The Making of Donald Trump (6 page)

New Jersey required all license applicants to complete a highly detailed personal history under a system designed to fulfill the promise to New Jersey voters that Atlantic City would not become a mob-run Las Vegas East. Applicants had to fill out about fifty pages of details, including every address where they had lived in the past decade, any insurance claims of more than $100,000, extensive details on their business dealings, and any government investigations, civil or criminal. The state was so diligent in vetting would-be casino owners
that it sent detectives overseas to interview people and inspect documents.

Trump was told in advance that investigations took about eighteen months. Unwilling to endure such a lengthy inquiry,
Trump set about arranging special terms to prevent scrutiny of his past, a practice he has continued to this day.

First, instead of going to state government offices in Trenton,
Trump asked John Degnan, the New Jersey attorney general, to come to him. Degnan and G. Michael Brown, the head of the Division of Gaming Enforcement, traveled to the Short Hills office of Nick Ribis, a New Jersey lawyer Trump had hired at the recommendation of billionaire publisher Si Newhouse.

Trump assured Degnan there was no need for a long inquiry into his conduct and business dealings; he was “clean as a whistle”—too young at age thirty-five to have become enmeshed in any sort of trouble. Trump then told him that unless the attorney general expedited approval, he would not build in Atlantic City, where he had already acquired a prime piece of land at the center of the Boardwalk. Finally, Trump hinted that his Grand Hyatt Hotel, next to Grand Central Terminal in midtown Manhattan, could accommodate its own casino. Given Trump’s well-known success in convincing the City of New York to perform lucrative favors, that was a subtle but powerful threat. If New York State lawmakers authorized casinos in the Empire State, it would draw a disastrous amount of business away from Atlantic City, more than 125 miles south of Manhattan.

Degnan was about to make his own run for New Jersey governor. He knew that a Trump lawsuit, a Trump campaign for casinos in New York, or denunciations from Trump about excessive government regulation would not win him any votes. He agreed to Trump’s terms.
He did not promise approval, but did promise that, if Trump cooperated, the investigation
would be over within six months. Trump paid Degnan back by becoming a vocal opponent of gambling anywhere in the East except Atlantic City. Nonetheless, Degnan lost his gubernatorial bid.

Of course, Trump was not clean as a whistle by the standards of the New Jersey Casino Control Commission, even though he has still never been indicted, much less convicted of any crime.

The casino license application asked whether Trump had “ever been the subject of an investigation” by a government agency “for any reason.” He had, but the DGE report made no mention of two such cases and dealt with two others in a footnote, making it clear that Trump did not include them when he submitted his application.

The first investigation was a 1979 federal grand jury inquiry into how he had obtained an option to buy the Penn Central railroad yards on the West Side of Manhattan. FBI agents interviewed Trump twice, telling him the second time that he was a target of the grand jury. The tip that launched the investigation by Ed Korman—then the United States attorney in Brooklyn—came just before the five year statute of limitations was to run out. Korman’s probe was not complete when the deadline came. No charges were filed.

In 1980, John Martin—the United States Attorney in Manhattan—briefly investigated Trump’s deal to acquire the old Commodore Hotel, which was remade into the Grand Hyatt in Midtown Manhattan. The issue, again, involved the Penn Central yards, which (together with the Commodore) were owned by the bankrupt residue of the old Penn Central Transportation Company. At stake was whether the Commodore deal cheated the debtors in the bankruptcy case. No charges were filed.

A third omission was the FBI’s questioning Trump about his dealings with John Cody, the mob associate with three felony convictions and five other arrests who, as local head of the teamsters union, controlled the flow of ready-mix concrete in New York City. Law enforcement reports described Cody as a very close associate of the Gambino crime family. Cody had a history of getting free apartments from builders who wanted to avoid trouble from labor unions. Agents had heard that Cody sought a freebie apartment from Trump. Trump denied it. No charges were filed.

The fourth case was the Justice Department’s 1973 suit accusing Trump of racial discrimination in the rental of Trump apartments, prompting the unsuccessful countersuit filed by lawyer Roy Cohn. Casino owner applicants were asked about being accused of any civil misconduct, which would include racial discrimination in housing. Trump checked the “no” box.

