Just What Were Donald Trump's Ties to the Mob? I've spent ye

[admin]

Part 3 of ___

Page 112

Dale Scutti said he left Atlantic City convinced that Donald Trump had stumbled onto a great real estate play. Scutti wanted in on it. On January 19, Scutti bought one hundred thousand Resorts Class A shares at $13.50. Soon he would invest more than $5 million until he owned nearly 6 percent of the one-share, one-vote Class A stock. But he needed someone to force up the stock price to make any real money.

Page 112

Meanwhile, Trump's withdrawn fifteen-dollar bid disturbed others and not all of them were shareholders dismayed at getting fifty dollars less per share than they could have had before Trump took charge. Casino Control commissioner Valerie Armstrong, who just months earlier had voted against renewing Trump's casino license because she believed he had lied, said Trump's conduct could be interpreted as intending to drive down the price of Resorts stock, which would be a violation of his fiduciary obligation to all shareholders.

Page 112

Trump's withdrawal of the fifteen dollars per share bid was a bit much even for the other four casino commissioners. When the commission announced that it would hold hearings in two weeks to reconsider the approval of the comprehensive services agreement. Trump realized that Armstrong might have allies willing to kill the lucrative services agreement.

Page 112

Trump got the unstated message, that an independent party had set a fair price for Resorts stock and Trump had better meet it or he could see his billion-dollar comprehensive services agreement voided. Two days later Trump said he would pay twenty-two dollars for the rest of the Resorts stock, which ended the commission's interest in any hearings.

Page 114

A minute later Connolly phoned Ernie's. His conversations with Peter Aiello would play a crucial role in the most celebrated business deal of 1988 — Merv Griffin's hostile takeover of Resorts International from Donald Trump. The battle of the moguls was a story dear to the hearts of the glitzmongers who pose as journalists at many of the nation's leading news organs. Before the deal was finished, exactly eight months later, network television would chronicle the fight, major newspapers would carry the exchanges of witty barbs on their front pages, and breathless magazine covers would herald how Merv had taught the deal artist a lesson. Virtually all of these accounts would be based on how the highly

Page 117

next day Donald Trump immediately faxed a copy to Nick Ribis, his casino lawyer.

Page 117

Trump had no interest in Merv's deal. Having paid $135 per share for his Resorts stock, it would be a disaster for him to sell. The market, however, pushed the price of Resorts shares from twenty-two dollars to near the thirty-five dollars Griffin was offering. To some it looked like a chance to recoup from some of the damage Trump had done. Connolly said he quickly got his clients out of their Resorts position and filled in his SEC pal.

Page 117

Over the following weeks Trump and Griffin fed the glitzmongers with cute one-liners, but no progress was made toward a deal. Griffin made a second offer, doomed from the start. Then the two moguls met at Trump Tower and afterward Griffin's aides designed an offer that showed he had come to appreciate a fundamental requirement of any deal with Trump: Donald's cash machine had to be fed.

Page 117

This third proposal bought Trump out of his management contract for $63 million cash, sold Trump the unfinished Taj at a fire-sale price of fifty cents on each dollar Resorts had invested in it, and paid Trump back every penny he spent to buy the controlling stock held by the Crosby estate, Crosby family and Jim Crosby's lady friends. The other Resorts stockholders saw their deal sweetened by a buck to thirty-six dollars per share.

Page n132

Jess Marcum dreamed up the "freeze-out" game to lure Kashiwagi back to Trump Plaza after he had won more than $6 million there. Marcum, a physicist who helped invent radar, was a lonely atheist in the temples of chance because he did not believe in Lady Luck. He had endeared himself to casino owners by inventing a lucrative new bet, one he admired Kashiwagi for being too smart to make.

Page n136

Donald Trump put his then wife Ivana in charge of his Trump Castle casino even though she had no management experience. He blew a fortune having Ivana compete for high rollers against his own Trump Plaza casino while ignoring Harrah's next door, which earned a million dollars a week in profits. To attract high-stakes play to the Castle, Trump offered rides on the world's sixth-largest yacht, the Trump Princess, but its $861,000 monthly cost just drained money.

Page n136

Steve Hyde was the Mormon accountant who briefly made Trump Plaza the highroller heaven his boss wanted. Ivana nearly forced Hyde out. After Hyde was killed in an October 1989 helicopter crash, the Trump casinos plunged into disarray and all three ended up in bankruptcy proceedings.

Page n137

Merv Griffin and his companion, Eva Gabor, triumphantly ride a hundred feet across the Atlantic City Boardwalk on November 16, 1988, the day he bought Resorts from Trump in Mike Milken's last big junk-bond deal. Griffin's takeover began as a stock manipulation, one of many run out of The Griffin Company president's office. Griffin said that he was unaware a reputed mob associate had a desk in*the president's office at The Griffin Company.

Page n138

Griffin's takeover of Resorts from Donald Trump was the looniest casino junk-bond deal of them all, involving more than one billion borrowed dollars. This chart shows the complicated flow of money needed to complete Griffin's side of the deal and preserve various tax breaks.

Page n140

Bob Signore argues his case that Trump Castle cheated him because its gaming guide was riddled with errors. New Jersey regulators knew about the mistakes, which cost Signore eight hundred dollars, but instead of ordering them fixed, let the Castle continue using them, then falsely told Signore the brochures had been corrected. Signore sued Trump Castle for fraud. The judge who threw the case out lectured him for having the temerity to question the integrity of casino regulation in New Jersey.

Page n144

Donald Trump talks at Merv Griffin in April 1990 during the grand opening of the Taj Mahal casino, which lacked a swimming pool and other amenities because Trump was on the edge of financial collapse and ignored memos warning about cost overruns.

Page n144

Trump outside the Taj, which cost a billion dollars but lacked any of the pizzazz that drew high rollers from around the world to Wynn's Mirage, which cost $630 million.

Page n146

Marvin B. Roffman accurately predicted that the Taj Mahal would be in bankruptcy soon after it opened. Robert Trump threw him off the property, and Donald Trump not only demanded he recant but tried to edit his forced letter of apology. Unable to tell a lie, Roffman refused and was fired by the Janney Montgomery Scott securities brokerage. Janney and Trump both later paid him big settlements.

Page n146

Fred Trump had his lawyer buy $3.5 million worth of chips so his son Donald could make the December 1990 mortgage bond interest payment on Trump Castle. The director of New Jersey's Division of Gaming Enforcement was tipped in advance about the loan but kept it to himself.

Page n147

Casino Control Commissioner Valerie Armstrong voted against renewing Trump's casino license once, saying he lacked integrity. Later she asked if the Division of Gaming Enforcement knew about Fred Trump's loan in advance and was told it did not. She complained about a double standard in regulation that benefited Trump, but cast the crucial vote in 1990 to renew his license.

Page n147

Steven P. Perskie sponsored the Casino Control Act as a New Jersey legislator in 1977. But after he became chairman of the Casino Control Commission in 1990, he refused to enforce its provisions against Donald Trump and voted to renew his license even though Trump did not meet the act's financial stability requirements.

Page 121

Hanlon had his own reasons for wanting a new job, even if leaving meant giving up Holiday stock worth $6 million. When Trump forced Holiday into restructuring Mike Rose arranged for the senior executives to receive 10 percent of Holiday's stock over eight years as an incentive to keep the team there and working hard. But the only executive showered with enough stock and other benefits to make leaving out of the question was Mike Rose. In one of the many accounts from which executives got special payments Rose one year received thirty-four times as much as Hanlon, who ran the property that generated 28 percent of Holiday's profits.

Page 123

The New Jersey Casino Control Commission, still smarting from the Hilton debacle three years earlier, was determined to license Merv Griffin. The commissioners did not want Trump to close the original casino in town and they wanted the Taj finished. They also wanted a new player in town to counter Trump's influence and the risk of what might happen to Atlantic City if Trump ever got into trouble. Griffin, with his Hollywood connections, held out the prospect of restoring to the Boardwalk some of the glamour that left when his buddy Steve Wynn returned to Las Vegas.

Page 123

For their part, Howard Goldberg and Tom Gallagher, Griffin's top lawyers, needed to focus attention on Griffin's promises and away from the financial realities of his deal with Donald Trump. They had to come up with a way to make the deal appear financially stable even though the added Drexel debt would push interest costs to $300,000 per day

Page 126

The actual terms of the Trump-Griffin deal were largely ignored in favor of obtuse testimony about side issues and inflated claims about cost savings. The dangerous Nigris and American Leisure matters were put off until the following year, when Griffin would have to undergo full personal license hearings. For the deal to close, both sides agreed, all he needed was a temporary license, which could be issued based on an incomplete investigation of Griffin's fitness since it appeared, or at least what was in the public record made it appear, that nothing was amiss.

Page 127

appear to be dumb, a guy who relied on experts for everything and who really did not understand his own deal with Trump. Hanlon's ability and integrity is what should be of greatest concern, the Griffin team said. Griffin contributed to this by claiming ignorance of some parts of the deal and by telling self-deprecating stories, like the one about the Vegas duck.

Page 128

Although the deal was far from done, Griffin flew to Atlantic City. The afternoon began with a clever remark by Griffin, a preemptive strike against Trump, whose style was to finish a deal and then denounce whoever sat on the other side of the table as a chump. Griffin, followed by his official companion, Eva Gabor, and by Brent Plott, who would later sue him for palimony, stood before a battery of television cameras in a Resorts ballroom that had been freshly painted and carpeted, unlike much of the rest of the deteriorating old hotel.

Page 128

Asked if he intended to put his name on Resorts hotels in Atlantic City and the Bahamas and on his recently acquired Beverly Hilton in California, Griffin replied with a reference to the huge red letters on another Boardwalk casino: "No, not unless I can get Merv to be as big as Trump — or get the T off Trump." Griffin's clever way of calling Trump an ass revealed the emnity between the two moguls that again and again threatened to blow up their deal over the following four months, a prospect the casino commissioners wanted to avoid.

Page 129

To raise the $85 million Resorts would have to sell land. Resorts was the largest private landowner in Atlantic City, controlling one third of the developable acreage. Griffin and his publicity machine set to work in June to create the impression that this could be done with ease. The Los Angeles Times Magazine even swooned about how in teaching Trump some new deal artistry, homeboy Griffin had won "150 acres of prime real estate in the heart of Atlantic City."

Page 130

Norton, a father of eight with a nervous twitch and eyes sunk deep in skin furrowed by years of worry, figured that buying just the Atlantic City casino would cost $200 million or so. Knowing the commission wanted to keep Resorts open, Norton figured the regulators would force Trump to accept such a proposal.

Page 132

Trump maintained that he could not understand why Griffin would do this deal. "Merv's the only guy I've ever done a deal with where 1 could not figure out why he would do it," he said. On the day the deal and the flow of money was laid out before the commission. Trump fretted. Leaving the hearing room he turned to an aide, Harvey Freeman, and said, "Now that they've explained it to him, he'll pull out."

Page 132

On November 16, eight months after Peter Aiello called from "Ernie's," the deal closed. Griffin owned Resorts and, for a day, the Taj, which then went to Trump for half what Crosby had squandered on it.

Page 132

Then Griffin took another dig at Trump when he was asked how it felt to owe nearly a billion dollars.

Page 133

Meanwhile, Trump was sailing toward his first date in Bankruptcy Court.

