Fiscal Crisis, Civic Corruption, and Organized Crime: Donald Trump’s Rise in Manhattan
This article covers Donald Trump’s entry into the Manhattan real estate market and his early connections to organized crime. It is the first article in the series “Donald Trump, Corruption, and the Insidious Influence of Organized Crime.”
This article is an excerpt from my book, While We Slept: Vladimir Putin, Donald Trump, and the Corruption of American Democracy, available here.
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“He demanded absolute loyalty and would go after anyone who crossed him. He seemed always to stay one step ahead of the law,” Mark F. Pomerantz, a veteran prosecutor who investigated Donald Trump for the New York District Attorney’s Office, wrote in his new book about the investigation. “In my career as a lawyer, I had encountered only one other person who touched all of these bases: John Gotti, the head of the Gambino organized crime family.”
The former President of the United States’ ties to organized crime are numerous. While uninformed observers or outright shills will often wave this uncomfortable fact away, claiming cynically that it was impossible for anyone who worked in New York City real estate to avoid the taint of the Mafia, there is in fact far more to the story than that.
Donald Trump moved to Manhattan in 1971 at the age of 25. Despite his ambitions to become the city’s premier real estate tycoon, New York City was in a state of decline.
America’s largest city was lurching towards a fiscal crisis, in the throes of an escalating violent crime wave and riven by racial and ethnic tensions. Certain boroughs such as the Bronx were, quite literally, on fire. Where some saw an unfolding urban tragedy, Donald Trump saw opportunity.
Trump’s first apartment was a modest, rent-controlled Upper East Side studio off Third Avenue at 196 East 75th St.
In moving to the city in the hopes of striking it big, Donald channelled the same restless ambition his grandfather exhibited when he arrived at Ellis Island on October 17th, 1885 as a 16-year old immigrant from Kallstadt, Germany.
Friedrich Trump later opened a restaurant in a rough and tumble section of Seattle, Washington that likely also served as a low-rent brothel.
During the Klondike gold rush Friedrich closed up shop in Seattle and headed further north to Alaska where he opened The Arctic Bar and Grill which offered gold prospectors both hard liquor and “sporting ladies”.
Donald’s move to Manhattan set him apart from his father, Frederick Trump. Whereas the son dreamed of planting his flag in the most glamorous real estate market in the world, the father had earned his fortune through building developments in the outer boroughs for modest, working class families.
Donald joined his father’s company upon graduating from Wharton’s School of Business and was familiar with its operations. Despite the move to the big city, he commuted from Manhattan each morning to company headquarters on Avenue Z in Brooklyn.
Fred Trump, the House of Lehrenkrauss, and the Brooklyn Democratic Machine
Fred Trump had skipped university and contrived his own shoestring method of financing and flipping houses straight out of high school. By 1926, Fred built and sold nineteen homes in Hollis, Queens.
The crash of 1929 wiped out the housing market in New York and across the country. With his ambitions temporarily sidelined by the Great Depression, Fred made do operating a supermarket until opportunity in real estate would rear its head again in 1934 with the collapse of the House of Lehrenkrauss.
A German-American firm and family conglomerate established in 1878, the House of Lehrenkrauss had developed a booming business selling “guaranteed” or “certified” mortgages following the conclusion of the First World War. Events related to the Depression had revealed wide scale fraud within the organization and quickly led to its demise and the auctioning off of its component parts.
Fred Trump sensed an opportunity. He realized that whoever emerged as the owner of the troubled firm’s mortgage department would enjoy inside information on homes across Queens and Brooklyn that were at risk of foreclosure and thus available to be snapped up at bargain prices.
Fred Trump purchased the House of Lehrenkrauss’s mortgage department and became one of the most successful developers in Brooklyn for the next three decades.
A key element to his success, and to the subsequent success of his son in Manhattan, was the deft way in which Trump built and cultivated access and influential relationships within Brooklyn’s Democratic Party establishment.
In a one party town, as New York was at that time, the Democratic borough party bosses determined who could run for elective office or hold positions in municipal government and were all-powerful. Brooklyn, with 125,000 more votes than the infamous Tammany Hall machine in Manhattan, was a potent force in citywide politics.
Fred Trump established Metropolitan Investors to house his newly acquired mortgage list and opened an office at 66 Court Street in downtown Brooklyn.
The same building housed an insurance company owned by the cigar chomping Democratic Party boss Irwin Steingut, who provided insurance to the Brooklyn docks which at that time was being run by the mafia.
Trump befriended Steingut and quickly became a donor to the Madison Club, the influential Democratic Club he led. Through the Madison Club, Trump became acquainted with a young accountant by the name of Abe Beame and the clubhouse attorney Abraham “Bunny” Lindenbaum, a future New York City Mayor and Planning Commissioner respectively.
Trump was known to pick up Steingut, Beame and Lindenbaum in his limousine and treat them to dinner.
Fred Trump became the largest developer in Flatbush and Crown Heights, neighborhoods located in Central Brooklyn that also served as the political base of Steingut’s Madison Club.
In the same year Trump completed the purchase of the House of Lehrenkrauss, the administration of Franklin D. Roosevelt established the Federal Housing Administration (FHA) to support the housing market and help spur recovery in the overall economy.
