America’s love affair with The Donald reaching impossibly new highs; his reality show, The Apprentice, was prime-time television’s highest-rated series last year…. After nearly defaulting on its debt obligations, Trump’s gaming properties to reorganize … No matter. For Donald, real estate is where his real wealth lies. Over 18 million square feet of prime Manhattan space.
Forbes was one thing: a respected business magazine with about a million subscribers. It was good for Trump to appear on their list of the world’s wealthiest, which is why he took the time to argue that their valuations were too low.
The TV show The Apprentice launched Donald Trump into celebrity status. Here, the Trump family walks the red carpet for The Celebrity Apprentice in 2015 in New York. From left to right: Lara Yunaska, Eric Trump, Melania Trump, Barron Trump, Donald Trump, Ivanka Trump, Donald Trump Jr., and Tiffany Trump. (Debby Wong/Shutterstock)
But The Apprentice was something even better.
The prime-time television show launched Trump into a new orbit of fame. It cemented his image in the United States as a gifted and down-to-earth businessman, and in the 2003–2004 season, 20.7 million Americans were riveted weekly by his performance. The season finale that first year boasted 40 million viewers.
And little wonder. He’d had plenty of practice living his life as performance art for decades. He’d admitted as much back in 1990 in that interview with Playboy.
“The show is ‘Trump,’” he said, “and it is sold-out performances everywhere.”
Between September and November of The Apprentice’s second season, NBC generated $106 million in ad revenue. The show was so popular that NBC executives told their advertisers Trump had saved the network after departure of the popular series Friends.
That was great news for NBC, but it didn’t mean everything was going well for Trump’s businesses.
When The Apprentice was soaring, Trump Hotels and Casino Resorts cratered. The company filed for bankruptcy in 2004 and Trump lost his job as the CEO, though he remained on the board of the company, which was renamed Trump Entertainment Resorts. Also, he was cut out of a casino management deal he’d made in 2000 with the Twenty-Nine Palms Band of Mission Indians. The twelve-member tribe determined that paying his company not to manage their business was the safer financial bet, so they paid him $6 million in 2004 to go away.
What’s more, Trump had lost his shot at developing the West Side Yards when the Hong Kong investors in control of the property sold it. He earned management and construction fees, but New York would never have a Trump City with a giant bronze statue of Christopher Columbus on the shore.
Despite all this, people believed Trump had the golden touch, and that’s what mattered the most. His brand was everything to him, and the television exposure was working wonders in building it.
He was also on a roll in his personal life. He and Melania married in 2005. The sparkling, sixty-pound dress she wore to the ceremony cost $100,000 (she changed into a lighter one for the reception at Mar-a-Lago). The guest list glittered, too, with attendees like Elton John, Heidi Klum, Shaquille O’Neal, Simon Cowell, Barbara Walters, Billy Joel, Chris Christie, and former president Bill Clinton and first lady Hillary Clinton.
Fame gave Trump a new way to make money without the same level of risk he’d faced as a builder. Glowing with celebrity, Trump lent his name to a dizzying variety of products, including eyeglasses, suits, neckties, cologne, deodorant, water, and steaks. Each one was packaged to make it sound as luxurious as possible.
He didn’t stop at consumer goods. Because business schools were already talking about Trump’s TV show in their classes, he trademarked Trump University, which promised students “the opportunity to learn directly from Donald J. Trump himself.”
“Trump University is going to be very big.”
“Trump University is going to be very big,” Trump told author Timothy L. O’Brien in 2005. “It’s an investment in banking and education.”
That same year, Trump entered into a one-year pact with a company called Bayrock, which had opened offices in Trump Tower, to build a luxury high-rise on the site of an abandoned pencil factory in Moscow. Nothing came of the deal, but it wouldn’t be the last time he’d work with Bayrock.
In 2006, the year Trump released a vodka named after himself, his fifth child was born. Trump called the boy Barron, the name he’d sometimes use when talking with reporters about his business. Riding a wave of celebrity, he accepted invitations to participate in celebrity golf tournaments, like one in Lake Tahoe, where he met other famous people—everyone from professional athletes to adult film stars and Playboy models.
Trump had also started selling his name to buildings he did not construct in exchange for 8 to 15 percent of the gross sales price. This required no financial outlay for Trump. There was value in it for builders; in New York, Trump condominiums fetched a 36 percent premium in 2005.
Trump introduced one of those partnerships in 2006 from the set of The Apprentice.
Perched in a burgundy leather chair, he belted out a description of the glorious building to come: “When it’s completed in 2008, this brilliant, $370 million work of art will be an awe-inspiring masterpiece.”
