Trump engineered a sudden windfall from Las Vegas as campaign funds dwindled in 2016

By Susanne Craig, Mike McIntire and Russ Buettner, The New York Times Company

Saturday, Oct. 10, 2020 | 2 a.m.

Donald Trump needed money.

His “self-funded” presidential campaign was short on funds, and he was struggling to win over leery Republican donors. His golf courses and the hotel he would soon open in the Old Post Office in Washington were eating away at what cash he had left on hand, his tax records show.

And in early 2016, Deutsche Bank, the last big lender still doing business with him, unexpectedly turned down his request for a loan. The funds, Trump had told his bankers, would help shore up his Turnberry golf resort in Scotland. Some bankers feared the money would instead be diverted to his campaign.

That January, Trump sold a lot of stock — $11.1 million worth. He sold another $11.8 million worth in February, and $7.5 million in March. In April, he sold $8.1 million more.

And the president’s long-hidden tax records, obtained by The New York Times, also reveal this: how he engineered a sudden financial windfall — more than $21 million in what experts describe as highly unusual one-off payments from the Las Vegas hotel he owns with his friend Phil Ruffin, the casino mogul.

While the hundreds of millions of dollars earned from “The Apprentice” and his attendant celebrity rescued his business career, those riches, together with the marketing power of the Trump brand, were ebbing when he announced his 2016 presidential run.

The new findings may offer a hint to one of the enduring mysteries of his campaign: In its waning days, as his own giving had slowed to a trickle, Trump contributed $10 million, leaving many people wondering where the burst of cash had come from.

The tax records, by their nature, do not specify whether the more than $21 million in payments from the Trump-Ruffin hotel helped prop up Trump’s campaign, his businesses or both. But they do show how the cash flowed, in a chain of transactions, to several Trump-controlled companies and then directly to Trump himself.

The bulk of the money went through a company called Trump Las Vegas Sales and Marketing that had little previous income, no clear business purpose and no employees. The Trump-Ruffin joint venture wrote it all off as a business expense.

Experts in tax and campaign finance law consulted by the Times said that while more information was needed to assess the legitimacy of the payments, they could be legally problematic. Unless the payments were for actual business expenses, claiming a tax deduction for them would be illegal. If they were not legitimate and were also used to fund Trump’s presidential run, they could be considered illegal campaign contributions.

In response to questions about the Times’ findings, a White House spokesman, Judd Deere, referred to this article as “yet another politically motivated hit piece inaccurately smearing a standard business deal.” He added that “during his years as a successful businessman, Donald Trump was longtime partners with Phil Ruffin and earned whatever payments he received.”

A spokeswoman for Ruffin, Jennifer Renzelman, said Ruffin was not involved in the day-to-day operations of the hotel, adding that “all tax statements go to the people who work on his taxes.”

It is fair to say that, over the years, Ruffin has been very generous to his friend. He contributed more than $2.5 million to Trump’s campaign, his ill-starred foundation and his inaugural.

After the inauguration, Ruffin would ask for a favor: Would the president help revive a dormant project of great importance to a lot of powerful people in Las Vegas — a bullet train that would whisk gamblers from Southern California to The Strip in less than 90 minutes?

Four years earlier, Barack Obama’s administration had considered, but ultimately decided against, a $5.5 billion loan for the train.

This past March, a panel composed largely of Trump appointees gave the train company permission to sell $1 billion in tax-free bonds to private investors. Authorities in California and Nevada fell in line, approving additional bonds. Trains could begin running as soon as 2024.

Among the train’s chief beneficiaries will be Ruffin and the other grandees of gambling who became a vital font of political money for Trump when he needed it most.

And, of course, Trump himself.

A Friend of the President

Ruffin’s patronage of the president has been less lavish, and less examined, than that of his Las Vegas compatriot Sheldon Adelson. But he has long been a wingman for Trump’s political ambitions — urging him to run and promising financial support.

When Trump was considering a White House run back in 2011, Ruffin donated the venue for a Las Vegas rally: a ballroom at his Treasure Island Hotel and Casino. After Trump decided that he would indeed run, in 2015, it was at another Treasure Island rally that Ruffin expounded on his friend’s charitable good works.

