Back in July, the Manhattan District Attorney announced a whopping 15-count indictment against the Trump Organization (and its long-time CFO, Allen Weisselberg) for, among other things, conspiracy, grand larceny, and multiple counts of tax fraud and falsifying business records. While the charges were no doubt unwelcome, particularly given that prosecutors revealed a literal spreadsheetDonald Trump’s family business used to keep track of its alleged crimes, Team Trump presumably comforted itself with the hope that that was all district attorney Cyrus Vance Jr. had, and further criminal charges would not be forthcoming. But, surprise!
The Washington Postreports that the D.A. has convened a second long-term grand jury to hear fresh evidence about the Trump Organization’s “financial practices” and will potentially vote on levying new charges. (It was the first grand jury, which met in the spring, that returned the felony indictments against the Trump Organization and Weisselberg, both of whom have pleaded not guilty.) The new grand jury will meet three days a week over six months and is expected to begin hearing evidence Thursday in Manhattan’s Surrogate’s Court. According to one person familiar with the matter, the new group will likely examine how Trump’s company values its assets; another person familiar with the matter said staffers in the D.A.’s office are working closely with the office of New York Attorney General Letitia James, who had the ex-president’s foundation shut down in 2019 for illegally scamming charities.
Prosecutors recently inquired about the initiation fees Trump golf courses charged new members, the person said, and Trump’s role in setting those fees for individual customers. Trump often cited his clubs’ initiation fees in the statements he sent potential lenders, as a sign of the courses’ financial health. That appears to be a separate issue from the one described in indictments from the first grand jury, which has dealt with allegations that Weisselberg and other Trump executives evaded taxes on their pay by systematically hiding some of their compensation from the IRS.
Both Vance and James have previously said that they were examining allegations that the Trump Organization misled banks, insurance firms or tax authorities by manipulating the value of its assets to get favorable loan rates or to lower his taxes. James said in a court filing last year that her office was investigating Trump’s valuations of three properties: his Los Angeles golf course, a Manhattan office building and an estate in suburban New York called Seven Springs. James’s filing said she was interested in a “conservation easement” that Trump obtained on the Seven Springs property in 2015—giving him tax benefits in exchange for renouncing his right to build houses on part of the estate. Trump boosted the value of that tax break by estimating that the land would have brought him $21 million if he’d sold it.
James also indicated in the filing that she was interested in valuations of Trump’s golf course in Los Angeles, where in 2014 Trump obtained a conservation easement that he said lowered the property value by $25 million, the filing said…. Vance’s office, which is convening the new grand jury, has given far less detail about its investigation of valuations at Trump properties
Last month, The New York Timesreported that Westchester County D.A.’s office had opened a separate criminal probe into the Trump Organization thought to be focused in part on whether the company misled local officials about the Trump National Golf Club Westchester’s property value with the express intent of lowering its tax bill. For instance, in one year, town officials assessed the property at roughly $15 million, while the Trump Organization claimed it was worth just $1.4 million. Meanwhile, on federal disclosure forms filed while he was president, Trump said the club was worth more than $50 million. Which is quite the discrepancy!
In 2011, for instance, a “Statement of Financial Condition” claimed that Trump owned 55 home lots ready to sell for at least $3 million apiece at his Southern California golf course. Yet, in reality, he’d only been zoned for 31, thereby overstating his future revenue by approximately $72 million. In a document from 2012, he added an extra 800 acres to the size of his 1,200-acre Virginia vineyard. In 2013, in an attempt to bolster his bid for the Buffalo Bills, a two-page “Summary of Net Worth” conveniently omitted his ownership of two hotels, in Chicago and Las Vegas, meaning, as the Postnoted, “some of Trump’s actual debt load was hidden from anyone reading the statement.” In perhaps the most brazen example of Trumpian “exaggeration,” he invented an extra 10 stories at Trump Tower, claiming that the building was 68 stories when, in actuality, there are 58.
As the Post noted on Thursday, it’s possible the second grand jury could conclude without handing down further indictments, though if the prior one is any guide, that may not be the case. The Trump Organization did not respond to the Post’s request for comment. Trump’s personal lawyers Ron Fischetti and Phyllis Malgieri declined to comment. In previous statements, Trump, his spokespeople, and his family have decried any investigations into the ex-president and his family business as politically motivated witch hunts. Last year, Eric Trump told the Post, “This type of targeting and harassment violates every ethical guideline of a prosecutor. It’s wrong
The Trump International Hotel in Washington, D.C., which served as a gathering place for supporters of President Donald Trump during his tenure, is due to be sold and rebranded as a Waldorf Astoria, according to a report in The Wall Street Journal.
The Trump Organization has reached an agreement with CGI Merchant Group to sell the property, located in the Old Post Office building just a few blocks from the White House, according to the Journal.The deal is for $375 million, less than $500 million that Trump’s business reportedly had sought.
