It's Even Worse Than You Think Read online

  In negotiating trade deals, Trump was inherently conflicted by this shower of trademarks in his duty to the United States and what he has often said is his duty to his business interests.

  Trump has even drawn the Justice Department into acting as a de facto agent for his properties. Hotelier Eric Goode filed a lawsuit asserting unfair competition because since Trump took office, Goode’s Bowery Hotel in New York City was losing business to Trump’s hotel across from Central Park. The claim was a stretch because the two hotels are three miles apart. The Justice Department responded with an observation more marketing than legal. Trump’s hotel gets five diamonds from the American Automobile Association, the government lawyers wrote, while Goode’s rates only four.

  Trump’s defenses in these matters include that he has put his properties into a trust run by his grown sons and that he will give away profits earned from foreign governments. The disgorgement policy is laid out in a glossy eight-page brochure filled with promotional photos. The text is skimpy, forty sentences at best, that narrowly define when an attempt would even be made to identify foreign government business. For example, if a foreign government used direct billing, its payments would be considered for disgorging profits. However, if paid with a credit card, they would not.

  Representative Elijah Cummings, a Maryland Democrat who took the lead in pressing the emoluments issue on Capitol Hill, said, “Complying with the United States Constitution is not an optional exercise, but a requirement for serving as our nation’s President.” Under the emoluments clause gifts can be accepted when Congress grants permission. Cummings offered a simple way out for Trump—ask Congress to grant its consent to accept money at his hotels and golf courses from foreign governments and their agents.

  The Maryland attorney general’s office said that in addition to the corrupting influence of owning the hotels and golf courses, Trump has pitted the interests of states with Trump properties against those without. “No state should be in competition with another state,” when it comes to the president’s business, said Raquel Coombs, a spokeswoman for Attorney General Brian Frosh.

  An American-educated law professor who teaches in Ireland and is sympathetic to Trump’s position offered an interesting historical point about the Old Post Office lease deal, one that illustrates the difference between Trump’s conduct and the scrupulousness of George Washington. Seth Barrett Tillman of Maynooth University Department of Law noted that George Washington wanted to buy a piece of land the nascent federal government owned when he was president. Washington submitted a bid at public auction, just like everyone else seeking the parcel.

  Washington won the auction, but he did so fair and square—and while taking care to not use his position as president for personal advantage. In contrast, Trump uses his privileged position to acquire additional revenue while continuing his lifelong practice of trying to avoid paying what he owes to governments and to other businesses for goods and services.

  Refusals to Pay

  Once they take office, most presidents try to behave with propriety. Even Chester Arthur, as noted earlier, told his corrupt cronies in 1881 to get lost. Harry Truman left office with less money than the little he had going in. As we have seen, Jimmy Carter was so scrupulous that he sold his peanut business lest anyone think he was taking advantage of his position as president. For two years Bill Clinton and his wife paid more than twice as much federal tax as the law required out of an excess of caution about reputation.

  Not so Donald Trump. As president, he did not change his long history of refusing to pay contractors, fighting tax bills, and using two sets of wildly different estimates of the value of his properties. But as president he had to assign those values and certify to their accuracy, an ethical and legal obligation he tried to evade.

  Like all high-level federal employees, Trump files an annual disclosure form with the Office of Government Ethics listing his income, assets, and debts. Its purpose is to “assist employees and their agencies in avoiding conflicts between official duties and private financial interests or affiliations.” The front page of the form, in a bold box, twice warns about the consequences of lying, denying, or concealing. The form says:

  Falsification of information or failure to file or report information required to be reported may subject you to disciplinary action by your employing agency or other authority. Knowing and willful falsification of information required to be reported may also subject you to criminal prosecution.

  The signature box reads:

  I certify that the statements I have made on this form and all attached statements are true, complete, and correct to the best of my knowledge.

  Trump wanted to submit his financial disclosure without his signature. Sheri Dillon, his lead lawyer at the Morgan Lewis law firm, wrote to the Office of Government Ethics saying that since Trump was filing voluntarily a year before the next report was due, she saw no reason why a signature was required. Marilyn Glynn, a retired veteran of the Office of Government Ethics, was astonished that Trump and his lawyer would even think they could file an unsigned ethics form. “It would be as unusual as not signing your taxes,” Glynn said.

  The form showed that Trump was worth nowhere near what he claimed in the campaign when within days he said $8 billion, $7 billion, $10 billion, more than $10 billion, and once $11 billion. The form showed $1.4 billion.

  When the report, properly signed, was filed, it showed that profits at Mar-a-Lago had shot up by 23 percent from $30 million to $37 million. That occurred after President-elect Trump doubled the fee for joining the club to $200,000 and after the Secret Service, cabinet members, and other federal employees paid for rooms, meals, golf carts, and drinks, and the taxpayers picked up the tab for guests like the president of China and his retinue.

