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How Donald Trump Bankrupted His Casinos, Left Contractors Unpaid, Ruined Investors & Made Millions

StoryJune 16, 2016
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Guests
Russ Buettner

reporter for The New York Times. His new piece is called "How Donald Trump Bankrupted His Atlantic City Casinos, But Still Earned Millions."

Charles Bagli

reporter for The New York Times. His new piece is called "How Donald Trump Bankrupted His Atlantic City Casinos, But Still Earned Millions."


A series of new investigative articles have revealed Donald Trump’s shady business dealings in Atlantic City, his failure to pay contracted workers over the years, and his decision to partake in what may amount to "calculated tax fraud"—a felony. We begin by looking at how Donald Trump bankrupted his Atlantic City casinos, but still earned millions. "Even as his companies did poorly, Mr. Trump did well. He put up little of his own money, shifted personal debts to the casinos and collected millions of dollars in salary, bonuses and other payments. The burden of his failures fell on investors and others who had bet on his business acumen," wrote Russ Buettner and Charles Bagli in The New York Times. They join us to discuss their piece, "How Donald Trump Bankrupted His Atlantic City Casinos, But Still Earned Millions"


TRANSCRIPT
This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: This is Democracy Now!, democracynow.org, The War and Peace Report. I’m Amy Goodman. An anti-Donald Trump playbook compiled by the Democratic National Committee has leaked online following this week’s report that the Democratic National Committee’s computers were breached by hackers. The DNC initially blamed Russian hackers, but on Wednesday a hacker using the handle Guccifer 2.0 took credit. In the document, Trump is pilloried as a "bad businessman" and "misogynist in chief."

Well, instead of devising a dossier on Trump, the DNC could have just encouraged voters to pick up a newspaper and read the facts for themselves. A series of new investigative articles reveal Trump’s shady business dealings in Atlantic City, his failure to pay contracted workers over the years, and his decision to partake in what may amount to "calculated tax fraud"—a felony.

We begin by looking at a lengthy article this past weekend in The New York Times detailing how Donald Trump bankrupted his Atlantic City casinos, but still earned millions. Reporters Russ Buettner and Charles Bagli write, "[E]ven as his companies did poorly, Mr. Trump did well. He put up little of his own money, shifted personal debts to the casinos and collected millions of dollars in salary, bonuses and other payments. The burden of his failures fell on investors and others who had bet on his business acumen." Their new article is headlined "How Donald Trump Bankrupted His Atlantic City Casinos, But Still Earned Millions."

Russ Buettner and Charles Bagli, welcome to Democracy Now! Russ, let’s begin with you. Talk about what you were most surpirsed by in this piece, how Trump profited on failed casinos.

RUSS BUETTNER: That’s a good question. I think the most surprising thing to me was the pattern that just repeated over and over again, which is him buying high, mortgaging even higher and then promising that everything was going to be wonderful, and the inevitable happens, that they run out of cash. The casinos can’t support the debt that he’s put on them. He’s able to get his investors to take a haircut, a big cut in the money they have coming. And then the pattern starts all over again. And that repeated itself four times, and probably would a fifth, except for the investors had finally had it with him by about 2010.

AMY GOODMAN: What do you mean four times? Four times bankruptcy?

RUSS BUETTNER: Four times bankruptcy, yes, yes.

AMY GOODMAN: Which is very interesting, because many who support Donald Trump, you know, people out on the road who go to his rallies, talk about just this country needing jobs and that we need a businessman to run this country correctly.

RUSS BUETTNER: That’s exactly right. That is the central core of his candidacy.

AMY GOODMAN: Charles, tell us the story of the empire that Donald Trump assembled in Atlantic City. Lay out the hole boardwalk geography.

CHARLES BAGLI: Sure. Voters in New Jersey approved gambling in Atlantic City in the late '70s. So, you saw the development of a bunch of casinos down there. Donald Trump came in in the second wave. And so, in 1982, he got licensed, he saw an opportunity, and he piggybacked on other people's efforts there. So, he had a great location. He had a piece of land right next to the—on the boardwalk next to the convention center. But he didn’t have the money to actually erect a casino. So along came Harrah’s, and they agreed to put up the money for the building, to pay him a construction management fee and to let him have half the profits. So, that was his first casino.

The second casino, Hilton had just about completed a casino in the marina district that couldn’t get licensed. Donald bought it. It was directly across from his patron’s casino, a Harrah’s casino. And they were outraged about this, so that partnership ended. Donald now has two casinos.

All of this was bought with debt. There wasn’t a lot of money that Donald was putting into the properties. So then, he’s no sooner done acquiring two, when Resorts International, which was the first company to build a casino, is now building what they say will be the biggest casino in the world. The chairman died. Donald made a play for the company, got into a fight with Merv Griffin, the talk show host, and they ended up splitting the baby. So he got the Taj Mahal. He told regulators, "Don’t worry. I’m going to do fine here. I hate junk bond debt. It makes for junk bond—junk companies." But then, five minutes later, he turned around and put $675 million of more debt, high-interest debt, on the properties.

So here he is now with three casinos by 1990, and they’re—

AMY GOODMAN: He had Trump Taj Mahal?

CHARLES BAGLI: Trump Taj Mahal. And they’re all competing with each other. So, Trump Taj Mahal opens. It’s siphoning off, ultimately that year, $58 million from his other two casinos. It was a fatal amount of debt that was there. In fact, the Casino Control Commission was appalled at the high levels of debt—$3.4 billion on his entire empire at that point.

