As the former president tries to fend off authorities, new revelations about Trump Tower suggest that the building is—and always was—something of a fraud.
Forbes
For decades, Trump Tower has embodied the various stages of Donald Trump. It was new and exciting in the 1980s, an afterthought in the 1990s, reality-TV famous in the 2000s, then world famous in the 2010s, when it served as the launching pad to the presidency. Now the building, like its owner, seems empty and past its prime, of fading interest to most people. Except prosecutors.
The offices of the New York attorney general and the Manhattan district attorney have both focused on Trump Tower as part of their probes into Donald Trump’s efforts to mislead lenders about the value of his assets. The attorney general filed $250 million civil suit in September, accusing Trump, his business and his underlings of fraud. Manhattan District Attorney Alvin Bragg inherited a related criminal probe when he took office last year, but he hesitated to file charges, and two top prosecutors resigned. Bragg’s office says it is still investigating. Perhaps the district attorney is hoping to turn up additional information.
Forbes has some. Since the early 1980s, long before our efforts had anything to do with a quarter-billion-dollar lawsuit or potential criminal charges, we have been scrutinizing various aspects of Trump’s properties. Our latest look at Trump Tower uncovered three new pieces of potential evidence:
- Property records show that the real estate mogul has been lying about the financial performance of the building since it first opened in 1983.
- Tax and lending documents indicate that Trump lied about the square footage of the office and retail space at the base of the property (not to be confused with his lying about size of the penthouse atop the building, which Forbes previously exposed).
- Portions of a 2015 audio recording, released here for the first time, prove that Trump was personally involved in the efforts to lie about the value of Trump Tower’s commercial space.
Nine days ago, Forbes reached out to the Trump Organization to ask for explanations about various discrepancies in its past statements. An attorney for the firm replied by asking for four weeks to respond, explaining that the legal team was “already quite busy.” Forbes granted a few extra days. A spokesperson for the Trump Organization then sent a statement that did not address the discrepancies but instead took issue with the attorney general’s case. “The attorney general’s attempt to interfere with private loan transactions between sophisticated business parties is utterly baseless and a complete overreach,” the statement said. “Not only was there never a loan default, but all the loans are either current or have been completely paid back in full in the ordinary course of business. Indeed, all of the Wall Street banks that issued these loans profited handsomely.”
It is true that Donald Trump has already taken care of some of the loans at issue in the attorney general’s case. But it is also true that Forbes’ latest revelations, combined with earlier reporting and stacks of documents now in prosecutors’ hands, all point to a simple conclusion: The Trump Organization lied about the value of its properties to lenders for years, and although multiple people inside the firm participated in those efforts, the person at the center of the deceit was Donald Trump.
Forbes
In 1978, the future president was just a 32-year-old from Queens, who happened to have a rich dad and a desire to make a name for himself in Manhattan. To fulfill his ambition, he teamed up with an outfit named the Equitable Life Assurance Society, which owned some land on Fifth Avenue. He got several lenders, including his father’s, to lend him and his partner $130 million so that they could build a skyscraper. Five years later, Trump Tower opened to great acclaim, some of it from Trump himself, who dubbed his creation “the most successful real estate development of recent times.”
Trump Tower started as a bold idea from a brash developer, eager to make his mark in Manhattan with a signature building on Fifth Avenue.
bettmann/getty images
To back up such bluster, he offered big numbers, telling Forbes he sold 85% of the residential units for $500,000 to $12 million apiece before the building had even opened. “The apartments will bring in $268 million, all profit.” He repeated similar numbers to the New York Times, which also printed them, at one point citing “a financial statement from an outside accountant.” Biographers referenced the same figures, which became cemented into the legend of Trump.
But the numbers were not true. A fresh review of property deeds shows that in 1983, the year Trump Tower opened, Trump and his partners in fact sold about 60% of the apartments, or 150 units, in the building. Roughly 130 of those went for less than $500,000, with the cheapest fetching just $130,000. The most expensive one sold for $2 million, one-sixth the price that Trump claimed. By the end of the year, he and Equitable had taken in $45 million—a good start, but not nearly enough to pay back the $130 million they had borrowed, let alone take in hundreds of millions in profit.
The apartments ultimately all sold, fetching about $125 million in total, according to the records. Trump bought out Equitable in 1986, leaving himself with the base of the building, which housed both retail and office space, including some he used for his own firm. He also ended up with the penthouse, where he and his family moved. From his office on the 26th floor and his apartment on the 68th, Trump managed his business and life for decades.
