A few facts are clear from Donald Trump’s 92-page financial disclosure filing to the Federal Election Commission (FEC). One is that Trump is carrying a heavy debt load. He owes four creditors “Over $50,000,000” apiece; loans total $215 million-plus to $400 million-plus; and at least $25 million to $125 million in loans come due in the next four years. Trump, who has declared bankruptcy four times in the past, has taken on more than $130 million of the current debt since 2012. The FEC filing also shows that few people who are not Trump himself employ Trump, or pay him for work. It also shows that Trump has sold or liquidated substantial assets in value stocks and in bank funds from the beginning of 2014 to now, the period covered by the FEC filing.
It is not clear whether the assets were sold to finance Trump’s White House bid or for other reasons. The asset sales generated handsome capital gains; his own more volatile companies and properties—the corporations and LLCs with Trump as officer or member, and the famous hotels and resorts, etc., bearing the Trump name—were not sold. The FEC filing also does not clarify Trump’s net worth. Not a balance sheet or a budget, it does not clarify the proportion of income to outlay. Trump’s campaign and press office, contacted by phone and email on Aug. 13, have not responded to questions.
Trump floated one of his preliminary statements about running for president back in 2011, with sources quoted by Politico putting out word that he was worth $7 billion. The net worth figure was disputed even at the time: “The eye-popping figure is far higher than the $2.7 billion that Forbes Magazine valued his net worth to be last month.” Estimates of Mr. Trump’s net worth have fluctuated, with Bloomberg News and the New York Times among others expressing skepticism when Trump upped his claim to $10 billion. Trump’s own estimates have also fluctuated, although Trump’s much-quoted emphasis on his wealth—”I’m really rich”—remains a constant. Since launching his campaign on June 16, Trump has reiterated brash statements about his wealth, seemingly at every opportunity.
One statement not being recycled, however, is the unnamed 2011 sources’ claim that Trump’s financial disclosures would indicate “more than $250 million of cash, and very little debt. He is very, very liquid.”
In 2015, in actuality, Trump’s financial disclosure filing shows massive debt and undefined liquidity. “Part 8: Liabilities” (page 47) lists 15 debts. Two are Merrill Lynch mortgages totaling less than $1 million. The remaining 13 are gargantuan. Trump’s filing shows “Over $50,000,000” owed to Ladder Capital Finance LLC; Deutsche Bank Trust Company Americas; Chicago Unit Acquisition LLC; and Capital One. Trump also owes another $25 million to $50 million to Deutsche Bank, due in 2024, and $5 million to $25 million to Deutsche Bank due in 2015. He also owes $5 million to $25 million apiece to seven other creditors including Bank of New York Mellon, Ladder Capital, Royal Bank America, and Amboy Bank. Two of the loans come due in 2015, one in 2016, two in 2017, and three in 2019. Setting up a blind trust for a Trump term in the White House would be a challenge.
One question put to the Trump campaign is whether the debts are in any way problematic. Does Trump expect to pay them all? If so, will he resolve them before entering the White House, should he win? If not, how would they be handled?
Meanwhile, one of Trump’s “Over $50,000,000” notes is from an entity owned 100% by Trump himself, called Chicago Unit Acquisition LLC. This Trump-to-Trump loan is Trump’s highest-interest big loan, at Prime + 5%. No deadline year is given; the “Term” column is filled in with the phrase “Springing loan.”
Other questions put to Trump concern this springing loan. Not an MBA myself, I had to look up the phrase. A “springing guaranty” is a guarantee that takes effect when something bad happens, like bankruptcy. (It is also called a “bad-boy guarantee.”) According to the asset wizards at Andrews Kurth, in a springing guarantee, “the borrower is required to fund an escrow account serving as additional security for the loan.” This way, if something bad happens—”say a key tenant decides not to renew its lease”—”when funded, the borrower has more skin in the game to offset drops in value.”
