When NBC announced its fall lineup in May 2007, The Apprentice was nowhere to be found. Ratings had tumbled as the format grew stale, and the network had quietly decided to cancel the show. Before network executives made a formal announcement, Trump beat them to the punch, announcing he would leave the show to launch a “major new TV venture.”
A few days later, Trump—along with Ivanka, Don Jr., and Eric—held a press conference in front of their Chicago tower, still under construction six years after Trump announced the project. They celebrated partial completion of the exterior work and made clear they were still trying to sell units. One reporter asked why sales had slowed in recent months. But questions from reporters quickly turned to the show.
“NBC wants very much for me to do The Apprentice,” Trump answered. “It’s been an amazing experience for me, but it’s very hard. I’m building this job, and we’ve got jobs—with Ivanka, Don, Eric—we’ve got jobs all over the world that are going up. It’s very, very hard for me to find the time to do another season of The Apprentice, as much as I love doing it, and as much as I love the show, and as much as I love NBC.”
At about that time, Ben Silverman, a producer behind the hit shows Ugly Betty, The Office, and The Biggest Loser, took over the NBC division responsible for The Apprentice. Silverman learned the show had been canceled, but he also knew that he had adopted a looming problem: a writer’s strike only months away. He wanted a guarantee of fresh shows even if all his scripted shows went dark.
A celebrity version of The Apprentice in England had done well months earlier. That seemed like an easy option to Silverman. Other network executives warned him that Trump would not accept being overshadowed by bigger celebrities. Silverman called Mark Burnett, who accepted the idea, but also said he expected Trump to balk. Silverman felt he knew how to win Trump over, so he called.
“All I know is there’s more in The Apprentice,” he later recalled saying, “but I want to make it about celebrity.”
“Really?” Trump said.
“Because you, Donald, are the biggest celebrity in the world,” Silverman told his star. “And you will be the decision-maker of the other celebrities.”
“You’re right!” Trump responded.
With that, the show abandoned any pretense of a job interview to join Trump’s company for a year and learn business from a master. The celebrity contestants would compete for a donation to a charity of their choice. The new version would frequently devolve into embarrassing train wrecks between washed-up stars and long-retired athletes. NBC insiders began calling the show Celebrity Screaming. Well past their prime, most contestants desperately needed, or wanted, the exposure of appearing on a prime-time show. “They were playing for fame,” Silverman later recalled.
Most importantly for Trump, the television show would remain the engine that fueled his licensing and endorsement deals, by far his largest source of income and still growing at that point. The Trump family controlled and owned two ongoing construction projects—the Chicago tower and a new golf course in Scotland—and half of a third, a hotel in Las Vegas. All were costing Trump millions a year. And the public casino company bearing his name, of which Trump remained chairman of the board, looked to be hurtling toward yet another bankruptcy.
But it was Chicago, a ninety-two-story tower with debts approaching $770 million, that posed the greatest threat to Trump’s finances, greater than any risk he had faced in decades.
In 2003, when Trump unveiled his design for a tower on the site of the Chicago Sun-Times Building, he said it would be finished in 2007. He began taking deposits for units in late 2003, before he tore down the Sun-Times Building. The Apprentice debuted in January 2004, and as Trump’s notoriety rose with the show’s ratings, he announced that he had contracts to sell three quarters of the condominiums in the planned building for a total of $515 million.
With those contracts in hand, Trump secured two loans. Fortress Investment Group LLC, a hedge fund and private equity company based in New York, agreed to lend him $130 million to finance the purchase of the Sun-Times Building and the cost of razing it. And Deutsche Bank, a German bank that was one of the few willing to do business with Trump, agreed to lend him another $640 million.
In part because of Trump’s past performances with lenders, the money would not come cheap. Deutsche Bank’s real estate lending division got over its qualms by requiring Trump to personally guarantee $40 million of the total, meaning he would be on the hook to pay that amount even if he never finished the building or sales fell short. The bank also vetted Trump’s list of buyers who had made deposits to make sure they were real and could close the sale when their unit was finished. Deutsche bankers reviewed Trump’s income tax returns and were shocked by what they saw. “The vast majority of his income was from NBC for The Apprentice,” one person familiar with the process later recalled.