Page 134

Now the ship belonged to Donald Trump, another casino owner with an immense ego who had invented a game, this one named for himself, and who seemed to be on his way to dominating everything in Atlantic City and perhaps Manhattan as well, with all the daring buildings bearing his name and promises of many more to come.

Page 135

world's sixth largest private yacht. The journey from New York began with a scare for Trump, who feared they were sinking until someone explained that it was just the anchor being drawn into his ship. Trump was not a sailor and admitted that waves made his stomach queasy.

Page 135

When the waters calmed, the great white ship headed for the Atlantic City Inlet, cutting through a channel that separated two worlds, a channel dredged deeper just days before to accommodate her. Off starboard lay a clean white beach where waterfront land sold for ten thousand dollars per foot and perfectly sturdy little homes were routinely razed so opulent ones could be erected. Off port, though, the shore was blackened by the stinking muck that crews dredging the channel for Trump had dumped there illegally. Behind this fetid mess stood dilapidated houses that some occupants had acquired for as little as seven hundred dollars in the dark days before the casinos came to Atlantic City.

Page 135

The boat arrived hung with a huge green banner heralding its new name. Trump Princess, in gold letters, the words separated by a crown. Its sleek side opened, revealing a gold-and-green velvet throne bearing Donald Trump, wearing his usual dark suit and sheepishly holding an umbrella, and the elegantly dressed Ivana, a maid holding her parasol. As an elevator lowered the throne to the dock, crewmen rolled out a red carpet and pointed the couple to a waiting electric cart. Trump waved the cart off and the couple marched triumphantly several hundred feet on the squishy carpet, past the yachts of the merely rich, toward the patient throng, which surged toward them.

Page 136

swirling fans. The adored couple pressed on toward the building across the street. Trump waving, his wife smiling. As they rode the escalator up into Trump Castle Hotel & Casino a new crowd appeared and others flowed out of the gambling hall to join in the endless applause. "Be our next president, Donald," one man shouted before Trump and his entourage slipped into a ballroom, where two lines of women in scanty sailor suits greeted them.

Page 136

Inside Trump held a news conference during which he was asked three questions about the filth polluting the beach. The answers were classic Trump. He answered the first by denying any knowledge of dredge spoils dumped on the beach. He answered the second by saying that he had agreed to pay a fine. He answered the third by declaring the matter a nonstory.

Page 136

Then he stepped off the dais to shake hands. Before reaching Trump, though, the local officials and their spouses had to pass the muster of a stout man in a pink silk blazer. One or two at a time they approached Paddy McGahn and, after paying homage for having been invited, waited for him to decide when their turn would come to have their hand shaken and their picture taken with The Donald and his missus.

Page 136

The arrival of the ship and its owner in the tattered resort showed Donald Trump perfecting the art of being idolized. The crowds loved him for personifying the American Dream of success and the government officials basked in his glow. Trump's claim that the ship was his "personal yacht," suggesting it was an incredibly costly toy financed from his bottomless pockets, was uncritically repeated in print and television stories across the nation, adding to the Trump legend of unlimited wealth flowing from his deal-making artistry. For the rich kid from Queens who had taken Manhattan by audacious architecture, July 9, 1988, was a public relations triumph.

Page 137

glossed over its realities, that Trump was being treated as royalty, even urged to lead the world's oldest democracy, a suggestion he encouraged at every opportunity.

Page 137

To the discerning eye, though, much more went on that day behind the glitzy image the Trumps projected, for these same events also demonstrated how much Trump had come to believe his own myth of being a modern Midas, able to turn dross into gold merely by affixing his name to a casino, an airline or even bare ground. In less than a year his spendthrift ways and foolhardy management would tarnish the carefully polished Trump image and press him to the brink of uncontrolled bankruptcy, a horror he escaped only because of the extraordinary leniency of government, a bailout from six dozen banks and the hundreds of millions of dollars lost by hardworking people whose pension money was invested in the Trump name.

Page 137

Much of Trump's apparent wealth was illusory, the result of complex financial engineering that had come to resemble not the smooth-running money machine Trump endlessly hyped, but a Rube Goldberg contraption constantly in need of more cash to avoid collapse. It had been true almost from the start of his career. Now nothing showed this better than the Trump Princess, which added millions of dollars per year to the drain on his cash flow, plus $29 million in new debt since, as usual, he put no money down. He assumed these new obligations shortly before he was due to fulfill promises to pay down the balances on bank loans and on casino mortgage bonds — money he did not have.

Page 137

Ivana imposed odd restrictions that hampered its use as a device to draw high rollers. She wanted only white wine and champagne served on board in case anyone dropped their glass, which angered a few red wine drinkers among the gamblers given a ride. Trump Castle executive Christian Mari said. Ultimately that rule was rescinded. Mari and others

Page 138

also complained that it was difficult to get players on board. Ivana required that some guests remove their shoes and walk in stocking feet, though Casino Control commissioners and most gamblers were exempted from this rule. "Mrs. Trump does not want the carpets ruined," Captain Richard Cuckson explained, coughing lightly into his fist, as he stood beside two of the many maids who endlessly polished and cleaned every visible surface.

Page 138

The ship had been built in 1980 for arms merchant Adnan Khashoggi, a world-class gambler who had a habit of not paying his bills, as Steve Hyde had painfully learned at the Las Vegas Sands. Khashoggi claimed that the ship, which he named after his daughter Nabila, cost $90 million. Although Trump claimed to have spent $8 million refurbishing it, half of it on the interior, the fabrics and furniture were unchanged. Nor did Trump spend any money to remove the original logo, a black onyx triangle on a white background into which black stones are set in a design that looks like a wave and a whale, a play on the Arabic symbols for the name Nabila. While Nabila's name was a permanent fixture, Trump's presence was not. His name was visible mostly in the neat arrays of magazines on tables in every room, magazines that featured his smiling face and that inside treated whatever he said as gospel.

Page 139

Trump had bought the ship from its second owner, the Sultan of Brunei, who had foreclosed on Khashoggi when he failed to repay a loan. The Sultan was by far the richest person in the world, a man who owned his own country and who each year made far more money than even Trump claimed his empire was worth. Trump bought the ship the way the impulsive and profligate buy cars beyond their means: no money down and years of payments. Trump had two advantages, though, not available to most buyers.

Page 139

One was his influence in Trenton, where New Jersey tax officials decided that Trump did not have to pay the 6 percent sales tax of $1.74 million on the $29 million purchase price. Instead, Trump only had to pay 6 percent of the monthly lease payment of about $400,000. The state's reasoning ignored the fact that Trump owned the company that leased him the ship.

Page 139

Second, while the 1986 overhaul of the federal tax laws had taken away most deductions for boats. Trump did not pay for his "personal yacht" with his personal funds. While Trump bought the ship simply because he wanted it as a symbol of wealth, it was in fact a marketing tool for Trump Castle. Lose enough money and Trump would take you for a ride.

Page 139

The Crystal Tower, the $110 million suite expansion that was intended to draw high rollers to the Castle, was still under construction. Trump needed a draw for high rollers and a luxury ship seemed like an interim solution.

Page 140

The lease payments and all operating costs were charged to the Castle, which Trump owned in its entirety and which could deduct these costs on its tax return. The Castle would have turned a small profit in 1989 but for these costs. Instead, the Castle lost $6.7 million.

Page 140

The Princess was not the only drag on profits. The Castle's Monte Carlo high-roller slots area opened just before the 1989 gambling season began. Separated from the hoi polloi by low marble walls, brass railings and etched glass, the Monte Carlo denoted an area for favored players, the kind willing to pay one hundred dollars per pull at their choice of three machines. Dozens of other slots priced at $25, $5 and just a buck stood arrayed before plush seats. The hosts, called Monte Carlo ambassadors, wore tuxedos. So did the ever-present cleaning man, who swept cigarette butts into what Trump said was a gold dustpan. The casino even provided phone jacks for those who wanted to play and work at the same time. And when the slot tokens turned hands black from heavy play, the ambassadors provided moist, hot towels.

Page 140

Snyder was a certified high roller. He lost eight hundred thousand dollars at Trump Castle, according to the Division of Gaming Enforcement. To lose that much a player typically would have to pump about $13 million into the one-armed bandits, including recycled winnings.

Page 141

But the Monte Carlo arena, like the Trump Princess, failed to attract enough high rollers to pay for itself. In time, abandoning the Hilton marketing plan to chase high rollers proved disastrous.

Page 141

Trump Castle barely turned a profit in 1987 and lost $3.1 million in 1988, but its cash flow created a mighty river of greenbacks. This is because net profits take into account deductions that appear on tax returns bift that involve no cash outlay, notably depreciation on the hotel and its equipment.

Page 141

In 1987, the Castle's cash flow was $23.4 million, rising to $33.7 million in 1988. Trump tapped this flow of cash during the Castle's first four years to withdraw $38.5 million of capital, a neat maneuver, since he had borrowed his capital contribution from a bank.

Page 141

But in 1989 the failed high-roller strategy nearly dried up the flow of cash. The Princess, lavish comps for high rollers like Snyder, and the Crystal Tower overruns drained off so much money that cash flow slowed to a trickle — just $183,000 in 1989, which was less cash than flowed into the Castle every two days in 1988. Trump Castle was drifting toward Bankruptcy Court.

Page 141

Before it got there, in 1992, there would be a few stops along the way where laws would be deliberately broken and the promise that casinos would be "highly regulated" would be treated like the polluted spoils dumped on the beach. And Trump would flout more rules. He would even be accused of cheating Castle players — with the sanction of casino regulators.

Page 164

The testimony and many of the exhibits from the hearings were sent to the Division of Gaming Enforcement by JJ's lawyer, Nick Ribis, who was also Donald Trump's casino lawyer. Ribis, seeking an advantage in the dispute with the Sands, and no doubt hoping to weaken the Sands as a competitor to the Trump casinos, pointed to the flow of money in and out of the casino for Janna's benefit, to the huge sums of cash that had vanished, and to the testimony by Pattison that showed the Sands people had been told that the DEA had frozen Janna's bank account.

Page 166

The regulators, who saw nothing wrong with drug money subsidizing a casino company, faced other issues testing their diligence — issues that involved "little people," not high rollers with millions of dollars. The first test began with a roulette player who said Trump Castle deliberately cheated him out of eight hundred dollars.

Page 167

Bob Signore longed to be walking on the beach enjoying the warm, gentle breeze at the Jersey Shore one August evening in 1987. But the rest of the family wanted to get out of their summer place. Asko Sullivan, his favorite uncle, yearned for some action at Trump Castle. Reluctantly, the soft-spoken Signore tagged along. Signore, a slight man in his thirties with a mustache, had trained as an accountant, so while he did not gamble he understood numbers enough to know the family would probably lose all their stakes. At least, he figured, with all the state regulations anyone who gambled at Trump Castle would lose their money honestly. He figured wrong.

Page 167

Alone, Signore wandered through the half acre of Trump Castle slots, pulling the smooth handles here and there to try his luck. The slots just did not feel right to Signore, so eventually he ambled over to the roulette wheels to watch his uncle. Asko Sullivan played Trump Castle and the Claridge often enough to be a rated player, wise to the ways of being comped to dinner or a suite to soothe the pain of losing hundreds or even thousands of bucks on the gaming floor.