AMY GOODMAN: So, how, Russ, did he make money?

RUSS BUETTNER: Well, that debt, each time he took it out, created a big pot of cash—right?—that could have supported the business for some numbers of years, that could have been reinvested into the business to make casinos look better and work better. Instead, what seems to happen is it supported a bottom line that was lagging, and then he pulled out large fees throughout the course of the thing—a million dollars a year basically for them using his name, that rose to $2 million a year later on. He charged the casinos $300,000 a year for occasional use of his jet. He took a $5 million bonus in 1996, which was the year that the stock both hit its peak and then sunk down and began a long slide from which it never recovered.

AMY GOODMAN: I want to turn to a clip from the Republican presidential debate in September. This is former Hewlett-Packard CEO Carly Fiorina sparring with Donald Trump.

CARLY FIORINA: There are a lot of us Americans who believe that we are going to have trouble someday paying back the interest on our debt, because politicians have run up mountains of debt using other people’s money. That is in fact precisely the way you ran your casinos. You ran up mountains of debt, as well as losses, using other people’s money, and you were forced to file for bankruptcy, not once—

DONALD TRUMP: I never filed for bankruptcy.

CARLY FIORINA: —not twice, four times. A record four times. Why should we trust you to manage the finances—

JAKE TAPPER: Mr. Trump—

DONALD TRUMP: I’ll tell you why. It’s very simple.

CARLY FIORINA: —of this nation any differently than you managed the finances—

DONALD TRUMP: I’ll tell you. I was running—

CARLY FIORINA: —of your casinos?

DONALD TRUMP: Carly, Carly, Carly—

JAKE TAPPER: Mr. Trump?

DONALD TRUMP: I’ve made over $10 billion. I had a casino company. Caesars just filed for bankruptcy. Chris will tell you—it’s not Chris’s fault either—but almost everybody in Atlantic City is either in trouble or filed for—maybe I’ll blame Chris.

CARLY FIORINA: Well—

DONALD TRUMP: But Atlantic City is a disaster—

CARLY FIORINA: Mr. Trump also—

DONALD TRUMP: Wait a minute, Carly. Wait. I let you speak. Atlantic City is a disaster, and I did great in Atlantic City. I knew when to get out. My timing was great. And I got a lot of credit for it.

AMY GOODMAN: "I knew when to get out. My timing was great." Charles Bagli?

CHARLES BAGLI: Absolutely not. The problems in Atlantic City started in 2006 when Pennsylvania started opening up casinos and siphoning off potential revenue for Atlantic City. But Donald was full bore from 1990 through 2004, and, in fact, he was finally ousted from the company because the management didn’t want him around anymore.

AMY GOODMAN: You write, "[A] close examination of regulatory reviews, court records and security filings by The New York Times leaves little doubt that Mr. Trump’s casino business was a protracted failure. Though he now says his casinos were overtaken by the same tidal wave that eventually slammed this seaside city’s gambling industry, in reality he was failing in Atlantic City long before Atlantic City itself was failing.

"But even as his companies did poorly, Mr. Trump did well. He put up little of his own money, shifted personal debts to the casinos and collected millions of dollars in salary, bonuses and other payments. The burden of his failures fell on investors and others who had bet on his business acumen."

Russ Buettner, who suffered? Do you tell stories of the people who got hurt in this massive failure in Atlantic City?

RUSS BUETTNER: Yeah, there were large categories of people, several large categories, one where people who worked on the initial Taj Mahal—that bankruptcy, they really shorted contractors who were actually owed money. They had performed work, they hadn’t been paid, and they negotiated very small amounts for those people to be paid. We quoted one person in the article whose father almost lost their business, took 30 cents on the dollar for the work he had done on the Taj.

The other big categories were bondholders and stockholders. Now, some of those, as Mr. Trump has said, were sophisticated investors who should have been able to look at the balance sheet to see what they were getting into. Others were people who actually had their retirement income invested in these stocks or had their retirement income invested indirectly through mutual funds and whatnot that had purchased the stock. We spoke with one man, a stockholder, who at one time his stock had been worth $500,000, and he left with essentially nothing.

AMY GOODMAN: How unusual is it for a businessman to have four bankruptcies?

CHARLES BAGLI: Well, I think it’s somewhat unprecedented. And the idea that Wall Street continued to give him money—not once, not twice, three, four times—I mean, we were kind of holding onto our heads, when you look at the full record down in Atlantic City. I don’t think I’ve seen anything like it. Now, more recently, a number of casino companies have had trouble in Atlantic City, because the market is shrinking as other states put casinos online. But in my experience, I’ve never seen anything like it.

AMY GOODMAN: Was the state takeover similar to Flint?

RUSS BUETTNER: The state takeover of Atlantic City?

AMY GOODMAN: What they’re proposing.

RUSS BUETTNER: Atlantic City has been a mess for a long time. And you can see the casino industry has been there for more than 35 years, and it still looks like a gap-toothed city. There’s lots that are just sitting vacant. The state is edging towards a takeover of the city, where there’s a long history of corruption. But I think there’s equal blame for the city, the state and the casino industry.

AMY GOODMAN: We’re going to break and then come back to this discussion and broaden it out to USA Today reporters, reporter for The Daily Beast, looking at Donald Trump’s record from Atlantic City, well, and beyond. We’re talking with Russ Buettner and Charles Bagli, who wrote a piece, a major front-page Sunday piece in The New York Times, "How Donald Trump Bankrupted His Atlantic City Casinos, But Still Earned Millions." We’ll be back in a minute.

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