Trump had two partners on Trump SoHo, Bayrock and the Sapir Organization, both of which had ties to Russia. The Trump organization would get money for the use of the Trump name, as well as management fees. He would also own a minority share. Don Jr. and Ivanka, both graduates of Wharton, handled sales and some marketing, as they’d become fully involved in Trump’s business as senior executives.
Even as Trump had reduced his financial risk by only licensing his name to others, who’d in turn build his projects, this particular partnership introduced new risks to the organization. For one thing, his contact at Bayrock, Felix Sater, had a criminal record.
Sater, a Russian who emigrated to Brighton Beach as a child, lost his Wall Street trader license and went to jail for a year for stabbing a man in the face in 1991. In 1998 the former stockbroker was arrested for being part of a $40-million stock fraud and money-laundering scheme linked to Russian mobsters and four Mafia families. Authorities busted Sater after he neglected to pay the bill on a storage locker in Soho, coincidentally located right across the street from the future Trump tower.
Inside the locker, police found guns and a gym bag that had paperwork outlining the money-laundering scheme and the offshore accounts where Sater and his partners had stashed their loot.
Sater pleaded guilty and avoided jail because he had turned into a government informant. Sater was providing the government information when he became an executive at the Bayrock Group and started pitching Trump on real estate partnerships around the world.
Meanwhile, Trump had filed a lawsuit against Timothy O’Brien, author of Trump Nation, which pegged Trump’s wealth at between $150 million and $250 million, rather than the $6 billion Trump sometimes claimed. Newspaper coverage of the book had embarrassed and enraged him. What’s more, he believed it had harmed his reputation and cost him deals.
When the book came out, Trump had been telling people his brand was hotter than ever. O’Brien’s writing undermined that, and Trump wanted O’Brien to pay.
Trump demanded $5 billion, claiming that O’Brien had purposely underestimated his fortune in order to harm him. In December of 2007, Trump was deposed in connection with the case, exposing that many times he’d exaggerated the soundness of his business and the size of his fortune.
Although his lawyers tried to keep the deposition secret, it became public during the course of the suit.
During his hours with lawyers, Trump was caught in numerous lies and unorthodox explanations of how he valued his own property.
“My net worth fluctuates, and it goes up and down with markets and with attitudes and with feelings, even my own feelings,” he said.
His percentage of ownership in a property also depended on how he felt about the deal. For example, he’d sold the West Side Yards in 1994 to a development group from Hong Kong. Trump had bought the property for $115 million and sold it for $85 million, with the understanding that he’d get a 20 to 30 percent cut of the profits once it was developed and sold.
Trump valued this arrangement as being worth half the total value of the property. He reasoned that owning a 20- to 30-percent share without having to put anything down meant his share was worth more than 20 to 30 percent.
“And I’ve always felt I own 50 percent from that standpoint,” he said. “I’ve always felt that…. And other people say said [sic] it’s one of the best deals that they’ve seen made.”
O’Brien wasn’t the only journalist who challenged Trump’s argument about his stake in the West Side Yards. During the deposition, Trump was forced to read a letter he’d written to a New York Times reporter named Peter Slatin, who’d written that “Trump has a small minority stake in the project.”
“And what did you write?” the lawyer asked.
Trump read, “‘Peter, you’re a real loser. Thanks for the nice story.’ And I wrote, ‘Is 50 percent small?’”
He struggled in other ways to make the case for his own method of determining his net worth, which was not consistent with generally accepted accounting principles.
For example, Trump owned a golf course on the Pacific Ocean. Typically, the value of any property would consider the value of the land plus the revenue Trump earned, minus any expenses and debts. The value of a golf course can be affected by other things, like its design and maintenance. But this wasn’t how Trump wanted to measure its value. He believed the land was worth whatever he might make by subdividing and building luxury homes on it. So, if he could build 75 homes for $12 million each, the land would be worth more. But he also admitted he had no intention of doing that, because he didn’t want to sell off oceanfront property.
Ultimately, the case was dismissed as a matter of law, without a trial. To win a libel suit in New Jersey, a public figure like Trump would have to demonstrate that the author of the book acted with “actual malice,” intentionally printing information he knew to be wrong or which he printed with reckless disregard as to its truth. Trump failed to do so.
What’s more, the court said, Trump had long been suspected of playing fast and loose with his net worth. The ruling quoted newspaper and magazine articles to that effect. For example, the Washington Post reported in 2004, “There are skeptics out there who believe Trump has $300 million, tops. And the guy has a reputation for, let’s say, shading the news in a light that reflects his enthusiasms.”
The court also cited a Fortune magazine story where Trump said he purposely tried to make it harder for people to figure out what he was worth.