Page 168

The two-page spread on roulette featured a colored illustration of the betting table showing how thirteen different bets work. Signore studied the illustration and watched the dealer pay wins and take chips when players lost. At first he couldn't quite grasp the game. But soon his eyes opened wide. The dealers were not paying by the rules, at least not by the rules in the official Trump Castle gaming guide.

Page 169

through the opening. Bally's Park Place claimed it once had to spend a quarter million bucks on new carpeting because the regulators decided that there was not enough contrast in colors where the casino carpet was sewn to the hotel lobby carpet. Sullivan figured that all the mistakes in this booklet, the official book of rules, could mean serious and expensive trouble for Trump Castle.

Page 169

Go tell the casino manager about it, Sullivan advised his nephew, and after you explain to him what you found suggest that Trump Castle return the favor by buying us all dinner.

Page 169

As the manager in the sharp black suit walked off, Signore felt humiliated at the treatment and outraged that Trump Castle didn't give a damn that its gaming guide had the rules all wrong, that novices could be cheated.

Page 169

The following night Signore returned to Trump Castle. His uncle and a friend came along, but they entered the casino separately. Signore sat down at the roulette table and bought a stack of fifty-dollar chips. He also pulled out the official "Guide to Games at Trump's Castle Hotel & Casino" and a piece of paper. He made a show of looking at the guide for advice, explaining to the dealer and the other players this was his first time at a roulette table. On the p^per he wrote down each bet. On his nineteenth bet, when the ball fell on 17 black and the dealer reached for his chips. Signore spoke up.

Page 170

"No I didn't. I did bet red and even. And, yes, it did come up black and odd. I should win," Signore said. "Look," he implored, "just look at this official Trump Castle official gaming guide." The dealer's lips suddenly sealed tight.

Page 171

there are errors in it and you're the same person who handed me this booklet half an hour ago? This makes a lot of sense. But what he said was, "In that case. I'd like my money back. I'm out two hundred dollars, but according to this booklet I should have won six hundred dollars. Trump Castle owes me eight hundred dollars." The bureaucrat said she had no authority. She did call the casino shift manager on duty, James McDermott, and when he showed up twenty minutes later Signore showed him the guide.

Page 171

Finally commission inspector Louise O'Donnell wrote a brief notation of the incident and Signore left, almost vindicated. All he had to do now was get the state to return his money. After all, he reasoned, by removing all those official gaming guides Trump Castle had confirmed he was right.

Page 171

Signore thought that was ridiculous. The casinos were regulated industries. They do not kill people. This is not the mob, he said, this is Donald Trump. And besides, he said, waving a copy of the Casino Control Act, the law said that the overriding principle of casino regulation is honesty. People, the law says, can trust the "credibility and integrity of the regulatory process and casino operations."

Page 172

More than a year earlier, in 1986, a state Division of Gaming Enforcement agent had spotted the same mistakes and recommended that new guides be printed. The guides had been in use since Trump Castle opened in 1985. Before the first one was distributed proof sheets had been submitted to the regulators. But the toughest regulatory agency the world had ever seen had failed to notice that nearly half the roulette bets in the Trump Castle guide were wrong. And when the mistakes were first found the regulators did not order the brochures thrown out, but said the casino could keep distributing them.

Page 172

"But, still," Gushin said, recovering his argument, "there was no cheating because Trump Castle played the game according to the rules. If they had cheated anyone, we would have filed a complaint against them immediately."

Page 172

Signore hired a lawyer and wrote letters to the commission and to lawmakers seeking new gaming guides, an apology and restitution of his money or, at least, forfeiture of the eight hundred dollars by Trump Castle to the state or, better yet, his favorite charity. Sometimes he also asked for his legal fees.

Page 173

Hall of the New Jersey State Police wrote Daly a letter in January 1988 saying Signore's complaint lacked merit because when he played roulette he already knew the official gaming guide had errors. Hall also wrote that Trump Castle had placed corrective stickers on the gaming guides. Daly passed the major's letter on to Signore, who figured that ended his quest. It didn't.

Page 173

Three weeks later Signore decided to swing by Trump Castle and take a look at the corrective stickers. At the Casino Control Commission booth he found the gaming guides uncorrected and without stickers. Signore was livid.

Page 173

He started writing letters again. When they were ignored he filed a lawsuit charging Trump Castle and the Casino Control Commission with fraud. Nearly three years after he found the mistakes, Signore thought he was about to get his day in court. He showed up early at the modern red-brick courthouse in Atlantic City, as did a lawyer for the state and another for Trump Castle. The judge dispatched them to a windowless room with plain white walls where two local lawyers, Dara A. Quattrone and Michael R. Mosca, tried to settle the case.

Page 173

Trump's lawyer, Steven D. Scherzer, could not figure out why he was there. It struck him that Signore had a point, even if he had pushed it to ridiculous lengths, and that the amount of money at issue was not worth his time when the casino could have just written an eight-hundred-dollar check to a charity of Signore's choosing. But Scherzer knew Trump would never write a letter of apology, so he was there working on the clock to defeat Signore. Deputy Attorney General Franklin Widmann represented the regulators. Projecting an air of august contempt for Signore, he had a simple view of the case: not only was Signore not cheated, because he knew the brochure was flawed, but Widmann said the state was under no obligation to enforce any particular law. He also had an interesting defense of the faulty guides, arguing that the gaming guide's illustrations showed only "sample bets and did not say you would win, or lose, if you placed them."

Page 180

Vegas hamburger stands teenagers readily pop open their wallets to show off their frequent-gambler cards from Harrah's, Caesars, Trump Plaza, Resorts and other gambling halls.

Page 180

Debra was soon a rated player not just at Caesars, but also at the Atlantis, Harrah's, Resorts and Trump Plaza. They all plied her with

Page 182

During the time when Debra's case focused public attention on the problem hordes of other teenagers, including Joseph Bevan, continued wagering. He gambled at Harrah's, Resorts, Showboat and Trump Cas-

Page 183

The trial was held before Judge John G. Himmelberger, who had lectured Bob Signore for having the temerity to sue Trump Castle because it played roulette by a different set of rules than it handed out to novice gamblers. Cohen asked for a two-week delay, saying he had had trouble finding a lawyer without a conflict of interest because every one he approached did some work for the casinos. The day before the court appearance, one finally agreed to take the case, but he needed time to prepare. Himmelberger refused the request, forcing Cohen to act as his own counsel.

Page 184

Five months later, on December 12, 1990, Debra Kim Cohen got off work and started playing blackjack at Trump Plaza. She was twenty, still too young to gamble in a casino, although under New Jersey law she was old enough to be a cocktail waitress. You can't legally drink in New Jersey until you are twenty-one, but you can serve liquor at age eighteen. At eighteen you can also gamble with the state by playing the lottery.

Page 185

It would be easy to create powerful incentives for casinos to challenge youthful patrons. Every time an underage gambler is caught on the casino floor, gambling or not, Cohen favors a one-thousand-dollar fine, believing that sum is high enough to encourage diligence at the entrance. Repeat offenses should result in progressively larger fines with a casino that behaves as Trump Plaza did when it threw out O' Brick facing a fine of up to $1 million and a place that acts as Caesars did, laughing at a parent while continuing to give comps to a juvenile, losing its license.

Page 190

On July 4, 1988, the Atlantis declared its independence from coin giveaways. Players who wanted quarters could get sixty of them by riding a bus to Caesars, Trump Plaza, Showboat and the other casinos. Players who wanted to watch the reels spin twice as long could ride a bus to the Atlantis and get 120 tokens. Players could also get half tokens and half scrip, a deal the sharp players quickly recognized as the most lucrative in town because they could play the slots and get a free meal instead of choosing one or the other from the competition.

Page 192

His comments foreshadowed how three other debt-ridden and cashstarved casino owners — Donald Trump, Merv Griffin and Bally Manufacturing— would deal with financial instability. In essence Satz was proposing the equivalent of Chapter 11 protection from bills coming due by negotiation with creditors, a sort of privatizing of bankruptcy proceedings.

Page 197

In the audience watching all this was Nick Ribis, Donald Trump's gaming lawyer. Trump was not the only outsider interested in the Atlantis. Golden Nugget chairman Stephen Wynn flew into Atlantic City aboard his private jet — a DC-9 like Hefner's — to look over the Atlantis. The two casino moguls had very different ideas in mind. Trump wanted beds, Wynn wanted bets.

Page 197

The nearest casino to the Atlantis is Trump Plaza, three hundred paces up the Boardwalk. At the time Trump Plaza was the busiest casino in town and its hotel often had to turn away serious gamblers, many of whom had switched after Wynn sold the Atlantic City Golden Nugget in 1987 and returned to Las Vegas. Trump coveted the five hundred Atlantis rooms as an annex to Trump Plaza. He figured he could buy the property ^for much less once its casino closed because no one else could afford its $36 million annual operating cost, which came to more than three times what it could generate as a hotel alone, even assuming 100 percent occupancy. Besides, he wanted a place to stash Marla Maples and a permanent apartment at the Atlantis offered the best mix of access and privacy.

Page 199

When the license expired at midnight Hood had decided to stay open under conservator Nolan's aegis. Just before midnight she sold the Atlantis, for $63 million, to Donald Trump. Afterward, Nolan fought the deal, insisting he could get a better price. But the commission said he was not hired as a real estate broker and let the deal go through.

Page 199

When the sun rose over the sea in the morning Donald Trump seemed to be the only winner in the Atlantis debacle. In addition to his two existing casinos and his Taj Mahaf, where workers hurried to finish construction, he had bought up the abandoned Penthouse casino site between Trump Plaza and Caesars, taking a potential competitor out of

Page 200

the picture. Now he had taken over another casino, the Atlantis, removing it from the market while keeping its hotel rooms to serve Trump Plaza. Not many fully appreciated it, but from that day forward Atlantic City's destiny would be tied to Donald Trump's.

Page 201

In August 1989, just nine months after he closed his deal to buy Resorts from Donald Trump, Griffin had announced that Resorts would not continue paying interest on either the $325 million of Drexel bonds sold to finance his purchase or on the $605 million of Bear Stearns bonds

Page 202

The suspension of interest payments came after Griffin announced that in April, May and June of 1989 Resorts had lost $27.9 million, more than twice as much as it had the year before under Donald Trump. That meant that on the very days when the Casino Control Commission was moving to shut down the Atlantis because it was losing nearly a buck a second. Resorts was losing $3.54 with each tick of the clock.

Page 202

Trump boasted that he had shown Griffin a few renovated rooms and that Griffin had not asked to see rooms picked at random. Had Griffin shown such diligence he would have seen hundreds, priced at $150 a night, more suited to a Skid Row dump than a glamorous resort. Griffin also evidently failed to inspect all the costly and unseen systems that make a hotel work: the boilers and chillers, the wiring and ductways, the plumbing and elevators. Some of the elevators were so old, so jury-rigged that their jerks frightened many riders. Left unsaid was how the experts Griffin retained, the appraisers and attorneys and underwriters, could have failed to notice such things and to factor them into the numbers presented to the Casino Control Commission and to the prospectus for the Drexel junk. For that matter, how did such basic facts escape the casino regulators who supposedly investigated the deal thoroughly before the commission certified its financial stability? That

Page 203

From Griffin's perspective it was a brilliant proposal because it immediately set the two groups of bondholders at each other's wallets, fighting over whether the mortgages were valid or whether the deal with Trump involved a fraud in which money due the Bear Stearns bondholders had been wrongly diverted to Trump and other stockholders. Knowing this Griffin had set aside two meeting rooms, one for the Drexel crowd, composed entirely of sophisticated money managers, and the other for the Bear Stearns crowd, which included many retirees.

