“T.H.C.R. is a casino and entertainment company,” the lawsuit, filed in 1999, said. “It is not in the business of loaning money. The company desperately needed (and needs) cash to shore up its deteriorating financial condition.” (The suit was dropped in 2000, shortly after Mr. Trump paid the company back.)
Indeed, the company posted losses of $66 million in 1996, $42 million in 1997 and $40 million in 1998. Those losses would continue.
Still, Mr. Trump made money, receiving $1 million a year for what was essentially a part-time job. In 1996, he was paid a $5 million bonus. The public company lent him $3 million to cover costs he had incurred while exploring whether to open a casino in Indiana, then forgave the loan when the stock met price targets.
The casino company leased office space in Trump Tower in Manhattan, and Mr. Trump’s other businesses were paid to entertain its “high-end customers.” It was later alleged in a lawsuit that at least part of the money was paid for big-name performers, including Celine Dion, Tony Bennett and Billy Joel, who had appeared at Mar-a-Lago, Mr. Trump’s resort in Palm Beach, Fla. In its response, Mr. Trump’s company did not challenge that allegation.
Trump casinos reported paying about $300,000 a year in “pilot costs” to transport high rollers in Mr. Trump’s jet. The company never disclosed in securities filings just how much the jet was used for casino purposes.
The public company’s collapse began in 1999. Just three years after spending about $60 million to buy back the former Trump Regency Hotel and pumping in millions for renovations, the company closed it. The company spent another $26 million to demolish the building, taking a $125 million write-off.
In 2000, Mr. Trump fired the chief executive and installed himself in the role, promising he would turn things around. The share price was by then hovering near $3.
“Stock price is always a concern,” Mr. Trump told The Associated Press at the time. “I was focused very much on my Manhattan real estate over the last number of years. Now, I’m going to be focused much more in Atlantic City.”
‘We have a company that’s really got great potential’ — 2005
Though he has acknowledged mistakes in piling crippling debt on Trump Hotels and Casino Resorts, Donald Trump has steadfastly maintained that his resorts were the best-run and highest-performing casinos in Atlantic City.
“The casinos have done very well from a business standpoint,” he told Playboy magazine in 2004. “People agree that they’re well run, they look good and customers love them.”
Credit Mark Makela for The New York Times
In reality, the revenue at Mr. Trump’s casinos had consistently lagged behind their competitors’ for a decade before larger forces ravaged the industry. Beginning in 1997, his share of the Atlantic City gambling market began to slip from its peak of 30 percent.
Revenues at other Atlantic City casinos rose 18 percent from 1997 through 2002; Mr. Trump’s fell by 1 percent.
Competition grew more intense in 2003, when the Borgata Hotel Casino and Spa opened. The $1.1 billion, 40-story resort redefined the concept of an Atlantic City luxury casino. Revenues at Trump casinos dropped another 6 percent in a little more than a year.
Had Mr. Trump’s revenues grown at the rate of other Atlantic City casinos, his company could have made its interest payments and possibly registered a profit. But with sagging revenues and high costs, his casinos had too little money for renovations and improvements, which are vital for hotels to attract guests. The public company never logged a profitable year.
“There’s something not right when every single one of your projects doesn’t work out,” said Mr. Roffman, the casino analyst.
In a recent interview, Mr. Trump attributed his declining market share in those years to the fact that his three casinos were competing with one another, a tacit acknowledgment that he overbuilt.
“That was the bad news,” he said. “The good news is that I saved a lot of money in terms of dealing with costs.”
The year the Borgata opened, Mr. Trump was already asking his bondholders to accept less money, in preparation for a third casino bankruptcy. Yet, at the same time, he managed to pull more money out of the company for himself, The Times found.
Since taking Trump Hotels and Casino Resorts public, Mr. Trump had been bound by a “contribution agreement” that required him to engage in the gambling businesses only through his own company and banned him from personally owning more than 5 percent of the stock in any other casino company. So when he bought 10 percent of the shares in Riviera Hotel and Casino, a company based in Las Vegas, Mr. Trump was required to grant an option to purchase the shares to his public corporation.
However, when Mr. Trump sold the Riviera shares in April 2004, the company, which was entitled to the proceeds, simply canceled the option, without explanation.
The company’s description of the sale did not disclose Mr. Trump’s profit or how he had sold the shares. But in its securities filings, Riviera reported that Mr. Trump had sold the shares in a privately negotiated sale for $10 a share, well above the going price. That would have generated a gain of more than $1 million.
Asked to review the transaction by The Times, James D. Cox, a professor at Duke University Law School who specializes in corporate and securities law, said such “material omissions of fact” in the filings by the Trump company could have resulted in criminal charges “if it is knowing and willful,” though such charges are rare.
“I think the biggest thing is, it understates his compensation,” Mr. Cox said.
At the time, the company was also asking its lenders for a break, and headed toward another bankruptcy.
Credit Mark Makela for The New York Times
“Basically, that sounds like a fraudulent conveyance,” said David Skeel, a bankruptcy law professor at the University of Pennsylvania Law School.
“The company is throwing away money,” Professor Skeel said. “It’s the equivalent of giving big bonuses to your executives right before you file for bankruptcy.”
But lawyers involved in the bankruptcy case said the transaction had apparently gone unnoticed.
In a recent interview, Mr. Trump said that he did not recall the transaction or why the board had canceled its option.
Months later, in November 2004, the company filed for bankruptcy protection, the third such trip for Trump casinos.
