Reimagining Trump

We invite you to join us in a short thought experiment. Before we begin, please set aside everything you think you know about Donald Trump and his past business record. For the moment, we don’t know whether Trump was a serial bankrupt or an astonishingly successful business man.

Could we invent a story – straight out of a mobster movie – that would be consistent with the known facts of Trump’s life? It could be the story of a daring heist – the embezzlement of a billion dollars in borrowed money by two celebrities and their mob associates, pulled off like a magic trick in the public eye. In the aftermath of such a heist, stolen money could have been moved offshore while one of the celebrities laid low, staving off bankruptcy with luckily-timed receipts of “just enough” cash. Then, after the statute of limitations had passed, the money could have started slowly coming home, disguised as business loans.

Imagine that Donald Trump came up in this world as a successful New York real estate developer back when the mob controlled New York real estate development. Imagine that Trump followed this success with a brash entry into the New Jersey casino business at a time when mob interests were vying for control of the New Jersey casino business.

Imagine that organized crime got involved in the stock market as the 1980s progressed. Imagine that Donald Trump got involved in the stock market at the same time, often making bold bids to buy out public companies with borrowed money before backing away and failing to close the deal. Imagine Donald Trump even got sued by Federal regulators for using shell corporations to amass secret positions in publicly traded companies.

Imagine Trump borrowed $675 million in junk bonds to finance the purchase and construction of his Taj Mahal casino. Imagine that Trump’s business partner in that deal had proven ties to the mafia and later bankrupted his own company with $950 million in debt. Imagine that brokers were actually indicted for profiting off of insider trades based on that deal. Imagine that Donald Trump had managed to borrow as much as $2 billion overall by June of 1990, when he signed a five year plan to restructure and reduce his debt obligations.

Imagine that Trump somehow escaped this loan default without losing control of his lucrative casino, thanks to the negotiations of Wilbur Ross and Carl Icahn, both of whom are now part of his Administration. Imagine that for some reason, lenders ended up letting Trump keep a surprisingly large share of his assets and live on an allowance of $450,000 per month despite having lost hundreds of millions of dollars.

What if all this were one of the greatest heists of the twentieth century?  Imagine that Trump and his associates actually embezzled a huge share of this borrowed money, secreting it away in offshore accounts. Imagine that the spectacular bankruptcy of his casino and the ensuing cash flow problems were all a show, designed to legitimate the disappearance of money that had been embezzled, not squandered. What if Trump’s business empire doesn’t make sense because it’s all an elaborate shell game designed to hide the movement of stolen money? A lot of stolen money?

What might we expect to find if such a thing were possible? During the “near-bankruptcy” years, Trump’s financial solvency would have to hang by a thread, shored up by mysterious loans from shadowy sources.

Would we find a detailed study of Trump’s finances in June of 1995 prepared by New Jersey casino regulators that told us “for this four-month period, DJT’s cash position fell below the forecasts submitted on February 3, 1995”? Or that Trump’s cash position was only maintained by transactions that “appear to be one-time occurrences and do not represent continuing sources of funds”? Would we learn that Trump was facing a “June 30, 1995 maturity of the Override Agreement” that had resolved his debt negotiations five years earlier? Would the regulators certify Trump’s financial stability by noting “DJT’s flexibility is limited. However, DJT has demonstrated an ability to adjust cash flow requirements when necessary”?

Imagine what would happen if Trump began repatriating his offshore cash in the form of business loans from foreigners shortly after that bank agreement expired in June of 1995. This could be a classic money laundering technique known as a “loan-back.” First you steal some money. Then you secretly move it offshore. Then you give your stolen money to a bank or business overseas. They keep a cut, and loan back the rest to you. Then, you live off the loan itself, treating it as tax-free income. To an outside observer, you would seem to be very rich despite being terrible at business.

Imagine that a group of Hong Kong investors had bought the mortgage to a key Trump development out of foreclosure for $88 million, agreeing to “assume Mr. Trump’s debts and pay him 30 percent of the profits, as well as fees for helping to manage the development of the site, which they agreed to finance.” Would such a deal make more sense if it had been underwritten offshore with Trump’s own cash, embezzled from the earlier bond deals?

Or imagine that Trump purchased a 72-story skyscraper for a million dollars in cash from a Hong Kong-based entity in the latter half of 1995 (only months after the investigation of his finances by casino regulators had concluded). Imagine that Trump claimed to have invested an additional $65 million renovating the building by 2004. Imagine that the building was encumbered with $145 million in mortgages by 2005. Imagine that Trump had somehow come up with that $1 million in cash and secured those millions in mortgages in the same year that he reported losses of $916 million on his taxes. Wouldn’t we wonder why he’d borrowed $80 million more than he had spent? Could such a building, bought for so cheap, allow Trump to live tax-free off of the loans themselves, as though they were income for years?

How would your understanding of Trump change if many of those perplexing business deals he struck after 1995 weren’t bad business loans at all? What would we expect to find if we were looking for evidence of a  scheme? A foreign bank that has loaned $364 million to Trump despite a checkered history of repayments, but where Trump maintained brokerage accounts worth at least $20 million and possibly as much as $50 million?

What if Trump really had been a lot wealthier this whole time than any of us realized? What if that wealth had stemmed from a billion dollar stock fraud pulled off in 1990, and all those strange loans from foreigners would have just been Trump’s stolen money coming back home? What would we expect to find if such a story were true?

We’re sorry we’ve been so quiet lately. We’ve been doing a lot of research into Trump’s business dealings. Many of them are even starting to make sense.