Judge Arthur Engoron’s ruling on Friday concludes the nearly century-long history of the Trump Organization in New York in disgrace and ruin. For his financial fraud, Donald Trump must pay $355m in fines. He is suspended for three years from doing business in New York. His sons – Donald Jr and Eric, executives of the company – are barred for two years. “New York means business in combating business fraud,” the judge stated in his decision. The Trump brand is now adjudicated to be synonymous with fraud and failure.
“In order to borrow more and at lower rates, defendants submitted blatantly false financial data to the accountants, resulting in fraudulent financial statements,” the judge wrote in his decision. “When confronted at trial with the statements, defendants’ fact and expert witnesses simply denied reality, and defendants failed to accept responsibility or to impose internal controls to prevent future recurrences … Their complete lack of contrition and remorse borders on pathological.”
The hundreds of millions that Fred Trump bestowed on his son could not prevent him from steering the family legacy on to the rocks.
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The Trumps were Democrats. They had always been Democrats. Fred Trump had made his fortune through the Democrats. There was no Trump Organization apart from the Democratic organization of Brooklyn. Who Fred knew was what he was worth.
In 1977, Fred Trump and Donald Trump reached a pinnacle of acceptance: they were listed as sponsors on the invitation for New York’s Salute to the President, a fundraiser for the Democratic National Committee held in the ballroom of the Waldorf Astoria. The political, corporate and social cream of the city were present to toast Jimmy Carter. The Trumps’ high-dollar donation got them an invitation to the exclusive party at the Upper East Side home of the dinner’s organizer, Arthur Krim, the chair of United Artists.
The Trumps mingled there with Governor Hugh Carey, Mayor Abe Beame, Senator Daniel Patrick Moynihan and John Glenn, Hubert Humphrey and Vice-President Walter Mondale. Donald posed for a photo with the president. Between them stood an unsmiling Louise Sunshine, Fred’s executive vice-president of the Trump Organization, his all-purpose lobbyist, and finance co-chair of the New York Democratic party. She was the granddaughter of Barney Pressman, who had founded the Barney’s department store.
Donald Trump had been working out of his father’s nondescript office on Avenue Z in Brooklyn. But he was restless being sent as his father’s rent collector. He was intent on conquering the heights of Manhattan, making all the money in the world, basking in the glow of fame and being ushered past the rope line into the pulsating clubs with the celebrities and the models. He had the arrogance and complacency of a pampered heir who wouldn’t have to claw his way upward.
Donald was uncontrollable and Fred was controlling. Fred was self-disciplined, meticulous down to his monogrammed shirts and cufflinks, and brutally demanding. He had dispatched the unruly Donald to a military academy in his early teens hoping he would learn to conform. Now he thought he might harness Donald to be useful to the family business.
Fred bought a new Cadillac every two years and he wanted Donald to be more than the equivalent of a hood ornament. His older son, Fred Jr, his namesake, had sorely disappointed him. Resisting Fred’s pressure, Fred Jr had gone off to become an airline pilot, only to become an alcoholic, and was at the moment living in the top floor of the Trump home in Queens. Fred had ordered his sons to be “killers”. Fred and Donald derided Fred Jr as a loser. Fred’s hopes devolved on to his second son.
Fred was hardly an outlier among the powerful at Krim’s townhouse. He had helped make many of the New York politicians there. They were among his closest friends, some since the 1930s and 1940s. Donald trailed after Fred through the crowd until finally Fred located the DNC official with whom he had arranged his donation.
The DNC official, a friend of mine, recalled that Fred had asked him: “Wouldn’t it be great if Donald got experience in Washington?” Clearly, he wanted to get Donald a gig so that he could make national connections. Donald’s expression was unhappy. He opened his mouth, getting out only a couple of words: “Well, I … ”
Fred cut him off before he could say anything else. “Shut the fuck up,” he said sternly. “We didn’t fucking ask you. Who the fuck cares what you think?” And Donald shut up. The official told Fred he would look into it. But Donald wasn’t interested in Washington, at least not then.
***
Donald Trump had crossed the East River into Manhattan with the ambition to be the king of the heap. Walking through Central Park in 1974 with the manager of the bankrupt Penn Central yards he sought to develop, he boasted: “I’ll be bigger than all of them. I’ll be bigger than Helmsley in five years.” To attain the stratospheric level of Helmsley was Donald’s ultimate aspiration.
