Part 2 of ___
As ‘The Apprentice’ Seeks Cannes Sale, Trump Team Sends Cease and Desist Letter to Block Film’s Release (EXCLUSIVE)by Brent Lang, Katcy Stephan
Variety Magazine
May 24, 2024 11:48am
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“The Apprentice”, Courtesy of Tailored FilmsAttorneys for Donald Trump have sent a cease and desist letter to the filmmakers behind “The Apprentice” [2004 to 2017] in an effort to block its U.S. sale and release. It warns the team behind the film not to pursue a distribution deal, according to two people who have read the letter. “The Apprentice,” which looks at Trump’s early years as a real estate developer and his relationship with Roy Cohn, premiered at the Cannes Film Festival this week.“The film is a fair and balanced portrait of the former president,” the producers of the film said in a statement regarding the cease-and-desist letter. “We want everyone to see it and then decide.”
The movie, which was independently produced, stars Sebastian Stan as Trump and Jeremy Strong as Cohn. It presents a damning portrait of the former president as an ethically compromised, philanderer who stiffs contractors and cuts deals with the mob to get his buildings completed. It includes other controversial details, including a scene where Trump rapes his first wife, Ivana, and depicts him abusing amphetamines to lose weight, as well as undergoing liposuction and plastic surgery.Trump’s camp responded with a blistering note, threatening legal action. “This ‘film’ is pure malicious defamation, should not see the light of day, and doesn’t even deserve a place in the straight-to-DVD section of a bargain bin at a soon-to-be-closed discount movie store, it belongs in a dumpster fire,” Steven Cheung, Trump campaign communications director, said in a statement.
When reached for comment about the letter, the Trump campaign referred to its earlier statement on the film.
“The Apprentice” was directed by Ali Abbasi, the Iranian-Danish filmmaker behind “Holy Spider” and “Border,” and features a script by Gabriel Sherman, a journalist who covered the Trump administration.
At a press conference in Cannes for “The Apprentice,” Abbasi responded to Trump’s legal threats. “Everybody talks about him suing a lot of people — they don’t talk about his success rate though, you know?” he said. He also offered to screen the movie for Trump, saying, “I don’t necessarily think that this is a movie he would dislike.”*****************
https://archive.org/details/templesofch ... up?q=trumpTemples of Chance: How America Inc. Bought Out Murder Inc. to Win Control of the Casino Businessby David Cay Johnston
1992
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While newspaper accounts and bestselling books focused on the excesses of Wall Street in the 1980s, another industry driven by greed was expanding right under the noses of middle America. Today the casino industry has passed from the hands of old-style gangsters to a new generation of "respectable” businesspeople — the heads of well-known publicly traded corporations, as well as junkbond kings like Donald Trump, Merv Griffin and Steve Wynn. Temples of Chance is a compelling documentation of this passage: the little-publicized transformation of one of the country's fastest-growing, most lucrative industries.
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Trump Beaches a Whale
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Donald Trump couldn't sleep. He was so nervous that he insisted A1 Glasgow call him every thirty minutes until right before dawn, when his three Atlantic City casinos closed.
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Glasgow, a gravel-voiced concrete contractor who used to drink mob lawyers under the table in the days before he became one of Trump's closest advisers, stepped from behind the low black marble wall that separated the high-roller tables from the rest of Trump Plaza Hotel & Casino. He rang the boss.
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"Make it four point four," Sonny Nathans whispered to Glasgow, who passed the number on from his post on the floor at Trump Plaza, the mighty cash machine that powered the Trump empire, throwing off more than $80 million in 1988.
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What had kept Trump up all night was a Japanese businessman with a serene smile, a white shirt open at the collar and gray wool slacks with pockets as big as bank vaults.
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Akio Kashiwagi was one of the world's five biggest gamblers, literally a one-in-a-billion customer, who at this very moment in May 1990 was sitting at a green-felt table at Trump Plaza calmly wagering $14
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For three and a half years Trump Plaza had been trying to lure Kashiwagi from his mansion near the foot of Mount Fuji, a house known locally as Kashiwagi Palace, to this low-lying island on the New Jersey shore where the South Bronx meets Las-Vegas-by-the-Sea. When Trump flew to Japan in his own Boeing 727 for the Mike Tyson-Buster Douglas world heavyweight championship fight he presented this fellow real estate speculator with an autographed copy of his myth-making autobiography The Art of the Deal, a gift Trump would later regret.
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Trump Beaches a Whale
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But the biggest loser of them all was Robert Libutti, who blew $12 million in more than three hundred trips to the craps tables, mostly at Trump Plaza. Once Trump Plaza had emptied his wallet, the casino regulators took their turn at making Libutti's life miserable and ultimately banned him from the casinos.
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two hundred thousand dollars on each hand at the rate of seventy hands an hour. His bet never varied from the moment Trump Plaza's casino opened at ten in the morning until it closed just before dawn, a legal requirement in New Jersey at that time. The intention was to give gamblers a chance to get a grip on their pocketbooks before the casinos picked them clean. Kashiwagi had no such concerns. He left the table only for meals, accompanied by his own aides and a squad of casino security guards, and to visit a nearby restroom that had been closed to all other patrons with an "out of order" sign on the handle of a mop stuck in a bucket outside the door.
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Kashiwagi told Ernie Cheung, Trump's specialist in Asian marketing, that he was on a round-the-world gambling spree during which he was willing to risk $50 million. Other casinos desperately wanted a piece of that action. Caesars Atlantic City Hotel-Casino, which vied with Trump Plaza as the top money-winner on the Boardwalk, had invited Kashiwagi to drop in. Steve Wynn, the golden boy of Las Vegas gaming, wanted Kashiwagi to visit the Strip and try his luck at the brand-new Mirage, a giant ivory-trimmed gold box featuring a volcano out front, white tigers just off the casino floor and, lest anyone forget its elemental purpose, a huge aquarium behind the registration desk where sharks lurked. But at this moment it was Trump who had Kashiwagi's action — and all the risks that go with it.
