How can you tell when the Trump organization’s scamming you? Donald Trump’s lips are moving.
His $200 million luxury hotel project in Washington D.C.’s Old Post Office building is no exception. Even as the Donald runs for president, the Trump organization is in hot water for (allegedly!) cooking the books.
Buzzfeed got hold of a deposition that reveals the Trump organization lured investors in with much “rosier” numbers than the ones used internally.
‘The testimony concerns Trump’s $200 million project to transform the Old Post Office building — a taxpayer-owned landmark just five blocks from White House — into a luxury hotel. The company developing the hotel is owned by Trump and three of his children, Ivanka, Donald Jr., and Eric.’
Raymond Flores, an analyst who used to work for the Trump organization, testified in May that Team Trump promised lenders millions more in earnings than the more staid estimates used within the company. He explained that internal project estimates “generally tend to err on the side of being pretty conservative.” He then added:
‘And then there are other projections where, you know, we’re pitching to a lender or an equity source, where it’s rosier. [With these estimates] we’re pushing the boundaries of — we’re pushing ranges of reasonability at those — at those projections to show, you know, what the hotel could be.’
The financial analyst defended these “more aggressive” projections by insisting people in the Trump organization believed they “could reasonably stand by them.”
Yet there’s a huge disparity between the internal numbers and those given to lenders. Take room, food and beverage revenue projections for starters:
- Room revenue projections: $40 million (internal); $50 million (for lenders).
- Food and beverage revenue projections: $15.7 million (internal), $32 million (for lenders).
These are definitely more than mere rounding errors.
So far, the only bank that got suckered into this project is Deutsche Bank. They’re on the hook for a $170 million construction loan. The Trump organization has also applied for a $32 million federal tax credit.
Here’s the kicker: The Trump organization brought the lawsuit.
But here’s the kicker. Usually, when a dodgy company gets busted for cooking the books, it’s because someone’s suing them. But in this case, the Trump organization’s the one doing the suing.
An earlier Buzzfeed article reports Donald Trump filed a lawsuit against Geoffrey Zakarian, better known as The Iron Chef. He’d signed a contract to open a restaurant in the hotel but bailed out after Mein Trumpf made those hateful comments about Mexican immigrants being rapists and criminals.
Now, the Trump organization’s suing him for $14 million.
Buzzfeed filed a legal action demanding access to testimony from the case.
‘The testimony concerns Trump’s $200 million project to transform the Old Post Office building — a taxpayer-owned landmark just five blocks from White House — into a luxury hotel. If Trump’s hotel company, owned by the candidate and three of his children, made decisions based on conservative expectations but presented more positive numbers to stakeholders such as bankers or government officials, that could raise serious ethical and even legal questions.’
On Thursday, much to the Trump organization’s chagrin, the judge denied their requests to withhold testimony. Apparently, cooking the books does not count as “trade secrets.”
Donald Trump won this contract in 2012 from the General Services Administration (GSA). Buzzfeed reports three sources told them he beat out the competition by “saying all the right things.” The Trump organization also made two big promises:
‘Trump promised to employ the architect who had, over decades, championed the building’s careful, historic restoration. And he promised the involvement of a multibillion-dollar real estate investment firm with a rock-solid financial reputation.’
Now, of course, they’re backing out on those promises. Neither the architect nor the real estate investment firm are anywhere to be seen.
But what can be seen is an enormous blue sign emblazoned with the terrifying words: “Coming 2016 TRUMP.”
Watch: Donald Trump’s press conference at the Old Post Office in Washington D.C.