Page 205

From the day the game-show mogul first petitioned them for a license the commissioners had shown their willingness to go along to win Griffin both as a prospective source of glamour in Atlantic City and as a counter to Trump. They had swept aside the stock manipulation that had fathered the deal, rationalized Griffin's decision to retain Mike Nigris for nine months as head of his noncasino businesses, and dismissed Griffin's past association with casino-stock swindler Nate Jacobsen. They had also let Drexel peddle the junk for the deal even after it was clear it would be indicted for fraud.

Page 205

Two weeks after Griffin closed his deal with Trump on November 16, 1988, Hanlon had begun cutting costs furiously. The Treniers, who had performed in Resorts' lounge since it opened, had their contract abruptly canceled because their nine-thousand-dollar weekly fee was too high. So did other entertainers, all* replaced with the cheapest talent Hanlon could find. But for months Hanlon kept his polo team on Resorts' tab and he delayed selling its helicopters, which he often flew as

Page 206

Resorts did not fold, in large part because Griffin's statement that he would sew his pockets shut was only a negotiating ploy. The terms of the bankruptcy plan were mostly worked out in advance, prepackaged for Judge Rosemary Gambardella to review and sign with few hearings. "This is the harbinger of what restructurings will be like in the future," observed Tom Gallagher, the Gibson Dunn & Crutcher attorney who supervised the deal with Trump and for a time acted as Griffin's chief

Page 212

In a way the New Jersey Casino Control Commission and its favored licensee, Donald Trump, made this gaudiest of Las Vegas gambling palaces possible. Donald Trump's raid on Bally Manufacturing, which the commission could have stopped, resulted in Bally offering $440 million for the Atlantic City Golden Nugget. The nearly $200 million that Wynn took back to the Nevada desert provided the down payment so Milken could sell enough junk to build the Mirage. Without the Golden Nugget windfall even Wynn acknowledges the Mirage might have remained just an illusion shimmering dreamily in the future.

Page 212

Money alone, though, could not have created the Mirage, for even much larger sums could be squandered on a building lacking its magic touch, as Donald Trump would soon prove. Wynn is a master showman, a P. T. Barnum whose genius lies in his ability to see what the people want in entertainment even as he slowly loses his own vision to the degenerative eye disease retinitis pigmentosa.

Page 213

He has secrets to tell about boxing impresario Don King, with whom he has sparred for dominance over Buster Douglas, and about "that lightweight phony Donald Trump."

Page 220

As Resorts hurtled toward default so did the Taj — and Trump knew it. Walt Haybert, the gentle accountant he put in charge of the Taj's finances, sat down in his dark office in the collage of temporary buildings that served as Taj headquarters on Brigantine Island, six miles from the Boardwalk, and analyzed spending against the budget. Haybert warned Trump in a memo that at current spending levels the Taj would go $108 million over budget. Haybert hoped the memo would result in an end to the lavish spending spree, a thoughtful scaling back of the project, or else would prompt Trump to put in more money.

Page 220

Trump had no cash to put in, though. The $63 million Griffin paid him for the Taj management contract was gone. Although Trump had paid that same sum for the failed Atlantis, which he renamed the Trump Regency, none of the money went there. Trump borrowed every penny for the purchase price plus the modest sums he spent to replace the lumpy mattresses and worn carpets. He even charged the monthly mortgage payments on the loan, adding them to the balance owed Manufacturers Hanover until the debt soared to $81 million. Even if the Atlantis ran at full occupancy every day it would barely generate enough revenue to pay the mortgage interest. Why the bank, which foreclosed in 1992, made such a stupid loan was a mystery.

Page 221

Instead Trump used some of the Griffin money to plug other pressing financial holes and lost most of it in a feigned raid on American Airlines that his brother Robert said cost him some money, too. The deal fell apart when the market realized he was not a real raider and the stock of the airline's parent dropped like a jet out of power.

[admin]

Part 4 of ___

Page 221

It appeared that Trump had $75 million invested in the Taj, but that, too, was borrowed. First Fidelity Bank of New Jersey made the loan, which was guaranteed by Trump's management fee for the next decade. The fee gave Trump 1.75 percent of the Taj revenues.

Page 221

Haybert's memo did prompt Trump to seek more money. He persuaded NatWest, the British bank, to lend him $50 million for furniture, fixtures and equipment. That solved almost half the problem Haybert initially foresaw, but because the orders for chandeliers and carpets and art, and the innumerable costly change orders and mistakes, had continued, he projected that even with the First Fidelity money the casino would go more than $100 million over budget. Then tragedy struck.

Page 221

Steve Hyde, Taj president Mark G. Etess and Jonathan Benanav were flying in a chartered Italian helicopter back to Atlantic City from a Manhattan press conference promoting a boxing match when the main rotor and transmission broke loose and flew off on their own. The copter fell like a rock for a terrifying half mile, crashing into the pine trees that separate traffic on the Garden State Parkway. The three executives and the two pilots died instantly. It was a major catastrophe for Trump, who knew little about how his casinos actually operated and whose management style bred intrigue among his senior staff. Hyde had been a solitary, calm and competent force in this chaos, slowly building an organization of the best people he could persuade to work for Trump by promising them great pay, contracts and himself as a buffer.

Page 222

of the defendants but prosecuted them anyway. Usry plead guilty only to the least serious charge against him, one of the few successes in a prosecution that was largely a disaster for the state police and the attorney general's office, which publicly admitted to serious flaws in its own conduct. The political life of Atlantic City, such as it was, would go on after the arrests. But without Hyde's steady hand in the Trump casinos, the cash machines that financed the vaunted Trump lifestyle desperately needed a firm hand, one that Trump trusted and would largely leave be. With the Taj opening, one of every four casino jobs would be in a Trump casino, making his welfare the region's.

Page 222

Trump sent his brother Robert down to be his eyes and ears. Robert had an easygoing style and a taste for simple things like the Thursday meat-loaf special at a greasy spoon called Gilcrest's Cafe, but gaming was not in his blood the way it was in Hyde's. Haybert was named president of the Taj and he continued the stream of warnings that money could run out before the Taj opened.

Page 222

As the new year began the wild spending on the Taj began to draw the bank account dangerously low. Vendors, used to the Trump slowpay method, waited longer and longer for their money. Irwin Tobman, who sold the Taj its seventy multicolored fiberglass minarets, demanded payment with such urgency that he was invited down from New York. Tobman walked into a Taj construction office and was shown a check for the full amount due. "Just as soon as the money's transferred to the checking account we'll give it to you," Tobman reports being told.

Page 222

Trump's construction chief, Tom Pippett, Robert Trump, Haybert and even Donald pleaded with contractors to make the promised April 2 opening, saying the checks would be forthcoming. Making the opening was critical because the first two Taj bond interest payments, totaling $94.5 million, had come from the proceeds of the Taj bonds that Merrill Lynch had sold at a stiff 14 percent interest. Making the third payment, due May 15, depended on starting up the cash flow that Griffin had joked about the day he took over Resorts.

Page 223

Trump fortune. He purchased the Eastern Airlines Shuttle for $365 million in borrowed dollars and only later realized that he was stuck with a fleet of jets more than twenty years old that guzzled kerosene. He paid way too much for the Plaza Hotel in Manhattan. And like all developers he was leveraged, making him vulnerable the moment the economy stopped growing, as it did just as he went on his spending spree. He owed $1.3 billion to the junk bond buyers for his three casinos and an astounding $1.9 billion to six dozen banks, with Citibank's syndicate due more than $1 billion. And he knew that without some new deals he could not pay his bills as they came due.

Page 223

A key sign of Trump's troubles came on March 20, 1990, when Neil Barsky, the savvy Wall Street Journal reporter who was one of the few journalists not taken in by the Trump myth, wrote a routine story about the Taj opening set for thirteen days later. Included in it was the latest version of a quote by Marvin B. Roffman, the sagacious Philadelphia gaming analyst who had said again and again that the Taj was a bad investment and would have a hard time getting through its first winter. "When this property opens, he will have had so much free publicity, he will break every record in the book in April, June and July. But once the cold winds blow from October to February, it won't make it. The market just isn't there," Roffman told the Journal.

Page 223

Trump exploded in fury. When Roffman showed up that morning for a tour of the Taj, Robert Trump told him to get off the property and never come back. Back at Janney Montgomery Scott, Roffman was greeted by a letter from Trump that demanded he recant or the brokerage would face "a major lawsuit."

Page 223

Janney cochairman Edgar Scott, Jr., a Main Line scion whose mother, Hope, inspired The Philadelphia Story , came to Roffman's cramped office and spoke to Trump by telephone.

Page 223

"Janney Montgomery Scott has been in business since 1832 and to the best of my knowledge it has never publicly apologized to anyone," Roffman heard Scott say. "What is it you want, Mr. Trump?"

Page 224

The next morning he went to advise Janney's brokers to dump the Taj bonds, but research director James Meyer barred him. "I can't let you," Roffman said he was told, "because if word ever gets back to Donald Trump that you are badmouthing his bonds you'll get fired."

Page 224

After fretting for several hours, Roffman faxed Trump a new letter, but instead of including the changes Trump wanted, Roffman withdrew his retraction. Scott fired Roffman. Both Janney Montgomery and Trump would later pay Roffman hefty settlements that enabled him to buy a palatial suburban home and start his own money management firm. But ten weeks would pass before the reason would emerge for Trump's vociferous response to a quote that was not news and that later would be proven stunningly accurate.

Page 224

A week after the Roffman incident, and three days before the Taj opening, the Casino Control Commission breezed through licensing Trump in less than an hour of jovial exchange between Trump lawyers and the commissioners. No one asked a question about the unpaid bills from contractors or all the unfinished work, about how a hotel could meet the first-class standard in the Casino Control Act without a swimming pool, a gymnasium or a theater. The commission did ask the enforcement division to look into a complaint from the Atlantic County Board of Chosen Freeholders and the Brigantine City Council that Trump had violated a state permit in paving over an old dump to create a Taj parking lot. Everyone knew nothing would come of it.

Page 225

Then the lights died. Amid hoots and shouts the employees twirled phosphorescent light-sticks above their heads that created swirls of red, green ancl blue in the dark. Suddenly a Max Headroom-style genie appeared on the giant television screen, his face and eyes moving abruptly in a visual stutter. Fabu, short for fabulous, implored "members of the fabulous Trump team" working at "The Eighth Wonder of the World" to remember from their training that the "one key ingredient to success is ESP — Excellent Service and Performance."

Page 225

When Fabu urged everyone to stand and clap their hands while performers in costume danced on stage, Taj casino manager Bobby Yee and General Counsel Harry Levin ran onto the stage to join in. In the front row Blaine Trump moved gently to the music while her husband, Robert, danced in place by swiveling on his knees. Next to him Taj highroller handler Bucky Howard thrashed about wildly. Harvey Freeman, the detail man who made Trump's deals work, stood still, politely appearing to clap. Next to him was The Donald, stiff as a corpse, his lip curled, clapping his hands out of time with the simple rhythm. When an aide approached, Trump seemed relieved to be led away from the madness. Soon green laser beams projected a Bengal tiger running across a white curtain at the back of the darkened stage. As the loudspeakers blasted out "Eye of the Tiger," the image focused down to the tiger's head, then to its giant eye. The curtain rose to show Trump, emerging as if from a genie's puff of smoke, an array of pencil-thin green laser beams fanning out from behind him as four thousand Taj employees screamed "Donald! Donald! Donald!"

