Lucky Loser

these days, it can be difficult to remember who donald trump was prior to his running for president, and prior to his starring role on the apprentice. his entry into politics, as well as his high profile television show, both served as a kind of rebranding of the trump name. but those who’ve tracked his career from the start can see a different story: a persistent pattern of bold and impulsive behavior that has both earned him admirers and resulted in a succession of financial misadventures.

from the start trump has positioned himself as a self-made man who earned fame and fortune on his own terms. but as we’ll see in this chapter, the financial record proves otherwise. here we have a story of a man who was given the keys to a real estate empire and access to his father’s fortune. it also shows how donald trump used that money and influence to rack up a mountain of debt through poor decisions and bad investments. his mistakes threatened to ruin his career more than once, but, as you’ll discover, he managed to persist time and again.

fred c. trump was a teenager in queens, new york, with a vision to build his future. it was the 1920s, and the borough was booming, with a population surge and a growing demand for housing. instead of spending time on typical high-school activities, fred worked relentlessly, delivering building supplies, learning carpentry, and even constructing a garage for a neighbor. his interest in real estate echoed his late father’s dreams, which had been cut short by his death during the spanish flu pandemic. fred’s mother, elizabeth, took over the family’s real-estate interests, dreaming of building a family real-estate company. fred was determined to make that dream a reality.

while his siblings pursued other careers, fred stuck with the family business. he took courses to sharpen his skills and began buying land and building homes alongside his mother. his first major success came in jamaica estates, where he built upscale homes with modern touches, selling them at much higher prices than the simpler designs he had initially created. this success positioned fred as a builder for wealthier clients, marking a significant step forward in his real estate career.

however, as fred's ambitions grew, the great depression hit. during this economic downturn, fred briefly dabbled in running a supermarket, but real estate remained his true passion. when the opportunity arose to purchase foreclosed properties from a collapsed financial firm, fred jumped at the chance. it was a pivotal moment in his career, as the federal government had created new housing programs that made homeownership more accessible, and builders like fred benefited from these opportunities.

using loans backed by the federal housing administration, fred gained a reputation for mass-producing quality homes quickly and cheaply. his efficient techniques earned him the nickname “the henry ford of the building industry.” throughout this period, fred remained hands-on, working twelve-hour days and obsessively controlling costs, even reusing bent nails found on construction sites. his success during the early 1940s, as world war ii approached, helped solidify his place as a significant figure in real estate.

after the us entered world war ii, fred’s business continued to evolve, driven by the housing needs of military workers near crucial shipyards. the government introduced programs like title vi, section 608, which allowed developers to secure low-interest loans without much oversight on costs. fred seized this opportunity, building two-story apartment complexes near military bases. by the war’s end, he had constructed 1,400 units and was ready to capitalize on the post-war housing boom for returning veterans.

in the post-war years, fred focused on larger apartment complexes, creating shore haven and beach haven, which together housed over 3,000 units. he transferred ownership of these projects to trusts in his children’s names, including donald trump, securing their financial future. however, fred’s business practices became increasingly questionable. after completing these projects, he had millions left over from government loans, which he pocketed. though this would catch up to him later, for now, fred was laying the foundation for the trump family fortune.

by 1951, fred trump had been gaming the system by exploiting loopholes, inflating cost estimates, pocketing excess mortgage funds, and avoiding taxes on his windfall. but nothing lasts forever, and the irs began to catch on. the turning point came when president truman appointed a new irs commissioner, who quickly identified the exploitation of federal housing programs and started closing the loopholes.

at the same time, the scandal surrounding the misuse of section 608 gained national attention. senate hearings and media coverage exposed how fred trump and other developers had pocketed millions in excess government funds. during the hearings, fred offered a circular defense, first claiming he hadn’t padded his estimates, then admitting he did so as a precaution against inflation. this reasoning was unconvincing, especially since the committee knew fred had already taken advantage of the option to increase his mortgage if costs rose.

as pressure mounted, a newly appointed fha commissioner began tightening regulations. fred responded by hiring high-powered lawyers to negotiate a deal. eventually, clyde powell, an fha official with a criminal past who had overseen fred’s projects, took the brunt of the blame. fred, meanwhile, managed to keep his control over the projects by agreeing to leave the excess funds in his accounts, escaping more severe consequences.

despite the scandal, fred emerged wealthier than ever. he now owned over 5,500 apartments, with section 608 transforming his business model from building homes to becoming a large-scale landlord. this marked a new chapter in his real estate empire, setting the stage for the family’s future success. as fred’s wealth grew, so did the expectations for his children, particularly his son, donald.

by the time donald trump was ten, he had already established himself as the dominant figure among his siblings. tall for his age, he excelled in sports but developed a reputation as a troublemaker and a bully. his behavior eventually led fred to send him to the new york military academy, a strict boarding school aimed at instilling discipline. at the academy, donald avoided the harshest punishments, partly due to his father's status as a major donor.

