Transcript

Speaker 1:

Listener supported WNYC studios.

Ilya Marritz:

To call the Trump Taj Mahal a casino, would be like calling the original Taj Mahal, a mausoleum in India. Technically you'd be right, but you'd be missing the point.

Speaker 3:

Donald Trump gave Michael Jackson a personal tour of his $1.2 billion extravaganza. And we were there every step of the way. At the Taj Mahal casino is the eighth wonder of the world...

Ilya Marritz:

When it opened in 1990, it was the largest casino ever built. A helicopter was required to Mount the gigantic letters T-R-U-M-P onto the building. The staff wore turbans with ostrich feathers. The Taj contained at least a dozen restaurants.

Speaker 3:

In one reserved for VIPS, where Michael was flanked by [inaudible 00:00:50] fans, there are no menus, its gourmet chefs will create anything you wish. With revenue topping $37 million a month, Donald's biggest gamble is turning up aces.

Ilya Marritz:

There were skeptics. The New York Times noted that to cover its enormous debts, the Taj would have to bring in a million dollars a day. It would have to be a massive hit right from the start.

Speaker 4:

Colorful. Colorful is a good way of describing it.

Speaker 5:

As glitzy and fancy as any casino in Las Vegas.

Ilya Marritz:

Put it in perspective here, we have to remember what the world was like then. This guy wasn't running for president, this guy was opening the biggest, loudest, shiniest, cattiest casino in the world. This is the Taj Mahal in Atlantic City, New Jersey.

Heather Vogell:

And this is a story about the president of the United States. His casino, money laundering, possibly some Russian gangsters and two federal investigations that result in record setting penalties.

Ilya Marritz:

Welcome to Trump, Inc. An open investigation into Donald Trump's family business from WNYC and ProPublica. I'm Ilya Marritz from WNYC.

Heather Vogell:

I'm Heather Vogell from ProPublica.

Andrea Bernstein:

And I'm Andrea Bernstein from WNYC. Spoiler alert. The Trump Taj Mahal dies at the end of this tale. It folds after 27 years and four, count them, four bankruptcies. We're interested in how the Taj lived because of what it tells us about how Trump operates in business and as president. The casino shows some real Trump signatures, too much debt, not very good longterm planning. And what makes the Trump Taj Mahal and especially good case study, there are documents that tell a story about what went wrong, tons of them.

Heather Vogell:

So for this story, my role was mostly to take a deep dive into hundreds of pages of documents that are publicly available. And that includes bankruptcy reports, that includes the regulatory reports, licensing documents, anything we could get our hands on. So I went through hundreds of pages of records and I knew that if I stuck with it, that I'd find these little nuggets in there. All right, what was Trump's relationship to these businesses? What kinds of decisions were being made? What kind of customers were they targeting?

Ilya Marritz:

They do tell a story.

Heather Vogell:

They do. The documents tell an amazing story, sometimes in [inaudible 00:03:15] language, but you can find those little nuggets if you really dig deep.

Ilya Marritz:

Would you be offended if I called you a document nerd?

Heather Vogell:

Not at all.

Ilya Marritz:

There's a particular thing we were looking for in these documents and that's money laundering.

Andrea Bernstein:

The Taj had a responsibility as a financial institution to combat money laundering and regulators said again and again that it had failed. Heather and Ilya are going to take it from here, I'll be back towards the end of this episode,

Ilya Marritz:

Picture it. Atlantic city, spring of 1990.

Speaker 8:

My assistant walked into the office and said, "Donald's on line one." And he said, "Jack, this place is a mess."

Ilya Marritz:

Jack O'Donnell is an executive working for Donald Trump. Not at the Taj Mahal, but at one of the two casinos Trump already owns in Atlantic city, the Trump Plaza. Opening day at the Taj is 24 hours away, give or take. And on the other end of the phone line, Donald Trump is sweating.

Speaker 8:

And he goes, "I don't know what it is, but they're telling me that it has to do with the slot accounting." And he said, "They want to shut us down, they're not going to let us open. I told them that you could fix this problem."

Ilya Marritz:

So O'Donnell jumps in a limo, apparently that's how casino executives get around in Atlantic city. When he gets to the Taj, he makes straight for the cage, which is sort of like the bank at the casino, the place you buy chips or cash your chips in. And he starts asking questions.

Speaker 8:

And I asked them, "Okay, how much money was in the main bank?" And I got a blank stare. They couldn't tell me. And it became very clear that they didn't even know how much money they had on the casino floor to open the property.

