Casinos had multiple run-ins with rules
Records show recurring troubles with regulators
Donald Trump often boasts he made a lot of money here, despite the repeated failures of his casinos, but what he doesn’t mention is his casino empire’s repeated run-ins with government regulators over broken promises and violating casino rules.
“The record before us is laced with hyperbole, contradictions and generalities,” then New Jersey Casino Control Commission member Valerie Armstrong said in 1988 at a hearing over Trump’s bid to take over Atlantic City’s Taj Mahal. Inconsistencies in Trump’s testimony, Armstrong said, “make it difficult to evaluate adequately the licensee’s fitness for licensure.”
As Hillary Clinton is set to speak Wednesday in Atlantic City about the financial background of Trump’s casinos, records gathered over four months by the USA TODAY Network shine light on an era marked by battles with regulators who often doubted statements by Trump yet allowed him to keep operating. The review found Trump’s casinos re-
peatedly broke state rules, leading to more than a million dollars in fines. The most egregious rule-breaking centered on the casinos’ illicit efforts to cater to high-rollers and last-ditch maneuvers to stave off the financial collapse ahead.
Despite his troubles in New Jersey, Trump eagerly sought to become an international casino mogul, adding an Indiana riverboat and trying to open more casinos in states including Nevada, Illinois, Pennsylvania, Colorado and Missouri and countries such as Canada and New Zealand.
All of this generated a trail of legal paperwork across the country. There are transcripts from hearings during which state regulators scrutinized his promises, his finances and his New Jersey casinos’ track record for following rules. Among the violations: discrimination against employees, illicit gifts to gamblers and an illegal loan from his father.
New Jersey’s rulings on the casino violations did not implicate Trump personally. Trump’s campaign did not respond to repeated requests for comment.
Records show Trump perplexed state regulators as they pressed him for specifics. He reneged on promises to casino authorities in New Jersey and Indiana. As his Atlantic City casinos cycled through bankruptcies, records show some casino regulators in other states were skeptical about his expansion plans.
Trump’s testimony before agencies in four states reveals a figure familiar to the world today: a media-savvy entrepreneur with a taste for luxury and unwavering confidence in his brand.
“There’s a certain impetuousness that he displayed, which is public,” said Brian Spector, an attorney who worked for Trump’s casinos. “He wanted his name attached to things that he acquired; he felt his name had an intrinsic value that went beyond the raw value of things.”
PROMISES UNFULFILLED
In 1986, when Trump sought a renewed license for Trump’s Castle, New Jersey commissioners blasted his team for “numerous direct and sharp conflicts” in their testimony.
Standing in the way was Trump’s resistance to fund road improvements, an obligation passed on from the casino’s previous owners. Trump said he had not fully understood the commitment and sued to void it. Over seven days of hearings, the Casino Control Commission and its lawyers attempted to straighten out what Trump knew. “As far as I’m concerned, somebody’s not telling the truth,” Commissioner E. Kenneth Burdge said.
Trump backed out of another pledge to the state before the Taj Mahal opened in 1990. Construction vendors were not getting paid, and the casino, then owned by Resorts International, was over budget and behind schedule. Trump pushed to take over, saying he needed full control to get prime financing instead of highinterest, high-risk junk bonds.
“The rates are so high on the junk bonds that they make the company — that could have been a very good company — they make them junk,” Trump told the state commission at a hearing Feb. 8, 1988. “So it’s like a self-fulfilling prophecy almost.”
Trump sold himself as a skilled manager who could achieve deals where others failed and get banks to offer better financing: “I mean, the banks call me all the time. It’s easier to finance if Donald Trump owns it.”
Then Trump financed the Taj with exactly what he promised he would not: $675 million in junk bonds at 14% interest, bankruptcy records show.
The Taj missed its first interest payment in 1990. Eleven months later, the casino filed for bankruptcy, and Trump gave up 50% of his ownership to bondholders in the restructuring deal.
In December 1990, as Trump’s Castle teetered toward missing an $18 million debt payment, the mogul’s father, Fred C. Trump, illegally loaned the casino $3.5 million by sending an attorney to buy gambling chips that were never used, according to state records. The family bailout broke state law because casino loans must follow strict procedures and come from approved financial sources. Trump’s father was not an approved source.
