A far more important talking point than Donald Trump’s taxes and the small businesses he has screwed is not getting much notice, the fact that Trump had an initial public offering in his name in 1995. When someone is the CEO of a publicly traded company it becomes a track record of that person’s ability to handle a public trust. If anyone wants a preview of what Donald J. Trump can do for this nation, just ask Americans who were trying to save for their retirement when they placed their full faith and trust in Trump by purchased common shares of Trump Hotels and Casino Resorts.
With all of the Trump surrogates spinning Trump’s NYT’s 1995 tax form revelation with “it shows how Trump was able to come back from difficult times” a closer examination of the few facts in a landscape where disclosure is required should help lift the fog that masks the Donald. In fact since his private business dealings are shrouded in secrecy, Trump’s short miserable record as the head of a publicly traded company is the only real means we have of judging him. From a publicly traded company we can find out quite a bit about a candidate who won’t disclose his taxes and keeps referring to some personal finance form that can’t possibly be verified. We do know that during Trump’s 13 years as chairman, the company lost $1.1 billion. We also know that the stock that had Trump’s name on it fell from a high of $35 to just 17 cents and while Trump was making his so called “dramatic comeback,” he made plenty of money as chairman while wiping out all of his loyal investors.
The stock began trading that same tax year, in 1995. First with an initial public offering (IPO) of 10 million shares at $14.00 a share. Then in April of 1996 the stock was broadened out (or diluted) to 24 million outstanding shares at $31.25. It spent a short time trading at around $35.00 until analyst started taking a closer look.
By April of 1997, when the stock was trading at just $9.25, the Motley Fool was recommending not just selling Trump’s stock but investing in short sales on the doomed stock. In 2002 the stock was topping out at around $2.50 per share and analyst had already concluded that the company would require a reorganization which would leave equity holders with nothing. A few more years and Trumps publicly traded company, that was all smoke and mirrors from the printing of the first prospectus until the day it became totally worthless, ended up delisted from the NYSE.
According to CNN Financial, while the stock posted losses for every single year it was public, Donald Trump made $39 million running failed casino company.
DJT paid Trump handsomely each year. His salary, bonus and options totaled about $20 million.
An additional $18.5 million came from what the filings called "other" compensation. That includes a web of inventive deals: -- complex consulting contracts that paid Trump for consulting with his own company; -- licensing deals under which DJT paid Trump to use the Trump name; -- reimbursement for the times the company used his personal jet or golf courses for VIPs.
In other words, a company that Trump controlled was paying Trump to use other stuff he owned, including his name.
Note that this is not $39 million total but $39 million per year while he was running the company into the ground! At the IPO Fortune Magazine estimates an $82 million payday while he still continued to hold a major share of the company and then he paid himself $39 million a year! Nice work if you can get it.
After that take a look at how dirty it was when it all happened. USA Today helped explain Trump for the scam artist he is with Trump's company tricked investors. Here's how
Trump Hotels & Casino Resorts, a once publicly traded company whose shares dropped more than 90% when the firm sought bankruptcy protection, was charged in 2002 by the Securities and Exchange Commission for reporting financial results in a way that made it appear the company was doing better than Wall Street analysts expected due to "operational improvements," the complaint said. But that was a "false and misleading impression" that initially fooled investors into driving the stock price higher, the SEC said.
The story explains that Trump’s company was the first U.S. corporation to be accused of using "pro forma" accounting to exaggerate results and mislead investors. Then the laws governing corporations had to be changed to prevent anyone else from preforming another Trump style bilking.
But there is so much more Trump to digest here. After reading “The Art of the Steal” by the Pulitzer Prize-winning investigative reporter David Cay Johnston, it all comes into focus. Donald Trump was hosting his own little Enron in Atlantic City. Only Houston survived Enron while Atlantic City surviving Trump, not so much.
Mr. Johnston points out that before the stock went public, to set off taxed due on his privately held investments “Trump agreed to forgo his future right to take about $1 billion worth of depreciation on his casino hotels.” That means the poor investors ended up owning shares of real estate with greatly diminished tax benefits while Trump, using the net operating loss from his 1995 taxes did not have to pay taxes on his big payday and got that ridiculous salary tax free too.
The $82 million Trump was paid by the publicly traded company bearing his name should have all been received income tax-free thanks to those NOLs. Thus his mismanagement, and the tax benefits he stripped out of the casino hotels before he sold them to shareholders, made him richer and them poorer.
So while Trump made money at every turn, the banks that lent him money, the workers and small businesses who delivered for Trump, and the investors in his casino company all got stiffed. And while they paid taxes on whatever income they did manage to collect, Trump enjoyed at least $916 million of tax-free income.
The new publicly traded company even took out loans that were used to pay off some of Trump’s remaining obligations to the banks from when he owned his casinos outright.
To explain, the most baffling part of this scam, why bankers would continue to do business with Trump, Mr. Johnston points out that Trump threatened endless litigation unless the 70 banks he owed money gave him millions more in new loans at low interest while the anti-immigrant candidate used poor Polish workers a pawns to prove his point.
What made the litigation threat credible was Trump’s refusal to pay more than 150 illegal immigrants who demolished the Bonwit Teller department store to make way for Trump Tower. A federal judge ruled that Trump conspired to cheat the workers, who never did collect all of their $4-an-hour wages despite an 18-year struggle.
The bankers realized that a man who would endure almost two decades of litigation to avoid paying such meager wages might tie them up for eternity over the billions of dollars owed to them.
There is still far more to examine about Trump in “The Art of the Steal” and I recommend you read the rest. But while this all went down, Trump having a payday while everyone else involved got screwed, who in their right mind would vote for him after reading that story?
It really isn’t much different from most anything else Trump has touched but this was the worst sort of black eye a stock exchange can experience. The end result was the ugliest word in in investing “delisted.” A stock in his own name (the ticker symbol was Trump’s initials) and after investors backed him in the traditional capitalist fashion, after he screwed everyone and undermined investor confidence, Democrats and the media still allow him to claim he is a great businessman without laughing in his face and saying “The Way Ken Lay was a great businessman?”
It was brilliant that Secretary Clinton had Alicia Machado to frame Trump’s thoughts on women in the first debate. There are probably many older men and women for the Clinton camp to find who fell for what Trump’s publicist was peddling about him and figuring that nobody can possibly lose money in casino gambling they put their faith in Trump. Those unsuspecting investors probably deserve a little time in the spotlight too. That way they can explain how investing in Trump has them eating cat food instead of shopping at Whole Food.
I would love to hear Hillary ask in the next debate “What was Trump promising investors back in 1995? Was he promising that they would lose everything? Because that’s what happened?” And when Donald gets around to his “strong polling” one very embarrassing question would be “How are you polling in Atlantic City, New Jersey? Because it seems that you went to a shining city by the ocean and all by yourself, you turned it into an economic depression zone.”
And then there’s the icing on the cake. The second presidential debate is this Sunday and on the following morning, Monday October 10, 2016 at 5:59 AM the Trump Taj Mahal will cease all casino and hotel operations. What a great place for a photo op and there’s no traffic driving into town anymore, it’s not busy like before Trump got there. I would love to see both Bill and Hillary Clinton tour those Atlantic City soup kitchens so the workers there can explain how Trump created their jobs. Hillary can call it “A Preview of Trump’s America” while Bill breaks bread with some former Trump employees and gets to say “I feel your pain” once again. Then go to one empty shell of a building after another to show the shadows of where Trump used to have his name in lights. After that take a walk on the famous Boardwalk in Atlantic City to ask the small business owners there “So what do you think of Donald Trump?”