For taking those measures, Deutsche kept $13 million of the loan total in fees, according to a bank executive familiar with the loan.
For its part, Fortress extracted a very high interest rate—one person involved said the rate was at least 12 percent—and a required $49 million “exit fee” at the end of the loan. Both lenders then sold off parts of the debt to other banks and investment firms, spreading both the risk and the reward.
Trump fell behind his 2007 completion schedule with dreadful consequences. His budget increased, in part because he decided to shrink the spa to add more hotel condominiums. He filled that hole with $65.1 million of his own money.
He planned to stagger the opening and sales of the condominium units so he would have enough money to pay down the construction loan before it came due in May 2008. But contracts for sales never budged much past the 75 percent he announced in 2004, and some buyers who had signed contracts years earlier did not close when the units were finished.
In addition to the traditional retail space and residential condominiums, there would also be 339 hotel condominiums, a newer concept. The hotel condominium buyers could stay in their units for part of the year and let the units be operated as a hotel room by Trump for the rest of the year. The hotel condominiums did not sell well. Trump said publicly that he did not mind owning more than one hundred of them, because he wanted the profits from the hotel operation. But even assuming the rooms would be full enough, and at high enough rates, to turn a profit, that money would arrive in small amounts over many years compared to the rush of hundreds of millions of dollars from selling units. Not much help with his loan deadline fast approaching.
Trump backed out of two promises he had made to increase money coming to him. He canceled most of the reduced-rate sales contracts he had signed with “friends and family.” And he withdrew a commitment to give the hotel condo owners a share of the proceeds from rentals of meeting rooms and ballrooms. One person familiar with Trump’s views at the time said he was “pissed off about the fact that the sales of the hotel condos had stalled.”
Then, in March 2008, a rating service downgraded mortgage-backed securities held by Bear Stearns, accelerating the worst financial crisis in the U.S. since the Great Depression. Banks drastically slowed down issuing loans.
Trump had not generated sufficient sales to pay off his construction loans by the May deadline, and his chances of finding another bank willing to lend him hundreds of millions of dollars to refinance those loans had vanished.
Even in the crisis, Trump and his three grown children only came to Chicago once every few months. They would typically schedule their visits around an interim step in construction. The people working at the site every day for outside contractors and others divided people on the job into workhorses and show horses. All four Trumps were seen as show horses. “Donald and Eric and Don and Ivanka—that was all just bullshit,” one professional involved in the project later recalled. “Whenever they were in a meeting you sort of nod your head and smile and then they leave, and then you start getting the work done.”
Trump was busy filming back-to-back seasons of The Celebrity Apprentice, making paid speeches and appearances at ribbon cuttings for licensing deals, periodically flying to Scotland to deal with problems getting his golf course there approved, and occasionally focusing on the plummeting performance of the Atlantic City casinos bearing his name.
At the end of April, Trump held another event to mark the opening of the hotel portion of the Chicago building with a ribbon-cutting ceremony. He was asked about the growing financial crisis. He said that his project had benefited from “old financing” received long before the crisis and encouraged people to buy now.
“This is a great time for people to start buying, looking at buying, and buying,” Trump said. “This is the time, because all of a sudden they’re going to wake up and they’ll see prices have gone up twenty-five, thirty percent. Then they’re going to say, ‘Ohhhh.’ No different than a stock. They’re going to say, ‘I missed our opportunity.’ So, this is an amazing time to buy, throughout certain parts of the country, but in particular in Chicago.”
He mentioned that he had sold “hundreds of millions of dollars” worth of units and then levied his forecast for real estate prices. “I think the market is now going to start going up.”
Following Trump’s advice that day would have been a costly mistake. Housing prices nationally would continue to fall for almost three more years, and the recovery in Illinois would lag the national market for at least seven years beyond that.