“We know that the people involved are not just the average run-of-the-mill employees in the house,” casino commission member Armstrong said at a hearing in 1991 when the state decided to fine the casino $65,000, complaining the identities of some involved were kept secret.
Trump’s Castle and Trump Plaza separately filed for bankruptcy in 1992. The casinos eventually reorganized under Trump Hotels & Casino Resorts and filed again for bankruptcy in 2004, then reorganized as Trump Entertainment Resorts and filed again for bankruptcy in 2009. Over the years, Trump’s stake in the casinos dropped to 10% before they were either sold or closed. In all, Trump’s Atlantic City casino properties filed for bankruptcy protection five times.
“Seven years ago, I left Atlantic City before it totally cratered,” Trump said in the first GOP debate in August. “And I made a lot of money in Atlantic City. And I’m very proud of it.”
FLOUTING STATE REGULATORS Casino patron Robert Libutti was known for tantrums. He’d chuck dice into chandeliers and throw game chips on the casino floor. One state regulator called him one of “the most obnoxious, abu- sive persons that we have had in this town,” records show. Libutti, who died in 2014, was later banned by the state from all Jersey casinos over alleged ties to organized crime. The premium player gambled thousands at a time, and Trump Plaza responded by catering to his desires, even if that meant breaking the law.
State regulators found in 1991 that pit bosses at Trump Plaza discriminated against black and female employees by removing them from craps games when Libutti played because they thought he disliked black and female dealers. The casino was fined $200,000 for discrimination.
The Casino Control Commission said although the Plaza had no formal discriminatory policy in place, some lower-level managers reassigned workers based on their race and gender.
“They were more like unwritten rules and regulations, and a lot of things that were going on, that were said, were only done to appease customers,” said Newton Brown III, a black worker who told investigators in 1990 that he was reassigned at least five times when Libutti was in the casino.
Spector, an attorney who represented Trump’s casinos then, said an administrative law judge recommended throwing out the discrimination charge, but casino commissioners reversed the decision. State records indicate the practice at Trump Plaza went on for two years.
“There are, or ought to be, certain things that a casino hotel cannot sell or provide to a customer in order to assure his continued patronage,” then-casino commissioner Steven Perskie said.
In November 1991, state regulators again fined Trump’s Atlantic City casinos for giving Libutti nine cars — three Ferraris, three Rolls Royces, a Mercedes and two Bentleys — some of which were resold immediately by the leadership. That let him get cash instead of the cars, records show, which violated state law at the time. The deputy attorney general who investigated the case testified Trump’s casino concocted the scheme to keep Libutti’s business.
Trump’s Castle masked illegal rebates as “airfare reimbursements,” but amounts were as high as $25,000, far exceeding the cost of a flight to the gambler’s home in the Philippines, state records show.
The casino was fined $176,000 and employees, including two vice presidents, were fined $53,000 for 23 violations.
A DISAPPOINTED APPLICANT Trump went before Nevada gambling regulators in 2004, seeking permission for his Trump Hotels & Casino Resorts to run a Vegas casino. He brushed off his early struggles in Atlantic City, assuring Nevada commissioners the market was improving and Trump casinos in particular were doing well.
“I’ve become very much involved in the company over the last six months, and generally, when I get involved in a company, historically they work,” he said. That fall, Trump Hotels & Casino Resorts went bankrupt. Trump never opened a Nevada casino.
In 2006, he was telling his story again in Pennsylvania, asking to open a casino in Philadelphia.
“The Trump brand has just come out and has been considered the No. 1 brand anywhere in the world and in the shortest period of time,” Trump told the Gaming Control Board.
Pennsylvania said no. The board found no evidence that Trump’s Keystone Redevelopment Partners would bring the business and jobs promised, records show.
Trump’s Keystone mounted two legal challenges when a competitor that got the license struggled to open and eventually went bankrupt. A state court rejected one Trump case, and a federal judge dismissed another.
Among the last of Trump’s approximately 1,800 casino lawsuits were his fight to get the Trump name taken off the Plaza and Taj Mahal in 2014, when he no longer controlled the casinos.
He left an impression in Atlantic City, though.
Trump is a brand “and he promotes his brand,” said state Sen. Jim Whelan, who was Atlantic City’s mayor in the 1990s. “That’s what he does now, with over-thetop pronouncements and saying outlandish things.”
Trump’s casinos repeatedly broke state rules, leading to more than a million dollars in fines.