Trump destroyed the value of Trump Hotels & Casino Resorts—while pocketing $44 million for his personal management of the disaster. But that wasn’t the end of it. Donald Trump doesn’t just treat the Trump Foundation like a personal slush fund, he treats his companies the same way.
… he offloaded personal debts onto the corporate balance sheet and had the public company purchase services ranging from bottled water to plane flights from Trump’s privately held enterprises.
Along the way, he bankrupted the company and all but completely wiped out the value of its stock.
And when Donald Trump made his comeback, the move was even worse than what he did while he was driving the business into bankruptcy.
To relieve himself of that big debt that shows up on his 1995 tax return, Donald Trump turned to the stock market. In the 1990s, stocks were having a prolonged period of gains, bolstered by companies who were dropping pension plans and instead leaving their employees with 401K plans. To make the 401K plans attractive, companies were pouring PR into the mythology of the market, promising employees returns that would make them millionaires.
There was a hot market; stocks were suddenly a much larger topic around the American dinner table; and the market was seeing an influx of money from new, inexperience investors. For con men, Wall Street was never more attractive.
Trump—flattened under debt from the high-interest financing he had personally guaranteed and saddled with the less-than-worthless remains of Trump Hotels & Casino Resorts, pulled the same Instant Riches switch as many other 90s swindlers: an IPO.
The company’s sole asset at the time was the Trump Plaza Hotel and Casino, and the IPO money was supposed to be reinvested in the company. But Trump Plaza was already indebted, so one of the first moves made with the new equity was to pay down the debts — debts that Trump had personally guaranteed, meaning that company money was used not just to relieve a company debt, but a personal debt owed by Trump himself. ...
The public company bought the Trump Castle casino from Trump, for example, for $490 million, a price that James Sterngold reported at the time “was based on optimistic profit projections and was about $100 million too high.”
Oh, and of course …
Trump also paid himself $880,000 for brokering the deal.
Even as the company continued to be unprofitable and value rapidly fell, Trump paid himself a fat salary and even fatter bonuses.
Trump was, in essence, paying himself a high salary for the trouble of running a company whose main purpose was to take enormous bad debts off Trump’s personal balance sheet and shift them over to the company.
The miracle by which Donald Trump got out of his billion dollar hole? He didn’t start a new business. He didn’t build a new building. He didn’t “create a lot of jobs.”
He turned a public company into his private dumping ground. He simply pushed all that debt across a line from “mine” to “theirs.” Then he collected a multimillion dollar check for the effort. Even after Trump had pushed all his personal debt onto the company, he continued to treat it like his personal toy.
As the company spiraled downward, it continued to pay for Trump’s luxuries. Between 1998 and 2005, it spent more than $6 million to “entertain high-end customers” on Trump’s plane and golf courses and about $2 million to maintain his personal jet and have it piloted, a Post analysis of company filings shows.
THCR went bankrupt, taking all the investors’ money—and all of Trump’s personal debt—with it.
Donald Trump got into debt because all the people who knew anything about casinos knew that his Atlantic City venture was a boondoggle, forcing him to use high-interest financing that could never be supported by the income. He got out of his debt by starting a public company so that people who didn’t know anything about the casino business could be convinced to swallow all the bills run up by Trump. Then he wrung the last dime out of the company … and threw it away.
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