The Art of Trump and Pump and Dump
Trump's valuations are extreme but, perhaps, directionally normal in New York real estate
I hate to say it but I fear the fraud trial of Donald Trump may well work to his political advantage.
Yes, I know that’s the politically incorrect thing to say.
But, having reported extensively on the ruthless world of New York real estate for my 2014 book The Liar’s Ball, sorry, I think people may struggle to get worked up about a civil case where the only possible real victims are (theoretically) lenders who’d be stupid enough to believe Trump’s hyperbole about the valuations of his real estate.
I gave a talk a couple weeks ago for a panel at The Real Deal, the industry must-read. And I noticed that the room really came awake when I talked about Harry Macklowe, the charismatic rogue who is the protagonist of The Liar’s Ball. And, when discussing Charles Kushner.
When I talked about Trump in the context of his real estate, I felt a slight ennui in the room.
That’s because as a self-aggrandizing real estate developer who is long on hype and short on facts and possibly principle, he’s not especially atypical. (For example, Harry Macklowe, who is beloved in the industry rather infamously knocked down a couple of buildings in the middle of the night while, it emerged, the gas was left on. He continued on, pretty much uninterrupted). In fact, you could argue that the real reason President Trump was atypical as a President was precisely because he continued to operate as a run-of-the-mill New York developer in charge of his family office.
Trump’s fantastical math is egregious, yes, but in the wheeling and dealing of New York City real estate, it’s actually commonplace for buildings to “grow” in valuations — perhaps not by the magnitude of Trump’s penthouse (which according to Judge Engoron’s ruling was multiplied threefold) — and it’s also commonplace to lie (hence the annual party’s nickname for itself: The Liar’s Ball).
The game of the industry — and it is at heart just a game, why else do you think Monopoly was created? — is to gamble, yes, on real estate, usually with other people’s money, but also to spot other people’s bullshit, and get away with your own.
Take, for example, the following snippet from my 2014 book, The Liar’s Ball.
In this passage below you can read how Trump’s former partner, Steve Hilbert, who once ran insurance giant Conseco, marveled at how Trump “found” an extra 500,000-square-feet of common space for which to charge tenants in the General Motors Building — as well as original brass windows, apparently.
As I read it I don’t think, “Oh, that’s fraud”… I think, ”Well if the suckers want to pay him extra for the common space, then they are suckers…”
What am I missing? You tell me in the comments section below.
Once it was official and Trump was the GM Building's co-owner, Trump got to work renovating.
“I fixed up the building. I cleaned it up,” Trump said later. “It was a real mess, all dirty and filthy. It hadn't been well run under Disque, and I made it great. I put in the most magnificent granite floor.
“It was called ‘Verde marble.’ It was the most beautiful stone, and I had the best masons in New York do it. I honed the white marble walls, and that lobby was gorgeous.”
Steve Hilbert was thrilled with his new partner. He thought Trump was like an Energizer bunny on steroids. “I got calls at 8:00 at night. I got calls on Sunday at 7:00 in the morning. I got calls on holidays. He was there constantly,” Hilbert recalls.
“The first thing [Trump] did was fix the parking situation. He told me before we ever did the deal that we were going to make a million and a half overnight because, he said, ‘the parking garage people are stealing from us.’
“And boom, he told me he was going to get the [GM showroom] cars out of the lobby.
“Donald was the first to break the $100-a-square-foot rent barrier at the GM Building. He did little things . . . like the prior owner wasn't charging anyone for the common space. So, in essence, we bought a 900,000-square-foot building and ended up with a 1,400,000-square-foot building, because [Donald] started charging for the common space.
“I don't think anyone appreciates how hands-on Donald is.
“It was a Sunday morning. I get a call from Donald, and he says, ‘Steve, I'm in front of the GM Building, and we were thinking about what we're going to do with these windows,’ because they painted those windows, painted the trim, and he had one of his guys take some of the paint off, and it was brass underneath.
“He said, ‘You know, you couldn't afford to do brass windows today. No one in their right mind could—only General Motors would've done that.’ And he had all the paint taken off.”
…
Trump also raised the subterranean plaza to street level. The new plaza was much prettier than its predecessor. It was creamy and clean, and it had greenery and lighting.
Then, in a very clever public relations move, he put CBS's morning show featuring Bryant Gumbel in at the base, so pedestrians could watch it at street level. Every morning CBS viewers would see the GM Building—with Trump's name on it.
Next, Trump drew up plans for a restaurant on the raised plaza. It would have a glass dome. “I came up with the idea of the dome in front. . . . It was going to be a glass pyramid. And it was going to have a Cheesecake Factory in it. I came up with this architectural plan, and I did these gorgeous renderings. . . . I'm so angry at the guy from the Cheesecake Factory. It would have been the most successful restaurant in the country, and he was all set to do the deal, but he backed out at the last moment because he was afraid of the unions in New York.
“Every time I see a Cheesecake Factory, I think what a mistake that guy made.”
Why does Vicky always lean towards to romanticizing and excusing NY grifters? Because she's financially dependent on those men and desperate to keep her foothold in their circles? Trump's real estate grifts hurt tax payers who subsidize his crimes with increased taxes on the middle class. But you don't have much use for the middle class, do you Vicky? It's obvious you're in love with the marginally grifty types and thrilled to frame the egregious criminals with a softer narrative.
Because even if it's acceptable in an industry to lie, some lies are so egregious that people need to be punished for them. Wow, what a concept, being held responsible for your actions, absolutely shocking. No wonder your audience didn't care about Trump, they are him.