meanwhile, donald's older brother, freddy, pursued his dream of becoming an airline pilot, much to fred’s disapproval. donald, who was increasingly seen as the heir to the family business, once mocked his brother, telling him he was “nothing but a glorified bus driver.” as freddy distanced himself from the family business, donald became the focus of his father's attention, solidifying his role as fred’s successor.

with fred’s influence, donald trump transferred from fordham university to the wharton school at the university of pennsylvania. at wharton, donald focused more on making future business connections than excelling academically, despite later claims of graduating at the top of his class. after college, he avoided the vietnam war draft with a medical exemption for bone spurs, clearing his path to take over the family business.

by the age of 22, donald was working alongside his father in the family’s real estate empire. fred gave him big titles and a six-figure salary, but donald found the daily grind of managing tenants and properties boring. eager for something bigger, he began rebranding the business as “the trump organization,” although it was still largely backed by his father’s money. while fred quietly transferred wealth to his children through trust funds and property ownership, donald sought to make a splash with bolder moves.

one of fred’s largest investments at the time was in starrett city, a tax-shelter project for wealthy investors, rather than a profit-making venture. fred contributed millions, setting the family up among the wealthiest in america. meanwhile, donald began positioning himself as the face of the family business, securing media attention by exaggerating his role in manhattan real-estate deals and projects like starrett city – claims that were often overstated.

a pivotal moment for donald came in 1973 when the us department of justice sued the trump organization for racial discrimination in their rental practices. taking charge, donald, with the advice of infamous lawyer roy cohn, fought back aggressively. despite countersuing for $100 million, donald eventually settled the case without admitting guilt, in a costly legal battle that could have been avoided.

as new york city entered an economic downturn in the 1970s, fred’s political connections and donald’s eagerness to seize the spotlight put the trumps in a prime position to capitalize on new opportunities. fred, however, was winding down, while donald took center stage, making grand announcements, often without the resources to back them. he famously announced plans for a $100 million development on the west side yards, despite not securing the land.

one of donald’s biggest early successes was securing the renovation of the commodore hotel. with help from mayor abe beame and a partnership with hyatt hotels, he negotiated a deal for massive property tax breaks in exchange for profit-sharing. however, his inexperience led to costly overruns and delays. throughout this period, fred’s financial support was crucial, helping donald secure loans and push through setbacks, solidifying donald’s image as a rising star in new york real estate.

fred trump was known for undervaluing property appraisals to reduce tax obligations, a tactic donald adopted and refined. donald frequently lowballed property values to minimize taxes while inflating them to impress banks and buyers. he also sought to distance himself from his father’s legacy, exaggerating his success to the media and falsely inflating his assets in dealings with outlets like forbes.

behind the scenes, donald’s financial reality was far from the image he projected. he relied heavily on bank loans and his father’s wealth to fund projects like trump tower and his atlantic city casinos. while trump tower was ultimately successful, his financial maneuvers were often messy, with a tendency to overextend and complicate matters with legal battles and delays.

donald never gave up on the west side rail yards project, which he first lost in 1979. by 1985, he took over the $115 million mortgage and taxes but jeopardized the project by proposing a massive skyscraper that clashed with earlier plans. his grandiose vision put him at odds with his team and city officials, but donald pushed forward, even falsely claiming nbc was interested in relocating to the site, which he named television city.

by 1986, donald was more than a billion dollars in debt, acquiring properties that generated no income but required costly maintenance. yet he continued to be portrayed as a successful businessman in the media. despite his financial instability, banks kept giving him loans, allowing him to acquire a stake in holiday corporation and purchase shares worth $69 million, sparking concerns of greenmailing.

trump's casino ventures, particularly the taj mahal, further exposed his financial troubles. he took on $675 million in junk bond debt, requiring enormous interest payments. to stay afloat, the taj mahal would need to generate $1 million in profit daily. worse, the casino would siphon customers from trump’s other casino, trump castle, deepening his financial woes.

by 1990, donald’s debt had ballooned to $3.4 billion, and he missed interest payments of $73 million. desperate for cash, fred trump intervened, sending an assistant to the taj mahal to purchase $3.35 million in chips to help cover donald's debts. fred’s financial support remained critical throughout, as donald’s businesses teetered on the edge of collapse, relying on secretive financial maneuvers to stay afloat.

at the start of the 1990s, donald trump faced serious financial trouble. he began defaulting on loans, and banks started imposing stricter terms when dealing with him. to avoid bankruptcy, trump sold off assets, including trump shuttle and the plaza hotel. despite investing millions in renovations, he walked away with no profit. his grand plans, like the west side rail yards project, continued to falter, and he eventually handed control to hong kong investors. trump also converted his florida estate, mar-a-lago, into a private club, while launching trump hotels and casino resorts to rebuild his financial empire, though he continued to saddle it with debt.