Also in 2015, Ruffin gave $1 million in seed money to the Make America Great Again super political action committee, only to have it refunded when the group was dissolved after news reports that it had improperly coordinated with the Trump campaign.

The two men had been brought together in the early 2000s by Ruffin’s belief that his business needed some Trump-branded glitter. Trump, whose Atlantic City casinos were flailing, was looking to expand to Las Vegas. The result, built on the former site of a mall parking lot: a “64-story tower of golden glass” that “soars above The Strip,” according to the hotel website.

It was Trump who introduced Ruffin, now 85, to his third wife, Oleksandra Nikolayenko — like Melania Trump, a much younger former model. In 2004, Nikolayenko represented Ukraine at the Miss Universe pageant. The couple were married in 2008 at Mar-a-Lago, Trump’s private club in Palm Beach, Florida, with him as best man.

Other People’s Money

Trump had promised to pour $100 million of his own money into the campaign, but after an early infusion of more than $35 million in 2015 and early 2016, the flow eventually slowed to a steady $2 million or so near the end of each month.

Even as his campaign was building its vaunted internet-powered small-donor operation, much of the Republican fundraising establishment hung back, still stunned that Trump had emerged as the party’s standard-bearer. At the low point, in June, the campaign had just $1.3 million in the bank, according to its financial disclosures.

After the convention, the Republican National Committee began pulling in its traditional big donors, but the Trump fundraising machine still sputtered heading toward Election Day, especially after the release of the “Access Hollywood” tape that showed Trump bragging about groping women.

Then, on Oct. 28, came his surprising $10 million contribution. (That brought his total spending to more than $60 million.)

It was in those final, decisive weeks, too, that the weight of Las Vegas fell in behind him.

After months of hesitation, Adelson — gambling magnate, Republican megadonor and strident voice for Israel — became the candidate’s biggest contributor, donating $20 million to Trump’s campaign and political action committees supporting it. He later gave $5 million more to the inaugural.

Others gave, too, including the Fertitta family, owners of casinos and the Ultimate Fighting Championship, and Steve Wynn, the candidate’s old Atlantic City casino rival.

As for Ruffin, he and his wife contributed almost $1.6 million during the campaign and to the inaugural. And he gave another $1 million in 2016 to Trump’s foundation before it shut down amid an investigation into allegations of self-dealing.

Moving the Money

Trump’s tax records reveal that when he decided to leverage his brand in the political arena, its true bottom line bore little resemblance to the gold-plated success story he was hawking to the American people.

Most of his core businesses were losing money. Cash from “The Apprentice” and the resulting fame that had sustained him for a decade were steadily running dry. NBC, which aired Miss Universe and “The Apprentice,” cut ties with him after he announced his candidacy in 2015 with racist comments about immigrants. Deutsche Bank turned down his request for a loan for work at Turnberry, the Scottish golf resort that he had bought for roughly $60 million in 2014 and that was on its way to gobbling up almost $80 million more by the end of 2016, according to tax return information. By year’s end, he would agree to pay $25 million to settle a class-action lawsuit involving allegations that Trump University was a fraud.

Since 2012, he had drained a lot of the cash he had on hand. That year, he took out a $100 million mortgage on the commercial space in Trump Tower and received nearly the entire amount as a cash payout. The following year, he took $95.8 million out of a real estate partnership account at Vornado Realty Trust. After selling $38.6 million in stock in the first months of 2016, he ended the year having sold nearly $30 million more.

And there was another maneuver, the one that experts consulted by the Times described as highly unusual: the more than $21 million in one-time payments that the Trump-Ruffin joint venture paid out in 2016.

By analyzing the tax return information and public records, the Times was able to trace the flow of money — first to companies that Trump alone controls and from there to Trump himself.

To understand how out of the ordinary those payments were, consider the company that became the destination for the bulk of the money: Trump Las Vegas Sales and Marketing.

