Clockwise from the bottom left: The Eugene (435 West 31st Street), the Hudson Yards observation deck condominium and 555 Tenth Avenue (Credit: Google

How did the Trumps become wealthy?

Donald John Trump born (14-June-1946) and raised in the New York City borough of Queens. He is the 45th and current President of the United States Of America. Before entering politics, he was a businessman and television personality but before we dive into “how he became wealthy ?” a little bit of background.

Trump’s paternal grandfather, Frederick Trump, first immigrated to the United States in 1885 at the age of 16 and became a citizen in 1892. He amassed a fortune operating boomtown restaurants and boarding houses in the Seattle area and the Klondike region of Canada during its gold rush. On a visit to Kallstadt, he met Elisabeth Christ and married her in 1902. The couple permanently settled in New York in 1905. Frederick died from influenza during the 1918 pandemic. Trump’s father Fred Trump started working with his mother in real estate when he was only 15, shortly after his father’s death. Their company, “E. Trump & Son”, founded in 1923, was primarily active in the New York boroughs of Queens and Brooklyn. Fred Trump eventually built and sold thousands of houses, barracks, and apartments. In 1971, Donald Trump was made the president of the company, which was later renamed as the Trump Organization. Trump’s mother Mary Anne MacLeod was born in Tong, Lewis, Scotland. At age 18 in 1930, she immigrated to New York, where she worked as a maid. Fred Trump and Mary Anne MacLeod married in 1936 and raised their family in Queens.

Education-: Initially Trump attended the Kew-Forest School from kindergarten through seventh grade. At age 13, he was enrolled in the New York Military Academy, a private boarding school, after his parents discovered that he had made frequent trips into Manhattan without their permission.

In 1964, Trump enrolled at Fordham University. After two years, he was transferred to the Wharton School of the University of Pennsylvania. While at Wharton, he worked at the family business, Elizabeth Trump & Son.

He graduated in May 1968 with a Bachelor of Science degree in economics.

Business Career-:

In 1968, Trump began his career at his father Fred’s real estate development company, E. Trump & Son, which, among other interests, owned middle-class rental housing in New York City’s outer boroughs. Trump worked for his father to revitalize the Swifton Village apartment complex in Cincinnati, Ohio, which the elder Trump had bought in 1964. The management of the property was sued for racial discrimination in 1969; the suit “was quietly settled at Fred Trump’s direction.”The Trumps sold the property in 1972, with a vacancy on the rise. When his father became chairman of the board in 1971, Trump was promoted to president of the company and renamed it The Trump Organization.

Manhattan Developments-:

  1. In 1978, Trump launched his Manhattan real estate business by purchasing a 50 percent stake in the derelict Commodore Hotel, located next to Grand Central Terminal. The purchase was funded largely by a $70 million construction loan that was guaranteed jointly by Fred Trump and the Hyatt hotel chain. When the remodeling was finished, the hotel reopened in 1980 as the Grand Hyatt Hotel.
  2. The same year, Trump obtained the rights to develop Trump Tower, a 58-story, 664-foot-high (202 m) skyscraper in Midtown Manhattan.
  3. In 1980, repairs began on Central Park‘s Wollman Rink, with an anticipated two-and-a-half year construction time frame. Because of design flaws and numerous other construction problems, the project remained unfinished by May 1986. In June the same year rump was awarded a contract as the general contractor to finish the repairs by December 15 with a cost ceiling of $3 million, with the actual costs to be reimbursed by the city. Trump hired an architect, a construction company, and a Canadian ice-rink manufacturer and completed the work in four months, $775,000 under budget. Trump managed the rink from 1987 to 1995.
  4. In 1994, Trump’s company refurbished the Gulf and Western Building on Columbus Circle with design and structural enhancements turning it into a 44-story luxury residential and hotel property known as Trump International Hotel and Tower.
  5. From 1994 to 2002, Trump owned a 50 percent share of the Empire State Building. He intended to rename it “Trump Empire State Building Tower Apartments” if he had been able to boost his share.
  6. In 1996, Trump acquired the Bank of Manhattan Trust Building, which was a vacant seventy-one story skyscraper on Wall Street. After an extensive renovation, the high-rise was renamed the Trump Building at 40 Wall Street.
  7. In 1997, he began construction on Riverside South, which he dubbed Trump Place, a multi-building development along the Hudson River. He and the other investors in the project ultimately sold their interest for $1.8 billion in 2005 in what was then the biggest residential sale in the history of New York City.
  8. In 1988 Trump acquired the Plaza Hotel in Manhattan for $407 million and appointed his wife Ivana to manage its operations. They sold it in 1995
  9. He received another contract in 2001 which was extended until 2021
  10. In 2001, Trump completed Trump World Tower.
  11. In 2002, Trump acquired the former Hotel Delmonico, which was renovated and reopened in 2004 as the Trump Park Avenue; the building consisted of 35 stories of luxury condominiums.