Ilya Marritz:

O'Donnell doesn't have much choice. He tells his people at the Plaza to come over and they start counting money.

Speaker 8:

And we developed a game plan with the Taj staff and my staff to basically just count money for the next 12 hours. And that's literally what it took to figure out a starting point.

Speaker 3:

In a space the size of three football fields, there are over 3000 slots.

Ilya Marritz:

The next day is opening day and some of the slot machines are roped off.

Speaker 3:

Beneath crystal that costs $15 million alone.

Speaker 8:

The place was so messed up and it took weeks before they opened up the casino 100%.

Ilya Marritz:

Jack O'Donnell goes back to work at the Plaza, which he says, and he says this like you're not going to believe him, was a well-run gaming hall. The Taj, on the other hand, struggles practically from day one to pay back all the money borrowed for the crystal chandeliers and the dozen or so restaurants. Even worse, the parent company, the Trump organization, is knee deep in IOUs.

Speaker 8:

You would get these calls on a monthly basis, sometimes a weekly basis. How much cash do you have? How much can you afford to send up?

Ilya Marritz:

Pretty soon he quits.

Heather Vogell:

The Taj had a rough couple years those first two years. It had this chaotic opening that was kind of a disaster. And there was the debt that continued to plague it, mountains and mountains of debt. I mean, this building was a record setter in a lot of ways and it carried that price tag with it into really the rest of its life.

Ilya Marritz:

In 1991, the Trump Taj Mahal files for bankruptcy, for the first time. Trump makes a deal with his lenders.

Heather Vogell:

In order to get himself out of that bankruptcy, he had to give up a big share of his ownership of the company, even though he retained managerial control.

Ilya Marritz:

Right at the start in '91, the Taj first comes under suspicion as a possible haven for money laundering. Who are you? What do you do?

Jose Pagliery:

The name is Jose canis, I'm an investigative reporter at CNN.

Ilya Marritz:

canis was reporting on the Trump Taj Mahal last spring. He was looking into a fine the Taj paid for poor anti money laundering controls in 2015, when he came across something in a treasury department press release.

Jose Pagliery:

There was a line in there that was particularly interesting, and it mentioned that this is not the first time this has happened.

Ilya Marritz:

He immediately filed a Freedom of Information request and he asked the Treasury Department to expedite it.

Jose Pagliery:

And some weeks later I got this CD in the mail. And on here were I think 417 pages of material on that. But the most interesting thing were the first two pages, which were a settlement agreement.

Ilya Marritz:

Between Trump's casino and the Treasury Department.

Jose Pagliery:

And in this settlement agreement it says that Trump's Taj Mahal, essentially in its first almost two years of operation, had apparently not followed the anti money laundering rules 106 times in that period, which to put it in perspective is something like a little more than one a week, right?

Ilya Marritz:

The specific rule he's talking about says all transactions above $10,000 have to be recorded. Name, address, date, time. It helps law enforcement track possible crimes.

Heather Vogell:

The reason for having this rule is that basically if you didn't have it, someone could walk in with $10,000 that maybe they made from selling drugs or something like that. They could buy $10,000 worth of chips and then they could either play them or not play them, cash them out, get a check from the casino or cash from the casino and walk away basically being able to claim that these were gambling profits. So that's essentially an open invitation for money laundering.

Ilya Marritz:

Money laundering. As in making dirty money from crime look clean, like you won it at a casino. Now it's not that casinos are supposed to catch every money launderer.

Heather Vogell:

That's not their job. There's not some big burly guy who's going to say, "You need to leave right now. We can tell you just laundered $20,000 or tried to in one of our slot machines." The casino is just supposed to keep the records there so that authorities who investigate financial crimes can use those records if they end up making a case that involves money laundering at the casino, and those records can also tip them off to cases that they need to investigate.

Ilya Marritz:

This is what the Taj wasn't doing that it should have been doing. It's the law. One more thing jose told us that's just strange. During this period, the Trump Taj Mahal is known as a favored destination for the Russian mob, that's according to the book Red Mafia, which canis combed through during the six months he spent reporting this story. And one day in the 1990s, the FBI locates a mobster they've been looking for, Vyacheslav Ivankov.

Jose Pagliery:

The guy that they tracked down was the top Lieutenant to the scariest Russian mobster in the world.

Ilya Marritz:

He'd been living in New York in Trump Tower, but then Ivankov disappears.

