Friday, October 02, 2015

Trump – The Self-made Billionaire?

Donald Trump is truly the .00001% candidate. He asserts that he is worth a cool $10 billion, having long been cagey about just how much he has. That figure, too, may be more scam than reality. Forbes pegs Trump's fortune at $4 billion in its 2015 top billionaires list, where he places 405th in the world and 133rd in the U.S.  In his 92-page Federal Election Committee financial filing, which doesn’t require the disclosure of his total wealth, the value of his global enterprises, assets, debts, and income sources are listed in ranges, rather than exact figures. More than 20 items are characterized as worth “over $50 million.” He has at least $1.4 billion in assets and $285 million in debt, if we use just $50 million as a guesstimate on those items; $2.8 billion in assets and $570 million in debt, if we pick the figure of $100 million instead. In other words, we still don’t know what he’s worth. As with so much else, we just have to take his word for it. He claims to be “the definition of the American success story,” as his campaign website puts it.

Donald’s father, Fred, convert a business in low-income housing into a $300 million fortune that Donald inherited. Trump recounts his first major deal was Swifton Village, a foreclosed apartment complex in Cincinnati that he said he bought with his father in 1969, while still in college. (Cincinnati Magazine claims the purchase was Fred’s exclusively.) The price was $6 million and in 1972, they resold it for $12 million, according to Trump (and a far more modest $6.75 million according to other estimates).

In 1973 the Penn Central Railroad filed for bankruptcy and was intent upon selling its long abandoned yards in the Manhatten’s West thirties and sixties districts. Trump still did nothing without his father’s involvement.  As their development firm had no official name, they decided to call it the Trump Organization, which covered them both and, they hoped, had a certain gravitas. Over the next several years, Trump solicited support from New York Mayor Abe Beame, who belonged to the same club as his father and to whom his father and he gave money.

Trump’s companies have officially gone bankrupt four times since 1991, or as Trump spun it, “I used the law four times and made a tremendous thing. I’m in business. I did a very good job.” that’s a small number of bankruptcies relative to the hundreds of companies that comprise his empire, they represented a fair amount of debt.

There was the Trump Taj Mahal (with $1 billion in debt) in Atlantic City in 1991 and the Trump Plaza Hotel in Atlantic City in 1992 (with $550 million in debt). Trump Hotels and Casino Resorts, the company created from the post-bankruptcy ashes of the Taj Mahal, the Trump Plaza, and also Trump Marina in Atlantic City filed for Chapter 11 bankruptcy protection (with $1.8 billion of debt) in 2004. Bankruptcy number four, Trump Entertainment Resorts (the post-bankruptcy company created to take over the remains of Trump Hotels and Casino Resorts) filed for Chapter 11 bankruptcy protection (with $1.74 billion of debt) in February 2009. While Trump owned 28% of its stock, as he told Bloomberg News upon resigning from the board four days before the $53 million bond payment that forced it into bankruptcy was due, “I have nothing to do with it. I’m not in it. I’m not on the board.”

He glosses over his method of creating new companies to purchase the bankrupt ones, after shedding their debts, and his convenient exit timing from management posts to shed blame. In 1989, for instance, Trump purchased the Eastern Air Shuttle, connecting New York, Boston, and Washington, D.C. with hourly flights, for roughly $365 million. But the Trump name didn’t carry the day and passengers didn’t pony up for the line’s fancier seats and gold lavatory fixtures. Instead, in 1990 Trump defaulted on the loans he had taken out to finance the company, and its ownership reverted to its creditors, led by Citibank. The Trump Shuttle was then merged into a new corporation, Shuttle Inc., and in April 1992, its routes were assumed by USAir Shuttle, which is one way the rich make problems disappear.

In April 2006, at a Trump Tower gala, Trump’s son Donald, Jr. promised that Trump Mortgage would become the nation's number one home-loan lender. In a CNBC interview shortly afterwards, Trump said, “Who knows about financing better than I do?” Eight months later, the company closed down amid the crashing housing market and negative publicity over an unfortunate hiring choice. Trump’s CEO, E.J. Ridings, had lied on his résumé. His previously advertised “top” spot at one of Wall Street’s “most prestigious banks” turned out to have been as a lowly broker -- for one week. As Trump continually reminds us, he only has the best people work for him.

Then there was “Trump University,” active from 2005 to 2010, where, for $25,000-$35,000, students could assumedly learn how to become real-estate gods like Trump. According to related lawsuits, they were then enticed to take out credit cards under phony business names to help pay for the privilege, and to inflate their income by projecting profits from non-existing businesses. Earlier this month, New York Attorney General Eric Schneiderman told the New York Daily News that approximately 600 former students have filed suit against the “university” in Manhattan Supreme Court. Similar suits are pending in California. Schneiderman claimed Trump banked $5 million personally from the scam. Trump had also ignored 2005 warnings not to use the word “university” in the name.

He has talked about “our leaders and representatives” for making terrible deals that have cost American jobs. He fails how he and his daughter, Ivanka, have clothing lines made in China and Mexico, (that land of “rapists,”)  and Bangladesh, a country continuously in violation of human rights for garment workers. Anti-China anger plays well with the xenophobic crowd, but the weaker Yuan keeps costs down on Trump’s clothing business.

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