Page 225

"Thank you very much, folks," Trump said, his stilted voice contrasting with the party atmosphere he had paid to create. "You really are

Page 226

Having dampened the enthusiasm. Trump left the stage. But his words were filled with truth. Trump was barely able to meet that payroll and the shortage of funds was obvious inside the building. The long second-floor hallways leading to the New Delhi Deli and the ballrooms were supposed to have marble columns. Instead they had been hastily covered with pink wallpaper. Many rooms were a mess, with hanging rods laying on closet floors, curtains that would not close and keys that did not match the doors weeks after the grand opening.

Page 226

Trump had promised real elegance. No faux marble, no Trump I'oeil views, none of that plastic posing as ivory that Steve Wynn used at his Mirage. But except for the chandeliers the place was mostly fakery and dross. At the main entrance to the Taj stood six white elephants that Trump said had been carved from stone; they were fiberglass, and even before the place opened a tusk on one had cracked, but no one repaired

Page 227

Round-the-clock efforts by the contractors allowed the Taj to open April 2 for a test run, but it was a disaster. The Taj covered more than two and a half acres, the size of Trump Plaza and Trump Castle combined, with three thousand slot machines. But instead of many change booths and an army of people making change, it relied on untested machines, most of which quickly jammed. Worse, they frequently shorted fhe customers. The casino cage was too small even for a casino half its size, as one of Castle president Ed Tracy's aides had warned in another ignored memo. To control the flow of money between the cage, which is the casino's bank, and the gaming floor, money must be handled in precise amounts. Thus if $1,001 in quarters is needed on the casino floor, exactly 4,004 coins must be obtained, signed for and delivered, where they are signed for again. The system quickly broke down on the first day, and no one knew how much money was out or who had signed for it. On the second day the casino did not open until late afternoon and then only because the regulators agreed to set aside the mass of money from the first day and count it later. Four days later a sack that propped open a door inside the cage was examined. Inside was four hundred thousand dollars. One Taj executive watched a man walk from the cage, his coat bulging as if he had just put on ten pounds. But the executive decided not to add to the chaos by questioning him. "There's no way of knowing how much cash walked out of the place," said Dino Marino, the Casino Control Commission official overseeing the opening.

Page 227

On the second day Trump had stood around the casino floor preening, telling Marino, "Isn't this going great?"

Page 227

"That's because they don't want tt) lose their jobs, Donald. They're telling you what you want to hear," Marino said, hoping to make Trump an ally in solving problems and not simply to ignite his fiery

Page 228

The grand opening, the night of April 5, was supposed to be a gala, high-tech affair, but it was as much a disaster as the night it rained on the opening of Bugsy Siegel's Flamingo. Trump promised a load of celebs, but produced only the building's one-day owner, Merv Griffin, and model Elle MacPherson. He didn't have the loot to pay for more. Siegel had wanted his Hollywood pals like Cary Grant, Spencer Tracy and Joan Crawford, but got only George Raft and Georgie Jessel.

Page 228

Trump promised high-tech wonders, but Fabu called Steve Perskie, the governor's chief of staff, "Steve Persico" and the green laser beams that were supposed to cut the giant ribbon wrapping the hotel tower didn't do so. Siegel had built a giant fountain with colored lights that was supposed to be visible a mile away, but then left it off because a cat had six kittens in the sump pump and he feared bad luck. Trump couldn't count the money straight, keeping the regulators on him, and eventually he had to take the Taj to Bankruptcy Court, giving up half his ownership. Siegel couldn't count the money straight, but the only regulators he dealt with enforced their rules with a gun.

Page 228

While Trump advertised the Taj on television as his "billion-dollar dream come true," an ad which explained his dreams but not why anyone would want to gamble there, he took a very different position with the taxman. Trump insisted that the Taj was not worth a penny more than $400 million and its property taxes should be based on an assessment even lower than that.

Page 228

During the second week, when the Taj still had not qualified for a full license. Trump promoted Ed Tracy from head of the Castle to Hyde's old job. Teams from the Plaza and the Castle, meanwhile, came to help straighten out the money. Marino regarded the Castle team as heroes, especially Barbara Primavera. Other problems grew, however.

Page 229

day of the grand opening. Then we were told we could get our checks late on April 6, which was a Friday so we knew that meant Trump wanted to keep the money over the weekend to earn the interest, which was fine. Then we were told we'd be paid on April 13 and then April 20.

Page 229

"Next Perini Construction [Trump's general contractor! says they have not received the money from Trump and they don't know when we will get even a partial payment. I feel, and so do some of the others, that Trump has gone through all the money he raised from selling bonds and that we will be paid through cash flows from the casinos and not from monies he has already borrowed," Tobman said.

Page 229

Meanwhile, the Wall Street Journal's Barsky arrived late for his monthly poker game. A banker greeted him with this line: "Donald Trump's headed for a brick wall at a hundred miles per hour with no brakes." Barsky started to shrug off the story, since by then everybody knew Trump was in trouble. The Philadelphia Inquirer , followed a day later by Forbes, had recently obtained Trump's confidential net worth statement, which showed he was no billionaire, and Barsky's own stories had poked holes in Trump's Midas touch claims. But from the snickers in the room, Barsky discerned that his poker pals knew something was up and the next day he started working his banking sources. The result was a June 4 front-page lead story revealing that Trump and his bankers were negotiating from dawn to dusk in what amounted to a private bankruptcy proceeding. Trump the Invincible was suddenly at the mercy of his bankers, unable to make the June 15 interest and principal payments on the Castle or to pay many other bills as they came due. He had boasted in April that he would soon be the king of cash, but just then he looked a lot more like the duke of debt.

Page 229

The bankers eventually agreed to loan Trump $65 million, of which the last $17 million was never advanced. It was such a complex deal that John Robbins, the Kenneth Leventhal & Company accountant brought in to value Trump's assets, quipped that "every lawyer in New York has come by for coffee, cookies and two billable hours." The legal fees at that point were $10.75 million and rising.

Page 230

The banks agreed to slash interest payments and reschedule loan dates in a package that saved Trump at least $64 million a year for five years. They also put him on an allowance, though a very fine one worth $5.4 million in the first year. Within two years, though, the temporary patch job on his finances would be over, he would give up much of his real estate, his Trump Princess yacht, his Boeing 727 and his Super Puma helicopter.

Page 230

The bankers' analysis of Trump's worth can be summed up easily: You are probably worth more than Donald Trump. By Trump's own analysis he was worth $1.4 billion. Leventhal figured he was worth one third to one half that much, while the bankers figured Trump was $295 million under water. The bankers' estimates included some generous calculations. Trump, Leventhal and the bankers all valued his yacht at $70 million, even though it eventually was taken back by Boston Bank & Trust for the $42 million Trump owed on it. They valued his Super Puma helicopter at the $10 million it would cost to replicate it, not the $2 million it was worth on the market. And the banks valued many assets at what Trump had borrowed against them, even if they were worth far less.

Page 230

The banks did one more thing. They required Trump to hire a chief financial officer, someone acceptable to them. Trump's choice was Stephen F. Bollenbach, who was the CFO at Promus Companies and who on his first day on the job there, when it was still the Holiday Corporation, had helped put together a plan to ward off a raid by Donald Trump. Bollenbach proved to be a skilled negotiator. He also charged a stiff price. For ten dollars Trump sold Bollenbach a Trump Parc condo overlooking Central Park that was listed in the sales brochure at almost $5 million. Bollenbach also got a seven-figure salary with the banks guaranteeing his pay for two years.

Page 231

Division of Gaming Enforcement. Auriemma asked another Trump lawyer, Thomas Cerabino, what would happen if the commission did not act that day. 'The banks will move apart and take whatever steps they think are appropriate to protect their interests," Cerabino said. That threat of imminent and uncontrolled bankruptcy persuaded the commission to set a vote after the weekend. The commission then approved the bailout.

Page 231

During this hearing, and during those that followed through the fall of 1990 and throughout 1991, the Casino Control Commission never looked at its own role in allowing Trump to get into trouble and in creating the illusion of his casinos' financial stability, a fiction maintained only by avoiding asking certain questions.

Page 231

Anthony J. Parrillo, the enforcement division director, did tell his staff to go look at Trump's tax returns, which he conceded had not been reviewed since Trump was first licensed in 1981. Parrillo said that, like many others, he just believed Trump had bundles of money. Certainly a lot of money passed through his hands. During the thirty months before the bank bailout. Trump had a cash income of $375.2 million, or more than $1.6 million per week, nearly $10,000 an hour around the clock. Where had it all gone? Some had gone into propping up bad deals, covering stock market losses, and maintaining the Trump lifestyle, with its trophy mistress and a private army of security guards, some of whom carried MAC-10 automatic pistols under their suit coats. And a lot of it had gone to pay interest.

Page 231

Not once did the Casino Control Commission exercise its broad powers of "strict regulation" to ask about the $90.5 million in capital withdrawals that Trump took from Trump Plaza and Trump Castle, money which would have allowed those casinos to make their mortgage payments without difficulty. Nor did the commissioners question the highroller strategy at the Castle, which had led to huge cost overruns on the Crystal Tower and the purchase of the Trump Princess, both of which drained cash and reflected on business ability.

Page 231

What the commissioners did do was approve the promotion of Tony Calandra from a casino salesman in charge of bringing in outer-borough high rollers to president of the Castl&, a promotion Trump made one night on the spur of the moment in the baccarat pit when Calandra asked for the job and four Trump yes-men said he would be great at it.

Page 232

Donald Trump was treated differently. His personal cash flow statement showed that, including the $10 million cash he paid Ivana in their divorce, he had $54.7 million in bills coming due in 1991 and an anticipated income of $1.6 million. Owing nearly thirty-five times one's income would not on its face seem to suggest financial stability, but Perskie brushed this matter aside even though Trump's solution to his problems was simply to stop paying his bills as they came due, but without seeking refuge in Bankruptcy Court as the Atlantis and Resorts had done because his bailout agreement would not allow that without dire consequences.

Page 232

In April 1991, when the time came to renew Trump's qualifications and those of his three casinos, Perskie approved Trump personally, the Trump Organization and Trump Plaza. Auriemma, with help from Robert Latimer, who had ferreted out numbers for the Atlantis closing, filed a sixty-seven-page report which declared that "the Trump Organization will be insolvent in the near future, if it is not already, and if judged on that basis would not be financially stable" and "more worrisome is the financial health" of Trump personally.

Page 232

But having laid the facts out in the record Auriemma opened a new escape from the financial stability requirement by suggesting that if Trump has a deal in the works that would make him stable once completed, that should be considered, too. Perskie immediately seized on Auriemma's initiative to help Trump. "It is obvious," Perskie said, "that neither Trump, the Trump Organization nor the Taj can satisfy the man-

Page 233

Commissioner W. David Waters said he could find no reason to deviate from the Casino Control Act's requirements. Waters believed that if Trump was unfit it was of his own making and that government should not intervene to protect him. Some predicted chaos if Trump lost his licenses, but Waters figured that the bondholders would step forward, propose that they take over as the real owners and hire competent managers. Besides, he figured, in the long run giving the commission's backing to owners when they could not pay bondholders would make it harder to raise money in the marketplace.