Palm Beach Estate-:

In 1985, Trump acquired the Mar-a-Lago estate in Palm Beach, Florida, for $10 million, $7 million for the real estate and $3 million for the furnishings. His initial offer of $28 million had been rejected, and he was able to obtain the property for the lower price after a real-estate market “slump”.In addition to using a wing of the estate as a home, Trump turned Mar-a-Lago into a private club. To join, prospective members had to pay an initiation fee and annual dues. The initiation fee was $100,000 until 2016; it was doubled to $200,000 in January 2017.

Atlanta City Casino-:

  1. After New Jersey legalized casino gambling in 1977, Trump went to Atlantic City to explore new business opportunities. Seven years later, he opened Harrah’s at Trump Plaza hotel and casino; the project was built by Trump with financing from the Holiday Corporation who also managed its operation. It was renamed “Trump Plaza” soon after it opened. The casino’s poor financial results exacerbated disagreements between Trump and Holiday Corp., which led to Trump’s paying $70 million in May 1986 to buy out their interest in the property.
  2. Trump also acquired a partially completed building in Atlantic City from the Hilton Corporation for $320 million; when completed in 1985, that hotel and casino became Trump Castle,
  3. Trump acquired his third casino in Atlantic City, the Taj Mahal, in 1988 while it was under construction, through a complex transaction with Merv Griffin and Resorts International. It was completed at a cost of $1.1 billion and opened in April 1990. The project was financed with $675 million in junk bonds and was a major gamble by Trump. The project underwent debt restructuring the following year, leaving Trump with 50 percent ownership. Facing “enormous debt”, he sold his airline, Trump Shuttle, and his 282-foot (86 m) mega yacht, the Trump Princess, which had been indefinitely docked in Atlantic City while leased to his casinos for use by wealthy gamblers
  4. In 1995, Trump founded Trump Hotels & Casino Resorts (THCR), which assumed ownership of Trump Plaza, Trump Castle, and the Trump Casino in Gary, Indiana.
  5. THCR purchased Taj Mahal in 1996 and underwent bankruptcy restructuring in 2004 and 2009, leaving Trump with 10 percent ownership in the Trump Taj Mahal and other Trump casino properties. Trump remained chairman of THCR until 2009.

Golf Courses-:

  1. Trump began acquiring and constructing golf courses in 1999; his first property was the Trump International Golf Club, West Palm Beach in Florida.
  2. By 2007, he owned four courses around the U.S.Following the financial crisis of 2007–2008, he began purchasing existing golf courses and re-designing them

As of December 2016, the Trump Organization owns or operates 18 golf courses and golf resorts in the United States and abroad. According to Trump’s FEC personal financial disclosure, his 2015 golf and resort revenue amounted to $382 million, while his three European golf courses did not show a profit.

Bankruptcies-:

Trump has never filed for personal bankruptcy, but his hotel and casino businesses have been declared bankrupt six times between 1991 and 2009 in order to re-negotiate debt with banks and owners of stock and bonds. Because the businesses used Chapter 11 bankruptcy, they were allowed to operate while negotiations proceeded. Trump was quoted by Newsweek in 2011 saying, “I do play with the bankruptcy laws – they’re very good for me” as a tool for trimming debt.

The six bankruptcies were the result of over-leveraged hotel and casino businesses in Atlantic City and New York:

  1. Trump Taj Mahal (1991).
  2. Trump Plaza Hotel and Casino (1992),.
  3. Plaza Hotel (1992).
  4. Trump Castle Hotel and Casino (1992).
  5. Trump Hotels and Casino Resorts (2004).
  6. Trump Entertainment Resorts (2009).

Side Ventures-:

After Trump took over the family real estate firm in 1971 and renamed it The Trump Organization, he expanded its real estate operations and ventured into other business activities. The company eventually became the umbrella organization for several hundred individual business ventures and partnerships.

Sports-:

  1. In September 1983, Trump purchased the New Jersey Generals—an American football team that played in the United States Football League (USFL).
  2. He hosted several boxing matches at the Trump Plaza in Atlantic City, including Mike Tyson’s 1988 heavyweight championship fight against Michael Spinks. He also acted as a financial advisor to Mike Tyson.
  3. In 1989 and 1990, Trump lent his name to the Tour de Trump cycling stage race, which was an attempt to create an American equivalent of European races such as the Tour de France or the Giro d’Italia.
  4. Trump also operates golf courses in several countries.

Miss Universe-:

From 1996 to 2015, Trump owned part or all of the Miss Universe pageants. The pageants include Miss USA and Miss Teen USA. His management of this business involved his family members—daughter Ivanka once hosted Miss Teen USA. He became dissatisfied with how CBS scheduled the pageants and took both Miss Universe and Miss USA to NBC in 2002.

Trump University-:

Trump University was a for-profit education company that was founded by Trump and his associates, Michael Sexton and Jonathan Spitalny. The company ran a real estate training program and charged between $1,500 and $35,000 per course.