Trump’s “old financing” would not save him. Two days later, Trump’s team talked through the project’s status with his lenders again in a conference call. Deutsche Bank’s printed agenda for that discussion, which we later obtained, showed that the project’s cost had ballooned to $858.9 million. Trump’s loans totaled a maximum of $770 million, and he had committed to putting in $88.9 million of his own cash, most of which had been spent. Trump expected closings on some residential units under contract to take place between July and October 2008, and the rest during the first half of 2009, long past the due date on the loans. So far, 63 percent of units were in contract or had closed, for total expected proceeds of $564 million.
Trump asked for a six-month extension on the loan. Deutsche Bank noted in its presentation that “the Trump name instantly drives attention in every major electronic and print medium” and “the Trump family holds celebrity cachet which further promotes interest for the brand.” In short, Trump argued that his family’s status as television celebrities would drive up sales prices.
His lenders granted the extension.
Over the summer, dozens of the buyers who had bought their units early at lower prices put them up for sale at costs as much as 30 percent below what Trump was asking for his unsold units. That flood of cheaper units further slowed Trump’s sales and put downward pressure on his asking prices. And then the financial crisis worsened with the bankruptcy of Lehman Brothers.
On September 24, the Trump team met in the new Grand Ballroom of the Chicago tower with twelve of its lenders to request another six-month extension past the current November 7 deadline. The presentation packet given to lenders showed there had been no new sales. Since May, eleven hotel unit buyers and thirty-three residential buyers backed out of their contracts before closing. Sales on the residential condos could not close until the units were completed, which was not going to happen until 2009. The retail space would not help before the November deadline, but it might if the deadline was extended. Eric Trump told the lenders that the first retail spaces should be completed by the end of the year, and the commercial real estate firm of CBRE had been hired to lease out the spaces and explore the possibility of Trump selling the entire 83,000 square feet of retail space.
In exchange for another extension, Trump offered to pay millions of dollars in additional interest and one-time fees. That offer began weeks of meetings to hash out terms. By the Friday before the November deadline, Deutsche bankers believed they had reached an agreement with Trump on the terms for another extension.
Trump, though, wanted to find a way out of the loans altogether. As the condos had sold, he had paid down the Deutsche loan to about $334 million. During a brainstorming session, one of his lawyers suggested finding a way to exercise the force majeure clause in the mortgage, which allowed exceptions in the case of a natural disaster that could not be anticipated. One of Trump’s lawyers, Steve Schlesinger, mentioned that Alan Greenspan, chairman of the Federal Reserve, recently called the financial crisis a “credit tsunami,” which seemed to fit the definition of a natural disaster.
Schlesinger mentioned the idea to Trump.
“It’s worth a shot,” Schlesinger remembered Trump saying. Schlesinger also remembered Jason Greenblatt, Trump’s in-house lawyer, seeming to think he was “full of shit” for suggesting such a thing. But papers were drawn up and served on Deutsche Bank the following Tuesday, the day after the loan had come due.
Deutsche executives who thought they had reached terms for Trump to extend the loan were shocked to find “a bunch of shit signed by Donald” waiting for them at the office, one banker recalled. “People were pissed,” the banker said. “You had a faction there, understandably, who were like, ‘I told you this was going to happen.’ ”
Deutsche Bank countersued to force Trump to pay the $40 million that he had personally guaranteed, and Fortress sued as well. Trump kept selling condos. The lenders worried that Trump might pull his name off the building and walk away, leaving them owning a building they did not want without the Trump name to attract condominium buyers.
The cases were settled in July 2010. The terms were confidential. But we later learned that Fortress settled for $48 million, which Trump paid in 2012, and Deutsche Bank agreed to take just $99 million. Trump got out of repaying $286 million that he had received from lenders and spent on the building.
Trump still owed $99 million to Deutsche, and the bank had vowed not to do business with him again. His son-in-law, Jared Kushner, made an introduction that served as a lifeline.
