The Real Trump Deal. Martin E. Latz
zoning benefits), Trump arranged a meeting with New York City’s newly elected Mayor Abe Beame. Beame was a longtime friend of Fred Trump’s and a candidate to whom the Trumps had made significant financial contributions.
At that meeting, organized within a day—illustrating Fred Trump’s political clout—Beame put his arms around both Trumps and said to the Penn Central representative, “Whatever Donald and Fred want, they have my complete backing.”148
Donald Trump appreciated the political interests involved and how to satisfy them. In fact, many would view politicians’ primary interest as getting re-elected. How could Trump satisfy their interests? Financial contributions. Trump told his Penn Central counterpart, according to Trump Show:
As they walked down Lexington Avenue together, Trump saw a newspaper headline announcing the arrest of a New Jersey mayor for allegedly taking an $800,000 bribe from a developer. “There’s no goddamn mayor in America worth $800,000,” Trump bellowed. “I can buy a U.S. Senator for $200,000.”149
But Trump ran into problems getting Penn Central to sell him the option rights to the site, as the bankruptcy judge needed to approve the deal. The court could only accept an offer that satisfied what it perceived to be in Penn Central’s best financial interest.
And a competing offer came in from a developer named Starrett that was “a lot higher than mine,” according to Trump.150
At the same time, though, Starrett was partnering with Fred Trump in developing Starrett City, a large government-subsidized 5,000-unit residential construction project.
Upon hearing of Starrett’s bid for the Commodore site, Trump met with Starrett’s chairman Robert Olnick. As Trump later testified about this meeting: “Starrett and Trump are partners in Starrett City, of which we own 25 percent and they own 5 percent. Frankly, if we hadn’t put in the $7 million equity, the project wouldn’t have been built. We have a big relationship with Starrett.”
Starrett abruptly withdrew its offer after meeting with Trump, before the court could even evaluate its competing bid.151
Trump appreciated Starrett’s more important interests here—continuing its “big relationship” with the Trumps.
2. Trump’s Carrot for a Competing Bidder—Join His Lawsuit
The second counterpart interest Trump understood involved a second competing bid supported by Penn Central’s shareholders. Here’s how Trump’s strategy addressing this challenge unfolded, according to Trump Revealed.
Trump was a construction neophyte, but he was already adept at turning around the opposition. David Berger, a lawyer who represented the railroad’s shareholders, initially opposed selling Trump the Commodore, but at a crucial moment in the negotiations, Berger flipped to support a deal with Trump.
A few years later, federal prosecutors investigated whether Berger’s sudden change of heart was connected to Trump’s decision to help Berger out and join his unrelated, $100 million suit by New York landlords against nine major oil companies for fixing the price of heating oil. The federal probe ended without any indictments. Both Trump and Berger denied there was any quid pro quo.152
But Trump joining Berger’s lawsuit brought a significant financial benefit to Berger. While Berger’s switch adversely impacted the interests of Berger’s Penn Central shareholder clients, it more fully satisfied Berger’s personal self-interest financially. Trump almost certainly knew this, as described in Trump Show.
Berger had a powerful financial stake in Trump’s signing on for the lawsuit: His firm would get a third of any settlement, and the size of the award would be determined by the number of apartment units owned by landlords who became plaintiffs…. When Trump ultimately became a plaintiff, he brought more apartments into the case than any of the other eight plaintiff groups….
[This became] a pattern of Donald’s business life before and since: The repeated wooing or retention of critical public or legal opponents would become a lifelong hallmark of the Trump style. [Emphasis added.]153
Trump focused on Berger’s personal financial self-interest—and likely offered up a powerful carrot that satisfied this interest.
3. Trump’s Carrot for the Critical City Official—a Great New Job
The third major carrot illustrating Trump’s strategy? To get the Commodore deal done, Trump needed to navigate multiple city bureaucracies and satisfy their interests and the city’s overall interest in redeveloping a rundown section of the city. How did he accomplish this seemingly herculean task for a young developer in his first Manhattan project?
Enter Deputy New York City Mayor Stanley Friedman. Friedman ended up with an extremely powerful personal self-interest in getting this deal done, according to Trump Show.
The inducement was the job Roy Cohn [Trump’s lawyer] had already promised him. Friedman was even to get Roy’s fifth-floor office in Cohn’s townhouse, complete with cathedral ceiling, bar, outdoor patio, a greenhouse where Friedman’s secretary would work, and an adjoining apartment with kitchen, living room, fireplace, and loft bedroom. Friedman was guaranteed a six-figure salary for the first time in his life and, unless he stumbled, the rest of it.154
Friedman got the city’s bureaucracies on board for Trump and Cohn. They reciprocated. “One of Friedman’s best paying clients over the years was Donald Trump,” according to Trump Show.155
4. Trump’s Carrot for the Banks—His Dad’s Personal Guarantee
The final counterpart interest that proved crucial to many future Trump negotiations involved the banks’ security interest for their $70 million construction loan. Since Donald Trump himself had little financial creditworthiness at this time, his father Fred and Hyatt Hotels jointly guaranteed the loan.
Hyatt negotiated in return a promotion to jointly own the hotel and not just operate it. “[Trump] could not have made it happen without Fred’s—and Hyatt’s signatures. Hyatt chairman Jay Pritzker said later that Donald simply ‘couldn’t get the financing’ and ‘we were able to help.’”156
Trump knew the banks would never loan him $70 million based solely on his personal qualities and the project’s strength. Their financial interest would not allow it. But Trump’s carrot was his ace in the hole—Dad’s guarantee.
He would use this carrot and later his trust fund to satisfy his counterpart’s interests several more times in future negotiations.
Trump Tower
Donald Trump needed to build Trump Tower fast. Delays would be disastrous. The main reason he needed to move fast related to the concrete for its construction. The other reason? Time is money in development. The sooner you complete the build, the sooner revenue starts flowing.
The “concrete” problem for New York developers at the time? John Cody, who ran the union controlling the cement truckers and who would be called “the most significant labor racketeer preying on the construction industry in New York” in 1989 by documents cited by the U.S. House Subcommittee on Criminal Justice.157
Trump himself would call Cody—after Cody died in 2001—“one psychopathic crazy bastard” and “real scum.”158
Trump’s interest? Timing. Get Trump Tower built fast with no construction delays.
Cody’s interest? He wanted a Trump Tower luxury apartment for his girlfriend Verina Hixon.
Trump got his concrete on time with no delays. “In 1982, when union strikes froze developments across the city, construction at Trump Tower didn’t miss a beat.”159
And Cody got his girlfriend three large duplexes on two Trump Tower floors, just under Trump’s penthouse, including Trump Tower’s