then another financial lifeline arrived, again from his father. as fred’s health deteriorated, donald led the division of his father’s assets among the family, using trusts to minimize taxes and bolster his own wealth. in 1997, weeks before the release of his book the art of the comeback, donald inherited a large portion of fred’s real estate empire, instantly increasing his net worth by millions. however, by 2003, his public image was tarnished, and his office at trump tower reflected his financial struggles with worn furniture and a small, understaffed operation.

in 2003, television producer mark burnett saw an opportunity in trump, despite his financial issues. trump’s casinos were near bankruptcy, and public opinion of him was unfavorable. burnett’s new reality show, the apprentice, aimed to reshape trump’s image, presenting him as a self-made billionaire who had turned his fortunes around. the flashy, exaggerated narrative worked, and the show’s success significantly boosted trump’s popularity, even though his real businesses were suffering heavy losses, including over $300 million in the 2003 tax year.

as the apprentice took off, trump sold the majority of his father’s assets for $705.6 million, despite their higher true value. however, burnett’s show began generating substantial income through brand integrations, earning $9.4 million in the second season alone. trump started making significant profits simply by being himself, without any investments or risks. his impulsive nature, often a liability in business, became a winning formula for television, helping the show average 20.7 million viewers per episode.

trump’s newfound tv stardom brought him lucrative endorsement deals, often with little regard for the companies or products involved. employees noticed that trump eagerly accepted money without vetting the businesses behind the deals, which eventually led to issues. one of the most notorious examples was trump university. after a brief meeting, trump agreed to fund the venture, ignoring warnings about regulatory requirements. the lack of oversight and questionable qualifications of instructors led to multiple lawsuits, with critics saying the operation was designed to scam students.

trump’s detachment from the inner workings of his ventures, combined with his willingness to endorse anything for a paycheck, showcased a recurring pattern. his short-term thinking and desire for quick financial gains often led to deeper problems, but his tv persona allowed him to maintain the illusion of success even as his businesses faltered.

the success of the apprentice triggered a surge in trump’s finances, bringing in over $103 million from endorsements in just seven years. despite this, many of his real estate licensing deals never came to fruition, leading to lawsuits and damaging his brand. trump’s short-term focus on financial gains often jeopardized his long-term reputation, as he recklessly managed these projects for immediate profit.

in chicago, trump had high hopes for a new tower on the site of the sun-times building, but the financial crisis of 2008 derailed his plans. with ballooning costs and looming loan deadlines, trump invoked a “force majeure” clause to escape financial responsibility, settling his debts with lenders and walking away with borrowed money. his tax strategies, including declaring the chicago project worthless, allowed him to avoid significant tax liability, even as his financial maneuvers drew irs scrutiny.

the 2008 financial crisis also presented an opportunity for trump. he claimed $777.2 million in suspended losses in 2009, resulting in over $90 million in tax refunds. despite these financial issues, trump continued investing in real estate, particularly in golf courses. his projects, like the menie estate in scotland and others in ireland and florida, faced opposition and environmental concerns. these ventures often failed to turn a profit, requiring trump to subsidize them with millions of dollars annually.

in 2015, trump decided to run for president, confident in his chances against hillary clinton. his campaign launched with a controversial speech, alienating key business partners like nbc and retailers, who severed ties with him. as a result, trump’s endorsement income plummeted, dropping from $51 million to $2.9 million between 2011 and 2018. financial pressure mounted as he was forced to sell off properties, including golf courses and a washington, dc hotel.

despite these setbacks, trump’s political candidacy boosted his finances. mar-a-lago saw revenue skyrocket from $664,000 in 2014 to nearly $6 million by 2016. however, trump still faced significant financial threats, including an irs audit that could cost him over $100 million and various legal judgments amounting to $537 million. his pattern of risky financial decisions persisted even as he entered the political arena.

trump’s behavior has remained consistent throughout his career. he distorts reality to suit his needs, makes impulsive choices with other people’s money, and often blames others when things go wrong. his narrative of persecution resonates with his supporters, but as he contemplates another run for office, americans may again face the decision of whether they want trump as their leader.

in this chapter to lucky loser by russ buettner and susanne craig, you’ve learned that…

over the years, donald trump has touted himself as a self-made man. but the reality is that he never had to spend any money of his own in order to present himself as a successful businessman. he was able to do this by leveraging his father’s achievements and wealth, and using loans and favors to present himself as a successful dealmaker. that image nearly fell apart as he took out millions in loans to make a series of bad investments, buying property and businesses that cost more to keep running than they brought in. his successful image was on the decline at the turn of the century, when most banks were declining to work with him and businesses were on the verge of bankruptcy. but that image was restored by television producers and he rode the popularity of his tv show to the presidency, despite his financial accounts continuing to show massive losses of money.

okay, that’s it for this chapter. we hope you enjoyed it. if you can, please take the time to leave us a rating – we always appreciate your feedback. see you in the next chapter.