Deutsche Bank, which did not have a major presence in the U.S., was building a division to lend to high-net-worth individuals. Kushner knew the head of that division, Rosemary Vrablic, through his father’s real estate business and introduced Vrablic to Trump.
Vrablic’s division soon made two loans to Trump, personally guaranteed by him, for $99 million so he could pay off another division of Deutsche Bank that would no longer lend to him.
To issue the loan, the bank required Trump to maintain a net worth of at least $2.5 billion and cash on hand of at least $50 million, and to submit to an annual review to ensure he still met those thresholds. The bank’s first analysis of the figures Trump provided showed the potential for trouble ahead. The analysis estimated that Trump’s entire operation generated $13.4 million in extra cash during the first six months of 2012. That total included $19.8 million from his television show, and $32.4 million from licensing deals, meaning that without that $52.2 million, his core businesses would put him deep in the red. He would need his income from television and a constant flow of new licensing deals—the payments from which were typically front-loaded—to keep the lights on.
By then, Trump had secretly made an audacious claim on his tax returns. For the year 2008, he declared to the IRS that his investment in the Chicago tower was worthless. His tax return showed total losses from businesses he ran of $678,005,977. Trump’s accountants used that stunning figure to eliminate Trump’s entire tax bill that year. He paid no federal income taxes during a year in which he collected $14.8 million from The Apprentice and $18.5 million from celebrity endorsements and licensing deals.
When we, working with Paul Kiel of ProPublica, discovered Trump’s remarkable savings from the worthlessness deduction fifteen years later, tax experts we consulted were shocked that the IRS had not audited the claim, especially because a large chunk of the money seemed to be based on borrowed money. But Trump went a step further.
Trump had, in essence, taken a total loss on the project before ever knowing how the numbers would ultimately work out, and he still was able to keep the portion of the tower he had not yet sold. He and his tax advisers, though, executed a maneuver to claim that he, in essence, lost the same money again. Trump merged the partnership through which he owned the tower into another partnership, then used that new structure as a fig leaf to declare another $168 million in losses on the tower over the next decade. It was if he had shifted his coins from one pocket to the other, and the IRS eventually caught on.
The resulting audit remained active through at least 2022, and an adverse outcome could cost Trump more than $100 million in additional taxes, plus interest and possible penalties.
The massive retail space in the Chicago tower remained empty, and Trump continued to lose money on the property. After declaring it worthless on his 2008 tax returns, Trump’s accountant removed the Chicago tower from his annual “statements of financial condition” to avoid a discrepancy. Trump provided those statements to banks and reporters to demonstrate his wealth. In Trump’s telling, it was as if the largest building he ever constructed never existed.
In Atlantic City, analysts noted that the crippling debt he had loaded on the company years ago had left nothing to renovate the casinos and hotels, or even keep them looking fresh. His longtime investment bankers at Donaldson, Lufkin & Jenrette had noted the same. In a court filing, the firm noted: “The Trump name does not connote high-quality amenities and first-class service in the casino industry…Rather, the Trump name is associated with the failure to pay one’s debts, a company that has lost money every year, and properties in need of significant deferred maintenance and lagging behind their competitors.”
Randal Pinkett, the winner of season four of The Apprentice, showed up not long after to work on what Trump had billed as major renovation of the casinos. Trump then directed him to spend much of his yearlong apprenticeship appearing at press conferences and Trump University events, using his fame from the show to draw attention to Trump’s latest licensing deals. What time he spent with the casinos gave him a window into the world of businesses that Donald Trump controlled and ran.
Pinkett, who had earned master’s degrees in business and electrical engineering from MIT, recognized right away that the $110 million budget would not go far enough. Everything in the three large casinos looked like the 1970s to Pinkett. Purple carpeting. Gold all over the walls. “It was just a retro throwback,” he later recalled. When the renovations were complete, the effect remained incomplete. “You see shades of modernity over there, and I look over here and I still see shades of 1970.”