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The Warrior had visited Trump Plaza once before, twelve weeks earlier, when he beat Trump for $6.4 million in ten hours. Two months before that Kashiwagi had flown to Darwin, where he had won the Australian equivalent of $19 million at the Diamond Beach Casino, bankrupting it.
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Trump figured it was now his turn to win. But just to make sure, he paid five thousand dollars to secure the advice of a man who knew as much about baccarat and the numbers that rule the gaming business as anyone else on earth. Hardly a soul besides the executives at the highroller houses in Atlantic City and Las Vegas has ever heard of Jess Marcum. An owlish little man who in his youth had helped invent radar, he was a founder of the RAND Corporation, the Air Force think tank, and later worked on the neutron bomb. The casino executives all trusted his mathematical genius. Stories abounded among the small circle who
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Trump Beaches a Whale
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Kashiwagi and his entourage had arrived in Atlantic City on a Thursday. The next day he began demonstrating that he understood that the art of the deal in high stakes casino gaming occurs in the casino cage, the gambling hall's financial office, where players buy their chips. He had told Cheung when he arrived that he wanted to gamble $22 million at Trump Plaza. He was told to bring checks that could be verified easily and cleared through the banks. Instead Kashiwagi brought a $6 million check drawn on a Singapore bank and a $4 million instrument that could be cashed only in Japan. He asked for $12 million in credit.
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Mike Mullen, the Trump Plaza cage manager, confirmed that the $6 million Singapore check was good. He sent it to Manufacturers Hanover
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Kashiwagi was ready. The Warrior strolled across the bold red-andgold Trump Plaza carpet to the high-roller area. An aide carried the fortune in chips in boxes under his arms, uniformed security guards making sure the path was clear and that others saw how royally big players were treated.
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Marcum, in a confidential written report to Trump, calculated that even with Kashiwagi's bold and smart betting style, the odds were fiveto-one that the high roller would lose his bankroll before doubling it. That meant if Kashiwagi made six visits and bought $12 million in chips each time. Trump could expect to win five times, collecting $60 million, and lose once, leaving Trump with a net win of $48 million.
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Trump Beaches a Whale
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Those statistical slivers grow in importance as the play continues, eroding the player's remaining bankroll. The house advantage works like the reverse of compound interest, which makes a dollar saved grow over time. After 10,000 hands, Marcum's calculations showed. Trump could expect to win 5,125 bets to Kashiwagi's 4,875. At that point Kashiwagi theoretically would be out $50 million. In reality his $12 million stake would have been lost long before them.
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Trump flew down from Manhattan that Saturday accompanied by arms merchant Adnan Khashoggi, four vivacious blondes and an Arab prince. Khashoggi was well known in gambling circles, especially for all the unpaid markers he had left behind at the Sands in Las Vegas, which its chief executive blamed for that casino's collapse in 1983.
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The deal artist, the arms merchant and the Arab prince checked into Trump Castle and that evening limoed over to Trump Plaza. Trump introduced Khashoggi to Kashiwagi, saying they must have met because they traveled in the same circles. They had not.
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Trump hung around, pumping hands and cocking his ears to hear how great he was. Some saw Trump's behavior as nervous pacing.
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rather than his usual glad-handing. Casino owners, favored by the odds, are not supposed to begrudge lucky players their winnings, are not supposed to "sweat the action." And if they do sweat, they should do it from their executive offices, watching on a remote television screen, their anxiety hidden from the player. Within a quarter hour. Trump had grown restless and left.
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Finally Trump panicked. He wanted the game stopped. Now. He could stop the game at any time by lowering the maximum bet that the house would accept. Glasgow and everyone else involved knew that lowering the limit would be an insult, that Kashiwagi would almost certainly storm out and probably never return — and he would be leaving with all that money.
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And they knew word would get around that Donald Trump was not a worthy opponent but a coward. This was an extremely sensitive subject with Trump. While he gloried in his image as a fearless capitalist, he surrounded himself with bodyguards. And while he sponsored heavyweight fights, he had also acknowledged that he could not imagine a physical blow and recoiled from the thought of being struck. That Trump's image could descend from all powerful into fancy-pants wimp vexed some of his executives and advisers.
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Glasgow put Marcum on the phone to Trump.
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"He's on a winning streak," Trump insisted, his voice gathering force for one of his frequent temperamental storms. Is Kashiwagi cheating? he asked. No, Marcum said, Kashiwagi is no cheat.
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"Be patient," Marcum counseled. "He wants to keep playing, and soon the wave will run the other way." Trump said he would let the game go on a bit longer, but he wanted to know at once if Kashiwagi's pot continued to grow.
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Fly east to Atlantic City and the story is similar. Hilton, Holiday and Ramada all came here, although Hilton had to sell out to Donald Trump when it was refused a New Jersey casino license in 1985 because of past
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The Atlantic City market is dominated, though, by Donald Trump. He owns three of the area's twelve casinos and controlled Resorts, the first Boardwalk gambling hall, until Merv Griffin bought it in a hostile takeover that grew from stock market manipulation. Shares of two Trump casinos and Resorts trade on the American Stock Exchange, as do the bonds of all four casinos.
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Brand name hotel chains — Hilton, Holiday, Ramada — moved into the gambling business in the seventies. Meanwhile, New Jersey casino regulators forced men tainted by dealings with mobsters to resign as the chief executives of Bally Manufacturing and Caesars. These five firms, plus Wynn's Mirage, Circus Circus and Trump dominate the casino business in America today.
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Milken addicted casino executives to junk, not the kind heroin addicts shoot into their veins in the burned-out buildings a block from the Boardwalk casinos, but the kind companies inject onto their books. Junk bonds catapulted Steve Wynn from a mere millionaire to a fortune two hundred times that size, commanding a company with a billion dollars in annual revenue. Hilton, Holiday, Ramada, Circus Circus and Merv Griffin all loaded up on Drexel debt while Donald Trump and others relied on junk sold by Drexel's imitators. Casino companies sold more than $5 billion worth of junk bonds in the eighties, some of which was never paid back despite the supposedly intense regulation of modern casinos by the states of New Jersey and Nevada.