“It’s always good to make things nice and complicated,” Trump told Fortune in 2000, “so that nobody can figure it out.”
Finally, the court was not persuaded that Trump’s brand had a dollar value, no matter how convinced Trump was that it did.
“As Trump’s accountants acknowledge in the 2004 Statement of Financial Condition, under generally accepted accounting principles, reputation is not considered a part of a person’s net worth,” the judgment read.
As challenging as it is to figure out what Trump’s empire is worth, one thing is true: Had Trump invested everything his father gave him and simply sat on a Florida beach, he would be worth considerably more than he accumulated through his deal-making. Trump inherited an estimated $40 million worth of cash and real estate from his father, according to Forbes magazine. If he’d bought stocks that performed at average levels, he’d be worth between $2.9 billion and $13 billion. (He’d have had to borrow against his portfolio and invest to hit that higher number.) He had also underperformed against his peers in real estate, another Forbes analysis found.
Donald Trump’s business efforts had left him worse off financially than if he’d never worked at all.
Donald Trump’s business efforts had left him worse off financially than if he’d never worked at all.
Around the time of Trump’s revealing deposition, his organization was reeling along with the nation’s housing and stock markets.
His bankruptcies—six in total, with the most recent occurring in 2009—represented an unprecedented level of failure in recent American business history. No major American company had filed for Chapter 11 bankruptcy more during the last thirty years. The majority of companies that size—80 percent—avoided running aground even once.
Trump’s history of bankruptcies also had made his organization a risky bet for banks, but one bank, Deutsche Bank, new to working with Trump, agreed to lend to him and financed several of his projects.
But in 2008, as the financial crisis hit, Trump fell behind on payments of a $640 million loan the company had taken out to build Trump International Hotel and Tower in Chicago, a project steered by Don Jr. and Ivanka.
In the midst of discussions for an extension, Trump sued Deutsche Bank for $3 billion, arguing that the economic downturn was the equivalent to a “force majeur”—an unexpected act of God outside of anyone’s control or anticipation. The bank countersued, calling the move “classic Trump.” Trump ended up getting extra time and a loan from one bank division to another to pay back what he owed.
And yet, even as Trump was struggling to make payments to Deutsche Bank, his company was plowing cash into fourteen luxury properties around the world: golf courses, homes, a winery, and more. The total tab from 2006 to 2014 topped $400 million, an unusual outlay for a real estate developer, and especially one struggling to keep up with loan payments.
What was the source of the money, particularly for the golf courses, which banks were not funding at that time? A lot of it came from people and companies connected to Russia.
In 2008, Trump sold a mansion in Florida to a Russian oligarch for $95 million. It was more than twice the $41 million Trump had paid for it four years before, appreciation that far exceeded the average gain in Florida real estate during the period. The buyer, who beat a murder rap and made his fortune in fertilizer, tore down the home.
That same year, Don told attendees of a New York real estate conference: “Russians make up a pretty disproportionate cross-section of a lot of our assets…. Say, in Dubai, and certainly with our project in Soho, and anywhere in New York. We see a lot of money pouring in from Russia.”
Eric said something similar toward the end of the buying spree. “We have all the funding we need out of Russia,” he told a golf journalist. (Eric Trump later denied saying this.)
In 2009, Trump opened a Twitter account. His kids had encouraged it, and the first person he followed was Ivanka.
His first tweet, on May 4, 2009, said: “Be sure to tune in and watch Donald Trump on Late Night with David Letterman as he presents the Top Ten List tonight!”
His next few tweets promoted an appearance on The View, another on Letterman, and a blog post about lessons he’d learned from Celebrity Apprentice.
But on May 12, 2009, Trump’s singular Twitter personality emerged. “My persona will never be that of a wallflower,” he said. “I’d rather build walls than cling to them.”
Despite outward appearances, it was another challenging era for the family. Ratings of The Apprentice never matched its first season’s popularity. It was still a hit, but it was losing viewers every year. And Trump Entertainment Resorts filed for Chapter 11 bankruptcy in 2009.
There was also a lawsuit over Trump Tower Tampa, one of the developments Trump had licensed his name to use. Buyers spent millions on something they thought Trump was building. The tower was never finished, and buyers lost their deposits.
In a deposition on September 20, 2010, lawyers asked Trump why he didn’t return his $4 million license fee to buyers.
“Well, because I had no obligation … to give it back,” he said.
Trump also claimed buyers who lost their deposits “were better off,” because the housing market sank.
Buyers who got scorched disagreed. They’d trusted his name.