Trump dispatched Pinkett to serve as an ambassador in Philadelphia, where his casino operation had pinned its hopes for the future on winning community approval for a new casino in a predominantly African American neighborhood. Pinkett, who is Black, attended a few community meetings and heard nothing but opposition, mostly because of the perception that Trump’s casinos in Atlantic City had not been good for residents there. One night, the Trump team was booed off the stage and left dejected. On the drive back to Atlantic City, Pinkett sensed that Trump’s executives realized the company could not survive without that project.
In early 2009, as Trump casinos lurched toward bankruptcy for the fourth time, Trump was still trying to hang on to control of the company. At loggerheads with board members who had been selected by bondholders after the 2004 bankruptcy, he offered to buy all or a part of the casino company bearing his name. He was rebuffed.
Trump announced in February 2009 that he was quitting the board of directors. “If I’m not going to run it, I don’t want to be involved in it,” he told the Associated Press. “I’m one of the largest developers in the world. I have a lot of cash and plenty of places I can go.”
As a result of the bankruptcy, Trump would lose the $2 million a year he had been receiving under a services agreement with the casino company. But his tax lawyers had a plan to make his failure even more lucrative.
The same day Trump quit the casino company board, he notified the board, and then the Securities and Exchange Commission, that he had “determined that his partnership interests are worthless and lack potential to regain value” and was “hereby abandoning” his stake. The language was crucial—the precise wording of IRS rules governing the most beneficial, and perhaps aggressive, method for business owners to avoid taxes when separating from a business.
A partner who walks away from a business with nothing can declare all the losses on the business that he could not use in prior years—known as suspended losses—to wipe away tax liability on income from other sources. The partner can then request a refund of previously paid income taxes. Prior to 2009, that refund request could only go back two years. But that November, the window was more than doubled by a little-noticed provision in a bill that President Barack Obama signed as part of the Great Recession recovery effort. Now business owners could request full refunds of taxes paid in the prior four years, and 50 percent of those from the year before that.
For 2009, Trump declared what appear to be suspended losses of $777.2 million. The recession recovery bill allowed him to use those losses to request a refund of every dime in federal income taxes he had paid on the rush of cash from The Apprentice and related licensing deals for 2005 through 2007—a total of $70.1 million, plus $2,733,184 in interest. Following its usual procedures, the IRS issued those refunds and began an audit after the fact of its appropriateness. Trump also received $21.2 million in state and local refunds, which often piggyback on federal filings.
It was the second year in a row that Trump declared losses exceeding $700 million, a combined total of more than $1.5 billion. In the years ahead, he would use the remaining balances of those losses to wipe away income taxes on future profits, almost entirely from The Apprentice and licensing deals.
Thanks to his tax lawyers and accountants, and an assist from President Obama, Trump had essentially collected more than $90 million for failing. The IRS audit would remain open for years to come, posing a potential threat if the final decision went against him. But for the foreseeable future, the cash was his.
Years later, Michael D. Cohen, one of Trump’s lawyers from that era, recalled Trump beaming with delight at a massive refund check he had just received from the IRS and saying, “He could not believe how stupid the government was for giving someone like him that much money back.”
In 2016, when we asked Trump about his three decades of failure in Atlantic City ending with being pushed out of the company bearing his name, he said the timing worked out well for him because things went further downhill from there.
“Sometimes you’re better off lucky than good,” he said.
In June 2008, Trump’s 727 landed on the Isle of Lewis, part of the Outer Hebrides archipelago off the western coast of mainland Scotland. His mother had grown up there, in the village of Tong, before she left for America at age eighteen. Trump made his way to an airport building where several second cousins still living in the area waited to meet him. At this homecoming of a sort, the cousins handed him babies, and he handed them autographed copies of his latest books on how to get rich.