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Just outside the little seaport of Mystic, Connecticut, the Mashantucket Pequot Indian tribe's Foxwoods High Stakes Bingo and Casino offers craps, poker, blackjack and other table games, but not slot machines. Within a month of opening, the table drop at Foxwoods — the amount of chips sold — exceeded that at Trump Plaza in Atlantic City. The Pequots plan to add hotels, restaurants and other amenities. Other Indian nations from Nebraska to California are moving to copy all or part of this format, some with professional management.
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"Bett^ to have a little joint and a big bankroll than a big joint and a little bankroll," was Binion's sage advice to the ambitious young Wynn, who would later become the king of the world's gamblers. It was the kind of advice no one ever gave to Donald Trump or Merv Griffin.
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At night, a halo often seems to hover over Atlantic City as moist sea air gathers into low clouds that reflect the floodlights and the brightly lit signs of high-rise casino hotels. From a distance this halo looks appealing, and as one motors along the Atlantic City Expressway's last four miles, through the flat marshlands, the sudden appearance of an urban skyline with bright lights heralding Caesars, TropWorld and, again and again. Trump, is strangely engaging. But the halo effect is deceiving. Atlantic City is no heaven on earth, but an urban hell that brings together the filthy poor and the filthy rich.
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But not all of Atlantic City's dozen temples of chance stand by the city's slums. Harrah's Casino Hotel is on the northwestern edge of Atlantic City just off another road across the marsh to Absecon Island, the White Horse Pike. Just before reaching the public housing projects that stretch for block after block, players can turn north and head through the stands of phragmites and sedges to Harrah's or its sole marina neighbor, Trump Castle Hotel & Casino Resort by-the-Bay.
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The affluent suburbanites Harrah's targets are often as boring as their beige Buicks and maroon Mercurys. But typically they own their cars outright, unlike the leased Mercedes and BMWs of many Trump Castle players. Mostly Harrah's gamblers are fifty or older, with grown children and houses bought and paid for long before escalating real estate prices prompted the phrase "affordable housing." They had picked the right time to be born, and as their hair thinned their wallets thickened so much that they could afford literally to play with their money.
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could be seen on the garage's top deck. Blotches of dripped oil mottled the cement floor, while the top deck of the neighboring Trump Castle garage was nearly spotless years after it was finished.
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players could get a Trump Card, become an Island Ambassador at the Sands, or join the Officer's Club at the Showboat.
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The prospect of making millions and millions fast and easy drew lots of potential investors into the casino business once Atlantic City opened up the market and, with the state lotteries, whetted the natural appetite for gambling. Steve Wynn came to Atlantic City early on and in 1982 Merv Griffin came for the first time. Before long Jack Bona and Donald Trump would seek fortunes there. Meanwhile, Holiday's chief hotel competitor, Ramada, was going into the gaming business in both Las Vegas and Atlantic City. And an eccentric rich Californian named Mitzi Briggs was getting out.
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A1 Glasgow, the contractor turned casino newsletter publisher and later Donald Trump consultant, stood on the Boardwalk one day looking
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The interest on the existing Playboy casino debt was at floating rates that had risen to the point where the casino's balance sheet began to tip, the interest costs pouring onto its books like seawater weighing down a stricken ocean liner. The new obligation to Hefner only weighted the casino down with more interest burdens. But it set a pattern for financial manipulations that would long plague Atlantic City and that would extract a heavy price from investors whose money went into future deals by Donald Trump and Merv Griffin.
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The crowds with designer suits and silk blouses moved on to Wynn's Golden Nugget and the newer places like Trump Plaza next door. Replacing them were the down-at-the-heels gamblers who didn't play enough to make them worth a free Coca-Cola. But even when the crowds shrank the place appeared to be busy. The casino had been designed so that the first floor offered slots, the second table games with a few slots, and the third was a lavish salon for high-rollers. Except for busy weekend nights in the summer the salon stayed closed. Because the building's layout made the salon level accessible by escalator and elevator, the Atlantis had to post guards around the clock to turn away the few people who wandered onto the third floor. It also meant that instead of having fifty thousand square feet of gaming area the Atlantis effectively had only thirty-four thousand square feet, barely half the size of most Atlantic City casinos. On all but the slowest winter days it appeared that the Atlantis was packed.
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Worse, while every successful business is organized to bring in more cash than it spends, dollars began flowing out of this enterprise at an increasing rate. No matter. Before long the Atlantis would become the property of another junk bond addict: Donald Trump.
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Although he polished his image as a self-made billionaire, Donald Trump grew up riding through New York's outer boroughs in his mother's Rolls-Royce. His father, Fred Trump, was reportedly Chase Manhattan's biggest depositor in Queens. Fred built working-class apartment complexes, huge brick fortresses often financed with government subsidies that he arranged in part through his close ties to politicians, notably New York mayor Abe Beame and Meade Esposito, who for decades ran the Brooklyn Democratic party organization.
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Donald Trump wanted more than his father's obscure wealth. He lusted for the glamour of Manhattan. He wanted to build with marble, not brick. He wanted to house the glitterati, not their servants.
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Like Holiday Inn's Mike Rose, Trump realized in the mid-seventies that the profits in hotels and even development deals pale beside the potential return from a casino. He boasted in 1978 that the Grand Hyatt was designed so that when it opened it could accommodate a casino. But when efforts to legalize casinos in New York faltered, and Resorts proved a phenomenal success after it opened in 1978, Trump started scouting Atlantic City and became an ardent foe of casinos in New York.