On page 13, Trump lists the value of “Chicago Unit Acquisition LLC” at $1,001 to $15,000 (thousands, not millions). So he owes the LLC at least 3,333 times its value, or he owes it to himself, or to a tiny LLC owned wholly by himself, to fund an escrow account, in case things go wrong? If he owes it to himself, is this enforceable? Will the loan be paid off? Does it have to be? If listed as a “springing loan,” is the escrow requirement enforceable, when the creditor is owned by the debtor? Whatever this dizzying arrangement means, the FEC filing makes clear that Trump owes somewhere in the neighborhood of half a billion dollars. Depending on how much over $50 million the phrase “Over $50,000,000” means, he could owe much more. Trump himself has spoken on the campaign trail in favor of transparency. It would be nice to have the debts elucidated. Trump has repeatedly said that a candidate like Jeb Bush is a “puppet” for donors who give him millions. Point taken, but what about a candidate who has been lent millions, or hundreds of millions?
As listed in “Part 6: Other Assets and Income,” substantial assets have been liquidated or sold since the beginning of 2014, in stocks and funds. These sales did not include the 501 corporations or LLCs for which Trump lists himself as director, president or member; they included Baron funds, Paulson funds, and Dow-average major companies. Recently, Trump has sold assets held in twelve of eighteen bank funds (page 35). Amounts are given in ranges, and some capital gains are combined with interest and dividends, but the sales total falls somewhere between $2 million and $15 million. The filing does not make clear how much of the assets remain.
Trump has also sold company stocks from several brokerage accounts. He still owns stock in at least 190 companies. Oppenheimer and one Deutsche Asset account seem to be the fullest, and another Deutsche Asset and a JP Morgan account the emptiest. Many remaining company stocks are listed as producing no income, “or less than $201.” Meanwhile, the JP Morgan brokerage account (pages 44-45) shows 40 companies from Amazon to Yahoo effectively cleaned out, their remaining value listed as “None (or less than $1,001).” Stocks sold include several on the current Dow Jones Industrial Average—Apple, Boeing, Caterpillar, Exxon Mobil, Johnson & Johnson, Procter & Gamble. The best sale appears to be “Over $5,000,000” realized from Bank of America stock.
If these sales were connected to the White House campaign, there may be more sales, depending on how much the campaign costs in coming months. Thus for transparency it would also help to know more about the sales and assets liquidation.
In the past, Trump’s flamboyant career as a financier has included buying the Miss USA and Miss Universe beauty pageants, which deflected media attention from his real estate troubles. He is now putting himself on a pageant stage. How serious the run is remains to be seen, but the effectiveness of the deflection is undeniable. Trump has brashly and repeatedly emphasized how much he has given to politicians—”almost everybody on this stage,” he said famously (and falsely) in the August 6 GOP debate. The emphasis on his giving deflects attention from how little he has received, usually a benchmark of candidate success. “I don’t care”; “I don’t want their money,” he has said repeatedly. Data from the Center for Responsive Politics, which tracks campaign donations, show donors to Donald Trump to be few and far between. Similarly, his brash emphasis on his own companies deflects attention from how few of other people’s companies he has managed. His brash emphasis on his wealth—in general terms—deflects attention from his bankruptcies, his volatility, and the lack of specifics on income and net worth.
Ironically, this is the campaign getting high marks for truthfulness. Donald Trump, who claimed in a televised interview that a woman attorney wanted to breast-pump in front of him, is the only Republican getting credit for telling it like it is. Media commentators have paralleled Trump to Bernie Sanders, calling both ‘outsiders’. Actually, Trump is an insider, as his financial disclosure makes clear. A better parallel would be to the Stay Puft Man. Buoyed up by destructive behavior and words, regardless of bankruptcy or loss, regardless of shame, so long as he can stay on his feet and bully, he seems to stay afloat in Republican opinion polls.
Margie Burns is a Washington, D.C., correspondent. Email margie.burns@verizon.net. See her blog at www.margieburns.com
From The Progressive Populist, September 15, 2015
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