After a brief exchange with his cousins, Trump’s motorcade proceeded to his mother’s childhood home. His sister, Maryanne, accompanied him. She had visited the island and their relatives there twenty-four times over the years. Donald had been once, when his mother brought him as a toddler. One reporter asked whether the visit was designed to help him finally win approval to build a golf course on land he had bought two years earlier. Trump insisted it was not. He just had been so busy “building jobs all over the world.”
“You reach a certain point in life where you like to think [about] where you came from, where your parents are from,” Trump said.
Trump said he selected Scotland for a golf course because his mother was “Scotch,” a term Scots use to describe their whiskey and pie, but not so much themselves. “If it weren’t for my mother, would I have walked away from the site?” he asked rhetorically. “I think I probably would have, yes. The reason I got involved was because of the feeling I have for Scotland.”
He stayed inside his ancestral home for not quite two minutes, according to a local paper, before returning to the airport for a quick flight to mainland Scotland for the latest hearing on his proposal to build a golf course near the town of Aberdeen, on Scotland’s northeastern coast.
He had made the decision to buy the eighty acres in a snap. Two men, Neil Hobday, who worked as a project manager building golf courses, and Ashley Cooper, who ran Trump’s golf course in Bedminster, New Jersey, both remember him saying “buy it” after they independently described the land and its potential as a world-class links-style golf course. Trump paid $12.6 million cash for Menie Estate in March 2006.
Trump had for years been trying in vain to create a course that would attract major professional tournaments and hoped this would be the place. “His number one, two, and three goal was those major championships,” Cooper later recalled.
He had spent no time pondering the possibility that locals might put up a fight. He publicly said they would bend to his will, or he would build his course in another part of Europe. “This development will either happen very quickly or not at all,” he said at the time. “I never like to get disappointed. I’m going to get a course in Europe, but I would prefer to build in Scotland because of my mother.”
When he heard about a plan to build electricity-generating windmills off the coast, he fired the opening salvo in what would become his forever war on windmills. “I would have no interest in proceeding,” he said. “If they were to ruin Aberdeenshire and Aberdeen with that, then I would walk away. We would sell the site and go elsewhere.”
As it would turn out, Trump would not win approval quickly. The windmills would be installed. And Trump would continue to push his case for years, in the process making a local dairy farmer into a folk hero.
Trump pushed Hobday to buy the adjoining properties from the families who lived on them, including Michael Forbes, who owned twenty acres near what was to become the fairway of Trump’s first hole. Goats wandered his grassy pasture. Ramshackle sheds and rusted farm equipment surrounded his small home. His mother, Molly, lived in a separate house on the land. They had been there for nearly four decades and rebuffed Hobday’s offers.
Frustrated, Trump pushed the local Aberdeenshire council to take some of the properties against the will of the owners through a process known as a compulsory purchase order. As much as Trump professed his great feeling for Scotland and its people, his aggression sparked the formation of a group that called itself “Tripping Up Trump.” Forbes eventually sold an acre of his land to the group as part of its effort to undermine any attempt by the local government to take the properties.
Over the years of their standoff, Trump referred to Forbes as a “village idiot” and suggested he knew enough about “Scotch” people to question Forbes’s background. “His property is a pigsty. It’s terrible. His barn is all rotted and rusted and falling down. I mean, it’s terrible,” Trump said at one point. “My mother was born in Stornoway, and she was so meticulous. And if I dropped a little piece of paper on the floor as a baby she said: ‘pick up that paper.’ She was the most clean woman I’ve ever seen. She was immaculate. The people of Scotland are that way.
“I don’t know where he comes from,” Trump continued. “Maybe his heritage is from somewhere other than Scotland.”
Forbes repeatedly said he did not want money. He wanted his home and to be left alone. He offered a succinct message to Trump: “Go back to hell, where you came from.”
