LUCKY LOSER: How Donald Trump Squandered His Father's Fortune and Created the Illusion of Success
By Russ Buettner and Susanne Craig
Penguin Press; hardcover, 528 pages; $35.00
Russ Buettner and Susanne Craig are investigative reporters at the New York Times, and since 2016, their reporting has focused on the personal finances of former President Donald Trump. These articles revealed the fortune that Trump inherited from his father, Fred, and the record of business failures found in twenty years of tax returns they examined. Their articles received a Pulitzer Prize and two George Polk Awards. Buettner, who has been with the The Times since 2006, was also a finalist for a Pulitzer in 2012 for articles with Danny Hakim highlighting abuse and neglect in New York's care of developmentally disabled people. Craig joined The Times in 2010, and before this reporting, she covered Wall Street and was the Albany bureau chief.
Lucky Loser is their new book, essentially a deeper version of their reporting and an essential read before an election in which Trump is seeking to return to the White House. Throughout his campaigns, dating back to his first run in 2016, he has always touted his business acumen as a reason for his greatness, but it doesn't take long to see that it's not all that it seems, from his early rise assisted by his father, to his misbegotten adventures in Atlantic City casinos, numerous bankruptcies, and a revival of his image by way of reality television.
The most valuable thing about this book is how they focus on two parts of Trump’s rise in business and politics that are far more consequential than is usually presented - the influence of his father, Fred, and the backing he gave his son, and the role of “The Apprentice” reality television show, and what he reaped from it.
Trump grew up wealthy, as shown by the family's home in Jamaica Estates, the nicest one on the best street there, and the fact that he and his siblings were chauffered to their private school. By the age of 10, Donald was the dominant one among his three siblings still living at home, as his oldest brother, Fred Jr., was already off to college.
Along with that, Donald had a reputation for misbehaving, with one neighbor saying he threw a rock through her window. Then, at the Atlantic Beach Club, a private club in Long Beach, about fifteen miles from Jamaica Estates, Trump would wait by the pool for arriving families and then do a cannonball and soak them, which was verified by a member of the club at that time. It wasn't long before Donald was sent to military academy in Upstate New York, where the authors reveal he was drawn to men with a penchant for violence and an ability to dominate in that realm.
Meanwhile, Fred Trump was looking to expand his empire in Brooklyn beyond his Beach Haven and Shore Haven apartment complexes. In the summer of 1957, he read in a newspaper that a non-profit group called United Housing Foundation (UHF) won tentative approval from the city for a 6,000-unit cooperative apartment complex one mile south of Beach Haven and just five hundred yards from the Coney Island boardwalk.
Fred said it was "Totally unfair!" (sound familiar?) they received a tax abatement and he set about using the connections he built within the Brooklyn Democratic Party to work on Borough President John Cashmore, who had a valuable spot on the city's Board of Estimate. After months of action by the Board being delayed, Fred proposed a solution by which he would take over construction of the project near Coney Island and pay the full property tax bill from the start. Cashmore never revealed how much he helped Fred get what he wanted, and one night, on his way home from a charity event, he keeled over in the back seat and died at the age of 65 of a heart attack.
The project became Trump Village, and before Fred could break ground on it, he had one more major decision, which was to take advantage of two state programs to fund construction, both of which offered a tax abatement, yes, just what annoyed him about the plan the city had agreed to with UHF. One program offered him unlimited profits, which meant he needed a bank mortgage that came with higher interest rates, while the other program was called Mitchell-Lama, and that awarded Fred a low-interest state mortgage, which he would get in exchange for capping his profits at no more than seven percent of construction costs. Of course, he accepted the government loan, but found ways to get around the commitment.
By this time, Fred Trump was maneuvering to keep his fortune in the family, and beginning in the 1940s, he transferred money to his still-young children, including Donald, through clever transactions that remained hidden for decades until Buettner and Craig discovered them. They had access to Fred's financial statement, confidential business records, and public filings as they built the most complete picture of how he built and protected their empire.