Between 1935 and 1942, Fred Trump built over 2,000 single family homes in Brooklyn using FHA-insured mortgages.
The Second World War also provided a boon to Fred Trump’s development efforts. After the bombing of Pearl Harbor, his center of operations shifted from Brooklyn to Norfolk, Virginia, the locus of American naval operations across the entire east coast.
The population of workers involved in the war effort exploded overnight and there was a desperate need for additional housing. By 1944, Fred completed 1,360 apartment units in Norfolk, which comprised a significant percentage of the total housing built in the area during the war effort.
In little over a decade, Fred Trump emerged from the dark days of the Great Depression and World War Two as a politically-connected, multimillionaire and undisputed real estate powerhouse in Brooklyn.
Fred Trump worked with organized crime-linked individuals during his long career as a developer. While building his Beach Haven development in Brooklyn, he partnered with a brick contractor named Willie Tomasello, who owned 25% of the project.
Tomasello was identified by the New York State’s Organized Crime Task Force as an associate of the Genovese and Gambino Crime families. Tomasello provided Fred with capital and helped him with union disputes.
In Tomasello’s other ventures, he had worked with individuals associated with the DiBono family and their plastering company, Mario & DiBono.
Frank Scalise, a drug runner for the notorious founder of the ruling Commission of New York’s Five Families, Charlie “Lucky” Luciano (AKA Salvatore Lucania), was a hidden partner in Mario & DiBono.
During this time Fred Trump had also become a family man, marrying a 24-year Scottish immigrant Mary Anne Macleod in 1936. Fred and Mary proceeded to have five children together.
On June 14th, 1946 their fourth child, Donald John Trump, was born. The family eventually settled into a 23-room mansion on Midland Parkway in Jamaica, Queens.
Donald Trump: The Early Years
Fred Trump was a workaholic with an authoritarian parenting style. His granddaughter, PhD psychologist Mary Trump, has described him as a “high-functioning sociopath.”
Despite his father’s disciplinarian tendencies, Donald chronically misbehaved. A neighbor recalled catching a five or six year old Donald throwing rocks at her toddler.
In The Art of the Deal, Trump claims he gave his second grade music teacher a black eye.
Fred Trump sent Donald away to New York Military Academy, hoping the strict regimen of boarding school would straighten him out. Though Trump claimed he graduated at the top of his class, his grades at NYMA remain unknown as Trump lawyers demanded that the school seal his records.
Young Donald often shadowed his father as he worked on developments in Brooklyn and Queens. Over the years, Fred accumulated a comprehensive knowledge of nearly every facet of the New York construction and real estate business.
An enduring lesson that Fred Trump imparted to his son was the importance of publicity and courting the media. Early in his career, Fred floated balloons over Coney Island that carried $50 dollar discounts for his houses.
He referred to himself in press releases as “Brooklyn’s Largest Builder.”
Fred offered his opinion on national political and business matters in the newspapers. In 1950 he was named alongside President Eisenhaur and General George C. Marshall on a list of the nation’s best dressed men.
After military school, Donald attended Fordham University before transferring into the real estate program at the Wharton School of Business. While there he displayed the typical brash, egotistical bravura that would become a hallmark throughout the rest of his life.
In one instance, a professor of the small real estate class asked the students what drove their decision to study real estate and Trump replied, “I am going to be the king of New York real estate.”
Upon graduating in 1968, Trump was poised to return to the family business and pursue his dream. However, there were two potential stumbling blocks.
One was the Vietnam War. While in college, Trump received four draft deferments that kept him out of the war. However, after graduating he was eligible to be conscripted.
On September 17th, Trump underwent an armed forces physical examination and was classified “1-Y”, medically unfit to serve unless in the case of a national emergency. It was a dubious diagnosis, given that Trump had played team sports throughout high school.
Though no records exist that describe his disqualifying medical condition, Trump himself has provided conflicting accounts of the medical deferment. He has at times said he had bone spurs in both his heels, and at others he has claimed that he had bone spurs in one heel but was unable to remember which one.
Regardless, a year later his high draft number was never called, making the medical deferment moot.
The second issue was whether his eldest brother Fred Trump Jr. was going to take over the family business.
According to Trump family biographer Gwenda Blair, while Fred Jr. was social and had a sense of humor, he “did not have the skills or the strategic sense to get what he wanted.”
Fred Sr. pushed his eldest son relentlessly and nothing he did lived up to his father’s lofty expectations. Friends of Fred Jr. claimed the experience of working with his father made him miserable.
Fred Jr. finally gave up on the family business and decided to become a pilot, a vocation which his father disdainfully referred to as, “a chauffeur in the sky.”
Donald saw that his brothers abdication left the pathway to leadership of the family company open to him.
Fred Jr later married a flight attendant against his father’s wishes but they subsequently divorced. He died of an alcoholism-related heart attack in 1981.
Donald was named president of the company in 1968 and Fred became chairman. In the six year period between joining the company and when he had his first genuine real estate opportunity in 1974, Trump’s day to day responsibilities primarily consisted of the management of up to 22,000 apartments located in the outer boroughs, forty-eight privately held corporations and fifteen family partnerships.
