Investigation shows a pattern in different projects around the world 🐷
"This month, two incredible investigative stories have given us an opportunity to lift the hood of the Trump Organization, look inside, and begin to understand what the business of this unusual company actually is. It is not a happy picture. The Times published a remarkable report, on October 2nd, that showed that much of the profit the Trump Organization made came not from successful real-estate investment but from defrauding state and federal governments through tax fraud. This week, ProPublica and WNYC co-published a stunning story and a “Trump, Inc.” podcast that can be seen as the international companion to the Times piece. They show that many of the Trump Organization’s international deals also bore the hallmarks of financial fraud, including money laundering, deceptive borrowing, outright lying to investors, and other potential crimes."
"The reporters—Heather Vogell and Peter Elkind of ProPublica, and Andrea Bernstein and Meg Cramer of WNYC—identified a similar pattern that occurred in deals around the world. The basic scheme worked like this: some local developer in Panama, the Dominican Republic, Florida, Canada, or some other location pays Trump, up front, for the use of his name and agrees to pay him a cut of every sale—not only of units but of things like hotel-room minibar items or, even, bathrobes. These projects typically require sixty per cent or more of units to be sold before construction gets under way. The same set of problems occurred in multiple projects. Many of the early units would be sold to shadow buyers—hidden behind shell companies. Donald Trump or, often, Ivanka Trump would deceive future investors by telling them that a much higher percentage of units had been sold than was factual. More investors pour money in, getting enough money into the project, often, to begin construction. Eventually, the project fails and goes bankrupt. Many of those investors lose all of their money. But the Trumps do not. They got paid up front and are paid continuously throughout until the day the project collapses. They are paid for their name and for overseeing the project, and, if the building is opened, the Trumps manage the property day to day, in exchange for hefty fees."
"In the Panama City project, Trump licensed his name for an initial fee of a million dollars, ProPublica and WNYC reported. Trump was also paid a portion of apartment-unit sales and minibar fees. Whether the project succeeded or failed, he was paid as well. A final accounting is startling: the project went bankrupt, had a fifty-per-cent default rate, and the Trump Organization was expelled from managing the hotel, yet Donald Trump walked away with between thirty million and fifty-five million dollars."
"The same pattern emerged in other projects. In Fort Lauderdale, Trump announced that a hotel-condominium project was “pretty much sold out” in April, 2006, according to a broker who attended the presentation. In reality,sixty-two per cent of units were sold as of July, 2006, according to bank records that emerged in a court case. The project entered foreclosure, and Trump’s name was removed before construction was completed. In Toronto, Ivanka referred to the property as “virtually sold out” in a 2009 interview. In fact, 24.8 per cent of units had sold, according to a 2016 bankruptcy filing by the developers. The project was built but went bankrupt, and Trump’s name was removed from it. In New York, Ivanka told reporters in 2008 that sixty per cent of units had sold in the Trump SoHo. A Trump partner’s affidavit revealed that only fifteen per cent had been sold at the time. The building was constructed, but the project went bankrupt, and Trump’s name was removed from it."
Is Fraud Part of the Trump Organization’s Business Model?
The New Yorker
October 17, 2018