He was referring to Harry Helmsley, the billionaire real estate developer, owner of the Empire State Building and other trademark properties, married to the flamboyant Leona Helmsley, notorious tabloid grist as the Queen of Mean. (In 1988, Helmsley was charged with financial fraud for inflating the value of his buildings and tax evasion, but was judged too frail to stand trial, while Leona was convicted and sent to prison.)
Then, Trump and the Penn Central manager walked down Lexington Avenue, where a tabloid headline shrieked about the arrest of a New Jersey mayor for taking an $800,000 bribe. “There is no goddamn mayor in America worth $800,000,” Trump said, according to his biographer, Wayne Barrett. “I can buy a US senator for $200,000.”
But Donald had not bought any politicians. He stood on his father’s wealth and connections surveying the island he planned to capture as his own. Donald would catapult to the top by starting at the top.
Fred Trump built his real estate empire favor by favor, brick by brick. From the 1930s onward, starting in Flatbush, relying on the New Deal program of the Federal Housing Authority to underwrite loans, he made millions, then tens of millions, then more. He was the biggest operator in Brooklyn. He built thousands of homes and owned tens of thousands of apartments. He didn’t want to edge into the Manhattan market, where the land prices were high and the competition fierce. He had Brooklyn wired.
Fred was an indispensable player in the borough’s political machine. His rise in Brooklyn would explain Donald’s calculation about invading Manhattan. In the naked city, Fred’s story was inextricable from that of the Madison Democratic Club. He stood at the center of a dense network of patronage, influence and money. From his relationships and donations flowed land deals and tax abatements. The clubhouse was his cornucopia.
Fred’s clout originated with his relationship with the Brooklyn political boss Irwin Steingut, a powerful member of the New York state assembly for 30 years and once the speaker. His chief fundraiser, Abe “Bunny” Lindenbaum, provided the insurance for Fred’s buildings. On Steingut’s recommendation, he became Fred’s attorney. Steingut’s accountant and Lindenbaum’s closest friend, Abe Beame, became the city comptroller.
Fred Trump and Beame were friends for 30 years, with Trump financially backing his career for decades. After Steingut’s death in 1952, his son Stanley succeeded him in the assembly and as the Brooklyn boss. Fred’s biggest project, Trump Village, received approval from the city planning commission and the board of estimate in 1960 after Lindenbaum and Steingut lobbied its key members. Fred got a 72% tax write-off on a parcel, too. A week later, Lindenbaum became the city’s new planning commissioner.
Beame was elected mayor in 1973 and Stanley Steingut became speaker of the state assembly two years later. Moreover, Hugh Carey had been elected governor in 1974; Bunny and the Trumps were the first donors to his campaign. The Trumps had co-signed a loan for $23,000 to open his headquarters. The influence of the Brooklyn machine – and Fred Trump – was at its peak.
Donald not only had his eye on the Penn Central yards but also spotted the seedy Commodore hotel next to Grand Central Station. The part-owners of the Penn Central property were owners of the hotel. He thought he could get a two-for-one bargain. Donald got an agreement from the Hyatt hotels to manage it, but it was non-binding. He needed a huge tax abatement to finance the $80m renovation to pay the mortgage and property taxes. This is when the art of the deal kicked in. Its secret was the friends of Fred Trump.
Beame and Steingut got behind a bill in the assembly crafted to provide exactly this unique type of tax abatement. Unfortunately, the assembly was overwhelmed with the city fiscal crisis and adjourned before passing it in the 1975 session. Beame’s administrator for the Lower Manhattan Development Corporation, Michael Bailkin, devised a scheme for Trump to buy the Commodore from Penn Central and donate it to the city, which would pay the taxes to itself and lease it to Trump for 99 years, who would reap the benefits but pay no taxes.
Donald hired a lawyer, Bunny Lindenbaum’s son, Samuel “Sandy” Lindenbaum, who would become renowned as the “dean of zoning”. The idea of the 99-year lease wouldn’t fly. If the city owned the hotel, it would have to put it up for sale to public bidding. So Bailkin proposed using the state’s Urban Development Corporation as a vehicle to give the tax exemptions and evade public bidding.
