Donald Trump’s Deals Rely on Being Creative With the Truth
By David Barstow – The New York Times.
There was the time Donald J. Trump told Larry King that he had been paid more than $1 million to give a speech about his business acumen when in fact he was paid $400,000. Or the time he sought a bank loan claiming a net worth of $3.5 billion in 2004, four times as much as what the bank found when it checked his math. Or the time he boasted that membership to Trump National Golf Club in Westchester County, N.Y., cost $300,000 when the actual initiation fee was $200,000. Or the time he bragged on CNBC about his new Trump International Hotel and Tower in Las Vegas, claiming, “We have 1,282 units, and they sold out in less than a week.” As Mr. Trump knew, more than 300 units had not been sold.
Confronted in a court case about this last untruth, Mr. Trump was anything but chagrined. “I’m talking to a television station,” he said. “We do want to put the best spin on the property.”
As Mr. Trump prepares to claim the Republican nomination for president this week, he and his supporters are sure to laud his main calling card — his long, operatic record as a swaggering business tycoon. And without question, there will be successes aplenty to highlight, from his gleaming golden high-rises to his well-regarded golf resorts, hit TV shows and best-selling books.
But a survey of Mr. Trump’s four decades of wheeling and dealing also reveals an equally operatic record of dissembling and deception, some of it unabashedly confirmed by Mr. Trump himself, who nearly 30 years ago first extolled the business advantages of “truthful hyperbole.” Indeed, based on the mountain of court records churned out over the span of Mr. Trump’s career, it is hard to find a project he touched that did not produce allegations of broken promises, blatant lies or outright fraud.
Under the intense scrutiny of a presidential election, many of those allegations have already become familiar campaign fodder: the Trump University students and Trump condo buyers who say they were fleeced; the public servants from New Jersey to Scotland who now say they rue the zoning approvals, licenses or tax breaks they gave based on Mr. Trump’s promises; the small-time contractors who say Mr. Trump concocted complaints about their work to avoid paying them; the infuriated business partners who say Mr. Trump concealed profits or ignored contractual obligations; the business journalists and stock analysts who say Mr. Trump smeared them for critical coverage.
Taken as a whole, though, an examination of Mr. Trump’s business career reveals persistent patterns in the way Mr. Trump bends or breaks the truth — patterns that may already feel familiar to those watching his campaign.
First and foremost is Mr. Trump’s tendency toward the self-aggrandizing fib — as if it were not impressive enough to be paid $400,000 for a speech. What also emerges is a nearly reflexive habit of telling his target audience precisely what he thinks it wants to hear — such as promising Trump University students they will learn all his real estate secrets from his “handpicked” instructors. And finally, there is the pattern already deeply familiar to his political opponents — making spurious claims against adversaries under Mr. Trump’s oft-stated theory that the best defense is a scorched-earth offense.
Equally striking is his Houdiniesque ability to wiggle away from all but the most skilled and determined efforts to corner him in an apparent lie. In interviews, lawyers who have tangled with Mr. Trump in court cases are sometimes reduced to sputtering, astonished rage, calling him “borderline pathological” and “the Michelangelo of deception” as they attempt to describe the ease with which Mr. Trump weaves his own versions of reality.
“He’s a bully, and bullies aren’t known for their veracity,” said Richard C. Seltzer, a retired senior partner at the law firm Kaye Scholer who confronted Mr. Trump in three real estate lawsuits.
In a telephone interview on Friday, Mr. Trump defended his integrity as a businessman — “I shoot very straight” — and argued that those who accuse him of acting in bad faith are often the same people he has outmaneuvered in deals.
“What, you’re going to quote people that I’ve beat? Are you going to quote people that I out-dealt?” he asked, adding, “I’ll give you hundreds of names of people that have dealt with me that say I’m very honest.”
Hillary Clinton, meanwhile, is already hard at work making the case that Mr. Trump’s truth-challenged business record is a harbinger of how he would mislead from the Oval Office. Her campaign has even put up a none-too-subtle website: www.artofthesteal.biz.
Mr. Trump’s business record may help explain why various fact-checkers have barely been able to keep pace with his false claims on the campaign trail. PolitiFact has labeled 34 of Mr. Trump’s assertions “Pants on Fire” lies. As of July 1, The Washington Post had fact-checked 46 statements by Mr. Trump. It gave 70 percent of them its worst rating, four Pinocchios — a record so abysmal that the newspaper recently compiled a video of what it called “Donald Trump’s most outrageous four-Pinocchio claims.”