He invited Forbes over multiple times, as part of his much-publicized effort to push himself higher on the annual Forbes 400 list of America’s richest people. The property played a key role in the calculation for decades, since its office-and-retail space long remained one of Trump’s most-valuable assets. “Trump says $275 million,” read a reporter’s notes from 1997. “He maintained ownership of the commercial space on the ground floors. Trump says that portion throws off $18 million a year.”
Gucci holds a ribbon cutting at Trump Tower on Feb. 8, 2008. Fifteen years later, the retailer remains Donald Trump’s most important tenant in the building.
rob loud/getty images
Another lie. Underwriters, scrutinizing the building around the same time, determined that the property was only producing about $6.3 million of annual net operating income, according to lending records. An appraiser, meanwhile, determined that it was worth just $65 million, less than one-fourth the figure Trump suggested. To those familiar with Trump, his boasts sounded ridiculous. “I had a laugh,” says Barbara Res, who worked with Trump from 1980 to 1998 and oversaw the construction of Trump Tower. “I mean, it didn’t seem like he had the kind of money he claimed he had.”
But Trump stayed on the offensive, and eventually, he did earn more money. In December 2006, news hit that Gucci was moving into Trump Tower, as part of a massive deal that brought in more than $15 million of rent a year on average. Profits surged to $16 million by 2010, according to lending records. Two years later, Trump took advantage of falling interest rates and refinanced the property, replacing $27 million of debt with a $100 million loan, reducing his rate from 7.4% to 4.2% in the process. Trump walked away with $68 million tax-free.
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Far from satisfied, he kept lying. He famously claimed his 11,000-square-foot penthouse was about 30,000 square feet, changing his financial statements to reflect the true size only after Forbes called him out on it. That lie became a key piece of evidence in both the attorney general’s case and the district attorney’s investigation. Strangely, no one seems to have drilled down on the fact that Trump also was throwing out inconsistent numbers for the square footage of the building’s commercial space, which is far more valuable than the penthouse.
Trump signed his name to one document that suggests there were less than 200,000 rentable square feet. But records connected to a loan say 215,000 square feet. A prospectus for a different loan counts 244,000. A city filing lists 257,000 square feet, citing a different document, which in fact says far fewer. Then there’s a Trump statement that lists the retail space at 114,000 square feet, even though a separate one says 46,000. With so much contradictory information flying around, it is hard to figure out the true size of the property.
But a logical place to start is Trump Tower’s founding document, its condo declaration. Filed in 1983, it lists the square footage of every parcel in the building, including the commercial space. The document says that portion of Trump Tower measures 235,000 square feet, and a footnote explains that 53,000 of those square feet cover common elements like elevators, public restrooms, mechanical areas, outdoor patios and a sewer pit. Subtract the common space, and you’re left with just 182,000. No amendments were ever recorded against that parcel suggesting a change in the numbers.
When appealing its property taxes, the Trump Organization listed a similar overall square footage figure—234,000. Although the filings made it clear that a small portion of that space could not be rented, the former president’s firm also seems to have used the common space to suggest huge vacancies in the building, which could theoretically decrease the property’s value. Tax documents from 2009 and 2010, obtained via a freedom of information request, listed 234,000 square feet in the property but said 45,000, or 19%, of those square feet were sitting vacant. Subsequent filings, for the years between 2011 and 2017, maintained that about 11% to 22% of the property sat empty.
Trump, who had plenty of reasons to want to appear more creditworthy to banks, inflated the value of his property by an estimated $400 million.
When the Trump Organization was interacting with lenders, on the other hand, the firm acted as if there was hardly any vacancy at all. A lending prospectus connected to the 2012 refinance said the Trump Organization marked its occupancy rate at 92% in 2010, 99% in 2011 and 99% in 2012. What happened to all the “vacant” space listed on its tax filings those same years? It seems to have been included as part of the Trump Organization’s own space, listed at about 75,000 square feet in the 2012 prospectus—roughly 30,000 more than the tax documents from that period suggest.
Forbes tried to add up the space that the prospectus described the Trump Organization as using to see if it totaled 75,000 square feet, but we only came up with about 49,000. How did Trump apparently convince his lenders he was occupying nearly 30,000 square feet of additional space? Perhaps he included some of the common space as part of his firm’s total, making the building appear to have more square feet of office and retail space than it actually did. He also somehow found a way to make his lenders believe the office and retail square footage added up to 244,000 square feet, far more than the condo declaration suggested.