Promising this to the brash young Donald was a problem. Mayor Beame had his deputy John Zuccotti check in with Fred, who promised he’d oversee it all. That satisfied Beame, who announced the project as the first of his brand-new business incentive program. But it still had to pass the board of estimate, where there was static from the Hotel Association, led by Helmsley, peeved because its operators would not get the tax abatement under the plan.
Louise Sunshine, Fred’s right-hand person in the Trump Organization, also fundraising for Governor Carey’s re-election, happened to be hired just then as the lobbyist for the UDC. She arranged with Carey’s chief counsel, Charles Goldstein, for the city development chief, Richard Kahan, to be appointed the new UDC head, who wrote Donald a letter approving the terms of the Commodore deal. But it still had to pass the hurdles of the board of estimate and the bureau of franchises.
Stanley Friedman, the deputy mayor and former secretary of the Bronx Democratic organization, took charge. He enlisted help in wrangling quid pro quos from Roy Cohn, mob lawyer extraordinaire, another heir to power, whose father had been an influential judge in the Bronx. Cohn happened to be the lawyer for the Commodore. The consent agreement was rewritten so that Donald would pay less in franchise fees for using public space than the hotel restaurant would earn in a day. The boards approved the deal.
But there was one more requirement. There would be no mortgage unless it was financially guaranteed by a third party. Donald himself didn’t have the money. The banks lacked confidence in him and withheld financing. Fred stepped forward to sign the guarantee. Only then did the banks provide the money.
“When it came to the financial bottom line of the deal, Donald was barely a factor,” wrote Wayne Barrett. An investigative reporter for the Village Voice, Barrett was the most dedicated pursuer of fact about Trump’s financial chicanery for decades.
The day after Beame left office, with the deal signed, sealed and delivered, Stanley Friedman joined Cohn’s law firm. (He would be convicted of corruption in 1986 and sentenced to prison.)
The Commodore deal was the making of Donald Trump. All his father’s powers had been exerted invisibly to move the pieces. Donald entered into Cohn’s demimonde for the first time. While Cohn applied his dark arts to secure the Commodore, he convinced Donald to force his fiancé, Ivana Winklmayr, to sign a harsh pre-nuptial agreement. Donald owed him. Roy was a man for all seasons. Donald brought Roy as his guest to the Carter event. Roy hated Carter.
***
Donald stomped through the city like he was King Kong. He built Trump Tower on Fifth Avenue with ready-mix cement from the mob, the “Concrete Club”, they called it, provided by Anthony “Fat Tony” Salerno, boss of the Genovese crime family, the client of Roy Cohn, and under the supervision of teamster boss John Cody, under the control of Paul Castellano, boss of the Gambino crime family. Cody bought an apartment for his mistress in the completed building without filing a loan application to show his income.
(Cody was convicted of labor racketeering in 1982 and sentenced to prison. Salerno was convicted in 1988 and sent to prison. His contract for concrete to build Trump Plaza was listed in his indictment as one of the charges of racketeering. Castellano was assassinated at Sparks Steak House in Manhattan in 1985 on the orders of John Gotti, who assumed control of the Gambino family.)
“If people were like me, there would be no mob, because I don’t play that game,” Trump said when asked later about his ties to what he called “OC”, or organized crime. He called himself “the cleanest guy there is”.
Fred’s Cadillac bore the vanity license plate “FCT”. (His middle name, from his mother’s family, was “Christ”.) Louise Sunshine arranged a little present for Donald to get his own vanity license plate reading “DJT”.
He wanted to shake off the image of the outer borough. He raced in his limo from Fifth Avenue to a red banquette at 21 for lunch with Roy, to leering at the celebs and models frolicking at Studio 54.
Donald tried to imitate Fred’s methods, but misunderstood them. Fred had slowly nurtured relationships with the Brooklyn clubhouse. The line between business and friendship was seamless. There were Brooklyn Democratic dinners where Fred brought his family. He hosted lavish parties at the country club, inviting everyone and their families. He knew how to become the godfather. But when Beame left office, Fred’s glory days of connections were fading.
