The Taj Mahal story is not quite complete. How Marvin Roffman got fired, sued Donald Trump and his employer is only part of the story. The Taj Mahal turned out to be disaster, and fell into default on its bonds beginning with a missed payment in October 1990. From MPA Magazine:
Roffman was awarded $750,000 by an NYSE arbitration panel, and settled with Trump for an undisclosed amount. But in the meantime, he couldn’t find work as an analyst. That’s when he started a new career as a financial advisor. That career took off; when he retired in 2007, Roffman’s firm managed more than $500 million.
Roffman is not bitter as he said the following in an interview:
“In a way, I owe Donald Trump a lot, because he forced me into a new career that turned out well,” Roffman told Barron’s. “…But that doesn’t excuse the hell he subjected me to in 1990, sliming my reputation so much that I got fired and couldn’t find another job as an analyst.”
The saga of the Taj Mahal is a long one, but it is clear the captain of the ship (Trump) did not go down with the ship, but found ways of making himself richer at the expense of the casino, and ultimately stiffed the contractors. The New York Times story states:
But even as his companies did poorly, Mr. Trump did well. He put up little of his own money, shifted personal debts to the casinos and collected millions of dollars in salary, bonuses and other payments. The burden of his failures fell on investors and others who had bet on his business acumen.
Trump agrees, as he stated in an interview:
“Early on, I took a lot of money out of the casinos with the financings and the things we do,” he said in a recent interview. “Atlantic City was a very good cash cow for me for a long time.”
Trump used every legal and illegal trick in the book to keep the ship afloat, while simultaneously enriching himself. Case in point as stated in the NYT article:
By December 1990, when Mr. Trump needed to make an $18.4 million interest payment, his father, Fred C. Trump, sent a lawyer to the Castle to buy $3.3 million in chips, to provide him with an infusion of cash. The younger Mr. Trump made the payment, but the Casino Control Commission fined the Castle $65,000 for what had amounted to an illegal loan.
What kept the Taj Mahal afloat was not Trump’s business acumen, but his showmanship skills to get others to invest millions in terms of stock and junk bonds. The Taj Mahal was close to bankruptcy, but was save in June 1995 through a stock offering to raise 140 million dollars. Junk bonds yielding 15.5% brought in 155 million dollars. The following year, approximately 1 billion dollars was raised by selling junk bonds. Trump used the money to pay off his personal debts.
These investors eventually got burned. However, I feel really sorry for all the contractors that Trump failed to pay as he defaulted on payments. Per the NYT article:
“He put a number of local contractors and suppliers out of business when he didn’t pay them,” said Steven P. Perskie, who was New Jersey’s top casino regulator in the early 1990s. “So when he left Atlantic City, it wasn’t, ‘Sorry to see you go.’ It was, ‘How fast can you get the hell out of here?’”
The casino survived under various managements until October 2016. The history of the Taj Mahal is documented on various sites. Wikipedia reports:
During eighteen months after its April 2, 1990 opening,[21] when the Casino was on the verge of bankruptcy, it became the “preferred gambling spot for Russian mobsters living in Brooklyn, according to federal investigators who tracked organized crime in New York City.”[29]
Further in their website post, they state:
The 1992 U.S. Senate Subcommittee 218-page report entitled “Asian Organized Crime: the New International Criminal”, linked Trump’s businesses to Asian organized crime.[50]
IRS investigation documents obtained by CNN (see link below) showed Trump violated anti-money laundering rules 106 times, but settled with the IRS in 1998 for $477,000. Money laundering continued from 2010 to 2012, however Trump is in the clear on these violations. Trump’s involvement with the Taj Mahal was in name only. He had departed Atlantic City in 2009, maintaining a small stake in the casino’s parent company.
The Taj Mahal’s new owner is Carl Icahn. The eighth wonder of the world, with 2100 rooms, and all the glitz and glamour, built at an expense of 1 billion dollars, has been shuttered up since October 2016 and has yet to change hands. Icahn has denied that Hard Rock Cafe would be a possible buyer.
This blog began with Trump launching a brutal attack on a relatively unknown stock analyst, and the threat of “you will be hearing from my lawyers.” Now, Trump sits atop the Department of Justice, but is powerless to direct the investigation, unless he wants to fire the Attorney General, Deputy Attorney General, the Special Counsel Robert Mueller.
It makes sense how Donald Trump constantly lashes out against the New York Times and the Washington Post for their in-depth reporting. They know Trump’s history. The Wall Street Journal and Barron’s have also done an excellent job at reporting the facts.
Links:
Trump’s casino was a money laundering concern shortly after it opened
MPA Magazine:
NY Times:
https://www.nytimes.com/2016/06/12/nyregion/donald-trump-atlantic-city.html?mcubz=0
I first got wind of this story by reading Alan Abelson’s column “Up and Down Wall Street” column in Barron’s. I can’t post his column as it is copyrighted by Barron’s.
Letters sent by Roffman and Trump’s reply
Stay tuned,
Dave
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