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Dealing with unsavory characters was not new to Trump. He bragged that his projects always came in on time and under budget (Trump's public budget pronouncements were inflated so it was easy to meet them), and it was remarkable how Trump always had labor peace, especially with the mob-controlled cement workers union, which took charge at most of his projects, including the concrete colossus known as Trump Tower. What Trump did not boast about or even publicly mention was that he hired mob-owned firms like S & A Concrete, whose secret owners were the two top Mafia figures in New York: Anthony "Fat Tony" Salerno, head of the Genovese crime family, and Paul Castellano, head of the Gambinos. Trump also made extensive use of attorney Roy Cohn, the notorious fixer, whose clients included Salerno.
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Trump boasted in his first autobiography that when he sought a casino license he persuaded John Degnan, the New Jersey attorney general, to limit his probe to six months. Trump became the first applicant that the attorney general's Division of Gaming Enforcement recommended for licensing. The division had either opposed or taken no position on the others.
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That Trump was not fully investigated by the enforcement division was obvious to anyone who read its 1982 licensing report. But it was almost a decade later that investigative reporter Wayne Barrett's biography of Trump revealed that the developer also had been the target of a 1979 federal bribery investigation. No charges resulted from the probe, which had been inspired by one of Barrett's disclosures in the Village Voice newspaper. But Trump had not listed the probe in his license application, and the Casino Control Act mandates license denial for anyone who omits a relevant fact. The key court case upholding the disclosure provision involves a woman denied a license as a blackjack dealer — a much lower level of license than casino owner — because she did not report that she had been forced to resign from a retail clerk job for selling frietids a few items below their ticketed prices, a matter handled in court as misdemeanor shoplifting.
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The licensing report did reveal that Trump had failed to list on his application an investigation of alleged racial discrimination against tenants. Still, the enforcement division recommended Trump for approval because he disclosed this matter just before he was to be questioned under oath about the omission.
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The report also gave a glimpse into his efforts to avoid income taxes by owning his properties through partnerships. At first Trump cut his siblings Maryanne and Robert in on some deals, but in his casinos and many other of his celebrated deals Trump was almost always both the sole general partner and the sole limited partner, a strategy designed to reduce income taxes. It worked fabulously to lighten the burden of supporting the United States government. By 1978 Trump had yet to build Trump Tower or any of his casinos, which together created opportunities for multimillion dollar deductions each year, by vastly enlarging his opportunities to report a negative income to the government while at the same time living the vaunted Trump lifestyle on cash flow.
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Although his tax returns have not been publicly disclosed since 1979, Donald Trump has had such enormous write-offs available to him that he probably did not pay a penny in federal income taxes through at least 1986, when an overhaul of the Internal Revenue Code made it modestly more difficult to avoid paying income taxes.
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The Casino Control Commission licensed Trump in March 1982, after a perfunctory public hearing. The terms of his license were both extraordinary and prophetic, finding on the basis of the incomplete investigation only that he had established, by clear and convincing evidence, his good character and integrity, while his business ability and financial stability were found in need of further proofs.
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No matter, Trump now had the extraordinary privilege of a New Jersey casino license in hand, and he got busy developing his narrow Boardwalk site. Since his Grand Hyatt and Trump Tower were not yet finished, he needed a partner. He turned to Mike Rose. The Holiday corporation enjoyed such phenomenal success with Harrah's Marina that coordinating operations with a Boardwalk casino seemed like a good marketing strategy.
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Immediately Trump set out on a course that, by his own account, raised questions about the one favorable finding in his casino license. He set out to deceive his prospective partners: In his first autobiography Trump wrote that Holiday's board wanted to "assess our progress in construction," which worried him "since we had yet to do much work on the site."
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To create the illusion of progress Trump jammed the site with bull-
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dozers and dump trucks, not caring if they accomplished any work so long as they looked busy. Trump's construction chief told him it was the strangest request he had ever received. One Holiday director asked Trump why a hole was dug and then filled. "This was difficult for me to answer," Trump wrote, "but fortunately this board member was more curious than he was skeptical." The deception worked.
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Although Trump claimed that Holiday came to him seeking a partner, Holiday put up the financing and was to run the place. All Trump brought to the table was his lease and his extraordinary ability to escape the usual union work stoppages. This was enough, though, to provide Trump with an incredible deal. All he had to do was build the 614-room casino hotel and then sit back and collect half the profits. He was even guaranteed against any losses in the first five years.
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The Boardwalk lots Trump leased were so narrow that the only way to make a hotel and casino attractive was to build not only skyward, but to create a wider space out of thin air. Here his Atlantic City real estate lawyer, Patrick McGahn, proved invaluable.
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Marine Corps days in Korea, where as a young officer he led troops up bullet-raked hills and claims to have personally strangled communist soldiers, a tale that has earned him the moniker "piano-wire Paddy." Other walls held photographs of McGahn with Donald Trump, President John F. Kennedy and the Pope. Friends said McGahn's connections went all the way to God; enemies regarded him as the devil incarnate.
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McGahn realized that the solution to Trump's narrow lot problem was to build out over Mississippi Avenue, which separated the site from the Atlantic City Convention Hall. Trump had no right to build beyond the curb, however. McGahn solved this by persuading Convention Hall officials to lease a one-foot strip of its property for ninety-nine years in return for a one-hundred-dollar fee. At City Hall McGahn argued that control of both sides of the street gave Trump air rights, and the people he had cultivated went along. Above this thin air Trump built the highroller area where Akio Kashiwagi, Bob Libutti and others would later blow millions of dollars.
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The enforcement division, which originally agreed to Trump's plan that Shapiro and Sullivan be his landlords without getting licensed, suddenly changed its stance in 1983 and demanded they apply for licenses as financial sources. This shift occurred after prosecutors had publicly detailed the depth of Shapiro's ties to mob boss Scarfo. But Sullivan noted that it was also after he notified Trump that he was in default on his lease, jeopardizing Trump's lucrative deal with Holiday. Knowing they would never be licensed, Sullivan, Shapiro and their partners sold the land to Trump. Later, Sullivan sued the enforcement division, alleging that it had improperly helped Trump gain an advantage in a business dispute. He lost on a technicality before a trial could be held on the merits of his claim.