Page 233

Since Trump needed four votes to keep his license that left his fate up to Valerie Armstrong, who longed for an appointment as a Superior Court judge. Armstrong said she wanted to avoid casting a no vote and she literally called out from the dais for help in finding some way to justify renewing Trump's qualification. Once again it was Auriemma of the Division of Gaming Enforcement, not Trump's own lawyers, who took up Trump's cause. Auriemma said the commission had broad powers and was obligated to look at many interests in making decisions. He said Trump could achieve financial stability by filing for Bankruptcy Court protection, but added "we should not necessarily, as regulators, be forcing" Trump to do that when "perhaps, the same result as a bankruptcy proceeding" can be reached through negotiation.

Page 233

Martin Greenberg, the former Golden Nugget executive who represented Taj bondholders, supported Auriemma and said that financial stability, when he voted on the bill in the state senate, was intended to insure that casino owners were not tempted to break the law if they were in a squeeze for money. In what turned out to be a prescient observation, Greenberg said: "If financial stability were viewed as a component of integrity," then the fact that Trump may be a million dollars or so short, even after the bankers stop requiring payments, is

Page 234

not significant. "You have all the authority you need to monitor the financial condition and Donald Trump on a periodic basis so that you can assure yourself of that stability to avoid the temptation that would give rise to the loss of integrity."

Page 234

Before that issue arose, however. Trump would lose both of his biggest customers — for very different reasons.

Page 238

had just taken charge of all three Trump casinos when Kashiwagi returned to Trump Plaza. In February, Kashiwagi had beaten Trump Plaza for $6 million, a pittance compared to the $19 million that Kashiwagi won that month at the Diamond Beach Casino in Darwin, Australia, breaking its bank.

Page 238

In May, Kashiwagi had been playing at Trump Plaza for five days and was insisting he should get more credit, that he had been promised more credit. Tracy met Kashiwagi in the Plaza Club, a lounge reserved for high rollers, and they sat near a large bronze Buddha that Trump Plaza had won away from another high roller. Bob Libutti. Tracy explained that he was a simple man, not familiar with Japanese social graces, but confident that he and Kashiwagi could talk amicably as businessmen.

Page 238

Then Tracy dropped his bombshell: the $6 million credit line extended by Trump Plaza, matched by the $6 million check Kashiwagi left at the cage, would not be increased. After this game to the death ended, however, Mr. Trump would be honored to have his very best customer come up the Boardwalk to the new Taj Mahal, and if that was of interest, there could be discussions about how much cash and how much credit would make for a worthwhile game there. At the Taj, though, Tracy hinted, the maximum bet might be just one hundred thousand dollars, half what Trump Plaza allowed, depending on what kind of checks or other instruments the gambler had with him.

Page 239

Trump had paid Marcum five thousand dollars plus expenses to tell him if Kashiwagi somehow had rigged the February game. Marcum and Glasgow watched videotapes made by cameras hidden in the smoky gray domes dotting the casino ceiling. Marcum quickly determined that Kashiwagi was no cheat. What fascinated Marcum were the subtle changes Tn Kashi wagi's face when he lost and how he kept coming at the house. "Turn off the machine. I know how to beat him," Marcum said. "This guy loves a challenge. He's a natural for the freeze-out proposition."

Page 240

Glasgow sauntered to a telephone on the casino wall and called Trump with the news about Kashiwagi's bad luck. "Isn't he great," Trump exulted. "He is really the greatest."

Page 240

Glasgow grabbed the phone and called the Trump Plaza cage. "Anyone been cashing in five-thousand-dollar cheques?" he asked, using the casino term for such high denomination chips that they bore serial numbers.

Page 240

Daryl Yong had, yes, the clerk replied. Yong had cashed in $474,000 worth of them during the week. Yong was Kashiwagi's translator and aide. At the table he wagered some of Kashiwagi's chips. Glasgow was astounded because the cash-ins meant that Kashiwagi had converted nearly 10 percent of the credit chips into cash, money Trump Plaza would have a hard time getting back if Kashiwagi played until he went bust.

Page 240

When Kashiwagi awoke that morning he proposed that Trump extend him another $4 million credit. He needed more bullets to fire at his adversary. No, said Tracy, who knew from Marcum's pages of handmade calculations that the odds were 87 to 1 against Kashiwagi coming back from his current state to double his original bankroll. Tracy said no because while the world still thought Donald Trump was the modern

Page 241

Kashiwagi was furious. Trump lacked honor, Yong told casino reporter Dan Heneghan. Kashiwagi had come all the way from Japan after Trump presented him with a signed copy of The Art of the Deal and now Trump was not honoring his word that he would be delighted to extend Kashiwagi credit. But the aide said Kashiwagi would get his revenge. Trump's published life story would have a new use, Yong said. "We plan to burn it soon."

Page 241

Kashiwagi called Caesars, which provided him a limousine to depart. While Trump would later propose that Kashiwagi return, that he come to the Taj on Pearl Harbor Day, that was just hot air. Kashiwagi had no intention of paying his marker. The word was spreading among casino executives that Kashiwagi was in hock deeply to the yakuza.

Page 242

Kashiwagi died owing Trump $6 million. With the money he won in February and the chips Yong cashed in, plus the expenses of bringing the player and his entourage from Japan twice, the experience was a loser for Trump, who was out about $1 million in cash. The Hilton held a $5 million marker from the Christmas 1990 visit. Casinos in Macao and elsewhere also held final markers.

Page 243

Among all the 33 million people who played in Atlantic City each year he held one major distinction. Bob Libutti was the biggest loser of them all. He had made a name for himself as a big loser at Steve Wynn's old Golden Nugget, and when Steve Hyde left there to run Trump Plaza he persuaded his best player to come along. Casino records showed that Libutti had lost $12 million in less than three years. No one knew how

Page 244

These subtle touches, and every other action Caesars took that day, came on the recommendation of Lynden Stockton, a man who regarded himself as Libutti's friend, his very good friend. Stockton was a "senior marketing executive" with Caesars and he knew to the minute when Libutti would walk out of Trump Plaza and stroll the thirty or so paces along the Boardwalk to Caesars, where Stockton would be waiting, along with a security guard so that everyone would know this was a special player. For two years Libutti had gambled every other day at Trump Plaza, where he wagered as much as twenty thousand dollars on a roll of the dice and his average bet was nearly twelve thousand dollars. Stockton knew these closely guarded Trump Plaza secrets because, until the day before, Stockton had worked at Trump Plaza as a casino host.

Page 246

The knowledge that Libutti was above the rules was no secret. Everyone who worked in the Trump casino knew it and so did plenty of others. At Duke Mack's, Graybel's and other watering holes where the dealers eased the strain of their jobs over whiskey and beer, the best way to top the tales of player foolishness and outrages was to recount the latest story about Bob the Monster.

Page 246

With Stockton's help Caesars had everything in perfect order to satisfy Libutti's whims and to show him how people who really knew how to run a casino, as opposed to what Caesars regarded as the amateur act at Trump Plaza, could treat a man of Mr. Libutti's stature. Yet this visit was about to turn into the worst day of Bob Libutti's gambling life, one that eventually would end the perks like the ten thousand dollars in cash that Trump Plaza funneled to him each month and the round-theclock limo and driver. Before it was all over government agents wearing flak jackets would raid Libutti's home, poking through his wife's underwear drawer. Trump Plaza and Caesars would not escape this mael-

Page 250

"As soon as I started gambling I forgot about my son, completely forgot about it," he said. It was the first relief he had felt. It cost him the $10,000, but the next day Libutti was back with $50,000 of his own money. When Hyde left for Trump Plaza, Libutti followed, which fit perfectly with Trump's desire to have only the biggest, only the best, in his joint.

Page 250

When the maze of tall columns in Trump Plaza, which were needed to support its thirty-eight stories, were stripped of their mirrors and fabric and covered with marble, along with the walls and the floor, some took to calling the lobby Libutti Forest because it was his losings that paid for it all.

Page 251

Sometimes, though, other players came and bought chips on credit and then passed them to Libutti at the table, players like a horse trainer who had a two-hundred-thousand-dollar credit line at Trump Plaza. While Trump Plaza kept such detailed records of Libutti's play that it could determine that his average 1987 bet was precisely $13,929.52, no one knew how many hundreds of thousands, or even millions, Libutti gambled and lost with chips obtained on other players' credit.

Page 251

To keep gambling Libutti said he had certain needs. They were all satisfied, including his need for a predictable ten thousand dollars each month so he could cover his nut, pay his electric bill and the like. Each montlThe would get show tickets from Trump Plaza and trade them to a broker for ten thousand dollars cash.

Page 251

The creative minds at Trump Plaza also gave Libutti cars. Ferraris. Rolls-Royces. Whatever he wanted. The rules required that the casinos buy the cars, but Libutti could instantly sell the cars back to the dealership, which would deduct a commission and then give him cash. Trump Plaza did not bother to arrange title to the cars — the casino and the car dealer simply exchanged checks, giving Libutti the cash, $1.6 million, with which to gamble. And when Libutti lost the money his temper would explode and Hyde would have to calm him down.

Page 251

To keep this lucrative business Hyde extended Libutti every privilege he could imagine. Libutti flew with Donald Trump in his black Super Puma helicopter and he sat between Donald and Ivana at Wrestlemania IV until one of the wrestlers threw a snake toward them. Libutti jumped up as if to block the creature while Ivana left in a huff. He even arranged a horse for Trump, to be called DJTrump, but then Trump ordered the horse run on a day when a sickness was sweeping

Page 252

the track where it was kept, ruining the animal. Trump refused to pay, so Hyde stepped in to pick up part of the loss.

Page 252

When Edie turned thirty-five. Trump Plaza threw a lavish party and made a professional videotape of it. Donald Trump gave Edie a creamcolored Mercedes-Benz convertible.

Page 252

"They had me so entranced that they got me to the point where I started taking artifacts, antiques from the house, down there to gamble," said Libutti. "The jade Buddha that's in the chairman's suite at Trump Plaza cost me one hundred eighty-five thousand dollars. There's another Buddha, the bronze one that cost me forty-five thousand dollars," Libutti recalled, Joan watching his every word, her eyes afire. Trump Plaza arranged for a liquor vendor to buy the Buddhas and then sell them to the casino, Libutti said. "I got fifty some thousand for them. I went to the table, made two bets and lost it."

Page 253

Joan said a limo soon showed up at her door with two women from Trump Plaza, who said they had come to take her on a shopping spree in Manhattan. Anything her heart desired at Tiffany's or wherever, Donald would be glad to pay.

Page 254

forcement lawyer who had pursued the case against the cocktail waitress who found a chip on the floor and who had brushed aside Bob Signore's complaints that Trump Castle played by a different set of rules than it gave players. Gushin cared passionately about civil rights issues and the moment he saw Respes' complaint he knew he had a case. While the enforcement division sometimes delayed for years and years deciding whether to issue a permanent license, Gushin filed this complaint in just six weeks. Respes was not the only employee the complaint named as having had his civil rights trashed in a manner "repugnant" to state policy. On orders from casino manager Nick Niglio and shift manager Rachel Bogatin, the enforcement division showed, Respes and two women dealers had been replaced with white men.

