bail themselves out? 

    Trump’s track record suggests that was the case. No wonder, the banks protected him.

    Trump’s impetuousness, his conceit, his belief in his brand and marketing savvy, and his uncanny knack for getting in over his head were illustrated when Eastern Airlines teetered on the edge of bankruptcy in the late ‘80s.

    He agreed to pay $365 million for the airline’s shuttle service between Washington, New York, and Boston, over a cocktail party chat with Eastern CEO Frank Lorenzo.

    Eastern competed with Pan Am’s shuttle. At the time, traffic was roughly split 60/40 in Pan Am’s favor. Instead of going head-to-head, Trump decided to go up market.

    He changed the service from “no frills” to luxury and rebranded it Trump Shuttle.

    The value was in the landing rights, not the aging planes that were part of the deal. He should have ditched them and upgraded to more fuel-efficient models. Instead, he spent $1 million simply repainting them in snazzy red, black, and gold colors. He upgraded the interiors and offered first-class food and drinks.

    Critics said the upgrades hardly seemed practical, since the planes were only in the air for about 60 minutes.

    As it later turned out, “Trump Shuttle” lost money every time a plane left the gate. Over the course of its short existence, it never earned a profit.

    He defaulted on his loans in 1990. Trump was on the hook for $135 million in personal guarantees.

    But Citibank stepped in on his behalf and arranged a takeover by Northwest Airlines. Trump was spared bankruptcy. But he would not be so lucky later.

    His most spectacular business failure was yet to come. In 1987, he bought the Trump Taj Mahal hotel and casino in Atlantic City.

    To break into the market, he sold a fantasy to the long-depressed seaside resort. He pledged to build scores of low- and moderate-income houses, just like his father, to replace the city’s slums.

    It was even written into the deal. In return, the city gave him extensive tax abatements.

    Trump told New Jersey regulators he would avoid using high-interest-rate junk bonds to finance his casinos, then, turned around and did just that, dooming them to fail, according to The New York Times. They never made enough money to cover his debt payments.

    Nonetheless, the Taj Mahal opened to great fanfare after Trump spent $1.1 billion to finish it. Michael Jackson was the guest of honor at its star-studded debut. Trump called the casino the “Eighth Wonder of the World.” But within a year it was in bankruptcy. What happened?

    Resorts International, an experienced operator, threw in the towel on its casino after the company’s CEO, James Crosby, died unexpectedly, triggering a takeover attempt of the company, according to Trump Argonautica, a book that traces the arc of his life and business career.

    Trump was one of a number of bidders and won a controlling stake from Crosby’s family for $79 million.

    Trump tried to buy the rest of the company in his own takeover, but entertainment impresario Merv Giffin outbid him. After dueling lawsuits, the agreed to split the spoils.

    Griffin, who got the company, leveraged his side of the deal with junk bonds, and was in bankruptcy a year later – a big red flag. Trump, who paid $273 million for the Taj Mahal, forged ahead anyway.

    Industry analysts warned Trump the property was too big, would cannibalize his other properties and die during the chilly winter months, when wind whipping off the Atlantic turned the city into a ghost town. Trump was so incensed, he had one of the analysts fired.

    As it turned out, his casinos were a financial house of cards.

    Trump financed the Taj Mahal with junk bonds that commanded an outsized 14 percent interest. It only took six months for Trump to fall behind on payments with $3 billion in debt still outstanding.

    Trump persuaded his bond holders to accept less money to stave off bankruptcy and when that failed he took his company public shifting the debt burden onto stock and bond holders.

    In the meantime, Trump was pulling millions of dollars out of the casinos to fuel a profligate spending spree. He bought Mar a Lago, a $20 million, 282-foot yacht, the Eastern Shuttle, a USFL football team and the Miss USA pageant. Much of the money came from extravagant fees he charged when loans were refinanced.

    In July of 1991, hopelessly mired in debt, Trump’s “Eighth Wonder” filed for bankruptcy.