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When Harrah's at Trump Plaza opened in May 1984, it was as prosaic as Harrah's Marina. To support its thirty-nine floors the lobby sprouted a forest of tall columns covered with red cloth and mirrors.
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The tallest building in town also suffered from a costly omission. While Harrah's Marina prospered in good measure because of its luxurious garage, Harrah's at Trump Plaza opened with only a surface lot across Pacific Avenue. Donald Trump had bought up most of that block, with half the money coming from Harrah's. But he balked at building a garage, threatening at one point to sell the land while insisting that the casino be renamed only Trump Plaza in his honor. The difference parking made showed up on the bottom line. Each week Harrah's Marina earned a bigger net profit than Harrah's at Trump Plaza earned in all of 1985.
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Trump had a good reason not to want a garage. He wanted to buy out Holiday's half, which would cost a lot more with a garage helping to pump up profits. He did persuade his partners to rename the hotel, removing the Harrah's name and calling it Trump Plaza Casino Hotel. Mike Rose was unhappy at Trump's actions, but he would not sell, confident that eventually Trump would have to fulfill his obligation by building the garage.
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But a series of events no one could have seen coming — involving the Casino Control Commission, the prime minister of the Bahamas, junk bond king Milken, and the late Conrad Hilton's eloquent will — changed Rose's mind. These events nourished the myth of Trump as an artist whose medium is deals.
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The commission found that Hilton's major sin was hiring Chicago attorney Sidney Korshak, whom law enforcement agencies said was a key tie between the legitimate business world and the underworld. Korshak's power lay in his supposed ability to insure labor peace for Hilton Hotels. The focus on Korshak, who was paid fifty thousand dollars a year and worked far from Hilton's headquarters in Beverly Hills, California, was a sharp departure from the policy followed with Trump, who worked closely with attorney Roy Cohn. The fact that Cohn, who had been indicted four times, was acceptable while Korshak, who had never even been indicted (much less convicted, or disbarred, as Cohn later was), would not be acceptable showed the capriciousness of the casino regulators and added to the growing evidence of official favoritism toward Trump.
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Hilton's greater sin, one not found on the official record, was its haughtiness. Barron Hilton would not bow and scrape before the casino commissioners, as Jim Crosby did at Resorts' hearings. Hilton neither confessed errors nor thanked the commissioners for showing his firm the light, promising never to repeat any mistakes, as Crosby had done, nor did he meekly listen to criticism, as Trump soon would. Hilton failed to grasp that humility fostered the appearance of regulation.
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Milken and Wynn failed, although they inadvertently helped impoverished children by raising the price Barron ultimately would have to pay for his father's stock. Meanwhile, Donald Trump was busy working on a deal that would leave Barron Hilton employed at Hilton Hotel while extricating the company from Atlantic City, and without destroying Barron's efforts to buy his father's estate at a discount.
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Barron Hilton took the Trump deal. Afterward, Trump publicly savaged Hilton, as he would others who did deals with him. In The Art of the Deal* Trump dismissed Barron Hilton as a member of the "lucky sperm club" who owed his lofty position to his father. Trump wrote that after the license denial Hilton "ended up selling to me at the last minute, under a lot of pressure, and without a lot of other options."
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Trump borrowed every penny for the deal and then some. Manufacturers Hanover loaned him his $70 million capital contribution. Bear Stearns, a New York securities firm anxious to get in on the casino junk business Milken had developed at Drexel, peddled $353 million worth of mortgage bonds. The deal was so fat that Trump even sliced off a $5 million fee for himself.
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The Casino Control Commission certified the deal, which required finding that Trump had demonstrated his financial stability and his business ability. The latter finding came even though Trump had no experience running a casino, only building one and sharing in the profits. The commission also found that the casino would be financially stable, meaning it could pay its bills as they came due, an important consideration for prospective bond buyers who want to get their principal back.
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To run his first casino Trump picked someone who knew even less than he did about the casino business*— his wife. Trump boasted that Ivana was "a natural manager" and the commissioners went along even though there was no way Ivana could prove by clear and convincing
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Mike Rose was not happy to see Donald Trump with his own casino, especially since it was across the road from Harrah's Marina. Earlier Rose had reluctantly agreed to remove the Harrah's name on the Boardwalk. Now Rose calculated that Holiday spent $8 million promoting Trump's name while his erstwhile partner was competing head-on for players with Holiday's most valuable asset, Harrah's Marina.
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The day Trump's Castle opened Mike Rose took Donald Trump to court. Holiday's lawsuit sought to block Trump from using his name in the marina, saying it would confuse patrons, and to bar Trump from using its confidential list of players. The suit charged that Trump's delays in repairing the Boardwalk casino's many construction defects, his threat to sell the parking site, and his failure to build the garage were predatory and "unmistakably" part of a plan to drive down the value of the Boardwalk partnership to force Harrah's to sell its stake cheap.
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Trump countersued, alleging Harrah's management was so sloppy that it had "badly bloodied" the Trump name.
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U.S. District Judge Stanley Brotman brought Trump and Rose to his court in Camden, New Jersey, in an attempt to forge a settlement. Brotman noted that nothing in their contract barred Trump from opening his own casino.
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Nine months later, in March 1986, Rose threw in the towel and sold Holiday's half of the Boardwalk casino. Trump paid $223 million, two thirds of what he paid for the Hilton, but then he already owned half of the Boardwalk casino. Again, Trump borrowed every penny and then some. The day the deal closed Trump announced the property would now be known as Trump Plaza Hotel and Casino.
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Trump also announced that work would begin right away on a badly needed garage.
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Donald Trump looked on Atlantic City as a real-life monopoly game where he wanted all the choice pieces. In Monopoly imprudence can lead to bankruptcy. Luck and other players' mistakes can also be more important than skill.