Donald was crass, belligerent and bullying. He believed that the conspicuous display of gold-plated wealth showed an irresistible Midas touch and that all publicity was good publicity. He threw $70,000 in campaign contributions at Ed Koch, who replaced Beame, and turned up at his election night victory party to celebrate like he had made Koch.
Koch, a former reform Democrat, was voluble and insecure, with a penchant for turning political disagreements into personal battles. Trump yelled at him for easements and tax abatements. Koch detested him. “I wouldn’t believe Donald Trump if his tongue were notarized,” he said.
Trump bloated his holdings, emblazoning his name in gold letters on everything he could get his hands on. He bought the Eastern airline shuttle and renamed it the Trump shuttle. He started the United States Football League. He built the Taj Mahal casino in Atlantic City. He dumped Ivana for an actress, Marla Maples.
And he floated his greatest scheme of all, a multibillion-dollar complex over the West Side railyards, “a new mini-city on the Hudson River … containing thousands of luxury apartments, the world’s tallest building, a huge shopping mall and a television studio complex that he said would be ‘the largest and most spectacular’ in the world,” according to the New York Times. He called it Television City. In his plan, NBC would relocate from Rockefeller Center. Then he changed its name to Trump City. He would rebrand New York in his own image.
After seeming to approve the deal, Koch killed it in 1987. He wouldn’t become in effect Trump’s partner through tax abatements and zoning. The Television City debacle was the reverse of the Commodore bonanza. Trump called Koch “a moron”, and Koch called him “greedy, greedy, greedy”, and said that if he was “squealing like a stuck pig, I must have done something right”. The house of cards began to crumble.
Trump tried to cover his financial crisis with stories about his sex life. He leaked to the New York Post a fake quote, supposedly Maples’ statement about his sexual prowess, timed for just after Valentine’s Day 1990, splashed on the front page: Best Sex I Ever Had.
Spy magazine, edited by Kurt Andersen and Graydon Carter, had pegged Trump as “a short-fingered vulgarian” from the start. Along with the Village Voice, Spy pointed out Trump’s financial trickery for years. In April 1991, it published a compendium: How to Fool All of the People, All of the Time: How Donald Trump Fooled the Media, Used the Media to Fool the Banks, Used the Banks to Fool the Bondholders, and Used the Bondholders to Pay for the Yachts and Mansions and Mistresses.
Trump’s Atlantic City properties were leveraged with debt to the hilt. In November 1991, he failed to meet the debt payment. Fred dispatched a lawyer to buy $3.35m in chips at the Trump Castle casino to give Donald cash to meet the bill. The New Jersey gaming authorities found him guilty of violating the Casino Control Act and fined him $33,000. In 1998, the US Treasury fined Donald’s casino $477,000.
Trump filed six bankruptcies. He was forced to sell his airline, the Plaza Hotel on Fifth Avenue and his yacht, named Princess for his daughter Ivanka. The Taj Mahal and the Castle went belly up. Fortune dumped him from its list of billionaires. Forbes reported he had a negative net worth. The New York banks cut him off from future loans. They put him on an allowance to give him a chance to repay part of his debts. His casino company filed for bankruptcy protection in 2014 for the fifth time.
Trump eventually found a new lender to guarantee loans in Deutsche Bank. Its records were subpoenaed in the New York state financial fraud case. “The bank did not trust all of Trump’s numbers, but it underestimated the depth of Trump’s lies,” Forbes reported in 2023.
What If You Could Have It All? read the chyron to the throbbing beat of the O’Jays’ For the Love of Money, to open The Apprentice television series in 2004, featuring Trump striding as the master of the universe. His limo, his helicopter, his Trump Tower and even the bankrupt Taj Mahal flashed as fantasy images of his brilliant success. He was the top of the list, king of the hill, a No 1.
During the 2016 campaign, Donald lied that he was a self-made man who started with a measly $1m loan from Fred. But the New York Times, after reviewing his tax records, determined in 2018 that he had “received the equivalent today of at least $413m from his father’s real estate empire”.
Fred died in 1999. He is not here to buy the chips.
Sidney Blumenthal is a Guardian US columnist. He is a former senior adviser to President Bill Clinton and Hillary Clinton and has published three books of a projected five-volume political life of Abraham Lincoln: A Self-Made Man, Wrestling With His Angel and All the Powers of Earth