Donald was viewed by Fred as the heir apparent rather quickly, and not his oldest son, Fred Jr., or Freddy. What started out as them both learning the grittier tasks, by 1965, Donald was set up to look like a deal maker, while Freddy was tasked with dealing with problems on fire sprinklers and natural gas lines, and was also set up as the face for a plan his father knew was unpopular in Coney Island.
Freddy had a propensity for disappointing his father, as he launched a window replacement project on his own initiative instead of playing the games his father would if tenants complained apartments were too cold. Even though Freddy respected what his father accomplished, he wasn't crazy about how his father did business when it came to working local politician's and judges.
In addition, Freddy was showing that he had interests beyond the family business, something that irked Fred Sr. and Donald. He pursued interests and friendships that didn't have any business value, and was especially focused on flying planes, even at one point attempting to be a pilot for TWA, as well as an interest in boats.
When Freddy hit the point that he lost his father's respect and his dream of being a commercial pilot, his drinking became more problematic. He moved back to the family home in Jamaica Estates and took a job from Fred Sr. overseeing a maintenance crew. On September 26, 1981, he had one of his many episodes of overdrinking, and this was one he would not recover from, and he passed away at 42. In the aftermath, Donald found a way to have the final say over his brother's estate, and he gave his children, Mary and Fred III, far less than they were entitled to, and both of them at this point are quite vocal in the news about how vehemently they oppose their Uncle returning to the White House.
By the 1980s, Donald had already achieved celebrity status, helped massively by his father bankrolling him and paying for expensive lawyers, consultants, and architects. Trump received far more than the "small loan" in 1975, and Buettner and Craig claim that he received over $1 billion in today's dollars via means that required no business experience. Mostly, he spent that money on ill-advised projects that often made little to no economic sense.
In 1986, when Donald turned 40 years old, and he was at the height of his debt-driven dealmaking phase, Fred turned Allen Weisselberg, who was his in-house accountant, over to Donald. He had worked for Fred since 1973, and he set up an accounts payable operation for Donald and handled the finances overall, and moved cash among the businesses to cover shortfalls. Weisselberg was the only person in the Trump Organization that knew the true picture of Donald's real finances. When Buettner and Craig obtained the tax papers for this era, it confirmed what few but those on the absolute inside knew, that even when Donald Trump appeared to be at his best, he was failing.
Jumping ahead two decades, to 2003, Trump's business was becoming sluggish and was in need of a boost. Along came the reality TV show "The Apprentice," and through exclusive interviews with those on the inside, including producers and contestants, Buettner and Craig provide the most complete picture of what really went on with the show that gave Trump fame beyond New York.
When producer Mark Burnett, then known for "Survivor," visited Trump Tower, The Donald's enduring symbol of his empire that had turned thirty years old, it was evident in the musty smell from the carpeting and the chipped wood on most of the furniture. The operation Trump had there was quite small, surprising relative to the build-up that this is the headquarters of a worldwide empire of golf courses, hotels, office and residential buildings. It was just one floor, around 10,000 square feet, with fewer than fifty people working there. Trump's desk also didn't have much evidence of work, as there was no computer or files, just newspaper and magazine articles about him.
"The Apprentice" would turn into a massive hit, and Trump was hooked on his newfound TV fame. However, none of it was real, as the authors reveal, down to how he would choose to "fire" a contestant, and the image he presented of his two consultants in the boardroom.
Before he eventually had his kids to his left and right as his sidekicks in the boardroom, which was pretty humorous, Trump had George Ross and Carolyn Kepcher in the first season. While Trump presented Ross as having worked for him for twenty-five years, it was really only seven years he worked exclusively for Trump after he was a prominent real estate lawyer with other New York firms for fifty years. Kepcher was billed as "the chief operating officer of one of my companies, and Carolyn is a killer," when she had worked at his golf course in Westchester for a decade and made a salary in line with a school principal.