It was created in 2004 as Trump and Ruffin were drawing up plans for the Trump International Hotel. Precisely what it did, though, is obscure. It had no employees, or at least no payroll. And while the Trump-Ruffin joint venture certainly spent several million dollars a year to promote its room rentals and condominium sales, that money did not go to Trump Las Vegas Sales and Marketing. The company’s tax records show that it had little income over the years, posting modest profits only twice: $54,924 in 2007 and $420,756 in 2008.

Then, in 2016, came a payment of $13,756,623.

The second unusual payment was for $2,685,000, divided between the two companies that hold Trump’s share of the hotel and then paid out directly to him.

The Trump-Ruffin hotel company listed one other large one-time expense on its 2016 tax return: a $4.8 million “development fee.” While the Times was unable to trace the path of all of this money through Trump’s tax records, his public disclosures say that a company called Trump Las Vegas Development also had a deal to receive development fees from a subsidiary of the joint venture. (That company, according to the filings, actually had revenue of $8.2 million from January 2016 to April 2017. It is not clear where the additional $3.4 million came from.)

The IRS lets companies use business expenses like sales and marketing payments to reduce taxable income — but only if they are “both ordinary and necessary.” The Trump-Ruffin hotel venture wrote off at least $21 million in one-time payments to Trump.

The tax records do not specify when the payments were made or where the joint venture got the money for them.

But taken together with public records, they may offer some clues.

The Las Vegas hotel had long been a money loser. Between 2010 and 2012, each partner put $23 million into the business. Its losses were narrowing, though, and it began 2016 with $6.3 million in cash reserves.

That might have been a decent cushion, but it was hardly enough to cover the more than $21 million in payments to Trump. In fact, the payments drove the hotel to its biggest loss ever.

Then, seven weeks before the election, something else unusual happened. The Trump-Ruffin partnership borrowed $30 million from City National Bank in Los Angeles. Trump signed the loan documents in New York City, but tax records show that Ruffin personally guaranteed nearly the entire amount, should the company ever be unable to pay.

The partnership was not required to disclose on its tax returns how the borrowed money would be spent. But the timing of the loan, combined with the partnership’s lack of available cash that year, strongly suggests that the loan funded the millions of dollars in payments to Trump.

Finally, a Train

Ever since Amtrak had shut down the last train in 1997, Ruffin and the other moguls who control the Las Vegas Strip had planned, waited, hoped.

Train schemes had risen and, inevitably, fallen. But in 2009, with the support of Harry Reid, the Nevada Democrat who was then Senate majority leader, the federal government had taken a crucial step, approving a rail corridor between Las Vegas and Victorville, California.

Four years later, a proposed $5.5 billion federal loan for a bullet train had come before the Obama Transportation Department. Ultimately the loan had been rejected, in part because the project could not comply with buy-American rules.

After Trump’s inauguration, Ruffin mentioned the predicament of his neighbor Anthony Marnell II, an architect who controlled the company trying to build the high-speed train.

So, a friendly favor for a friend.

Not long after, Marnell told the Review-Journal that he was considering approaching the Trump administration about a federal loan like the one the Obama administration had rejected.

But Marnell’s long-sought federal loan remained elusive, and in the fall of 2018, he sold the business, renamed XpressWest, to a company owned by Fortress Investment Group LLC, a big New York financial firm. (Marnell, who declined to comment for this article, kept an equity stake in XpressWest.) Fortress owns a company named Brightline, which operates a private rail service in Florida. Ben Porritt, senior vice president for corporate affairs at Brightline, said its trains had previously received several allocations of federal tax-exempt bonds.

These bonds, earning interest free of taxes, help companies attract private investors to often higher-risk projects. While they are distinct from the kind of federal loan Marnell sought, they nonetheless require government approval.

In March of this year, the Transportation Department’s Credit Council approved the sale of $1 billion in tax-free bonds, the final tranche of a $15 billion program begun during the Obama years. Overseeing the panel is Trump’s transportation secretary, Elaine Chao.

Now, with federal approval assured, California and Nevada voted to allow the issuing of an additional $3.2 billion in bonds.

The train company says it hopes to start construction later this year. The Las Vegas terminal will be on the Strip, a short bus ride from the Trump International Hotel.

“We would benefit some,” Ruffin told Forbes. “But there are a lot of hotel rooms here. A lot of places they can go.”