Jose Pagliery:

And he pops up a few months later at the Taj Mahal.

Ilya Marritz:

Right as the Taj is getting hit with a record fine for anti money laundering violations.

Jose Pagliery:

What's happening?

Ilya Marritz:

Maybe he just likes to gamble.

Jose Pagliery:

Fine. But I mean, it's just so weird. There's just so much and then there's also nothing, right?

Ilya Marritz:

It's not like the government is ignorant. They know casinos are a magnet for certain kinds of financial crime and they have people watching for it. In the '90s that's one guy in particular, Len Senia.

Len Senia:

Yeah, it was me, myself, and I.

Ilya Marritz:

Senia is the government regulator who specifically looked at the Taj Mahal's anti money laundering controls right after it opened in 1991. And he's the guy who oversaw their penalty some years later. That penalty was almost a half million dollars. Which is not that much if you're a casino, but it was the highest penalty ever paid by a casino for this type of violation. I met Senia in his basement rec room in Northern Virginia. Picture a guy with bristly silver hair sitting in the leather La-Z-Boy. He's retired from the treasury department now. When Senia starts out in the early part of the 1990s, only Atlantic city, Nevada and Puerto Rico have legal gambling. And some casinos, they treat their reporting requirements like a joke.

Len Senia:

They had forms filed on Mickey Mouse, Donald Duck, Superman, Wonder Woman, Batman, the Green Hornet.

Ilya Marritz:

Now, if you suspect Donald Duck of laundering cash, you're going to have a hard time tracking him down. Len Senia closely studied all the ways crooks try to avoid detection.

Len Senia:

I probably have a list of about several hundred red flags, these would be transactions that would obviously be suspicious.

Ilya Marritz:

There's a whole lingo.

Len Senia:

There is something called walking with chips.

Ilya Marritz:

That's when someone buys a lot of chips and leaves the casino with their chips.

Len Senia:

[inaudible 00:11:45] coin, now everybody uses it. They're being brought back in now by Smurfs who are-

Ilya Marritz:

Smurfs?

Len Senia:

Yeah. People who are coming in, who are hired to cash in the chips anonymously.

Ilya Marritz:

Smurfs cash the chips in in small increments so they don't have to fill out any forms. Senia told us he spends a lot of time in the '90s meeting with casino executives. He tells them about Smurfs and walking with chips and all these different kinds of crimes that can happen in casinos. He wants them to know they already have the tools they need to help the government to detect crime. It's not so obvious, but casinos are watching their customers constantly.

Heather Vogell:

The whole myth of casinos that they actually, in some ways, want to perpetuate because they want people to feel very uninhibited that you could almost sort of take on whatever persona you want. You can be this crazy high roller gambler for tonight and lose a thousand dollars and what happens in Vegas stays in Vegas. But the reality is that you are being tracked every minute that you're there in one way or another.

Ilya Marritz:

They have cameras, computers, and today some gaming chips contain tracking devices. Those are the tools casinos put the most effort into tracking people with lots of money because you know, they spend it.

Heather Vogell:

So here's the thing. It's actually really not that big a leap for the casinos to gather the kind of information that the federal government wants them to keep on their high dollar players and to report it and provide that information in a format that investigators can potentially use. Because they're collecting this information anyway.

Ilya Marritz:

And Senia says many casino owners step up and do their part.

Len Senia:

And it took a while, many years to convince them, please train your employees to identify this. And over time, though many years, they've gotten much better at it.

Ilya Marritz:

One casino in Atlantic City does not get much better at detecting and reporting funny business, the Trump Taj Mahal. It struggles through the 1990s and it's success or failure has implications for all gambling in Atlantic City. The Taj is one of three casinos Trump owns there. And as a former state regulator told us, if the Taj were to fail, or if Donald Trump were to lose his gaming license, that could put his other two casinos in danger and risk the jobs of thousands of workers. So state regulators add a special level of oversight to make sure Trump's casinos stay in business. It works for awhile. In the 2000's, a couple of things start to drag the Taj down though. The big one is debt. The casino never really sheds enough of it and it goes back into bankruptcy, along with Trump's other Atlantic City casinos.

Speaker 11:

Donald Trump's hotels and casino resorts are in deep debt to the tune of nearly $2 billion.

Ilya Marritz:

And again.

Speaker 12:

The three Atlantic City casinos once run by Donald Trump have filed for chapter 11 bankruptcy protection for the third time.