  The disclosure form set very high values on many Trump properties. For example, he valued the golf course he plays while staying at Mar-a-Lago at more than $50 million. The Palm Beach County property assessor valued that Jupiter, Florida, property at $18.4 million in 2016. Concerned about how much tax he would have to pay, Trump said that figure was too high and appealed. He said its value was no more than $5 million. Trump had first sued over the value of the property in 2014, saying the $25 million valuation by the county assessor vastly overstated the golf course’s worth. Trump’s property tax appeal papers say he paid $5 million for the golf course when he acquired it in financial trouble in 2012.

  So, which is it—more than $50 million or less than $5 million? What’s a mere 90 percent difference?

  Trump sued the county again in 2017, when he was president, claiming the property was worth far less than what he put down on his Office of Government Ethics disclosure form. This time he didn’t put a value on the property, reporter Jeff Ostrowski of The Palm Beach Post noted when he broke the story.

  If the Jupiter course is worth $50 million, his property tax bill would be a tad more than $1 million. The assessor’s valuation set the property tax at $383,171. Trump said he should pay no more than $104,000.

  Trump valued his Westchester golf course, a short drive north of Manhattan, at more than $50 million on his presidential ethics form. But Trump also protested his property taxes, saying the local tax officials in Briarcliff Manor had grossly overvalued the property. Trump said it was worth only $1.35 million. That’s roughly the value of two homes in the surrounding neighborhood. The golf course covers 140 acres, includes a 100-foot waterfall and a clubhouse that Trump claims has 1.7 acres of floor space.

  There is no way to justify the claim that the golf course is worth less than $1.4 million. Yet that claim stood until David McKay Wilson reported it in the Journal News, the Westchester County Gannett newspaper, and Brian Ross of ABC and I gave it national attention. Trump then revised his tax protest, saying he was willing to agree to a value of $9 million, still at least an 82 percent discount from his ethics filings.

  In California, Trump has said that he invested $264 million in his Palos Verdes Peninsula golf cour
se, a sum out of proportion to the $14 million a year Trump says it collects in revenue. The Los Angeles County assessor set the value of the Palos Verdes property at $21.8 million. Trump argued that $10 million was appropriate. The assessor finally cut the value to $10.7 million, but only after the number of rounds of golf played on the course fell so severely that Trump had to cut prices. So, it seems, contrary to his claims, not every business Trump owns is a money machine.

  We know the Palos Verdes value claims at both ends are absurdities, more evidence of how Trump just makes stuff up.

  On the high end, anyone who actually put $264 million into a golf course property worth just $10 million would win from Trump his favorite sobriquet—loser. On the other end, a handful of residential lots he carved out of the property were sold in 2017 with an average price of about $1.5 million. If a lot for a single house is worth $1.5 million or more, then clearly more than 250 acres of golf links, the driving range, the parking areas and the nearly 40,000-square-foot clubhouse with its ocean view dining room are worth more than $10 million.

  Then there is the story of the Doral, his Miami area golf course. The Doral brought in $115.9 million of revenue in 2016 plus $7.4 million in food and beverage sales for a total of almost $123.3 million. In addition to the “Blue Monster” golf course, the property includes 693 hotel rooms, unlike most of his golfing properties.

  Trump bought the Doral with $104.8 million he borrowed from Deutsche Bank, the German money house infamous for laundering money for Russian oligarchs. The loan was for $106 million, slightly more than the purchase price, so Trump had only borrowed money in the deal, but none of his own.

  He made extensive renovations that he said cost $250 million. More likely the costs were closer to the $19 million he borrowed during the renovation process. His purchase and improvement loans are on exceptional terms that most businesspeople would never get. The adjustable interest rate is about 3.5 percent, low for commercial property loans, with balloon payments due in 2023.

  When Trump took office, the Doral was under a foreclosure order. Trump, as he often does, refused to pay contractors in full. Months after he became president he still owed millions to contractors on the Old Post Office conversion into the Trump Washington hotel. Most contractors just walk away when Trump refuses to pay. That’s because Trump will spend far more to litigate than the amount in dispute to discourage contractors and small business owners he cheats from suing for what they are due.

  One Doral contractor decided he was not going to be cheated. Trump had agreed to pay $135,000 to the Paint Spot, a Benjamin Moore dealer. After all the paint was delivered Trump owed $32,535.87.

  After Trump repeatedly refused to pay, the Paint Spot owner filed a lien against the Doral, a common action by contractors to protect their interests. Trump lawyer Bruce Rogow argued that the Paint Spot lien was invalid. Rogow said the lien named the wrong Trump general contractor.

  Court papers show that Juan Carlos Enriquez, the Paint Spot owner, was so diligent in making sure his rights were protected that he personally had gone to the Doral offices. He asked for the name of the business to put on his papers just in case there was a problem later with payment.

  The lien he later filed did indeed name the wrong business entity—because Enriquez was given inaccurate information.

  A Florida state judge ruled that Trump’s firm knew that it owed the money. When Trump continued refusing to pay, the judge ordered a hearing to inquire as to why. Trump’s designated witness told the judge the Paint Spot was not getting the money owed because Trump feels he “already paid enough.” The judge ruled for Paint Spot.