In 2005, New York State authorities notified the operation that its use of the word”university” was misleading and violated state law. After a second such notification in 2010, the name of the company was changed to the “Trump Entrepreneurial Institute”.Trump was also found personally liable for failing to obtain a business license for the operation. Ronald Schnackenberg, a sales manager for Trump University, said in a testimony that he was reprimanded for not trying harder to sell a $35,000 real estate class to a couple who could not afford it. Schnackenberg said that he believed “Trump University was a fraudulent scheme” which “preyed upon the elderly and uneducated to separate them from their money.”

In 2013, New York State filed a $40 million civil suit against Trump University; the suit alleged that the company made false statements and defrauded consumers. Also, two class-action civil lawsuits were filed in federal court relating to Trump University; they named Trump personally as well as his companies.

During the presidential campaign, Trump criticized presiding Judge Gonzalo P. Curiel, alleging bias in his rulings because of his Mexican heritage. Shortly after Trump won the presidency, the parties agreed to a settlement of all three pending cases, whereby Trump paid a total of $25 million and denied any wrongdoing.

Foundation-:

The Donald J. Trump Foundation is a U.S.-based private foundation that was established in 1988 for the initial purpose of giving away proceeds from the book Trump: The Art of the Deal. The foundation’s funds have mostly come from donors other than Trump, who has not given personally to the charity since 2008. The foundation’s tax returns show that it has given to health care and sports-related charities, as well as conservative groups. In 2009, for example, the foundation gave $926,750 to about 40 groups, with the biggest donations going to the Arnold Palmer Medical Center Foundation ($100,000), the New York-Presbyterian Hospital ($125,000), the Police Athletic League ($156,000), and the Clinton Foundation ($100,000). From 2004 to 2014, the top donors to the foundation were Vince and Linda McMahon of WWE, who donated $5 million to the foundation after Trump appeared at WrestleMania in 2007. Trump later named Linda McMahon as Administrator of the Small Business Administration. In 2016, The Washington Post reported that the charity had committed several potential legal and ethical violations, including alleged self-dealing and possible tax evasion. Also in 2016, the New York State Attorney General’s office notified the Trump Foundation that the foundation appeared to be in violation of New York laws regarding charities, ordering it to immediately cease its fundraising activities in New York. A Trump spokesman called the Attorney General’s investigation a “partisan hit job”.

In response to mounting complaints, Trump’s team announced in late December 2016 that the Trump Foundation would be dissolved to remove “even the appearance of any conflict with [his] role as President.”

According to an IRS filing in November 2017, the foundation intended to shut down and distribute its assets (about $970,000) to other charities. However, the New York Attorney General’s office had to complete their ongoing investigation before the foundation could legally shut down, and in June 2018 they filed a civil suit against the foundation for $2.8 million in restitution and additional penalties.

The suit names Trump himself as well as his adult children Donald Jr., Eric, and Ivanka.

Wealth-:

Trump is the beneficiary of several trust funds set up by his father and paternal grandmother beginning in 1949. In 1976, Fred Trump set up trust funds of $1 million (equivalent to $4.3 million in 2017) for each of his five children and three grandchildren; Donald Trump received annual payments from his trust fund, for example, $90,000 in 1980 and $214,605 in 1981. By 1993, when Trump took two loans totaling $30 million from his siblings, their anticipated shares of Fred’s fortune were $35 million each. Upon Fred Trump’s death in 1999, his will divided $20 million after taxes (equivalent to $29.38 million in 2017) among his surviving children. Trump said that he began his career with “a small loan of one million dollars” from his father.

  1. He appeared on the initial Forbes 400 list of richest Americans in 1982 with an estimated $200 million fortune shared with his father.
  2. Former Forbes reporter Jonathan Greenberg stated in 2018 that during the 1980s Trump had deceived him about his actual net worth and his share of the family assets in order to appear on the list.
  3. Trump made the Forbes World’s Billionaires list for the first time in 1989, but he was dropped from the Forbes 400 from 1990 to 1995 following business losses.
  4. In 2005, Deutsche Bank loan documents pegged Trump’s net worth at $788 million, while Forbes quoted $2.6 billion and journalist Tim O’Brien gave a range of $150 million to $250 million.
  5. In its 2018 billionaires ranking, Forbes estimated Trump’s net worth at $3.1 billion(766th in the world, 248th in the U.S.)making him one of the richest politicians in American history.
  6. When he filed mandatory financial disclosure forms with the Federal Elections Commission (FEC) in July 2015, Trump claimed a net worth of about $10 billion;
  7. however, FEC figures cannot corroborate this estimate because they only show each of his largest buildings as being worth “over $50 million”, yielding total assets worth more than $1.4 billion and debt over $265 million. Trump reported a yearly income of $362 million for 2014 and $611 million from January 2015 to May 2016.
  8. A 2016 analysis of Trump’s business career by The Economist concluded that his performance since 1985 had been “mediocre compared with the stock market and property in New York”.
  9. A subsequent analysis by The Washington Post concluded that “Trump is a mix of braggadocio, business failures, and real success”