Ilya Marritz:

And again.

Speaker 13:

As another piece of the Atlantic City Boardwalk goes bust, Trump...

Ilya Marritz:

The other drag on the Taj, the gambling business in Atlantic City is hurting. Connecticut, Pennsylvania, and lots of other States have opened casinos, and people have choices.

Donald Trump:

It's just a tough, tough environment.

Ilya Marritz:

Donald Trump even talked about it at a ribbon cutting for a new tower at the Taj right around this time.

Donald Trump:

But for whatever reason, this place, I've always loved it. I've been here for a long time and it really does have a special place in my heart. So it's a great...

Ilya Marritz:

Even as it is struggling, Donald Trump is making money from the casino. He even has a clause in a contract that says if the casino decides to build any new projects, the Trump Organization has to be offered the job first as general contractor.

Heather Vogell:

So you think, "Well, these are related businesses so that's not all that surprising." But what was surprising was that Trump Organization could get paid, even if they turned down the project. And they did. They were paid even though they decided not to become the general contractor for that hotel project, they provided what were referred to as cost saving services and raked in $1.1 million. Bottom line, these huge fees were being extracted and sucked out of the casino right at a time when it was trying to get back on its feet.

Ilya Marritz:

In 2003 inspectors from the United States Treasury Department show up again in the Taj Mahal, and they want to have a look at the anti money laundering controls. When they get inside inspectors find "repeated significant violations of the Bank Secrecy Act". Just a few months later, in 2004, Trump Casinos file for bankruptcy, again.

Heather Vogell:

There was an incredible amount of pressure on the casinos at that point, especially the Taj, because remember that debt that it was carrying that was somewhat unique. So what I saw them doing in response to that pressure was they decided that they were really, really going to go after those high rollers.

Ilya Marritz:

And if you're targeting high rollers specifically.

Heather Vogell:

Then you're going to also have to make sure that you have your controls in place because among those high dollar rollers, you're bound to have a few money launderers.

Ilya Marritz:

Inspectors come back in 2007 and give the casino a stern warning that it's suspicious activity monitoring system is "deficient". which is odd because one year earlier in an annual report.

Heather Vogell:

They were bragging about how great their anti money laundering controls were. I mean, they were saying that they were going to review currency in suspicious activity transactions and reporting using a committee comprised of casino operations, marketing, and administration executives. I mean that makes it sound like everybody's geared toward complying with the treasury requirements that they totally got it covered.

Ilya Marritz:

By the way, this report was accompanied by a letter signed by Donald Trump.

Heather Vogell:

But what was really astonishing to me was that the Treasury Department said that after they put that really strong warning out there to the Taj, that they didn't get their act together, that they didn't take adequate steps to fix the problem.

Ilya Marritz:

Still, Treasury takes no formal action against the casino. Inspectors come back in 2010 and 2012 to see if there's been any improvement. There has not been any improvement.

Heather Vogell:

During one three month period when the treasury department was watching really closely, the Taj was filing less than half of the suspicious activity reports that they were supposed to. That included people coming in and cashing out without really playing any games or playing many games, which is of course a flag for money laundering.

Ilya Marritz:

Inspectors gather reams of evidence and Treasury starts negotiating with the Taj's owners. In 2015 they agree on a penalty, it's $10 million, a new record. So what made the 2015 fine against the Taj Mahal so bad?

Speaker 8:

Well, you just have to read the consent agreement. It screams out, don't have to say any more than that. Read the consent agreement, it gives you all the evidence you need.

Ilya Marritz:

In the agreement, the Trump Taj Mahal admits to willful and repeated violations of the Bank Secrecy Act. 12 years pass from the time inspectors go into the Taj and are disturbed by bad record keeping to the time the Taj gets that penalty. And in that time, Donald Trump goes from a man who undoubtedly controls the casino, the chairman of the board, to a man who's renting his name to the casino. He's kind of influential there. And in reality, he only owns a pretty small slice. The money the Taj uses to pay Treasury, it doesn't come from Donald Trump. It comes out of funds that would otherwise be used to pay creditors in the Taj's fourth and final bankruptcy. And just four months after that...

Donald Trump:

Wow. Whoa. That is some group of people.

Ilya Marritz:

Donald Trump announces he's running for president.

Donald Trump:

I don't need anybody's money, I'm using my own money. I'm not using the lobbyists, I'm not using donors. I don't care. I'm really rich, I'll show you that in a second.