  Contract law does not work Trump’s way. Imagine if it did. A boss might tell workers that their paychecks were short because they had been paid enough. Looked at from the buyer’s point of view, you could have remorse about that new car you bought and tell the dealer you decided that your deposit was enough and you were not making any more payments. But this tactic of refusing to pay in full, and sometimes refusing to pay at all, has been a constant throughout Trump’s life, involving him in hundreds of lawsuits accusing him of nonpayment. If everyone he stiffed sued, the number of cases would be much greater.

  Trump appealed the order to pay the Paint Spot. An appeals court ruled against the president in April 2017. At long last President Trump’s company, Trump Endeavor LLC, paid Enriquez with interest. Trump also paid Daniel Vega, the lawyer representing the Paint Spot, the amount the judge set as a reasonable cost of enforcing the contract—$280,000.

  Vega said his client got paid only because he “had the fortitude to endure the massive pressure of potentially having to pay” Trump’s legal fees if he lost the lawsuit.

  Trump had previously lost another Florida lawsuit, this one over the Jupiter club. That lawsuit, which he continued to litigate as president, raises serious questions about his integrity.

  When Trump bought the Jupiter course from the Ritz-Carlton hotel chain in 2012, many members resigned, as their membership allowed them to do. They asked for refunds of their membership deposits. Those were between $40,000 and $200,000 depending on the level of their membership. The membership contracts entitled members to get their money back. However, that could take years. Refunds are paid only on every fifth new membership sold. The membership contracts allowed people who resigned to continue playing golf and using the clubhouse, so long as they paid their dues, until they got their refunds.

  Trump ordered them out immediately.

  “As the owner of the club, I do not want them to utilize the club nor do I want their dues. In other words, if you choose to remain on the resignation list, you’re out,” he wrote in a letter after learning that many members applied for their refunds.

  The issue before Kenneth A. Marra, a federal district court judge, was whether Trump now had an immediate duty to pay refunds because he barred the members from the property and refused their dues.

  Judge Marra ruled in February 2017, just after Trump took office, that the contracts were crystal clear. He ordered Trump to pay the refunds with interest. “By categorically denying Class Members all rights to Club access [Trump] revoked or cancelled their memberships, thus recalling their memberships.” That meant refunds should have been paid within thirty days.

  Six months later Trump appealed. Trump argued that people seeking refunds should have continued paying their dues even though he had barred them from the property. That is, as a lawyer for the members who sued said, a “contorted” position. It is also classic Donald Trump. Had people paid for no play it would have cost them much or all of the refunds they had coming to them. And by appealing, Trump knew he would get to hold on to their money longer. He may even manage to delay the case long enough that the members settle for less than they are owed just so they get something back.

  In New York’s Westchester County there were other fights with Trump over his golf course. His Westchester National Golf Club kept the water level in golf course ponds at six feet above the approved level and did not properly maintain drains. The ponds overflowed during a 2011 rainstorm, sending a river of muddy water from the golf course cascading into the quaint downtown. The town sent Trump a $238,000 bill for cleaning up the mess. He refused to pay.

  Gloria Fried, the receiver of taxes for Trump’s golf course in Westchester, said it is disheartening for other taxpayers to cover the costs of Trump’s efforts to get out of his obligations. “It is very difficult when you see someone who has all these assets at his disposal who would rather pay lawyers to avoid his civic duty of paying taxes,” she said.

  Residents of Briarcliff Manor, where the golf course is located, decided to try a new tactic. Their goal was to persuade Trump to quit seeking a discount of 82 percent or more on his property taxes. Residents of the affluent suburb held a protest march on the president’s seventy-first birthday hoping it would shame him into changing his behavior.

  There was not much of chance of that, as indicated by what happened when Trump took the
oath of office. That was when he interrupted his inaugural ride in the presidential limousine in front of his Washington hotel to send a signal that he intended to use his office to enrich himself at the expense of not just taxpayers, but also competitors in business.

  Appointees

  Filling the four thousand positions a new president is authorized to fill is a daunting task even for the best prepared candidates. Donald Trump said he did not expect to win and thus it was no surprise that he did not have an operation under way to identify the best talent along with places for those loyalists who had helped him become president.

  But even a year after the election, the Trump administration has left many jobs vacant. Trump has the slowest rate of appointments of any modern president. And as time passes he is not catching up with those who came before him, but falling further behind.

  By the time Congress took its regular August recess, Trump had not even nominated people for 368 of 591 key positions requiring Senate confirmation. Paul C. Light, a New York University professor who studies the federal workforce, said that “Trump is running at a subglacial speed.” He had just 124 nominees confirmed, less than half the number for Presidents Bill Clinton (252), George W. Bush (294), and Barack Obama (310). The Partnership for Public Service, which tracks presidential appointments, noted that there was not a single case in which the White House had announced an appointment but not yet formally filed the nomination, so the appointments pipeline was empty, too.

  Particularly troubling was Trump’s dawdling on ambassadorships after he created a problem by firing every current ambassador the moment he took his oath. While he had the power to do so, traditionally incoming presidents leave sitting ambassadors, especially career diplomats, in place until the Senate confirms their replacements. That ensures a steady flow of information and assures foreign leaders about continuity between administrations.