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Once Trump got full ownership of Trump Plaza on the Boardwalk in May 1986, he cast aside Mike Rose's concept of coordinating marketing between a marina operation primarily outfitted with slots and a Boardwalk house geared to table players, a strategy intended to give a pair of jointly owned casinos an advantage against everyone else. Instead Trump started his two casinos competing against each other. They not only vied for the same players, they competed for entertainment talent, executives and sales staff to entice players. The economies possible by jointly purchasing supplies and advertising were ignored in favor of duplicate, competing operations. *
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smooth-running Team Trump and his claimed ability to promote people like Ivana into positions far above their experience and make them winners. So did the cold reality that the Trump Organization operated in constant chaos, his empire run on office intrigues. Long-range planning consisted not of how to build for next year and the year after that, but of how best to vanquish the executive in the next office.
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A1 Glasgow, Trump's loyal casino consultant, shook his head in disbelief at the costly warfare, which he called "disorganized crime," among the Trump executives. "Instead of bringing in the business and making money they're all stabbing each other in the back, all busy trying to figure out how to fuck the other guy and get on Donald's good side," said Glasgow, himself a skilled veteran of the in-fighting whose sensitive antennae detected early on which executives were rising and which were heading for the door.
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In such a battle a novice like Ivana, working with the Castle, ordinarily would be no match for the competition at Trump Plaza, which was run by the experienced and steady hand of Steve Hyde. But ordinary was poison in the Trump Organization, where ability or even success at bringing money to the bottom line was sometimes less important than one's relationship with Donald. Minor talents sometimes rose to great heights, briefly, before Donald abandoned them. When it came to intimacy with Donald, Hyde was no match for Ivana, at least not at first.
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Trump planted stories that Ivana had been on Czechoslovakia's Olympic ski team. She had not, nor had she ever made such a claim. He called her a top Canadian fashion model. She had been an anonymous runway model. He did not mention that Ivana Zelnickova Winklmayr Trump had married before.
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Hilton had designed for the mass market, but Trump did not want his name associated with the common men and women whose steady play earned a million dollars a week in profits for neighboring Harrah's Marina.
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To the eternal high-roller question, "Whaddya gonna gimme?" Trump Castle needed an answer. The really suite deals were at Atlantic City's twcr high-roller houses, Caesars and Steve Wynn's Golden Nugget. Caesars marketing offices in Medellin, Hong Kong and other cities where great fortunes were being accumulated provided a steady flow of people who demanded the most luxurious and flamboyant lodging.
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Hyde returned to Atlantic City and joined the Golden Nugget, where Wynn regarded the big bear as a solid executive, but not a star. Wynn did admire Hyde's ability to smooth stormy waters, to not confuse personal tiffs with getting the job done. This ability, this willingness to absorb verbal assaults and go on about the job, became crucial once Hyde moved to Trump Plaza.
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During this time Trump suddenly faced his first major problem with casino regulators. One of them accused him of lying under oath.
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The issue grew out of Hilton's promise to help finance part of a $40 million project to improve the only road into Brigantine, the island town immediately across an inlet from the marina. Trump lawyer Nick Ribis promised the casino commissioners that Trump would stand in Hilton's shoes, but once the casino changed hands Trump renounced the commitment and filed a lawsuit.
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Valerie Armstrong, an ambitious young Republican lawyer who had lived in Brigantine and who was recently appointed to the Casino Control Commission, pressed the matter. Attorney David Sciarra of New Jersey's Public Advocate office said seven days of testimony made it clear that Trump never intended to build the roadway, a charge which, if true, could cost Trump his license because it would show he lacked integrity.
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But while Armstrong believed Trump had failed the Casino Control Act's integrity and character tests, she had only one vote. By June 1986, Trump had already become a powerhouse, owning two of Atlantic City's eleven casinos. His license was renewed on a 4 to 1 vote.
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With his license renewed the deal artist made his first major foray onto Wall Street. In his first autobiography Trump told how Daniel Lee, the casino analyst at Drexel Burnham Lambert, and some colleagues came to his Trump Tower office at 4 o'clock on a summer afternoon "to discuss being my investment bankers on a deal to purchase a hotel company."
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The unnamed hotel company Lee and Trump discussed was the Holiday Corporation. Trump bought 1.1 million shares of his former partner in the summer of 1986, borrowing every cent from his bank credit lines and his broker, Bear Stearns.
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Trump had plenty of motivation both to weaken Holiday financially and to divert management's attention from its smoothly running Harrah's Marina next to his Castle. Far more than Hilton, Holiday's real
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Mike Rose was already working on strategies to restructure Holiday, including having management acquire the firm from shareholders in a leveraged buy-out, when Trump came hunting.
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I really didn't believe Donald Trump was a serious corporate raider. This was before he had established his reputation as a greenmailer. I just couldn't quite picture him as running a big company. But he had put us in play clearly, and our stock was moving, and arbitrageurs were taking big positions, and something had to happen, so we got hard to work with Goldman Sachs [Holiday's investment banker], and we started talking about alternatives. And frankly I wasn't satisfied with whether we were exploring all the alternatives; it seemed we got sort of a canned response from them.
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The meeting convinced Rose that he wanted Drexel working for Holiday, never against it. Of course, Drexel had already been working against Holiday, with Lee recommending that Trump buy the stock and bringing Drexel's mergers and acquisitions experts in to advise Trump on Holiday's prospects as a takeover candidate.
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To thwart Trump, Drexel recommended that Holiday take on $2.4 billion of junk bond and bank debt. Most of the money went to pay a special dividend of sixty-five dollars per share.
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Not only was management's attention diverted, but the company had little money to reinvest in Harrah's Marina, a prospect that thrilled Trump.
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Trump, meanwhile, sold his Holiday stock in November for a gross profit of $18.8 million, made entirely with borrowed money.
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But the commission ignored these duties. Trump got the implicit message. Within days of cashing in his Holiday position Trump started buying stock in another competitor, Bally Manufacturing.
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bond deals, and Drexel didn't even have to pay Trump a finder's fee.