Ilya Marritz:

We'll be right back.

Andrea Bernstein:

So it's Andrea back with Heather and Ilya. I get the Taj Mahal was not compliant with regulations about catching money launderers, but how do we know money laundering actually occurred in the casino?

Heather Vogell:

We know because of cases that were made by the New Jersey Attorney General's office. One of those involved this elaborate bank fraud scheme involving dozens of people from New York who basically stole money out of people's bank accounts and they went down to the casinos in Atlantic City and they withdrew that money from the casinos, which was basically using the casinos to launder the money. What was interesting was that it was not a tip through the casinos that alerted the police to what was going on, it was actually the bank that alerted them to it.

Ilya Marritz:

This bank fraud scheme was going down in 2011 and 2012 at the Taj.

Heather Vogell:

So all of this happened right around this exact same time that Treasury was looking at the Taj and saying, "You guys are really not keeping an eye on money laundering."

Ilya Marritz:

I should just say here that there is no evidence linking Trump to money laundering at the casino. Lax controls, definitely. But no criminal links there.

Andrea Bernstein:

So big picture, what does this tell us? You've dug in deep.

Ilya Marritz:

For a guy who cares about appearances, who put so much effort into making the biggest, glitziest, most amazing and opulent casino the world had ever seen, it is striking that he doesn't seem to care about appearing to follow the law or actually following the law. It does remind me a little bit of Trump in politics. He has chutzpah. He ignores rules and norms, and he gets away with it.

Andrea Bernstein:

I mean, it depends on what you mean by get away with it. I mean, he was fined, we're talking about it, it's been public. He seems to somehow be able to manage his reputation in a way that even the sorts of scoldings by regulators and fines and things like that, don't resonate with the public.

Heather Vogell:

So remind us when the Taj officially dies.

Ilya Marritz:

It's one year ago, middle of February, 2017 when crews start taking the Trump name off of the building. Last summer bits and pieces of the old Taj are auctioned off. Austrian crystal chandeliers are listed at $35,000. You can get a poker table for 650 bucks. I know some people got lamps for just $8. And upstairs a man is redefining the term liquidation sale.

Speaker 15:

Hi, how are you doing?

Speaker 16:

What are you doing?

Speaker 15:

I'm taking a shower.

Speaker 16:

Why?

Speaker 15:

I mean, it's a liquidation sale, they're giving us a sample, I want to see how the shower...

Ilya Marritz:

This guy decides to take one last shower in the Taj and a camera crew captures it. Okay so the Trump name is off the building, Donald Trump is in the White House, and you're probably thinking "This guy has got to be done with casinos." Not so fast. Donald Trump co owns a residential tower in Las Vegas and his business partner on that tower recently gave an interview to Forbes where he said he would like to develop a Trump branded casino adjacent to that site. The quote is "I can't talk to Donald about it, but it would have to be Eric or Donald Jr. I would want to do it with Donald or let's say the Trump family." And there is one more possible casino in Donald Trump's future. The Trump Organization has a trademark for a casino in Macau in Southern China, it is an Asian gambling hotspot, and they filed to renew that trademark summer. We asked the Trump organization a lot of questions about Donald Trump's Atlantic City casinos, and whether they have plans for any new casinos, they did not respond.

Andrea Bernstein:

So here's what you can do. We want to understand everything we can about the Trump organization. So if you've got a document, a picture, a tip, get in touch with us. You can message us by a signal or WhatsApp or call us at (347) 244-2134. Or you can head over to our website trumpincpodcast.org.

Ilya Marritz:

Next time on Trump, Inc, Russia. Donald Trump has been pursuing real estate deals in Moscow since the late 1980s. Funny enough, they keep falling through. Maybe there's no reason, or maybe we're thinking about it all wrong. Trump, Inc is produced by Meg Cramer, our associate producer is Alice Wilder, the pod was mixed by Wayne Schulmeister and Bill Moss. The editors are Charlie Herman and Eric Umansky. Terry Parris Jr. is ProPublica's Deputy Editor of Engagement. Jim Schachter is the vice president for news at WNYC. And Steve Engelberg is the Editor in Chief of ProPublica. A big thank you this week to Katherine Sullivan, who helped to report this episode. Thanks also to James Madinger, who literally wrote the book on money laundering. Seriously, his book is titled Money Laundering: A Guide for Criminal Investigators. We had research assistants from Micah Hauser. Hannis Brown composed the original score.