Spokespersons for the Trump Organization and CGI did not immediately return requests for comment. Waldorf Astoria is the luxury brand of Hilton Hotels.
The hotel was a favorite spot for members of Trump’s administration, and the president himself, to gather during his term, a haven in an otherwise heavily Democratic city. But it also became a focal point of lawsuits and congressional investigations that foreign dignitaries were staying in its pricey rooms to curry favor with the administration. During Trump’s presidency, demonstrators would often project images on the side of the hotel as part of protests of administration policies.
The Trump Organization has said that it gave profits from foreign governments to the U.S. treasury. But the House Oversight and Reform Committee is investigating whether the full extent of those profits were disclosed to the General Services Administration, which oversees the lease of the property. The committee also has been investigating other potential conflicts of interest.
According to findings of the House Oversight Committee, Trump’s hotel lost $70 million during his time in office. The hotel opened in 2016, just a couple months before Trump was elected.
Trump's business pays price for poisonous politics
Oct 29 (Reuters) - Former U.S. president Donald Trump’s slashing rhetorical style and divisive politics allowed him to essentially take over the Republican Party. His supporters are so devoted that most believe his false claim that he lost the 2020 election because of voter fraud.
But the same tactics that have inspired fierce political loyalty have undermined Trump’s business, built around real-estate development and branding deals that have allowed him to make millions by licensing his name.
Trump’s business brand was once synonymous with wealth and success, an image that now clashes sharply with a political brand rooted in the anger of his largely rural and working-class voter base. His presidency is now associated in the minds of many with its violent end, as supporters stormed the U.S. Capitol on Jan. 6.
Those searing images, along with years of bitter rhetoric, are costing Trump money. Revenues from some of his high-end properties have declined, vacancies in office buildings have increased and his lenders are warning that the company’s revenues may not be sufficient to cover his debt payments, according to Trump’s financial disclosures as president, Trump Organization records filed with government agencies, and reports from companies that track real-estate company finances.
Prospective tenants in New York are shunning his buildings, one real-estate broker said, to avoid being associated with Trump. Organizers of golf tournaments have pulled events from his courses.
Trump’s focus on the political brand has increasingly overtaken his identity as a real-estate mogul, says one hospitality industry veteran.
iv class="tlod">
“Prior to his political career, the Trump brand was about luxury - the casinos, the golf resorts,” said Scott Smith, a former hotel executive and hospitality professor at the University of South Carolina. “When he entered into politics, he took the Trump brand in an entirely different direction.”
Trump’s business also remains under the cloud of a joint criminal fraud investigation by the Manhattan District Attorney’s office and the New York Attorney General. The company and its longtime chief financial officer, Allen Weisselberg, have been charged with a scheme to evade payroll taxes, and investigators continue to probe whether Trump or his representatives committed fraud by misrepresenting financials in loan applications and tax returns. Weisselberg and the company deny wrongdoing and are contesting the charges.
As his development business struggles, Trump has announced his first major deal since leaving office — and it has nothing to do with real-estate. On Oct. 20, he said he will build a new social media platform aimed in part at giving him a political forum after being banned by Facebook and Twitter, who said after the U.S. Capitol riots that Trump used their platforms to incite violence.
That deal could prove lucrative for Trump regardless of whether the platform succeeds. Investors rushed to buy shares in Digital World Acquisition Corp, the publicly traded blank-check acquisition company that plans to merge with the newly announced Trump Media and Technology Group. Digital World shares surged and are now worth about $2 billion. Trump’s new media company will have at least a 69% stake in the combined company, but Trump has not disclosed his level of ownership in Trump Media.
Trump has also been raising money for his political operation, which reported having $100 million on June 30, as he hints at a 2024 presidential run.
Eric Trump, the former president’s middle son and a Trump Organization executive, said in an interview that the company is now in “a phenomenal spot.” He cited a refinancing of a loan on San Francisco office buildings that gave the Trump business about $162 million in cash, according to loan documents and a release by Vornado Realty Trust(VNO.N), the venture’s majority owner.
“We’re sitting on a tremendous amount of cash,” Eric Trump told Reuters.
In an email, a spokesperson for Donald Trump denied that the business has slumped since he entered politics.
“The real estate company is doing extremely well, and this is evident in Florida and elsewhere,” Liz Harrington said in an emailed statement. “Considering the coronavirus pandemic, in which the hotel industry was hit particularly hard, Mr. Trump’s company is doing phenomenally well.”
Financial records show Trump’s real-estate business has declined. Income from the family’s holdings, heavy on golf courses and hotels, took a beating during 2020 amid the coronavirus pandemic. Revenues at his Las Vegas hotel, for instance, fell from $22.9 million in 2017 to $9.2 million during 2020 and the first 20 days of 2021, according to Trump’s financial disclosures.