Trump had to know that failing to reveal these matters would make him ineligible to own a casino if investigators found out he had not been candid. The cover of the application declared in large capital letters:

This standard had been strictly enforced for other people. The prevailing legal case, which established how firmly the standard could be applied, involved an early applicant for a blackjack dealer’s license, one of the lowest-level licenses. The woman was rejected as morally unfit. Her offense? As a teenage cashier, she had admitted to a misdemeanor for giving
friends discounts, an offense she left off her dealer’s license application.

After completing its investigation of Trump in a record five months, the Division of Gaming Enforcement report gave the ruling body, the Casino Control Commission, no hint that Trump had been the focus of multiple federal criminal investigations. Two of these cases had been in the newspapers.
The reporter who broke the story, Wayne Barrett, was questioned by the DGE as part of the application investigation. Why the final report omitted these facts is a mystery.

The DGE gave Trump a pass on his failure to disclose. In a footnote to its 119-page report, the DGE said that just before completing its work, Trump had “volunteered” the information he had failed to disclose.
It was an early sign of what two Casino Control commissioners would later say was a pattern of DGE favoritism to Trump.

But there was much more that the commissioners, who had to vote on each licensee, didn’t know.

Beginning three years earlier, in 1978, Trump had hired mobbed-up construction firms to erect Trump Tower. Instead of building a high-rise skeleton of steel girders, Trump chose ready-mix concrete. He did so at a time when other New York developers, notably the LeFrak and Resnik families, were pleading with the FBI to free them from a mob-run concrete cartel that jacked up prices.

Ready-mix was a curious choice at the time. The liquid stone had to be rushed to construction sites and poured quickly to avoid costly problems like hardening in its rotating steel drums or not being wet enough to retain strength as it dried. Using ready-mix made developers vulnerable to union work stoppages, as Trump would later acknowledge. The teamsters controlled the trucks delivering the ready-mix.
The construction unions controlled the construction site gate. The concrete workers and carpenters controlled the pouring and making of forms.
At the top, the mob controlled the unions and rigged their elections, as a federal labor racketeering trial brought by federal prosecutor Rudy Giuliani later proved.

Trump favored concrete. The material has its advantages, like avoiding the costly fireproofing required for steel girders. Trump used ready-mix not just for the fifty-eight-story Trump Tower, but also his thirty-nine-story Trump Plaza apartment building on East 61st Street, his Trump Plaza casino hotel in Atlantic City, and other buildings.

Trump bought his Manhattan ready-mix from a company called S & A Concrete. Mafia chieftains Anthony “Fat Tony” Salerno and Paul Castellano secretly owned the firm.
S & A charged the inflated prices that the LeFrak and Resnik families complained about, LeFrak to both law enforcement and
The New York Times
.

As Barrett noted, by choosing to build with ready-mix concrete rather than other materials, Trump put himself “at the mercy of a legion of concrete racketeers.” But having an ally in Roy Cohn mitigated Trump’s concerns.
With Cohn as his fixer, Trump had no worries that the Mafia bosses would have the unions stop work on Trump Tower; Salerno and Castellano were Cohn’s clients. Indeed, when the cement workers struck in summer 1982, the concrete continued to flow at Trump Tower.

Years later, Barrett—the first reporter to seriously examine Trump’s business practices—was able to expose some of Trump’s dealings. Barrett enjoyed the deep trust of numerous local, state, and federal law enforcement sources. He reported that two witnesses observed Trump meeting at Cohn’s town
house with Salerno, an association that itself could have cost Trump his casino owner’s license. When the Salerno meeting became public knowledge, the DGE did not seek out the witnesses, who, though unnamed, any detective could have identified easily. Or, if it did, its report gave no hint of such an inquiry. Instead, the DGE put Trump under oath.
He denied meeting Salerno. Case closed.

Just as revealing was Trump’s association with John Cody, the corrupt head of Teamsters Local 282. Cody, under indictment when he ordered the citywide strike in 1982, directed that concrete deliveries continue to Trump Tower. Cody told Barrett, “Donald liked to deal with me through Roy Cohn.”