Buyers who got scorched disagreed. They’d trusted his name. And they were meant to. In his deposition Trump said, “The name has a lot of value, and so any time I use my name, whether it is a licensing deal or whether it is something I own and build myself, it is very important.”
In 2010, disgruntled Trump University customers filed suit, claiming they’d been given false promises in high-pressure sales situations, and didn’t get the mentorships they’d paid for. The year also brought trouble with the SoHo deal—trouble that ensnared Don Jr. and Ivanka. Not only were some of the financing sources convicted felons and oligarchs in Russia and Kazakhstan, but in marketing the building, the siblings had lied about how many units had sold.
A lawyer filed suit in August 2010, saying the false numbers made investors think they were buying into a healthier project than they did, representing “a consistent and concerted pattern of outright lies.”
Eventually, the case led to a criminal investigation of Don’s and Ivanka’s statements to potential buyers, particularly ones they’d made in e-mails they didn’t expect outsiders to see. New York state law prohibits false statements in connection with the sale of real estate or securities.
The e-mails aren’t public, but the liberal New Yorker magazine interviewed twenty people, four of whom had reviewed one of the e-mails in evidence. They said the Trumps talked about how to coordinate the fake stories they would tell prospective buyers. Don Jr. told a broker who was worried about the false statements that no one would ever find out because only company insiders and the broker knew about the deception.
It was deliberate deception to make sales, a person who saw the e-mails told the New Yorker. “They knew it was wrong.”
In 2011, the Trumps settled the civil lawsuit with the buyers who felt cheated, and part of the settlement barred the buyers from talking with prosecutors unless they were subpoenaed by the court. In exchange, buyers got 90 percent of their deposits back plus attorneys’ fees.
Trump admitted no wrongdoing.
In the midst of the investigation, one of Trump’s lawyers, Marc Kasowitz, donated $25,000 to the campaign of Cyrus Vance, New York’s District Attorney.
In August 2012, prosecutors abruptly dropped their investigation of Don Jr. and Ivanka, raising the eyebrows of some observers.
After scrutiny, Vance returned the money and defended closing the case. “At the end of the day, I felt if we were not going to charge criminally, we should leave it as a civil case in the posture in which it came to us,” he said. When the case was closed, Kasowitz followed up with an even larger campaign contribution.
The criminal probe of the Trump children over the Soho building did not end the family’s relationship with Felix Sater. Nor had a New York Times piece that came out in 2007, revealing Sater’s questionable past. Sater left Bayrock and started working in 2010 as an unpaid consultant inside the Trump Organization offices, where he had Trump Organization e-mail and business cards that read: “Senior Advisor to Donald Trump.”
Trump hadn’t been bothered by Sater’s criminal history. Nor had he been bothered by a separate suit filed against Bayrock over the Soho project. The suit did not name Trump but did name Sater. It claimed, “Bayrock does conduct legitimate real estate business, but for most of its existence it was substantially and covertly mob-owned and operated. [Management] operated it for years through a pattern of continuous, related crimes, including mail, wire, and bank fraud; tax evasion; money laundering; conspiracy; bribery; extortion; and embezzlement.”
In the meantime, Trump had hired one of Sater’s high school friends, a personal injury lawyer named Michael Cohen. In 2011, Cohen registered a website: Should Trump Run.
Thirty years after Trump told Rona Barrett he’d run for president if he lost all his money, he was once again on the edge of a deep dive into politics, and the site was meant to gauge how popular he was. Popularity was part of the equation. He also needed to get publicity, something that would be controversial enough to make a big splash so that this attempt to become president would achieve the necessary momentum.
Trump settled on attacking President Barack Obama, the nation’s first black president and the son of a white woman from Kansas and a black man born in Kenya.
In 2008, supporters of Hillary Clinton floated a theory that Obama wasn’t born in the United States. The Clinton campaign itself never advanced the idea, but Republicans embraced it. Many saw the notion as inherently racist. No white presidential candidate had been asked to prove they were born in the United States. Obama provided a birth certificate in 2008, proving he was born in Hawaii. Nonetheless, some people demanded the original longform version.
Trump, no stranger to race-based controversies, was the most visible doubter. In March 2011, he appeared on The View and said, “Why doesn’t he show his birth certificate? … There’s something on that birth certificate that he doesn’t like.”
The strategy appeared to work.
The strategy appeared to work. An NBC poll showed Trump was a top Republican contender for president, so he kept on the offensive.
“I’m starting to think that he was not born here,” Trump said in April on NBC News.
Trump also advanced the idea of his own candidacy. “I can make this country great again,” he said in April. “This country is not great. This country is a laughingstock for the rest of the world.”