Page 254

The recommendation to remove blacks, women and, had any been around, Asians came from Lynden Stockton, the casino host hired away from Trump Plaza by Caesars marketing operation. An internal Caesars memo said Stockton told Caesars that Libutti "did not want Blacks or Orientals dealing on his game; he had no problem with females, but preferred males."

Page 256

The pair told Walker that they knew Libutti and his brother-in-law, singer Jimmy Roselli. Later Cortellino and his pal Louis Lubrano told Walker that Libutti "was in Donald Trump's pockets," explaining that Libutti had obtained a lucrative contract for Roselli at Trump Plaza for "big money." They also said Libutti was known to have run a number of scams with horses.

Page 256

Libutti, meanwhile, went to see Ed Tracy, who was then head of all three Trump casinos, about getting $375,000 he felt Trump owed him. In the course of the discussion Libutti gratuitously dropped John Gotti's name. Tracy, a man of scrupulous honesty, smelled a shakedown and called the state police, who wired his office. At the time Trump was deep in negotiating his bailout with the banks.

Page 257

During the conversation Libutti explained how John Gotti offered to deal with Frank Sinatra because of how the Chairman of the Board had treated Roselli, who grew up on the same block in Hoboken as Sinatra. The two singers had been feuding for two decades and the latest development was when both were to sing in Atlantic City, Old Blue Eyes at the Sands and Roselli at Trump Plaza, where both were sought after because' of the crowds of free-spending wise guys they drew to the tables. Sinatra hired away several of Roselli's musicians.

Page 257

Later in the conversation Libutti brought up Gotti again, saying "Gotti wants me to find out if he can come" gamble in the Trump casinos. "He said he never got a letter [banning him from the casinos], that means he's not barred."

Page 257

Later Trump would tell the Philadelphia Inquirer that he had heard the name Libutti, but could not even remember what the guy looked like because they met, maybe, once. Libutti went ballistic at this distancing by Trump. "He's a liar," Libutti said, taking off into another angry tirade filled with four and seven and thirteen-letter denunciations of Trump and his integrity.

Page 257

Libutti also said he was aware of all sorts of serious rules violations at Trump Plaza that would be of interest to the casino regulators. He said he and Trump had a deal for an "elaborate marketing scheme" designed to inflate the table drop) — the amount of chips reported sold — because Trump wanted to report a higher figure than Caesars. He told one story of Donald Trump coming to him on the casino floor and personally handing him a check.

Page 258

Sweeney was advised of Libutti's claim that Trump personally handed him a check.

Page 258

"Well, that'll be thoroughly investigated," Sweeney said. It marked the first time that Donald Trump had ever personally been the subject of an enforcement division investigation. It did not last long. Several of the witnesses Libutti identified said they were never contacted, never questioned. But Sweeney's office did call in one witness and ask him under oath about the accusations. Donald Trump denied them. He said the check in question had been turned over, but in a perfectly legitimate way. Sweeney took his word for it.

Page 258

Libutti, whom the commission banned from the casinos because of his Gotti remarks, soon had new problems. At noon one day Edie kissed her mother good-bye in the kitchen and climbed into the Mercedes-Benz convertible Trump had given her. Moments later Joan Libutti noticed people in dark clothing with guns rushing her house. They were IRS agents and local police, wearing riot suits and flack jackets, come to serve a search warrant, wanting to know where her husband got all the money for gambling.

Page 259

The regulators, the high-up ones who did not want to see either Libutti's conduct or the casinos' until Joel Respes stepped forward, ultimately fined Trump Plaza for discriminating against its own workers and for deceiving the commission with fake-gift cars that were meant to help Libutti get cash.

Page 259

Trump Plaza was fined $200,000 for discriminating against its female and minority employees. For the sham car deals the fine was $450,000.

Page 266

In addition to the $540 million from the Chengs, Snell wanted to sell $400 million of new junk bonds. The debt would help entrench management by making Aztar unattractive in a takeover, as would a plan that eventually would put about 10 percent of Aztar stock in management hands. In many ways this resembled what the rival Holiday Corporation had done earlier when it paid a sixty-five-dollar-per-share dividend financed with $2.6 billion of bank and junk debt that gave the firm a negative net worth, at least on paper. But this was Ramada, not Holiday. This was 1989, after Drexel Burnham Lambert had been indicted and after the junk bond market had started collapsing and the real estate market had become depressed. The last big casino junk deal, Merv Griffin's takeover of Resorts International from Donald Trump, was already in trouble and within weeks Griffin would declare an end to interest payments on Resorts' debt.

Page 267

posed provisions that permanently entrenched existing management. Beyond that it was willing to take a casino company's word about how swell a deal was almost at face value, as shown by its approval of the looniest deal of them all, Merv Griffin's debt-laden takeover of Resorts. The commission made it easy for casino owners to prove by clear and convincing evidence that they would possess financial stability through these deals by allowing owners from Ramada to Donald Trump to produce paid experts who expressed the opinions managements wanted, opinions that a few pointed questions, in many cases, could have shown to be outrageously optimistic fantasies. Rarely did the regulators produce their own experts and when they did their testimony was often discredited during intense cross-examination by lawyers for the casino owners?

Page 284

Free to proceed, Connelly refurbished the President, a 1926 tour boat he had used for excursions in St. Louis. But the land-based development he promised Davenport kept being delayed. After Donald Trump's troubles became household knowledge Connelly said Trump was partly to blame for his difficulty raising financing and there was nothing he could do. Meanwhile, the scheduled start of riverboat gambling in 1991 approached.

Page 288

Jim Gwathney had just come on duty as a Casino Control Commission inspector at Trump Castle on December 17 when one of the gambling hall's security guards furtively offered a bit of news. "Someone just bought three million dollars worth of chips, but left without playing," the guard whispered.

Page 289

could stomach and he fumed until his shift ended after midnight. Gwathney rose early and telephoned Chris Best, the commission's principal inspector at Trump Castle, and started talking about the $3 million deal. Best had no idea what Gwathney was talking about. "Look on the shift summary," Gwathney said, assuming the chip purchase had been routinely logged. It wasn't.

Page 289

What Gwathney had stumbled onto, and what his bosses wanted to make sure he did not investigate, was an illegal loan to Trump Castle, a loan made in the form of chips purchased but not played because it provided the lender with absolute security and would not violate the terms of Trump's bailout deal with his bankers.

Page 289

The chip buyer was Fred Trump, who was giving his son an advance on his inheritance so he could make the December 1990 mortgage payment on the Castle.

Page 290

Donald Trump and the man who as an assemblyman had sponsored the law, Perskie, was doing his best to help Trump get around it.

Page 290

The ruse prompted an extraordinary response by a law enforcement agency: even though the law-breaking was deliberate and planned, enforcement division director Jack Sweeney's office worked closely with Trump lawyers to help Donald Trump escape the penalties mandated by law for illegally loaning money to a casino. The penalty was forced return of the loaned money, something Trump Castle could not do because the very day the chips were bought the proceeds went out to help make the $18.4 million mortgage interest payment to bondholders. The Castle was so pressed for funds that it ended the year with just $770,000 in cash, a tiny sum for a business with annual revenues of $260 million.

Page 290

Sweeney did indeed know about the illegal loan in advance, but he did not share his knowledge with Tom Auriemma, the deputy attorney general assigned to the Trump casinos. When Auriemma learned of it — because Trump Castle suddenly had enough cash to make the mortgage payment instead of falling a few million short — he went to Sweeney for permission to file a complaint. What for? Sweeney asked, saying he saw nothing wrong and, besides. Trump casino lawyer Nick Ribis had told him in advance about the chip purchase.

Page 290

Auriemma felt strongly that a complaint had to be filed, but the best he could wheedle from Sweeney was permission to negotiate with Trump's lawyers and to ask their advice on what to do since the law plainly made the loan illegal and mandated return of the money as well as barring Fred Trump from the casino industry. By spring Trump Castle had admitted the loan was illegal and agreed to pay a thirty-thousanddollar fine, less than half what a bank would have charged in fees to arrange a proper loan, assuming any bank would have loaned Trump a penny more at that point.

Page 291

to help prop up Trump and help him maintain an advantage with the bondholders he would eventually have to face in Bankruptcy Court. Perskie, who had championed the 1976 casino initiative and had sponsored the Casino Control Act with the reassuring words in its preamble, knew how to take care of this problem. He broke the matter into two issues. He ordered that Fred Trump's fitness to lend money to a casino be heard first. While the illegal loan made Trump unqualified — some casino lawyers felt it barred him forever from the industry — that issue was not yet before the commission. Thus, lacking any reason on the record to deny Fred Trump, he was licensed. Fred Trump, however, did not loan any more money to the Castle and in June 1991, the mortgage went unpaid.

Page 291

When the commission met one week later Perskie brought up the illegal loan and the negotiated thirty-thousand-dollar fine, a pittance compared to the significance of the loan to Trump and compared to penalties imposed in the past for far less serious offenses such as false and misleading advertising. Two of the commissioners, W. David Waters and Valerie Armstrong, would not go along quietly. They challenged the official version of events and accused the enforcement division of showing favoritism to Trump. They even began to say publicly what little people and their lawyers, people like cocktail waitress Diane Pussehl and lawyer Gregory Imperiale, had said for years: that casino regulation relied on two standards of justice, separate and unequal.

Page 291

Armstrong said she was "mystified by this settlement." Armstrong noted that during earlier hearings on Donald Trump's financial stability, "I was rather concerned about the situation" involving Fred Trump, "but I didn't want to prejudge at that time since all of the facts were not before me. I guess to put it quite simply, I still don't feel that all the facts are before me. This, to me, is a really serious situation."

Page 291

Armstrong noted that in the Trump hearings she was repeatedly told "that integrity questions are not an issue, everything is on the up and up, and it seems to me a financially distressed casino should not be deliberately violating the Casino Control Act."

Page 292

Waters was more explicit than Armstrong. "You have two standards for determining what the penalty is going to be," he said, one for run-ofthe-mill employees who get named and punished and another for Trump casino executives who go unnamed and unpunished.

Page 292

Chairman Perskie, anxious to shut down this line of official comment, proposed raising the fine to sixty-five thousand dollars and delaying a vote until after the commissioners could talk in private. At the next commission meeting Auriemma and Trump attorney Joseph Fusco presented the commissioners with a written statement naming three Trump executives as the responsible parties. Neither Harvey Freeman, who concocted the ruse, nor Nick Ribis, who had tipped Sweeney, was named. Castle president Tony Calandra was named, but everyone knew he was a figurehead without real power. What the commissioners did not know was that the other two executives named as the responsible parties — Ed Tracy, who headed all three Trump casinos, and Pat McCoy, the Trump Castle chief financial officer — had fought to stop the illegal loan. Tracy had been forced out of his job soon after that. McCoy resigned under pressure. It was the rankest kind of lie, but because both

Page 293

There it was, on the record, in a public meeting, two of the commissioners saying that when it came to owners, or at least to Donald Trump, there was a double standard.

Page 293

The commission did not enforce the law mandating return of the money because despite these words, Perskie was assured of at least three of the four votes he needed to get the sixty-five-thousand-dollar fine approved, ending the matter. Waters dissented. The key vote was Armstrong, who gave Trump what he needed, saying she did so reluctantly and only because there was no hint of mob involvement. Nick Ribis knew she would clear it back when he called Sweeney to boldly announce the illegal loan plan. "Valerie always goes along in the end," he had said four months earlier when asked to predict if the commission might force return of the illegally loaned money.