Cody’s son, Michael, told me that his father was both a loving dad and every bit the notorious racketeer people believed him to be. He said that, as a boy, he listened in when Trump called his father, imploring Cody to make sure concrete flowed steadily at Trump Tower so he would not go broke before it was finished.

While Cody did not get a Trump Tower apartment, as the FBI suspected, an especially gorgeous woman friend did. She had no known job and attributed her lavish lifestyle to the kindness of friends. She bought three Trump Tower apartments directly under the triplex where Donald and his then wife, Ivana, lived. John Cody invested $100,000 in the woman’s apartments and stayed there often. Trump helped the woman get a $3 million mortgage to pay for the three apartments, one of which she modified to include the only indoor swimming pool in Trump Tower. She said she got the mortgage from a bank that Trump recommended she use, without filling out a loan application or showing financials.

After Cody was convicted of racketeering, imprisoned, and no longer in control of the union, Trump sued the woman
for $250,000 for alteration work. She countersued for $20 million. Her court papers accused Trump of taking kickbacks from contractors. They further asserted that this could “be the basis of a criminal proceeding” against Trump if the state attorney general were to investigate.

Trump, who insists in his presidential campaign that he never settles lawsuits because that just encourages more of them, quickly settled. He paid the woman $500,000. He has testified that he hardly knew those involved, and that there was nothing improper in his dealings with either the woman or John Cody.

Federal prosecutors soon brought a major case against eight mobsters. The charges included inflating the price of concrete for Trump’s East 61st Street apartment building. In 1986, Salerno and seven others, including the head of the concrete workers union, were convicted in a racketeering trial that included murder, payoffs, and inflated prices for concrete.
The chief trial prosecutor, Michael Chertoff, told the judge that the defendants were “directing the largest and most vicious criminal business in the history of the United States.”

Even after he got his casino license, Trump continued to have relationships that should have prompted inquiries by the casino investigators.

In 1988, Trump made a deal to put his name on Trump Golden Series and Trump Executive Series limousines, as reporter Bill Bastone first revealed. In addition to a TV with a videocassette player and a fax machine, each limo had two telephones. Stemware and a handy liquor dispenser were nestled in rosewood cabinets. A hood ornament melded the Trump and Cadillac brands. The limos were modified at the Dillinger Coach Works, which was owned by a pair of convicted felons.

The first was convicted extortionist Jack Schwartz; the other was convicted thief John Staluppi, a multimillionaire Long Island car dealer identified in FBI reports and other law enforcement documents as a soldier in the Colombo crime family. New Jersey casino regulators (who claimed to oversee the most highly regulated industry in American history) did nothing when Trump made his deal with Staluppi and Schwartz to sell the Trump-branded Cadillacs.

New York liquor regulators proved to be much tougher. They denied Staluppi’s application for a liquor license because of his rap sheet and his extensive dealings with mobsters, including some common friends who provided Trump with his helicopters, as we shall see. But first, a look at Trump’s football team.

E
recting
gaudy buildings did not bring Donald Trump the national attention he craved. It was football that made him famous. Hiring a new general manager for his real estate firm drew little media attention, but “I hire a coach for a football team and there are sixty or seventy reporters calling to interview me.”

Trump’s foray into professional football provides an early example of a business career built on breaking, ignoring, or making up rules.

In August 1983, Trump bought the New Jersey Generals, one of a dozen teams in the nascent United States Football League. The league played its first game in March 1983, five weeks after Super Bowl XVI. The USFL drew decent crowds, but nothing like the National Football League, which took in about $1 billion at the gate that year and another $2.1 billion from network television broadcasts.

Back then, NFL teams were valued in the tens of millions of dollars. Serial sports entrepreneur David Dixon and other USFL founders had started the league as a way for people not
rich enough to buy an NFL team (like Trump) to invest in commercial sports. Trump initially said he paid $9 million for the Generals; he later claimed $5 million (which annoyed the other owners by implicitly reducing the value of their investments).