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May 15, 2021

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Trump’s ventures have long fueled business, controversy in Nevada

Trump in Las Vegas

Steve Marcus

Donald Trump speaks to a group of Republican organizations at the Treasure Island Thursday, April 28, 2011.

A month after the debut of “The Apprentice” in 2004, Donald Trump appeared before the Nevada Gaming Control Board, seeking approval to buy a 10 percent share in the Riviera. Regulators peppered him with questions about keeping minors away from slots and lobbying activity in New York, but they approved the deal, with the chairman adding that he was impressed with the “very clean backgrounds” of Trump and his board of directors.

“Well, if we’re fortunate enough to get licensed, I would love to be very active in Nevada,” Trump told the Gaming Control Board, according to a transcript. “We are looking at different properties in Las Vegas. We’re looking at one other property someplace else in the state, and, you know, I can see both real estate and casinos. I mean, predominantly, as we discussed before, I’m a real estate developer.” He added: “I’m the largest developer in New York, actually, by far.”

As Trump campaigns across the country, he cites his business acumen as a primary qualification for his ability to serve as president. And in Nevada — one of a few purple states that could swing the election — his business ties go back a long way.

The 70-year-old celebrity developer turned firebrand Republican presidential nominee said he'd been looking for development opportunities in Nevada since he was 21 years old, according to a 1986 deposition released by the Washington Post. That year, Trump purchased and flipped significant amounts of stock in two Nevada casino operators, moves many saw as attempted takeovers and for which he was forced to pay a $750,000 civil penalty to settle a lawsuit filed by federal regulators.

Among other maneuvering in the state during the ’80s and ’90s, Trump met with the governor to discuss potential projects, flirted with purchasing a large percentage of Caesars Palace's parent company and made a verbal pact to buy the Aladdin Hotel, according to transcripts and news reports. Little materialized, and it wouldn’t be until the early 2000s that Trump would begin to develop property near the Strip.

Though Trump’s 2004 registration with Nevada gaming regulators ended in 2010, his ventures in the state, from condo sales to Trump University, have brought him fortune and at times, controversy.

Trump's latest luxury property rises 64 stories over the Strip. A restaurant in the 1,282-suite tower is simply named DJT, his initials. Developers, real estate agents, politicians and beauty queens helped the Donald fete the opening.

Trump's latest luxury property rises 64 stories over the Strip. A restaurant in the 1,282-suite tower is simply named DJT, his initials. Developers, real estate agents, politicians and beauty queens helped the Donald fete the opening.

Casting a shadow on the Strip

It looms over Las Vegas Boulevard, casting a golden reflection on sunny days. The gilded, 64-story Trump International Hotel broke ground in 2005 and opened its 1,282 units in 2008. Yet the hotel-condominium project, one of several that sprouted up in Las Vegas as the real estate market plunged in the recession, soon after became the subject of several labor disputes.

One involved a Las Vegas curtain-factory owner, Larry Walters, who stopped work and filed a lien against the property in 2008, claiming that the developers wouldn't pay $548,020, including additional work and an unpaid portion of the original $702,958 contract. The incident, first reported by The Wall Street Journal, escalated when the developer Trump Ruffin — controlled by Trump and Treasure Island owner Phil Ruffin — sued Walters and persuaded a court to instruct sheriff’s deputies to seize the fabric Walters had been holding as leverage in the dispute.

Click to enlarge photo

Donald Trump, left, developer Phil Ruffin and his wife, Oleksandra Ruffin, celebrate with a toast during the ribbon-cutting ceremony for the Trump International Hotel and Tower.

Trump Ruffin argued in court filings that Walters was double-charging the company and that the “additional work” was covered by the original contract. In a settlement, Walters received $185,000, about a quarter of what he said he was owed.

Walters did not respond to a request for comment but told The Wall Street Journal this June that he sought to end the lawsuit because “they were going to drag it on for many, many years.”

Confronted with similar claims of stiffing contractors and threatening protracted lawsuits, Trump has defended the practice by saying it's the exception, not the rule — reserved for workmanship issues. Many more contractors, Trump has said, have been paid in full. Take the Utah company Young Electric Sign Co. Though it initially filed a $105,000 lien on Trump’s Las Vegas property, Chief Marketing Officer Jeff Young said the company was paid in full and dropped the lien, adding that Trump was a good customer.

The presidential campaign has inflamed scrutiny of Trump’s unfettered attitude toward his business dealings, and critics have pointed to the Trump International Hotel for examples of how his businesses interests don’t align with his public statements on labor issues. During the second debate against Democratic nominee Hillary Clinton, Trump vowed to take on China for “killing our steel workers and our steel companies,” though Newsweek uncovered government documents showing that Trump Ruffin purchased Chinese steel and metal for the Las Vegas project.

Trump has argued that such transactions occurred when he was representing himself and what was good for his businesses, not necessarily what was in the interest of the U.S. government or taxpayers. (A spokesperson for the Trump campaign did not respond to a request for comment.) But Trump’s business history could hurt him in the election.

Trump International Hotel Las Vegas workers and other union supporters ready to march down Las Vegas Blvd. to convince their boss to start contract negotiations after they won a unionization vote on Wednesday, April 20, 2016.

Trump International Hotel Las Vegas workers and other union supporters ready to march down Las Vegas Blvd. to convince their boss to start contract negotiations after they won a unionization vote on Wednesday, April 20, 2016.

The Culinary Union vs. Trump

David Damore, a political science professor at UNLV, said Democrats have effectively crafted a narrative that turns Trump’s pitch as a successful businessman into a political vulnerability. “If it’s one isolated incident, then it’s one thing,” Damore said. “But you have this pattern, and the Democrats have done a good job creating this narrative that he’s in it for himself.”