Page 294

DeVesa never asked the central question in the affair, though. He never asked why Sweeney did not simply enforce Section 95 of the Casino Control Act and direct Trump Castle to return the illegally loaned money. That was the issue that prompted Ribis to call Sweeney in advance, because if the money were loaned, and then had to be given back. Trump Castle would have had to close its doors. The only way to repay Fred would have been to do what Dennis Gomes pondered the night Akio Kashiwagi almost got away: raiding the casino cage and emptying the slot machines. Why wasn't the central issue explored?

Page 299

Beyond letting economic considerations shape their judgments about the fitness of casino owners and executives, the commissioners allowed themselves to hear what they wanted and to screen out undesired facts, another natural tendency. Nowhere was this theme more clear than when the Casino Control Commission certified as financially stable junk bond deals that any careful reader of the prospectuses could tell were doomed to failure. The Atlantis mortgage bonds turned to junk less than six months after Drexel Burnham Lambert sold them. Merv Griffin's deal to buy Resorts was in trouble just three weeks after Drexel wrote him a check for $325 million and the bondholders got just one interest payment before watching their investment axed to pieces in Bankruptcy Court. Trump made only three interest payments on his Taj Mahal Casino-Hotel, and two of those were made with the bondholders' own money before filing Chapter 11. The commission found Bally Manufacturing financially stable in 1990, but six weeks later Bally began missing payments to banks and bondholders it owed more than a billion dollars.

Page 299

Kaye Handley, a sharp-eyed securities analyst whose specialty is the stocks and bonds of companies on the edge of collapse, followed how the Casino Control Commission and the financial markets dealt with the Trump and Griffin borrowing binges and their aftermath. Those who focused on whether that particular deal involved fraudulent conveyance — cheating investors by wrongly transferring their property to someone else — missed the larger point, she said. The Atlantis, Resorts, Trump and Bally cases all fit a pattern.

Page 300

W. David Waters, the Casino Control commissioner most hated by the casino owners and their executives because he resisted the sirens of economic interest, believes it is also critical to enforce the integrity requirement and to define that term clearly. As the Trump casinos drifted into bankruptcy and he heard more and more complaints of rules violations, culminating in the illegal Trump loan, he realized that integrity was whatever the commission said it was. "Having integrity has come to mean that you haven't been convicted of a felony, and that's just plain offensive to me," Waters said.

Page 306

Art of the Deal, The (Trump), 2, 91, 241 Aruba Concorde, 2, 144, 145, 147, 148-49, 150, 151, 152, 154, 155, 156, 157, 158, 160, 161, 162, 164-65, 241 Atlantic City disinvesting in, 54 ghetto areas, 3, 52, 53, 129 organized crime in, 9 poverty, 135

Page 306

gambling by minors, 180 sale to Trump, 199

Page 308

Del E. Webb Corporation, 11, 34, 39, 65, 211 Del Tufo, Robert, 294 Dematteis, Fred, 121 Desert Inn, 36, 44, 146 DeVesa, Frederick, 294 Discounting, 151, 210, 237 Discrimination, 33, 55, 175, 253 employment, 55 investigation of Trump, 83 Dixon, Mead, 41, 50 Dodd, Frank (Pat), 196, 233 Dog racing, 17, 21, 283 Dopp, Paul A., 197 Douglas, Buster, 2, 213 Doumani, Ed, 272, 273, 276 Dratch, Stephen, 216

Page 312

Trop World, 52, 260, 261, 265, 268 Trump, Blaine, 225

Page 312

Trump, Donald, 1-8, 11, 13, 35, 59, 73, 81-92 bankruptcy bailout, 137 borrowing practices, 21, 91, 92, 97, 99, 104,

Page 312

and junk bonds, 14 licensing issues, 82, 83 management practices, 93-105, 221 official favoritism to, 81-82, 88, 91, 110, 230, 232, 291, 293 personal style, 94, 104 purchase of Atlantis, 199 regulation problems, 96 use of deception, 84-92, 202 Trump, Fred, 81, 289, 290, 291, 292, 294 Trump, Ivana, 91-92, 94, 95, 101, 102, 103, 104, 105, 135, 136, 137, 138, 232, 251 Trump, Maryanne, 83 Trump, Robert, 83, 102, 221, 222, 225 Trump Castle Hotel & Casino, 7, 55, 56, 57, 92, 95, 136, 166, 167, 227, 229, 288 cash flow, 103, 104, 141

Page 312

gambling by minors, 182, 183 illegal loan to, 289-95, 299 overruns, 231 profit margins, 101, 141 Trump Parc, 230

Page 312

Trump Plaza Hotel & Casino, 1, 2, 3, 4, 6, 7, 78, 86, 87, 92, 93, 96, 101, 197, 200, 227, 238, 243, 244, 251, 252 competition, 4

Page 312

gambling by minors, 180, 184, 185 profit margin, 101 Trump Princess, 134-41, 230, 231 Trump Regency, 220 Trump Tower, 82, 83, 84, 117 Turner, Wallace, 36, 40 21. See Blackjack Tyson, Mike, 2, 103, 193, 254

Page n342

once worth $44 million, lost everything she had when Ramada bought out her casino and then refused to pay her for it. The New Jersey Casino Control Commission stood by as bondholders were financially raped by the junk-bond borrowing sprees of Trump, Griffin and Bally Manufacturing. Government regulators even gave one casino written permission to cheat novice roulette players. The mentality of greed that is driving corporate investors to sponsor casinos on Mississippi riverboats, Indian reservations and Main Street U.S.A. has also led casino managers to encourage sixteen-year-olds to drink and gamble indiscriminately.

[admin]

Part 5 of __

The Black Hand Mafia
by Queensland State Archives
4 July, 2023
https://blogs.archives.qld.gov.au/2023/ ... and-mafia/

[x]
BLACK HAND! Special Writer Interviews People Who Live in Fear. VENDETTA NOT AT ... MOVE TO REPORT UNDESIRABLES. Only Way to Stamp Out Vicious Society of Killers

*Please note: the content of this blog post relates to historic crimes and accounts of violence which some readers may find distressing.

The Godfather playing out among the cane fields of tropical North Queensland? Sounds far-fetched.

But the unlikely location saw a string of unsolved murders throughout the 1920s and 1930s that baffled police and terrified the public. And at its heart, an Italian-Australian community haunted by a sinister guild which had followed them from their old country.

In 1932, nineteen-year-old Jean Morris’s body was found in an Ayr rooming house, with over 30 stab wounds. In 1935, Domenico Scarcella was shot in the head as he fed his horses and, the following year, Francesco Guglielmo ‘Frank’ Femio was killed in cold blood, riddled with shotgun pellets as he slept. Then Vincenzo D’Agostino was fatally wounded in an explosion at an Ingham bakery in 1938. All were linked to the notorious Black Hand: La Mano Nera, a secret society that originated in 18th century Naples.

When hard-working Italian canecutters and farmers began to prosper in North Queensland, the Black Hand infiltrated, demanding their countrymen pay exorbitant sums of money or risk extreme misfortune. Australians were warned to beware the ‘olive peril’.

[x]
[x]
Photos of Jean Morris included in her Murder File, 1932. ITM814574.

Jean Morris, a street girl known locally as ‘Stiletto Jean’ because of the small knife she carried, had been involved with several members of the Black Hand up until her an untimely death. Inspector O’Driscoll stated:

“In all my long experience as a policeman I had never witnessed such evidence of lethal ferocity or unbridled rage. Hardened as I imagined myself to be, I admit I felt sickened by the dreadful scene in Jean Morris’s bedroom.”

[x]
Deposition interview with Francesca Scarcella from the inquest into her late husband’s murder, 1936. ITM349599.

At the inquest into the murder of Domenico Scarcella, his widow Francesca swore that her husband’s death was a vendetta killing. It transpired that Domenico’s brother, Severio, killed Vincenzo Speranzo in Italy. Speranzo happened to be the brother-in-law of D’Agostino, the Calabrian man widely rumoured to have led the infamous Black Hand, and Francesca had received letters from relatives in Italy to support that theory.

A letter was also found among Domenico Scarcella’s personal items: an extortion letter from the Black Hand demanding £250 (approximately $24,500 today). Francesca said her husband had vowed to find its author.

In a post-mortem examination of his body, Dr Morrissey noted 71 pellet wounds to the torso: all had been fired prior to the fatal gunshots to the skull, which were made at close range from behind.

[x]
Francesco Guglielmo ‘Frank’ Femio’s passport, included in his Murder File, 1937. ITM666429.

For Francesco Femio, potential retribution had long dogged his footsteps. Dr Morrissey, in his Post-mortem examination, confirmed it found him in the form of “Gunshot wounds of the chest, left hip and right knee. Homicidal.” His Queensland police murder file reveals the cane-cutter’s murky past and tangled associations with the Black Hand gang.

Femio had close links to prostitution in the area and was believed to control more than 100 working girls across Cairns, Townsville and Innisfail. One of whom was also his lover, Jean Morris. The two had quarrels so bitter and violent they were reported in newspapers of the time. Months before Morris’ brutal murder, one passer-by allegedly heard Femio threaten “You come, you come with me. If you don’t, I’ll kill you” as she screamed at him to leave her home.

[x]
Newspaper clipping depicting an artist’s interpretation of Jean Morris, included in Femio’s Murder File, 1937. ITM666429.

Police also suspected Femio was an accomplice in the murder of Domenico Scarcella, the inquest disclosing that a handwriting expert had attested his writing was identical to that on the extortion letter Scarcella had promised to discover. Though Femio vehemently denied the allegations when questioned.

While it was never proven, his familiarity with other “men of doubtful character” and implicated involvement in various criminal offences shored public opinion of his having been, at least at some point, second-in-command to reputed Black Hand leader Vincenzo D’Agostino.

A baker by trade, D’Agostino remains a constant thread through the stories and files on the Black Hand. Suspected by police and reported by newspapers to be its chief – to both he claimed innocence, denying any knowledge or connection. Any truth, which may have aided in his arrest if he was indeed the leader, evaded police at every vicious twist.

[x]
Police background on Vincenzo D’Agostino, included in Femio’s Murder File, 1937. ITM666429.

The whispers of the frightened community terrorised by the Black Hand remained just that, with those interrogated by authorities refusing to share anything they may have known of the society and its actions. And not without reason, in 1933, D’Agostino was charged with corruption of a police witness using threats and intimidation. Though later acquitted of the charge, the warning to those in the community who might speak out about the Black Hand endured.

In 1938, as police sat by his deathbed, D’Agostino steadfastly refused to name his attackers, taking his secrets to the grave.

Perhaps the series of murders stemmed from 1928, when elderly canegrower Nicky Patane refused to pay any more protection money to D’Agostino and was shot in the head, dying in the arms of his wife.

Patane’s callous murder allegedly inspired another secret society in North Queensland. On the banks of a creek at Stone River, 16 defiant farmers allegedly signed an oath written in their own blood, vowing to eliminate the Black Hand permanently.

These cases, and more, remain unsolved to this day.

North Queensland’s Black Hand and its mysteries continue to intrigue and perplex. Presented by Anthony LaPaglia, ABC TV’s The Black Hand is set to unpack just some of these stories and histories from the cane fields. Watch the trailer below.


BLACK HAND Full Movie