    In the ensuing shakeout, service workers, contractors and investors were left holding the bag. Trump was forced to sell his private yacht and plane and lost half of his interest in the property.

    Stock and bond holders lost $1.5 billion.

    Among his creditors were more than 200 contractors who had worked on the project and were never paid. Their collective bill came to more than $72 million.

    “He put a number of local contractors and suppliers out of business when he didn’t pay them,” Steven P. Perskie, who was New Jersey’s top casino regulator in the early 1990s, told The Times.

    “So when he left Atlantic City, it wasn’t, ‘Sorry to see you go.’ It was, ‘How fast can you get the hell out of here?’”

    Of course, Trump also never built any of the promised housing units.

    As analysts had warned, the Taj Mahal had sucked the air out of Trump’s other casinos. Their combined revenues fell by $58 million after the Taj Mahal opened.

    His first project in 1984 was a distressed hotel and casino; he renamed it Harrah’s at Trump Plaza.

    His next project, Trump Castle, was the same kind of deal. He picked up the unfinished building from the Hilton Corp. at a fire sale price of $320 million.

    Trump Plaza went belly up in Nov. 1990, with more than $550 million in outstanding debt. The banks burned in the deal were forced to accept a 49 percent stake in the casino.

    Trump Castle went down in March 1992, sunk by $550 million in over-leveraged debt, the same thing that doomed his other properties. His bankers were burned once again, and were forced to take on a percentage of the property.

    The bondholders were given a 50 percent interest in the casino in exchange for lower interest rates on the $338 million in debt they held.

    Trump’s bad business decisions didn’t end there. In Dec. 1992, one of his signature New York City properties, the storied Plaza Hotel was also forced into bankruptcy.

    Trump had bought the Plaza Hotel on Central Park, an iconic symbol of old-money New York for $425 million, in 1988. It was a classic Trump boondoggle. By all accounts, he overpaid for the property.

    A banking syndicate, led by Citicorp, held a $125 million second mortgage and a $125 million third mortgage. The first mortgage of $300 million is held by another Citicorp-led syndicate.

    The Plaza was saddled with $550 million in debt, and Trump quickly fell behind on payments.

    A federal judge ultimately approved a prepackaged bankruptcy plan for the Hotel, costing Trump his 49 percent stake in the property

    By the end of his casino and Plaza deals, Trump was more than $1 billion in debt and had personally guaranteed $900 million, according to The Times.

    Trump sign over nearly all of his properties in exchange for more favorable terms on his personal guarantees, The Times reported.

    Citibank and five other lenders, including investors from Saudi Arabia and Singapore, were left holding the bag on $300 million in debt from the Plaza alone. They took a $100 million loss on the hotel, selling it for $325 million to Prince Alwaleed bin Talal of Saudi Arabia and a hotel chain.

    More than 50 banks were involved in the negotiations over Trump’s debt. They could have easily forced him into personal bankruptcy.  “But we all agreed that he’d be better alive than dead,” said Alan Pomerantz, one of the bankers involved in the negotiations.

    On top of those devastating blows, Trump’s business empire continued to crumble. In 2004, his umbrella company, Trump Hotels and Casino Resorts filed for Chapter 11 bankruptcy.

    In Feb. 2009, the last remnants of his “empire,” Trump Entertainment Resorts also went under.

    The Plaza collapse marked a turning point in his career. Going forward he would make most of his money from licensing his name, not just to builders but sellers of suits, cologne, chandeliers, mattresses and more. In professional parlance, he went from “asset heavy” to “asset light,” according to The Times.

    By the time he ran for president, however, 17 of the 19 Trump-branded businesses or products had failed. The two survivors were based overseas, in Panama and Turkey, respectively.

    Ironically, “The Apprentice,” saved him financially and burnished his stained reputation. The show portrayed him as a shrewd business executive over 14 seasons and helped launched his political career.

    Editor’s note: Portions of this article were excerpted from “Trump Argonautica: An Epic Poem in Three Acts: The Rise and Fall of a Man and His Myth”