The taxonomy of Mr. Trump’s business deceptions has been the subject of legal and journalistic scrutiny for decades. A Fortune magazine article from 2000 memorably described Mr. Trump’s “astonishing ability to prevaricate” this way: “But when Trump says he owns 10 percent of the Plaza Hotel, understand that what he actually means is that he has the right to 10 percent of the profit if it’s ever sold. When he says he’s building a ‘90-story building’ next to the U.N., he means a 72-story building that has extra-high ceilings. And when he says his casino company is the ‘largest employer in the state of New Jersey,’ he actually means to say it is the eighth largest.”
The casino magnate Steve Wynn, a sometimes friend and sometimes foe of Mr. Trump’s, took up the subject of Mr. Trump’s honesty in an interview with New York magazine. “His statements to people like you, whether they concern us and our projects or our motivations or his own reality or his own future or his own present you have seen over the years have no relation to truth or fact,” Mr. Wynn said.
Some of the earliest documented examples of Mr. Trump’s deceptive business tactics come from none other than Mr. Trump, who in books and in interviews sometimes seems to delight in describing the brazen bluffs and well-timed trickery he used to claw his way to the upper echelons of New York City’s cutthroat real estate world.
“You have to understand where I was coming from,” Mr. Trump wrote in his 1987 best-seller, “The Art of the Deal.” “While there are certainly honorable people in the real estate business, I was more accustomed to the sort of people with whom you don’t want to waste the effort of a handshake because you know it’s meaningless.”
Mr. Trump was particularly proud of a stratagem he employed in 1982, when he was trying to entice Holiday Inn to invest in a casino he was building in Atlantic City. The board of directors decided to visit Atlantic City, which worried Mr. Trump because he had precious little actual construction to show off. So Mr. Trump ordered his construction supervisor to cram every bulldozer and dump truck he could find into the nearly vacant construction site.
“What the bulldozers and dump trucks did wasn’t important, I said, so long as they did a lot of it. If they got some actual work accomplished, all the better, but if necessary, he should have the bulldozers dig up dirt from one side of the site and dump it on the other.”
A week later, when Mr. Trump escorted the Holiday Inn executives to the site, one board member wanted to know why a worker was filling a hole he had just dug. “This was difficult for me to answer, but fortunately, this board member was more curious than he was skeptical,” Mr. Trump wrote, boasting that weeks later Holiday Inn agreed to invest in his casino.
“That’s called ‘business,’” Mr. Trump said on Friday of the episode.
In court cases against Mr. Trump — USA Today counted 3,500 lawsuits involving Mr. Trump, and Mr. Trump estimates he has testified more than 100 times — plaintiffs’ lawyers frequently return to the same two paragraphs from “The Art of the Deal.”
“I call it truthful hyperbole. It’s an innocent form of exaggeration — and a very effective form of promotion.”
In depositions, lawyers have repeatedly probed for the limits of Mr. Trump’s “truthful hyperbole,” or, as one lawyer framed it, the distinction Mr. Trump makes between “innocent exaggeration” and “guilty exaggeration.”
For example, in the now-infamous Trump University litigation, Mr. Trump was asked in a deposition about a script that had been prepared for Trump University instructors. According to the script, the instructors were supposed to tell their students the following: “I remember one time Mr. Trump said to us over dinner, he said, ‘Real estate is the only market that, when there’s a sale going on, people run from the store.’ You don’t want to run from the store.”
No such dinners ever took place, Mr. Trump acknowledged. In fact, Mr. Trump struggled to identify a single one of the instructors he claimed to have handpicked, even after he was shown their photographs. Nonetheless, Mr. Trump was not bothered by the script’s false insinuation of real estate secrets shared over chummy dinners. Asked if this example constituted “innocent exaggeration,” Mr. Trump replied, “Yes, I’d say that’s an innocent exaggeration.”
On Friday, Mr. Trump argued that the script might fall under the legal concept of “puffery” — which many legal dictionaries define as an exaggeration or statement that “no reasonable person” would take as factual. And in any event, he continued, the true sinners in the Trump University case are the students who sued him even after giving rave reviews in their written evaluations of the seminars. “I think that’s dishonest,” he said.
Mr. Trump has been repeatedly accused of bringing false legal claims to avoid paying debts and evade contractual obligations. As far back as 1983, a New York City housing court judge ruled that Mr. Trump filed a “spurious” lawsuit to harass a tenant into vacating a Trump building.
Then there was the case Mr. Trump brought against Barbara Corcoran, the real estate broker best known for her appearances on “Shark Tank.” In the mid-1990s, Mr. Trump owed millions of dollars to Ms. Corcoran for helping him secure financing for a development. But when New York magazine published a cover story about the troubled project — “Trump’s Near-Death Experience” — Mr. Trump sued Ms. Corcoran, accusing her and her associates of sharing damaging information with the magazine and thus violating a confidentiality agreement. He refused to pay her the millions he owed, claiming her breach had gravely damaged his business.