Beuttner and Craig reveal how much Trump needed the financial windfall from the new celebrity bestowed on him from "The Apprentice." and the tax returns they examined document the millions he received from the show and various celebrity deals that he derived from it. The kicker is that, thanks to the losses he took on businesses he ran, he paid no federal income tax.
In addition, through their examination of confidential financial documents from the show, they reveal that Trump made secret side deals with advertisers who were paying millions to be featured on it, and cutting Burnett out whenever possible. While Burnett put up with it for awhile, it wasn't long before he began looking for ways to cut Trump out of revenue streams.
Of course, "The Apprentice" was just one way that Trump knew how to play the media, which he has for fifty years, going back to 1976, when he started a feud with prominent businessman Preston Robert Tisch, who questioned the merits of a tax abatement Trump would receive for the Grand Hyatt. This was the first of many instances of the media feeding his false narratives, and the rise of, as the authors term it, "wealth porn" shows like "Lifestyles of the Rich and Famous" to show how he craved the appearance of wealth no matter what his businesses were doing.
In this excerpt, Buettner and Craig write of how Trump's rejuvenation of his image as a top businessman served what became his ultimate goal: "The week before the 2016 presidential election, Donald J. Trump took a break from campaigning to attend the ceremonial opening of his new hotel a few blocks from the White House. Donald, his wife Melania, and his four grown children posed for photographers in their new Presidential Ballroom, clutching scissors at the edge of a long red ribbon bearing the Trump name.
Don Jr., Ivanka, and Eric, all in their thirties, were by then experienced ribbon cutters. They had each joined their father's business early in his star turn on The Apprentice, when his newfound fame made licensing the use of his name a core focus of the company. They had spent years traveling the world, posing with a shovel or pair of scissors and a developer paying to use the Trump name. The Trumps referred to those buildings as their 'jobs.' But the burdens of the work - the decision-making, overseeing construction, all the financial risk - fell to other companies.
This day represented a throwback to a time when the Trump name on a building signified that it had been built by Donald Trump. Back in 2012, the Trumps had won a bidding war to lease and redevelop the Old Post Office building, an ornate Romanesque revival building with a clock tower piercing the city's skyline. They committed to spending at least $200 million and paying base rent starting at $3 million a year. The Trump offer was so high that it gave a jolt to the government official overseeing the process and compelled other bidders, mostly major hotel chains, to protest that only a naif could believe he would ever make a profit.
At the time, Trump acknowledged he was 'paying too much for the Old Post Office.' But now, standing in his new ballroom as the Republican nominee, he described his family's work on the hotel as the latest example of why he should be elected president.
'Today is a metaphor for what we can accomplish for this country,' Trump said during the ceremony. 'I've been very lucky, and I've led a great life,' he added. 'Now I want to give back to the country which I love so much and has been so good to me.'
The truth of Trump's metaphor would remain hidden in his private records for years. What he had accomplished was to spend so much on the project that he would never make money running it. He would be forced to pump millions of dollars a year into the hotel's accounts to cover his losses. It was, by then, a defining pattern of his career, though one unknown to the outside world. He would eventually be forced to sell, and even that apparent windfall would not be what it seemed.
Throughout the campaign, Trump's most repeated argument for his candidacy leaned on his life in business, which he framed as one man's triumphant rise from modest beginnings. He typically mentioned his father, Fred C. Trump, a twentieth-century builder of tens of thousands of profitable homes and apartments, as a miniaturized contrast to his own enormity. During Trump's first debate with the Democratic nominee, Hillary Clinton, she pivoted from a question on economic policy to gently deride Trump as a child of wealth.
'Donald was very fortunate in his life, and that's all to his benefit,' Clinton said.
Trump took no offense at Clinton mocking his economic policy as 'trumped-up trickle-down.' He could not, however, tolerate Clinton's suggestion that any factor other than his own genius made him rich enough to affix his name to golf courses, apartment buildings, casinos, hotels, and dress shirts."
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