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What, exactly, is Donald Trump's affair? The Trump organization is unusual in that it does not seem to be doing the same thing very long. He was an apartment builder for the lower middle class, then a builder of luxury buildings and hotels, then a casino company and, more recently, a trademark licensing company selling his name to anyone wishingASSET"Blason on a building, a bottle of water or something else. These are extremely different companies. The way a company raises funds, plans projects and makes profits is totally different in each of these areas. Middle class housing, for example, is usually a slow and stable business in which profits come from careful cost control; Luxury housing, on the other hand, is more risky, with bigger and faster rewards but a higher risk of failure. Different types of accountants, salespeople and construction managers are hired. The casinos are quite another thing, and the licenses are completely different from all these other companies.
It is becoming increasingly clear that, in the language of business schools, the main competence of the Trump Organization is to take advantage of false and misleading information and, possibly, fraud. There are many ways to make money in real estate. The normal method is to identify a need in the market, to raise funds by convincing lenders or investors that your plan is sound, to set up the structure, then to make a profit from the current rent or sale. d & # 39; units. The key variables in such an enterprise are what is known as market-product fit – the accuracy with which the developer understands the housing needs or business needs of a location – and the ability to execute correctly in reducing costs without sacrificing the right level of quality. . Perhaps more than anything, practitioners of a successful real estate business obsessively focus on maintaining the ability to borrow money cheaply. The profits on many real estate projects are often due to simple calculations: the more you can borrow money to build, the less money you make. The more you are trustworthy, after a long period of successful projects, the less interest banks have on their loans, and the more profits you can make, the more successful you will be.
Quite famously, Trump has oversold luxury housing, has spent too much on his casinos and has completely failed his brief incursion into a regional airline. Much worse, Trump has done the opposite by ensuring a long tradition of fiscal prudence allowing him to borrow money cheaply. Despite the mixed record of the company, it has survived and grown. It's something good, so what is it?
This month, two incredible investigative stories have given us the opportunity to lift the hood of the Trump Organization, to look inward and begin to understand what the truth is about. company of this unusual company. This is not a happy picture. the Time published a remarkable report on October 2, which showed that a large part of the profits made by the Trump Organization did not come from successful real estate investments, but from a tax fraud conducted by federal and state governments. This week, ProPublica and WNYC have co-published a breathtaking story and podcast "Trump, Inc." that can be considered the international companion of the Time piece. They show that many of the Trump Organization's international transactions have also been marked by financial fraud, including money laundering, fraudulent borrowings, direct lies to investors and other potential crimes.
The reporters – Heather Vogell and Peter Elkind of ProPublica, as well as Andrea Bernstein and Meg Cramer of WNYC – have identified a similar trend seen in transactions around the world. The basic scheme worked as follows: a local developer based in Panama, the Dominican Republic, Florida, Canada or another place pays Trump in advance for the use of his name and agrees to pay him a share of every sale, not just units, but things like hotel room minibar items or even, bathrobes. These projects typically require the sale of at least 60% of units before the start of construction work. The same set of problems has occurred in several projects. Most of the first units would be sold to ghost buyers, hidden behind front companies. Donald Trump or, often, Ivanka Trump misled future investors by telling them that a much larger percentage of shares had been sold than was factual. More and more investors are investing money, often investing enough in the project to start construction. Eventually, the project fails and goes bankrupt. Many of these investors are losing all their money. But the assets do not do it. They have been paid in advance and are paid continuously until the project is closed. They are paid for their name and for the supervision of the project. If the premises are open, the Trumps manage the property day-to-day, in exchange for heavy costs.
In the Panama City project, Trump has given its name to a license for an initial amount of one million dollars, ProPublica and WNYC said. Trump also received some of the apartment sales and minibar fees. Whether the project succeeds or fails, he was also paid. One last accounting is surprising: the project went bankrupt, had a default rate of fifty percent, and the Trump Organization was excluded from the management of the hotel, but Donald Trump left with between thirty and fifty-five millions of dollars.
The same pattern appeared in other projects. In Fort Lauderdale, Trump announced that a condominium project was "almost fully sold" in April 2006, according to a broker who attended the presentation. In fact, sixty-two percent of the units were sold from July 2006, according to bank records that were revealed during a lawsuit. The project entered the seizure and Trump's name was removed before the completion of construction. In Toronto, Ivanka described the property as "near-exhausted" in a 2009 interview. In fact, 24.8% of the units had been sold, according to a 2016 bankruptcy report filed by the developers. The project was built but went bankrupt and Trump's name was removed. In New York, Ivanka told reporters in 2008 that 60% of the units had been sold to Trump SoHo. The affidavit of a Trump partner revealed that only fifteen percent had been sold at that time. The building was built, but the project went bankrupt and the name of Trump was removed.
The Trump Organization did not answer a long list of questions about its ProPublica and WNYC transactions. The White House had no comment.
Many people are losing in these diets. Often a bank loses money that it has loaned or, alternatively, individual investors who buy bonds to support the project lose their money. People who pay a down payment on units often lose their down payment. When everything collapsed, the assets in many cases ceased to claim – as was the case during the rising period – to be co-owners and developers of the project and began to declare that they were mere holders of license that has no active involvement in the project. business. This is often wrong, as the lawsuits revealed that Trumps were intimately involved in all aspects of construction and sales.
It's hard to understand why developers would pay the Trumps an unusually high amount of money over and over again, and then a significant share of the profits just for their name, especially when their track record is so low. One explanation could be that everyone involved is bad in business. The Trumps, their partners, the banks and others involved simply do not show due diligence, do not think about the potential risks of a project, and are not deterred by Trump's long chess list. Another explanation, however, is that they are good in a different business. They are not in the real estate sector. The evidence suggests that some of Trump's partners may belong to the money laundering and financial fraud sector.
Real estate has long been associated with certain types of fraud. Large projects are perfect for a wide variety of projects. There is a possibility of fraud by exaggerating the sales rate. The price that we pay for a unit in a new building is affected by the number of units sold earlier because a well sold building is worth more than a less well sold building. What the developer has put his own money is also an opportunity to mislead the buyers. If a developer does not invest in a project for which he or she is responsible, this may imply that he is not performing as well as the developer says. The Trumps repeatedly lied about both of these factors, ProPublica and WNYC found, indicating to potential investors that the number of shares sold was well above the actual number and claiming that they had invested much of their money in projects. This increases the amount paid by people and masks the very real risks they were taking with their investments.
What is Trump organization? How is it good? Where do his profits come from? It is becoming increasingly clear that most of the company's business can come from fraud. Daniel Braun, a former US Assistant Attorney for Fraud, told reporters, "You describe the basics of a long-term scheme to defraud investors. So, is this the kind of thing that the F.B.I. and the Department of Justice pay attention? It is. It contains a number of ingredients that you would typically see in an investigation or even in fraud prosecution. "