The strategy has energized organized labor. On the stump, Trump has said he has a good relationship with unions, but in Las Vegas, management at Trump Ruffin remains locked in a dispute with the state’s most powerful one. Even after Trump International’s management exhausted appeals with federal labor regulators over the certification of a housekeeper union at the hotel, executives for the property have yet to come to the bargaining table. “Right now, the hotel is operating illegally,” said Bethany Khan, a spokesperson for the Culinary Workers Union.

In September, the union, which is actively supporting Clinton, teamed up with the AFL-CIO to launch a boycott on all Trump properties and products.

“Where things are right now is that Mr. Trump, the 50-percent owner of this hotel, is legally required to bargain with the Culinary Union,” Khan said. “The hotel is a union hotel. The workers are unionized. The only thing that is missing is a union contract that Mr. Trump and this company need to negotiate.” Donald Trump Jr., speaking to the Sun last month, said he was not aware of negotiations but “wouldn’t be worried about it” given Trump’s record with unions.

Trump University in Nevada

During the recession and in the years leading up to it, Trump was involved in another real estate venture, Trump University. Not unlike many other self-help or motivational get-rich workshops, Trump University was created in 2005 as a for-profit school offering seminars for would-be investors. Through 2010, more than 100 Nevadans paid $5,000 to $34,995 on various offerings.

One Nevada ad in court records, for an August 2009 workshop, bills it as a chance to “learn from Donald Trump’s handpicked experts how you can profit from the largest real estate liquidation in history.”

With former students alleging that Trump University was a scam built around deceptive claims, Trump is entangled in two class-action lawsuits and a third lawsuit filed by New York’s attorney general. His lawyers have rejected the claims and argue that most students were satisfied. But former employees of the venture have testified that instructors were not “handpicked” by Trump, going as far as calling the workshops a “fraudulent scheme” and “a facade, a total lie.”

From its inception, Trump University was active in Nevada, according to sales data released in the course of litigation. An analysis of that data shows that between 2005 and 2010, at least 140 residents purchased roughly 185 Trump University products worth about $900,000. The business ceased operations in 2010 but re-emerged as an issue in the campaign. It became fodder for opponents in the primary debates and a flashpoint when Trump was repudiated for saying the ethnicity of a federal judge overseeing the class-action cases made him biased.

Gaming and aggressive tactics

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Republican Presidential candidate Donald Trump is pleased by the crowd's support as he speaks at the 2015 FreedomFest in Las Vegas, Nevada July 11, 2015.

Then there is Trump the casino operator. In 2004, Nevada regulators gave him their blessing to hold that 10 percent share of the Riviera, but their records don’t show him ever holding a license to build or operate a casino here. Through day-to-day operations of his Atlantic City properties, though, his companies reached Las Vegas.

When Trump Entertainment Resorts, which owned those Atlantic City casinos, declared bankruptcy in 2014, creditors included a Las Vegas-based mattress company, International Game Technology and Bally Technologies (which has since been acquired by Scientific Games). Another listed creditor was a company owned by Station Casinos. Trump Taj Mahal entered into an agreement with Ultimate Gaming, which was owned by Station Casinos. Shortly after the bankruptcy in September 2014, Ultimate Gaming severed ties with Trump’s company after what it described in a statement at the time as “multiple breaches by Trump Taj Mahal Associates.”

Operating a Nevada casino enticed Trump for years. According to investigative reporter Wayne Barrett’s book “Trump: The Greatest Show on Earth,” the real estate mogul told journalists in 1976 of plans to develop the world’s largest casino in Las Vegas and name it “Xanadu.”

When he made two attempts to enter Nevada gaming in the 1980s, it was not without disrupting the businesses of other operators. Though Trump denied the allegations in an ensuing lawsuit, the two incidents led the chairman of the Nevada Gaming Commission in 1986 to accuse him of being a “greenmailer.” The term describes an investor who acquires enough stock to threaten a hostile takeover, forcing the company to purchase back the stock, often at a premium.

Critics have pointed to two attempted takeovers in 1986:

• In September, Trump bought a 4.9 percent stake in Holiday Corp., which owned casinos in Las Vegas and Reno. A restructuring plan blocked any takeover, and Trump sold the stock a month later for a $35 million profit, with the stock boosted by takeover rumors.

• Later that year, Trump became the largest shareholder of Bally Manufacturing Corp., which owned the MGM Grand and a casino in Reno. As part of an attempt to block a takeover, Bally purchased back the stock, netting Trump $31.7 million in profit.

In December 1986, the Federal Trade Commission said it was looking into the two stock activities by Trump and his broker Bear Stearns for violating an antitrust disclosure requirement. Trump strongly denied the allegation, but he paid a $750,000 settlement two years later in what he told The New York Times was an effort “to avoid protracted litigation with the federal government over a highly technical disagreement.”

In 1987, Las Vegas Review-Journal columnist Ned Day wrote in a column about the attempted takeovers: “Trump makes the Chicago mob and its Stardust skim look like a bunch of pikers.”

He added: “And his moves, of course, are perfectly legal.”

Despite criticism from some within the state, Trump was not alone in the practice. During the 1980s, many investors threatened takeovers only to have their stakes be purchased back at a profit. The Las Vegas Sun, for instance, published an editorial refuting Trump’s characterization as a “greenmailer.”

“You have to look at it within the context of the time,” said Charles Elson, director of the John L. Weinberg Center for Corporate Governance at the University of Delaware, arguing that poor corporate structure often left companies vulnerable. “The Trumps or the Icahns, as unpleasantly as they were viewed in that era, were not necessarily the bad guys. They were opportunists.”

Like him or not, Elson said, Trump makes a valid point about putting his business interests first.

“He is a business guy,” Elson said. “Businesspeople are opportunistic.”

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