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Trump liked Bally's Park Place. Its magenta-and-green casino produced the largest cash flow in Atlantic City and Bally's Park Place also profited from a classy-sounding address. Boardwalk and Park Place, the most expensive squares on the Monopoly board. Like Harrah's, Bally's also had steady management under former stockbroker Richard Gillman and his crew. But its corporate parent did not do nearly so well — except when it came to extraordinary pay and perks for executives and directors. The price of Bally Manufacturing stock was low relative to the company's value, making it attractive to raiders.
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Trump, again using borrowed money, bought nearly 10 percent of Bally Manufacturing in the last two months of 1986. Drexel's Dan Lee advised Trump as he made these stock purchases.
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Within days Bally sued Trump, accusing him of antitrust and securities law violations, and Trump countersued. Bally also hired Drexel.
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In February 1987, Bally settled the litigation with Trump by buying back his stock at an inflated price and paying him a $6.2 million fee to go away for ten years. Trump's gross profit, including the fee, was $21 million. Drexel made much more and this time Trump not only saddled a strong competitor with debt, he got a bonus when an even tougher competitor, Steve Wynn, quit Atlantic City altogether.
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Because Trump owned two casinos. Bally could block a takeover by buying a second gambling hall. That's because New Jersey law limited him to three. Bally bought the Atlantic City Golden Nugget, paying a wildly inflated price of $440 million. Wynn's company had only $255 million invested in the baroque palace at the south end of the Boardwalk, whose early profits had not been sustained. Over the previous three years combined it had lost more than $6 million.
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Bally's spendthrift reaction to Trump's raid left Bally drowning in red ink, unable to compete effectively in Atlantic City (or Nevada) and the raid prompted Wynn, one of the two high roller specialists, to leave town. For Trump it was a straight win-win. He had eliminated one tough competitor, Wynn, and he had saddled two more casinos with the oppressive debt loads that held back Harrah's from expansion.
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Right after Wynn left town the badly needed garage was finished at Trump Plaza. On the side facing the casino were a few potted plants and two black hansom cabs, each drawn by a life-size bronze horse. Displaying the kind of chutzpah that Trump relished, Hyde claimed that the garage was a work of art and that its entire $30 million cost should be credited against Trump obligations under a city ordinance requiring investments'^ public art. (The ploy became moot when the ordinance was gutted.)
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Despite the hansom cab many thought the garage an architectural and urban planning atrocity, for it confronted motorists coming off the Atlantic City Expressway with a gigantic blank wall, to which were added huge red lights declaring the name Trump Plaza. More than any other structure in town the Trump Plaza garage demonstrated that the casinos were in Atlantic City, but not of it, that the casinos wanted to be walled off from the rest of the city.
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Whatever its aesthetic values the garage gave Hyde the tool he needed to outshine Ivana's Castle. In 1986, Trump Plaza's net profit was four times Trump Castle's. In 1987, with the garage open only seven months. Trump Plaza's net ballooned to more than ten times the Castle's.
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Still, during the last week of July 1987, Ivana nearly won her fight with Hyde. Ivana hired Christian Mari from the old Golden Nugget. But he wasn't coming to work at the Castle. Mari's contract read "senior vice president, hotel operations. Trump Plaza." Mari was to be Ivana's Trojan horse.
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Having won this battle Hyde renewed his efforts to make Trump Plaza the successor to the Golden Nugget as high-roller heaven. Among those Golden Nugget players he lured up the Boardwalk was Robert Libutti, a compulsive gambler with a hair-trigger temper and a habit of using vulgar street language when addressing women and minorities, habits that the Mormon Hyde ignored so long as Libutti was willing to while away hours risking up to twenty thousand dollars on each roll of the dice.
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What Hyde discouraged was the lusty interest Trump took in Libutti's only daughter, a stylish divorcee named Edie.
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Libutti said he was furious that a married man would want to bed his daughter and he finally confronted Trump, ordering him to stop asking her out.
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Hyde had another reason to want to keep Trump away from Libutti's daughter and it had nothing to do with his religion's rigid morality.
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Hyde had gained in the competition with Ivana by helping Donald hide his mistress, Marla Ann Maples. The bosomy Georgia blonde stayed at Trump Plaza, signing for anything she desired in its restaurants and shops. So long as Donald stayed focused on Marla, Trump kept his wife away from Trump Plaza, which meant Hyde and his team remained secure in their cushy jobs.
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Although Trump always surrounded himself with bodyguards, sometimes he abandoned them and drove himself to Trump Plaza to reduce the number of mouths that might spread stories about his secret liaisons. This precaution was not perfect, though, for a few insiders could not keep the secret.
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To really win Donald's heart Hyde and his team needed to establish Trump Plaza as the premier high-roller joint. Like Harrah's Marina, Trump Plaza was built as a prosaic place. Hyde remade it, covering the floors, walls and the columns with Italian marble and arranging Mike Tyson's fights next door at the Convention Hall, as well as other glamour events.
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Meanwhile, Donald had his own plan to attract high rollers to Trump Castle. (The 's had been dropped from the name, a grammatical refinement that Trump claimed cost a half million dollars.) Trump wanted suites. Ivana could spend lavishly on dinners, fine wines and gifts, but high rollers still wanted their egos fed by spending their hours away from the table in fantasy lodgings with marble and tapestries or brass and gauche colors, depending on their taste.
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This monument finished. Trump did something that was absolutely amazing given his practice of claiming wildly inflated values for his properties. At the start of 1988, Trump had paid Appraisal Group International to value the Castle. It settled on $636 million. Nearly two years later, just as the Crystal Tower was about to open, Trump's confidential net worth statement valued the Castle at $635 million.
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Perhaps Trump never compared the two statements, but nonetheless by his own account he had written off the entire $110 million expansion as less than worthless — it sliced a million bucks off the Castle's value.
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Shortly after he closed the deal Trump flew in his black Super Puma helicopter from Manhattan to the Castle helipad to close the book on the competition between Ivana and Hyde. He gathered a dozen Castle executives around the mahogany-and-granite conference table in the windowless executive boardroom and called Manhattan on the speakerphone.