But then came the night in May that President Obama evened the score. The White House Correspondents’ Association dinner is an annual event that gathers the most powerful forces in the nation’s capital to clink glasses, eat dinner, and enjoy a funny speech from the president. Dressed in matching black-and-white formal wear, Trump and Melania sat next to a socialite named Lally Weymouth, the daughter of Katharine Graham, who’d been the legendary publisher of the Washington Post.
Obama occupied the seat of honor on a long table set high above the crowd.
Obama occupied the seat of honor on a long table set high above the crowd. Looking relaxed and in command before the thousands of guests, the president took to the lectern.
“Tonight, for the first time, I am releasing my official birth video,” he said. The audience roared. Trump sat stone-faced at his table. He knew the spotlight was about to get hot.
Obama continued. “No one has seen this footage in fifty years. Not even me.” The film rolled, and it was a scene from The Lion King, a children’s movie set in Africa about a lion cub who overcomes tragedy to achieve his great destiny. The audience loved it.
Soon Obama unloaded on Trump himself.
“Now, I know that he’s taken some flak lately,” Obama said, “but no one is happier, no one is prouder to put this birth certificate matter to rest than the Donald. And that’s because he can finally get back to focusing on the issues that matter—like, did we fake the moon landing? What really happened in Roswell? And where are Biggie and Tupac?”
Obama paused between each sentence, patient comic timing that gave the audience time to roar in laughter and even applaud. Trump rocked in his seat, smiling tightly. Thousands of people were laughing at him.
And Obama wasn’t done. “But all kidding aside,” he said, “obviously, we all know about your credentials and breadth of experience. For example—no, seriously, just recently, in an episode of Celebrity Apprentice—at the steakhouse, the men’s cooking teams did not impress the judges from Omaha Steaks. And there was a lot of blame to go around. But you, Mr. Trump, recognized that the real problem was a lack of leadership. And so ultimately, you didn’t blame Lil’ Jon or Meatloaf. You fired Gary Busey. And these are the kind of decisions that would keep me up at night.” The audience laughed and clapped. “Well handled, sir. Well handled.”
People guffawed and cheered some more. They turned to stare at Trump, to see how he was handling it. Trump’s grimace tightened. He was a laughingstock.
But Obama still wasn’t done. “Say what you will about Mr. Trump, he certainly would bring some change to the White House.” The screen revealed a White House redecorated to look like one of Trump’s casinos, with gold-plated pillars and signs that read HOTEL & CASINO & GOLF COURSE and PRESIDENTIAL SUITE.
Trump, humiliated, left the party in a rush.
Since childhood, his favorite thing was to be cheered for. To be laughed at—repeatedly, by the elite of Washington, DC—was intolerable. Rather than move on from advancing conspiracy theories about Obama’s place of birth, though, Trump stuck with it, in much the same way the younger version of himself insisted Antonino Rocca was “Rocky Antonino.”
Trump stepped up the pace of the birther attacks, and Twitter emerged as a favorite media platform for his assaults on the president’s identity as a native-born American.
Trump stepped up the pace of the birther attacks, and Twitter emerged as a favorite media platform for his assaults on the president’s identity as a native-born American.
“Made in America?” Trump tweeted on November 18, 2011. “@BarackObama called his ‘birthplace’ Hawaii ‘here in Asia.’”
On May 18, 2012: “Let’s take a closer look at that birth certificate. @BarackObama was described in 2003 as being ‘born in Kenya.’”
On August 6, 2012: “An ‘extremely credible source’ has called my office and told me that @BarackObama’s birth certificate is a fraud.”
On October 11, 2012: “Why does Barack Obama’s ring have an Arabic inscription?” The tweet linked to an article on a conspiracy website claiming Obama’s ring said, “There is no God except Allah.”
On December 12, 2013: “How amazing, the State Health Director who verified copies of Obama’s ‘birth certificate’ died in plane crash today. All others lived.”
Trump’s approach, as controversial as it was, worked splendidly.
As he attacked President Obama’s legitimacy, he pummeled his way into the upper reaches of the Republican establishment. In part because of his continued appearance on The Apprentice, his reputation as a businessman remained largely intact despite a nearly two-decade-long string of bankruptcies.
If Trump was anything, he was a survivor. He’d crawled out of a deep hole of debt and come back, something he attributed to his positive attitude and his readiness to punch back.
“I knew conditions would change for the better,” he once reflected, “and they certainly have.”
April 6, 2011. Trump made his first speaking appearance after hinting at a run for the presidency in 2012 at the South Florida Tea Party’s Tax Day Rally in Boca Raton, Florida. (Storms Media Group/Alamy Stock Photo)