Tag Archives | Trump Plaza Hotel and Casino

Step Right Up, The Donald Has a Deal for You

By Sydney H. Schanberg

First published  in Newsday, April 4, 1995

Step right up, cries the barker with the jaunty derby and twirling cane, don’t miss out on your chance of a lifetime. Donald Trump has a deal for you. Please come closer, folks, I have to whisper this: If you act quickly, Donald is willing to sell you $285 million in casino stocks and bonds. And, oh yes, before I forget, the Securities and Exchange Commission has asked me to advise you that the odds are you’ll never see this money again.

That’s right, Young Donald is offering anew to let you buy the heirloom lint that is the last remaining occupant of his pants pockets. He’s still buried in a mountain of debt, more than $100 million of it personally guaranteed. So naturally, being a man of the people, he would like you to bail him out before he has to do something vulgar, like filing for personal bankruptcy.

Such an act could shut him down as the gambling king of Atlantic City, since New Jersey law requires casino owners to have “financial stability.” The Trump Organization “owns” three heavily debt-burdened casinos there. All three have been losing money. That’s of course why Donald, as a financial sage, wants to expand them — with other people’s money.

As you know, Donald has been running these hustles for years, conning local governments into subsidizing his projects (e.g., Trump Tower got about $40 million from New York City in tax reductions) and conning banks and insurance companies into loaning him the construction costs. In case you still think that big-name bankers are an intelligent race, just look at the customer money they’ve thrown away on their judgment that Donald Trump was a stable businessman.

It’s helpful not to lose touch with Donald’s unstable history. Remember how he reneged on his agreement to renovate the subway complex below the Grand Hyatt hotel? Remember how, after trying the usual strong-arm tactics to roust legal tenants out of a building on Central Park South so he could tear it down, he then offered — surely out of profound humanitarianism — to put homeless people in the apartments that were vacant? And remember how, when he served as chairman of the New York committee to build a local Vietnam memorial, he offered to pick up most of the cost if only the veterans on the committee would agree to name it the “Trump” memorial?

More recently on Donald’s history channel, in 1990 he and his companies defaulted on $3 billion of debt. The banks put him on an allowance. Unfortunately, from his early days as a school truant, Donald has never been able to live within his allowance. Nothing has changed, so he’s always short of the cash he requires to keep his name on the party lists and in the gossip columns. As a result, he has had to resort to his legendary hustles.

According to an interesting story by David Cay Johnston in yesterday’s New York Times, Donald has met his personal needs only by drawing unusual fees from his main gambling joint, the Trump Plaza Hotel and Casino. Last year, he took a $572,000 fee for negotiating a lease of space to Time Warner in a planned expansion of the hotel — an expansion that was halted by a judge’s ruling last week. Time Warner has yet to pay anything for the lease and may never do so; it has the right to cancel the agreement within two years.

On that same planned expansion, Trump was also personally paid a $1-million “construction management services” fee to supervise demolition of the building next door.

Even this expansion is being financed with other people’s money — in this case, the public’s dough. There’s something in New Jersey called the Casino Reinvestment Development Authority (CRDA), and this body awarded Donald $14.6 million in tax credits, which represents more than a quarter of the $55-million expansion price tag.

CRDA also invoked eminent domain in condemning three privately owned parcels of land that Trump wants for the expansion. Last week’s decision by a New Jersey judge threw out the condemnation, noting that Trump had, after the fact, altered his expansion plan to include additional gambling space, instead of just additional hotel rooms. In essence, the ruling said that the condemnation of the $14.6-million award violated state policy because it represented a use of public monies for a private person’s benefit. Trump’s lawyers said they would appeal.

Meanwhile, in the event any of you are contemplating throwing some mad money at Trump’s proposed stock and bond offerings, I suggest you read the fine print of the documents he submitted to the SEC last week for review.

These papers, for example, caution potential buyers that “there can be no assurance that Trump will be successful in repaying or rescheduling his indebtedness or that his assets will appreciate sufficiently to provide a source of repayment for such indebtedness.”

Another chilling sentence reads: “Any failure by Trump to repay or reschedule his indebtedness or otherwise maintain financial stability may have a material adverse affect” on the payment of interest or return of principal.

Donald never wrote sentences like these in the heady days before he was under surveillance. He just took other people’s money and bought a yacht with gold fittings and cruised around as if he was something more than a hustler.