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"Ivana, I'm here with some of your friends in the room," Trump announced, according to two of those present. Then Trump told Ivana that she was no longer their boss.
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Executives seated around the table, even those who detested Ivana, were aghast that Trump would publicly demean his wife instead of talking to her in private. The cruelty of it was mitigated when Donald continued, saying that he was promoting her to a new position in the Trump Hotel Corporation and putting her in charge of his newest property, the Plaza Hotel on Central Park in Manhattan. Over the speakerphone Ivana's whimper could be heard. One witness to this exchange recalled thinking: This man has freon in his veins.
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Trump, who often said money was the measure of success in business, had told the world how much he valued Hyde and Ivana. He paid
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But instead of focusing on his two casinos, on building the business, the easily distracted Trump would soon cast his eye on another casino — one that would soon entomb his presumed fortune.
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To Jack Davis, Donald Trump looked like a better bet than Jack Pratt. Trump was near the peak of media adoration. He had gone to Wharton, his lifestyle indicated deep pockets, and his ego would drive him to finish the Taj, Davis figured. Davis lined up the Crosby family for Trump and in March 1987, Donald Trump arranged to buy the B shares held by the Crosby estate, Crosby's relatives and some others. For $96 million they would give him stock controlling 88 percent of the votes. Trump, of course, borrowed all the money.
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Trump rewarded Davis with a lucrative new employment contract
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All Trump needed to close the deal was the Casino Control Commission's approval. The Casino Control Act limits an owner to three casinos. Since Trump already had the Plaza and the Castle, this posed a problem since Resorts already ran one casino and the commissioners also wanted the Taj finished. The logical choice was to close the casino in the existing Resorts while keeping open its restaurants and hotel rooms. Trump would then own three of the city's dozen casinos, but because the Taj casino was the size of the Plaza and Castle combined he would have as much floor space as four casinos. Would this much power in the hands of one owner diminish competition? Would it mean the kind of economic concentration the law prohibited? And was anyone willing to see a casino close?
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To make his case that buying Resorts would not result in undue economic concentration Trump relied on Marvin Roffman, the casino analyst at the Janney Montgomery Scott brokerage who reflected the views of Main Line investors by emphasizing capital conservation, not daring investments. Roffman testified that letting Trump buy Resorts would not cause undue economic concentration because there were so many other sites available for others to open casinos. Two days after Roffman testified the commission advised Trump he could finish his deal and could close Resorts when the Taj was completed. Almost immediately events began unfolding that made Roffman regret his testimony.
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Once in control Trump signed a "comprehensive services agreement" with Resorts that paid him a percentage of gross revenues in return for his management expertise. But Trump had no such expertise. The stock market saw immediately what the agreement meant that Trump would drain off money as an expense, insuring that he got his — even if nothing but red ink flowed to the bottom line.
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Trump asserted that he was only charging a fair price for his expertise. But the three independent directors of Resorts — whom the casino commissioners insisted upon to maintain a semblance of checks on Trump — were wary. They hired David Schulte, a savvy Chicago investment banker, to review its terms. Schulte quickly showed just what a
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steep price Trump wanted for his comprehensive services. Over the agreement's thirty-year term. Trump stood to collect about $1 billion, Schulte figured.
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The comprehensive services agreement required Casino Control Commission approval. Trump testified that the comprehensive services agreement was not his idea, but Jack Davis's. Some commission staffers argued internally that the agreement provided no benefit to the casino company and would weaken it, that it ran contrary to the commission's duties.
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That Trump knew next to nothing about how to actually run a casino, that Resorts already had or could buy on the open market far more qualified managers for much less money, and that the contract posed a direct conflict between Trump's pecuniary interests and his fiduciary duties to other shareholders was of no heed to Chairman Read, who stuck to his decidedly narrow view that it was not the commission's job to protect shareholders. So long as the agreement did not interfere with the integrity of casino gaming and did not threaten the financial stability of the casino. Read would go along.
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Emboldened by the laissez-faire approach that Read articulated on making money in what the law promised would be a "highly regulated" industry. Trump pressed on. Just five days after the commissioners rubber-stamped the services agreement Trump offered the rest of Resorts' owners fifteen dollars per share, or $85.6 million, to get out. It was the clearest possible evidence that Trump had not acted in the best interest of shareholders, whose stock was worth more than three times that just before Crosby died and more than five times as much the day after he died. Trump's fifteen-dollar price was for all shareholders, both the lowly A shares and the rest of the B shares, whose one hundred votes per share no longer carried any weight because Trump already had a majority of the voting power. Trump announced that unless he owned Resorts outright he would not risk his own money to finish the Taj, although anyone who had been following Trump's business style knew he would never risk his own money even if he won complete ownership of Resorts. (Trump later risked only the money of bank depositors and bond buyers on the Taj.)
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Trump had another tactic to get the other shareholders to sell out
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The fifteen-dollars-per-share price appalled Schulte, whose opinion Resorts' independent directors had sought to insulate themselves in the shareholder litigation. He called it "grossly inadequate." Schulte pronounced $22 per share fair, an opinion worth almost $40 million more to the other shareholders and worth a $1.8 million fee to his firm, Chilmark Partners. Presented with Schulte's appraisal on January 12, Trump did the expected. He said he wouldn't buy at any price.
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Scutti said he read in the newspapers that Trump would invest the $525 million needed to finish the Taj only if he could make Resorts his private property. How, Scutti asked himself, could it cost a half billion dollars to finish that building? Scutti was not in Trump's class financially, but he had built auto malls, strip shopping centers, and restaurants and had an idea of what construction cost.
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"Trump helped to make the stock price drop with threats of bankruptcy, with threats that no one could complete the Taj Mahal except him, and with threats that he was the only one who could finance the Taj Mahal," Scutti said. Shareholder suits making similar claims were already being heard in Delaware Chancery Court, where Resorts was officially organized. Trump denied the allegations.