Trump is now making a second attempt to sell his lease on one high-profile property, the Trump International Hotel, housed in a former federal building in Washington, D.C., after failing to secure a buyer at the original asking price of $500 million. Meanwhile, the business is paying the federal government $3 million annually in lease payments, according to documents released earlier this month by the House Oversight Committee of the U.S. Congress. Those records show Trump’s Washington hotel lost more than $73 million since 2016.
1/2
The damage to Trump’s business image started early in his presidency. One consultant for Trump, arguing in a 2017 public hearing for a lower tax bill at his Doral golf resort, said Trump’s politics had damaged his business model.
“It’s actually not about the property, it is about the brand,” said consultant Jessica Vachiratevanurak, at a December 2017 hearing of the Miami-Dade Value Adjustment Board, in a video recording reviewed by Reuters. She cited a meeting she attended where top Trump Organization executives had described “severe ramifications” to his golf business from, for instance, tournaments and charity events being canceled by organizations wanting to avoid associating with Trump.
The resort saw revenues fall from $92 million in 2015 to $75 million in 2017, she said at another hearing the following year. Trump’s presidential financial disclosure listed Doral revenues at $44 million last year.
Vachiratevanurak declined a Reuters request for comment.
“This is obviously false as Doral is doing very well,” Trump spokesperson Harrington said.
In Trump’s home base of New York, the Trump name has become increasingly toxic. One high-profile property, the Trump SoHo hotel in lower Manhattan, was rebranded the Dominick in 2017. New York City in January canceled his leases on a golf course, two Central Park skating rinks and a carousel; Trump has sued the city for wrongful termination of the golf course lease.
At 40 Wall Street, the 72-story skyscraper that was among Trump’s proudest acquisitions, problems that started before the pandemic have gotten worse, according to reports from firms that track real-estate performance. After the Jan. 6 U.S. Capitol riots, some of Trump’s large tenants, including the Girl Scouts and a nonprofit called TB Alliance, said they were exploring whether they could get out of their leases. One commercial real-estate broker says many prospective tenants won’t consider the building because Trump’s name is on it.
The Girl Scouts did not respond to comment requests, and TB Alliance said it was “exploring all options” for leaving the Trump building.
“Most New York tenants want nothing to do with it, and that’s been the case for five years now,” said Ruth Colp-Haber, who said she has placed seven clients in the building over the years, but can’t interest anyone now. “It’s the biggest bargain going, but they won’t look at it.”
Occupancy was 84% in March 2021, well below the average of about 89% for that downtown New York office market, according to Mike Brotschol, managing director of KBRA Analytics LLC. The rents Trump has been able to charge are lower, too – between $38 and $42 per square foot in a market where the average runs closer to $50, he said.
The property’s financials have tumbled into risky territory, the reports say.
Trump took out a $160 million loan in 2015 to refinance 40 Wall Street – personally guaranteeing $26 million. Last year, the building was placed on an industry watchlist for commercial mortgage-backed securities at risk of defaulting, according to reports by KBRA and Trepp, which also monitors real-estate loans. In the first quarter of the year, according to the KBRA report, the debt-service coverage ratio, a statistic monitored by banks, dipped to a number indicating that the building’s cash flow can’t cover its debt payments.
In the statement for Trump, Harrington blamed “the disastrous policies of Bill de Blasio,” New York’s mayor, for the downturn in the city’s office market. “Despite all these serious headwinds, Mr. Trump has very little debt relative to value and the company is doing very well,” she said.
The Doral resort and Washington hotel, along with a hotel in Chicago, are secured by about $340 million in loans from Deutsche Bank AG(DBKGn.DE), Trump’s biggest lender. But the bank has no appetite for more business with Trump and has no plans to extend the loans after they come due in 2023 and 2024, a senior Deutsche Bank source told Reuters on condition of anonymity.
Asked about the bank’s unwillingness to work with Trump, his spokeswoman said: “So what?”
Experts say the prospect of any new Trump-branded development faces long odds. One hotel industry executive said hotel developers – worried about cutting themselves off from the millions of customers turned off by Trump – will likely think twice before signing any branding deals to put the Trump name on their properties.
“People have choices. You can go to the Ritz Carlton, you can go to the Four Seasons, and not bring the politics into it one way or the other,” said Vicki Richman, chief operating officer of HVS Asset Management, a hospitality industry consultancy and property manager.
The Trump Organization tried to take its premium luxury hotel brand downmarket with two new brands: Scion, a mid-priced offering, and American Idea for budget travelers. The company scrapped plans for both in 2019, citing difficulties doing business in a contentious political environment.
Harrington said nothing is off the table for Trump’s business.
“We have many, many things under consideration,” she said. “But we also have politics under consideration.”
(This story refiles to fix typo in additional reporting credit line)