The manipulation of numbers carried over to Trump’s personal financial statements, which authorities say he passed along to lenders. In those documents, the real estate mogul marked Trump Tower at absurd values, part of his wider effort to make the Trump empire seem like it was worth more than it really was. The deceit involving Trump Tower’s commercial space reached its pinnacle in 2015, when the statements said the parcel was worth $881 million—even though appraisers had valued it at about half that amount three years earlier—and profits had declined over those three years. To justify its sky-high valuation, the Trump Organization based its calculation entirely on the sale of a single, marquee building across the street, which sold at a price per square foot that real estate publications dubbed a “world record” at the time. The Trump Organization then applied that metric to the number of square feet inside Trump Tower. Or at least, to the number of square feet it claimed were in Trump Tower.
Internal records show that the Trump Organization got to its $881 million valuation by counting 246,000 square feet of space in the building—about 10,000 more than the figure listed in the condo declaration. The calculation then broke that figure into 46,000 square of retail space and 200,000 square feet of office—with no mention of common space like mechanical areas or sewer pits. The end result: Trump, who had plenty of reasons to want to appear more creditworthy to banks, inflated the value of his property by an estimated $400 million.
Forbes
There is no doubt about Trump’s personal involvement in this. His 2015 financial statement is explicit: “The estimated current value of $880,900,000 is based on an evaluation by Mr. Trump in conjunction with his associates and outside professionals.” Over the years, similar lines appeared throughout his pumped-up statements, in reference to various assets. He once testified, under oath, that he reviews the annual statements with his Chief Financial Officer Allen Weisselberg, and that he generally keeps them handy at his own desk. Despite the absurd numbers that the documents contain, Trump has also signed paperwork in his own hand certifying their accuracy. And he has personally sent the statements to banks. “Hopefully you will be impressed!” he said in a 2011 note to the CEO of Deutsche Bank Securities.
Loyal lieutenant: Allen Weisselberg, second from the right, started working for Fred Trump in 1973 before joining his son Donald at Trump Tower in Manhattan in 1986.
timothy a. clary/getty images
He dispatched his employees to help push the numbers. In one instance, Trump’s CFO Weisselberg told a reporter that the building’s commercial space measured 257,000 square feet, a figure that also appeared on some city filings but was higher than the number listed on lending and tax documents. But no one took things as far as Trump, as became evident in a September 2015 interview with Forbes inside Trump Tower.
“If I wanted to sell Trump Tower today, I’d get $2.5 billion,” he said, roughly doubling the number that Weisselberg had previously suggested to Forbes and tripling the figure listed on his pumped-up financial statement.
“We tried to tell it to [another reporter],” Weisselberg jumped in, perhaps forgetting that the number he tried to tell the other reporter was a fraction of the figure Trump was now claiming. “There’s a comp right across the street for $1.8 billion. Ignored me. Just totally—”
“That sold for $1.8 billion, and it’s smaller,” Trump said, referring to the neighboring Crown Building, which was in fact nearly 150,000 square feet larger than his space in Trump Tower, according to the Trump Organization’s own documents.
CAMPAIGN STOP
Donald Trump took a break from running for president in September 2015 to speak to Forbes about his assets, including Trump Tower, which he falsely claimed was worth billions.
Trump then upped the sales price of the Crown Building, suggesting that its storefronts alone fetched $1.8 billion and lamenting the much-lower estimate Forbes had suggested. “When this thing sells, the retail over here sells, for $1.8 billion, and you got me down at $469 million?” Trump said. “It’s a joke.”
Later in the conversation, one of the reporters asked Trump about the profits at his building.
Weisselberg jumped in. “Go by the comp,” he said, referring to the recent sale, even though the Trump Organization valued the building in other years based on its profitability. “You have a comp. You have a real comp.”
But Trump couldn’t resist an opportunity to pump up his profits, too. “What’ll it make, $80 [million]? Seventy?” he asked Weisselberg, before answering himself. “It’ll make $80, $90 million this year.” The building actually earned more like $15 million of net operating income that year, according to both lending and tax records.
BIG LEAGUE LIES
Donald Trump suggests Trump Tower was poised to make about $90 million in 2015, exaggerating the true total by nearly 500%.
The lies were as clear as they were endless, a continuation of Trump’s yearslong crusade to convince everyone—his lenders, the media and the public—that he was billions of dollars richer than he actually was.
With the New York attorney general now moving forward with her civil suit, the biggest question is whether the Manhattan district attorney will join with a criminal one. The Department of Justice, which received a criminal referral from the state attorney general’s office, could also theoretically bring charges. Those who have known Trump for decades already understand how he would respond. “He’ll blame everybody else—he’ll blame Weisselberg, he’ll blame whoever,” says Barbara Res, the executive who helped Trump build his most famous tower. “You know, my knowledge of him was that nobody made a decision without his approval.”