Their battle became the subject of a documentary film, which gained attention when Brian May, the guitarist for the band Queen, gave the filmmaker permission to use “Bohemian Rhapsody” in the soundtrack. The rock classic includes the line:
He’s just a poor boy from a poor family,
Spare him his life from this monstrosity
Environmental concerns raised another obstacle for Trump. The dunes on the land had received Scotland’s most sensitive environmental designation. The constantly shifting mounds of sand and earth, blown by the persistent North Sea winds and pushed by its tides, are seen as living things by scientists. Block them in on one side and they begin a slow death. They were also home to seven species of endangered rare birds.
At a hearing in late 2007, a local council found the risk to the dunes to be too great. Trump had spent time over the prior two years entertaining Jack McConnell and Alex Salmond, successive first ministers of Scotland with the power to overrule the local council. Both officials believed the project would be a win for Scotland. Trump next took his case to them.
At the June 2008 hearing, Trump remained defiant. ‘‘If you reject this, there will be a terrible blow to Scotland,” he told the officials. Snickers emerged from the audience when Trump said he knew more about the environment than his consultants. “I would consider myself an environmentalist in the true sense of the word,” he said.
Martin Ford, a local legislator who had voted against the plan the year before, blamed Trump for creating his own problems by not performing due diligence on the site before opening his wallet. “You have little understanding of the property you bought or the environmental status of it,” Ford said.
That failure, the tendency toward snap decisions, the belief that local officials would bend to his will, had frustrated Trump’s development goals for decades. At Indian Hills, French Hill, and Seven Springs in Westchester County, New York. At Mar-a-Lago in Florida. At the old West Side rail yards in Manhattan. It was the same pattern of practice that led him to put his name to dozens of licensing projects that failed, many of which landed him in court. But as he sat there being criticized, Trump expressed confidence that he had never made a misstep.
“You know, nobody has ever told me before I don’t know how to buy property,” he said. “You’re the first one. I have done very well buying property. Thanks for the advice.”
The panel eventually approved Trump’s proposal, but added the requirements that he build a school, shops, and low-cost housing on land provided by the government. Salmond, one of the officials who had been criticized for seeming too close to Trump, said the potential impact to the local economy was too large to reject the plan. “Six thousand jobs, including 1,400 which will be local and permanent, is a powerful argument,” he said.
It would be two more years before Trump met every requirement to begin construction, and two more after that before he opened one golf course. For the foreseeable future, there would be no second course, no vacation homes, and no large hotel. Trump converted an old castle on the property into a small hotel and restaurant and would employ fewer than a hundred people there.
Hobday marveled at Trump’s endless energy, especially on his trips to Scotland, when he seemed to move and talk around the clock. “He could say some crazy things, but he is a workaholic,” Hobday later recalled. He caught a different glimpse of Trump’s complicated life on one trip to New York during those years. One day in the office at Trump Tower, Trump introduced him to a tall buxomly woman with blond hair. After she left, Trump showed Hobday playing cards with nude images of the woman and said she had pitched him on creating a pornographic evangelical television show. Hobday was bewildered. He only later realized the woman was Stormy Daniels, the adult film actress with whom Trump has denied having an affair. Daniels told us that she recalled the meeting. She did not recall talking about a church-porno television show and assumed that if she did it was in jest.
When Trump announced his plans for Aberdeen, he gave voice to the Field of Dreams business philosophy that for three decades had guided his decisions, justifying any expense to build to his personal tastes. “In my history, if I build something, then people come,” Trump said.
He built it; they did not come. Trump has said he spent $60 million on Aberdeen “out of my back pocket.” There have been no major golf tournaments there. The course regularly offers discounted rounds. Trump’s tax returns, which we later obtained, show that he pumps an average of $6 million a year into the course to cover operating losses.
During one of the ceremonial events at the Chicago tower, Trump answered a question that no one had asked. “I know how to build,” he said. “What I really know how to do is build. Somebody said, ‘Oh, you know how to sell.’ I said, ‘I don’t know how to sell. I know how to build.’ ”
He ran through a few achievements and ended with this: “I just built a city along the West Side of Manhattan. I know how to build.”