Trump’s Latest Deal: Finagling Atlantic City

By Sydney H. Schanberg

First published in Newsday, September 9, 1994

Donald Trump is cheating at cards again, appropriately in Atlantic City. He’s trying to fleece some of their property so he can expand his Trump Plaza Hotel and Casino.

And not for the first time, he has managed to stack the deck: He has found a way to get the local governmental agencies to do his dirty work for him. As chiseling schemes go, it’s a doozy.

Here’s how the scam is structured. Trump is trying to buy up a while block adjacent to Trump Plaza to put up new hotel rooms, a parking lot, limousine pickup area and the like. He wants to cash in on the business generated by a $254-million convention center scheduled to open in 1996 a short distance from the Plaza, one of the three casinos he runs in Atlantic City.

But instead of negotiating with the owners of the private parcels he needs on the block, he got the Atlantic City Planning Board and the state Casino Reinvestment Development Authority (CRDA) to move in on the properties by edict. The planning board began issuing approvals for the project and CRDA started condemnation proceedings under the law of eminent domain.

CRDA’s rationale is that the casino expansion serves the community interest because it will support the new convention center. It’s not clear how Trump won the allegiance of these public officials — that will probably come out later, in some court proceeding, as often happens with Trump — but the result is a familiar one: Trump, the property shark and deal-maker is in line to get another freebie.

In short, the state (CRDA) plans to seize the private land at fire-sale prices, pay for it with taxpayer dollars and the hand it over to Trump for nothing, to profit from as he pleases.

Not surprisingly, two of the property owners facing condemnation have stood up to cry foul. One is Vera Coking, who has a small three-story house where she lives with her daughter, Barbara Torpey, under the shadow of Trump’s casino. The other protester is the Sabatini family, whose restaurant has sat for 30 years a little ways down the block on the prime corner of Columbia Place and Pacific Avenue.

Six years ago, the Sands casino company, which was then trying to develop the block, made an opening offer to the Sabatinis for $1.5 million. But that project died aborning. Now, though Atlantic City is bustling with development activity, CRDA says the property is worth no more than $700,000, setting that as its final figure.

CRDA’s appraiser reached this figure by comparing Sabatini’s restaurant to four other restaurants. The curious part about the comparison was that the four restaurants are all empty and out of business and none of them was in the busy casino district.

As for Vera Coking and her weatherbeaten house, CRDA set its price at $251,000. Penthouse’s Bob Guccione, another who tried to develop the block and failed, says he offered her $1 million. When she refused, he decided to build around her narrow lot and got the steel superstructure up before he pulled out. Now, several years later, CRDA says its condemnation price is $251,000. Coking’s lawyer says the property is worth $2 million.

Trump and his attorneys have tried to portray Coking, a widow, as a person who has put her personal gain above the interests of the city. Coking, responding, said: “There’s a lot of memories in here. I raised my kids in here. I’m not greedy. I just want a fair price.”

The Sabatinis are also pretty upset. “We’re not blocking progress,” said son Louis, 37, a doctor. “You can call it eminent domain and you can call it public good, but they’re trying to steal our property, and it’s rotten.”

“We’ve been good neighbors and good community members,” said his mother, Clare Sabatini. “We’ve been here for 30 years, in lean times as well as good ones. We made sacrifices to put four kids through college. All we want is a sensible offer.”

The Sabatinis and their own appraiser came in with a property value that was at least three times the $700,000 price set by CRDA.

When CRDA held a meeting last month on the condemnation decision, Trump’s cozy relationship with the government officials became quite clear. Instead of sitting in the public seats, he entered at CRDA’s end of the room and stood directly behind the board members, facing the audience. Trump and CRDA were one. 

Another tip-off: Under the law, it was supposed to be a public hearing with questions allowed from anyone, but when the attorneys for Coking and the Sabatinis tried to raise several issues, they were cut short and the meeting was quickly adjourned with a bang of the gavel.

There are still some innings to go, among them a review process to examine the legality of the condemnation and the fairness of the money offers. If dissatisfied with those results, a landowner can seek a jury trial to set the price on the property. Judging from the rigged deal we’ve seen so far, Coking and the Sabatinis may have to go all the way.

In civics class way back when, we were always taught that eminent domain could be invoked only for a public purpose. In Atlantic City, we are watching it being used to benefit a private person, Donald Trump. 


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