This time bondholders took a $500 million loss. Mr. Trump, who stepped down as chief executive but remained chairman of the board, agreed to invest $55 million of his own money in the company, perhaps his first cash investment. He still received $2 million a year under a “services agreement,” which included the use of his name.
Shares sometimes traded below a dollar, but Mr. Trump said the problems had been fixed.
“For the first time ever, this will be a deleveraged company,” Mr. Trump told The Las Vegas Sun in 2005.
Not everyone agreed. Mr. Trump’s longtime investment bankers at Donaldson, Lufkin & Jenrette had backed out of a deal with Mr. Trump to invest in the company shortly before the bankruptcy was filed. Suing for $26 million in fees, the bankers said in court papers that the casinos would be back in bankruptcy court within five years because Mr. Trump’s revenue projections were too rosy and the company was still carrying too much debt.
“The Trump name does not connote high-quality amenities and first-class service in the casino industry,” lawyers for the investment bank said. “Rather,” the Trump name is associated with “the failure to pay one’s debts, a company that has lost money every year, and properties in need of significant deferred maintenance and lagging behind their competitors.” (The dispute was later settled.)
‘They will see how great it will become’ — 2009
When Donald Trump has been pressed on his casinos’ performance during his presidential campaign, he has repeatedly said he left Atlantic City at the right time.
“Atlantic City is a disaster, and I did great in Atlantic City,” he said during a Republican Party debate last September, according to a transcript. “I knew when to get out. My timing was great. And I got a lot of credit for it.”
Credit Mark Makela for The New York Times
That would suggest Mr. Trump willingly left sometime around 2006, the year that revenues peaked in Atlantic City and that Pennsylvania allowed its first casino to open, a development that marked the start of a rapid downward spiral in the city. The drop-off was exacerbated by the recession that began in 2008.
But in early 2009, as Trump casinos lurched toward bankruptcy for the fourth time, Mr. Trump was still trying to hang on. At loggerheads with board members who had been selected by bondholders after the 2004 bankruptcy, he offered to buy all or a part of the casino company bearing his name. He was rebuffed, and he quit the board soon after.
Testifying in bankruptcy court in Camden, N.J., Mr. Trump argued that the company could not use his name, since shortly before filing the bankruptcy it had stopped paying him the $166,000 a month he received under the services agreement. He testified that his brand was worth $3 billion. He also testified that he was personally negotiating the settlement of a lawsuit in Florida that would yield more than $100 million for the company.
And contradicting what he had said after the prior bankruptcy, he testified that the company’s debt load was still too high.
“This time, the debt is being cut by a lot, and the company is really poised,” he said.
There were odd moments on the stand. Mr. Trump, for example, vastly understated his role, saying he “became very much less involved with the company” during years when he was actually chairman of the board and chief executive, and “was on the board in a very minority position” during years when he had been chairman.
As in previous cases, others warned that Mr. Trump’s promises should not be trusted. This time it was Carl C. Icahn, the activist investor who had a major stake in the company. (The two men now describe themselves as friends and Mr. Icahn supports Mr. Trump’s candidacy.)
Mr. Icahn’s team argued that the remaining debt was still unsupportable, that the Trump name was replaceable, and that a windfall from the Florida lawsuit was wishful thinking. Under Mr. Trump, the company had a long history of making rosy revenue projections and never meeting them, Mr. Icahn’s lawyer argued.
Credit Mark Makela for The New York Times
But a judge approved the Trump plan and noted that Mr. Trump and his supporters had established “that the Trump brand is worth millions of dollars” to the casinos.
This time, bondholders gave up about $1.3 billion in exchange for control of the company. For the first time, Mr. Trump had no official role at the company he had founded, and he owned no more than 10 percent.
In a recent interview, Mr. Trump acknowledged that he left Atlantic City when he did because he failed in his effort to buy back the casinos. But he said the timing worked out well for him, in the end.
“In 2009 they were worth a hell of a lot more than they are now,” he said. “Sometimes you’re better off lucky than good.”
Trump Marina was soon sold for $38 million, less than 10 percent of what the company paid Mr. Trump for it in 1996. The Plaza was shuttered. The Florida lawsuit that Mr. Trump had valued at more than $100 million produced nothing for the company. Mr. Trump and his daughter Ivanka sued the company, saying their brand was being tarnished by the ramshackle appearance of the Taj Mahal.
Mr. Trump continued to earn money from the casinos. In 2011, the casinos reported leasing a Trump helicopter for $390,000 and spending $236,000 for “Trump labeled merchandise,” including $197,000 for Trump Ice bottled water.
In retrospect, David Hanlon, a veteran casino executive who ran Merv Griffin’s Atlantic City operations at the time of the Resorts battle, said, Mr. Trump succeeded in repeatedly convincing investors, bankers and Wall Street that “his name had real value.”
“They were so in love with him that they came back a second, third and fourth time,” Mr. Hanlon said. “They let him strip out assets. It was awful to watch. It was astonishing. I have to give Trump credit for using his celebrity time and time again.”
In 2014, the casino company filed for bankruptcy protection for the fifth time. The chief executive cited the debt level after the 2009 bankruptcy as the primary reason.
For a time, Mr. Trump lent a glamorous sheen to the faded resort city. But some of his former investors no longer see the value.
“People underestimated Donald Trump’s ability to pillage the company,” said Sebastian Pignatello, a private investor who at one time held stock in the Trump casinos worth more than $500,000. “He drove these companies into bankruptcy by his mismanagement, the debt and his pillaging.”