In some ways, it harkened back to a concern his father had expressed that people might refer to him as “a promoter” instead of his chosen identity as “a builder.” Like so many phrases that flow from Donald Trump, the claim he made to support his contention that he was a builder, not a salesman, flew by without anyone seeming to realize that it was not true. On the West Side, he had been mostly a salesman, not a builder.
As the businesses he ran floundered after 2010, having given away control of the West Side under duress turned out to be one of the luckiest strokes in Donald Trump’s lucky life.
In 2005, the Hong Kong investors sold the project, known variously as Riverside South and Trump Place, to the Extell Development Company and the Carlyle Group for $1.76 billion. Because of the agreement Trump had signed years ago, they did not need his permission.
Trump sued the Hong Kong partners, contending they had wrongly sold the project without consulting him and that the sale price should have been closer to $3 billion. He charged they had sold at a low price because they were using ‘‘their control over the disposition of Trump Place to extract kickbacks and other compensation.” He offered no proof of that allegation.
The Hong Kong team then used the proceeds from the sale to buy two large office towers, 1290 Avenue of the Americas in Manhattan and 555 California Street in San Francisco, for $1.76 billion. The deal was orchestrated with a complex tax strategy, known as a 1031 exchange, to avoid paying taxes on the gain from the West Side project.
Trump went to court again seeking to scuttle the deal, and a judge again ruled against him.
The following year, the Hong Kong partners sold their 70 percent share in the two buildings to Vornado Realty Trust. Once again, Trump was just along for the ride. He had no voice in the sale, and he was now a minority partner to Vornado in the two buildings. Vornado was headed by Steven Roth, a contemporary of Trump’s who had founded and built his company into one of the largest of its kind. Whether Trump ever received a dime more from the project, even if it was hugely profitable, would be entirely at the discretion of Roth’s company.
Trump sued a third time to block the sales. To his great fortune, that lawsuit was also dismissed.
In 2012, Roth refinanced the San Francisco building. After paying off the old mortgage, Roth had $522 million left over. Refinancing is one of the most splendid aspects of real estate ownership. As far as tax laws are concerned, the proceeds are not taxable as profit or income, because the money must be paid back. In reality, it will almost certainly someday be rolled into another mortgage or building. So most developers treat that money as tax-free income.
Though he was under no obligation to do so, Roth passed along more than $100 million of that cash to Trump. Despite Trump’s efforts, much of his losses on businesses he ran would be covered by a windfall from a business that was not subject to his judgment.
Similarly, thanks to the reinvention of The Apprentice as The Celebrity Apprentice, the show’s ratings and the licensing deals from Trump’s fame had risen again. For appearing on the show and letting other businesses use his name and promotional abilities, Trump received a total, after nominal expenses, of $51.3 million in 2011 and $37.5 million in 2012. That came on top of his $100 million-plus distribution from Vornado. But thanks to his losses on businesses he ran, he paid no federal income tax in either year.
By then, after decades of appearing on national television and being asked his opinion as a successful businessman on international affairs, he had interjected himself into the 2012 presidential campaign. He appeared frequently on television, especially Fox News, to accuse President Obama of not releasing his full birth certificate to hide that he had been born in another country, making him ineligible to be president. Trump never offered a glimmer of evidence, but his accusations and prominence made him the father of what became known as the birther movement.
In April 2011, Obama called his bluff and released his long form birth certificate. They appeared face-to-face at the White House Correspondents’ Dinner. Obama took wry aim at Trump. He joked that Trump was pleased because now he could focus on issues that matter, such as whether the moon landing had been fake. He mock-complimented Trump for his “credentials and breadth of experience” and cited a recent episode of The Celebrity Apprentice in which Trump had to decide whom to fire after a contest at a steakhouse.
“There was a lot of blame to go around,” Obama said. “But you, Mr. Trump, recognized that the real problem was a lack of leadership. And so ultimately you didn’t blame Little John or Meatloaf. You fired Gary Busey. And these are the kind of decisions that would keep me up at night.”
As the ballroom erupted in laughter, Trump sat stone-faced.