At trial, Mr. Trump was unable to produce a single document showing harm to his business. But his certitude never wavered, even after Ms. Corcoran’s lawyer, Mr. Seltzer, confronted him with article after article in which Mr. Trump himself had discussed with reporters much of the same “confidential” information he accused Ms. Corcoran’s team of divulging.
“There is something very belligerent about the way he presents facts, as if he thinks nobody will have the balls to stand up to him,” Mr. Seltzer said in an interview. (In dismissing Mr. Trump’s suit against Ms. Corcoran, the judge said the only damages he could identify were to Mr. Trump’s “bruised ego.”)
Well-Timed Memory Lapses
In Friday’s interview, Mr. Trump denied filing frivolous court cases, insisting, “I’ve won a massive majority of the litigation I’ve been involved in.” He pointed to the USA Today survey of his 3,500 legal cases. Although the newspaper could not determine who had prevailed in the vast majority of the cases, it did find Mr. Trump the clear winner in 450 suits and the clear loser in 38.
And, indeed, for all of the litigation Mr. Trump has attracted or spawned, for all of the times he has been accused of ruinous dishonesty, the legal and regulatory record is surprisingly bare of official findings by judges, juries or regulators that Mr. Trump engaged in perjury or improper deception or actual fraud.
A rare exception came after Mr. Trump decided to demolish a department store to make way for his Trump Tower in Midtown Manhattan. Mr. Trump’s demolition contractor hired about 200 unauthorized Polish laborers, paying them as little as $4 an hour to work 12 hours a day, seven days a week. The case ended up in federal court after some workers were shortchanged even these wages.
Mr. Trump protested that he knew nothing about the use of unauthorized workers — even though workers testified that they saw him visiting the site and some witnesses said that Mr. Trump and the executive he assigned to oversee the demolition were well aware of what was going on. In 1991, a federal judge, Charles E. Stewart Jr., ruled that despite Mr. Trump’s denials, there was “strong evidence” that he and his subordinates and his contractor had conspired to hire the Polish workers and deprive them of employment benefits. He awarded them $325,415 in damages.
But in case after case, Mr. Trump has displayed a special talent for turning what should be cold hard facts into semantic mush. Perhaps the most famous example of this skill came when Mr. Trump was asked under oath a seemingly straightforward question: Had he ever lied about his net worth? Mr. Trump responded, “My net worth fluctuates and it goes up and down with markets and with attitudes and with feelings, even my own feelings.”
So, he explained in a deposition, when he said membership costs $300,000 to his Westchester golf club, that included the $200,000 initiation fee plus every cent he guessed that a member might spend on annual dues over the next 20 or 30 years. In other words, “The way I say it is more accurate.” And when he told Larry King he was paid more than $1 million for a speech, it was not his fault if viewers failed to realize he was including not just his $400,000 speaking fee but also the hundreds of thousands of dollars he assumed must have been spent promoting his appearance.
Part of what makes Mr. Trump such an elusive target is that his paper trail is often minimal. Mr. Trump has repeatedly testified that he does not use computers. He says he also throws away his day planner each month, and just last year he testified that he did not own a smartphone. “Unlike Hillary Clinton, I’m not a big email fan,” he said, leaving open the question of how he posts to Twitter.
Mr. Trump is also adept at deflecting blame to his staff. In two of his books, Mr. Trump made the startling and, as it turned out, bogus claim that he had once performed the remarkable feat of climbing out from under more than $9 billion in debt. Mr. Trump blamed his ghostwriter for the mistake. Asked if he reads his books before publication, Mr. Trump said, “I read it as quickly as I can because of time constraints.”
Mr. Trump is also the beneficiary of miraculously well-timed memory lapses. In suit after suit, the man who claims to possess one of world’s best memories suddenly seems to have chronic memory loss when asked about critical facts or events.
Such was the case when Mr. Trump filed a libel lawsuit against Timothy L. O’Brien, the author of “TrumpNation: The Art of Being the Donald.” Among other things, Mr. Trump asserted that “TrumpNation” cost him a “deal made in heaven” with a group of Italian investors, men he had met and who were on the brink of signing a business partnership that would have made him hundreds of millions of dollars. Their names? He could not recall. “TrumpNation” also cost him a hotel deal with Russian investors, he said. He could not remember their names, either. He was certain the book also ruined a deal with Turkish investors. Again, he could not recall any names. Polish investors also got cold feet after they read Mr. O’Brien’s book. Their names escaped him, too. The book also scared off investors from Ukraine. Alas, he could not think of their names either.
Mr. Trump’s lawsuit was dismissed.