Fred Trump had by then mostly stopped building new developments and focused on managing his existing real estate empire. His young son, on the other hand, was hungry for more.
Donald’s move to Manhattan in 1971 marked a new phase in his life. He had learned from his father that one of the most important keys to success is forming relationships with influential and connected people.
At 25 years old, he also wanted to be wherever beautiful women congregated. Lucky for him, the watering holes of powerful men and attractive young women all too often overlap.
So upon arriving in Manhattan, Donald Trump joined Le Club.
“It was the sort of place where you were likely to see a wealthy seventy-five-year-old guy walk in with three blondes from Sweden,” Trump said of the establishment.
Located at 416 East 55th Street, Le Club’s stucco exterior was fashionably nondescript, its awning bore no name and its only identifying feature was a small brass tablet on the door that read “Members Only.”
The interior featured billiards, a restaurant upstairs and a stylishly small dance floor. Among Le Club’s members were counted 13 princes, 13 counts, four barons, three princesses and two dukes.
Other celebrity members included Hollywood heavyweights like Al Pacino and Mike Nichols, and George Steinbrenner, owner of the Yankees.
The member who had the largest impact of Trump’s life was a Roy Cohn. Cohn played such an influential role in Trump’s life that understanding his extended biography is essential.
Trump’s Mentor and Fixer: Roy M. Cohn
Roy Cohn exploded into the American national consciousness as an infamous player during the Red Scare. With the drawing of the Iron Curtain, the onset of the Cold War and the discovery of significant Soviet intelligence infiltration of American political, military and scientific institutions, a sense of fear and in many cases near hysteria swept over the United States.
As is so often the case in moments such as these, reasonable fears can be seized upon by unscrupulous demagogues for their own political purposes.
Cohn was born into the heart of New York’s corrupt machine politics. His father, Albert C. Cohn, was a New York judge and an influential member of the Democratic Party.
Cohn was childhood friends with the Pope family. Generoso Pope Sr. was a wealthy, politically-influential concrete baron who owned Il Prospero, New York’s largest Italian language newspaper. Cohn often rode to school with Pope Jr. in his fathers limousine.
Pope Sr. was close friends with Frank “the Prime Minister” Costello, the boss of the Luciano crime family (later known as the Genovese family).
Costello was Pope Jr.’s literal “Godfather.”
Costello was a legend in his own time, with profound influence over the corrupt New York City political establishment embodied by Tammany Hall.
Through his papers, Pope Sr. was an early supporter of Italian fascism in the 1930s. This brought him into conflict with an anarcho-syndicalist Italian antifascist and exile by the name of Carlo Tresca.
Penn State criminologist Alan Block writes that Pope Sr., who had numerous contacts with mafia beyond Costello, may have been complicit in the murder of Tresca. Tresca’s killer, the mafioso Carmine Galante, was later represented by Roy Cohn. Galante later became the head of the Bonnano Crime Family and a major figure in the international heroin trade, overseeing the legendary French Connection.
Generoso Pope Sr. had a major impact on Cohn’s life, introducing him to the corridors of political power.
“Gene’s father, had more to do with my incipient political career than any other single person,” Cohn stated in an interview.
After a stint working in psychological operations in the CIA, Generoso Pope Jr. founded The National Enquirer. Years later, under new ownership, the Enquirer was involved in catch-and-kill activities with unflattering stories related to Trump during his 2016 presidential run.
Cohn was a child prodigy. He graduated from Columbia Law School at the age of 20 and through his family’s and the Pope’s political connections landed a job at the US Attorney’s Office in Manhattan.
One of his first assignments in the spring of 1949 was to write a legal memo about the US Government employee and accused Soviet agent Alger Hiss.
Hiss was a high level member of the United States Government who was active in the New Deal, attended the WWII-era Yalta Conference with President Roosevelt and had a major hand in the establishment of the United Nations.
In 1948 a former US Communist Party (CPUSA) member named Whitaker Chambers testified under subpoena before the House Committee on Un-American Activities (HUAC) that Hiss was a spy for the Soviet Union.
In his autobiography, Cohn claims to have been initially skeptical of the charges against Hiss, but that a discussion he had over lunch with three FBI agents assigned to the case not only convinced him of Hiss’s guilt but that Communist infiltration was a problem throughout the US government.
According Soviet records opened up after the end of the Cold War, Hiss was an agent for the GRU, Soviet military intelligence. He had reportedly been recruited upon joining the State Department in 1956.
Seventy years later, the GRU engaged in a hack-and-leak operation to benefit Donald Trump during the 2016 American presidential election.
Hiss was arrested and convicted of perjury rather than treason as American authorities did not want to reveal their sources to the Russians.
It wasn’t until the trial of Julius and Ethel Rosenberg for transmitting secret nuclear secrets to the Soviet Union that a 23 year old Cohn truly made his splash.
Americans, including those at the highest levels of Government, were shocked and horrified by the rapidity with which the Soviet Union developed the atomic bomb, years ahead of American predictions.
That, along with the fact that the design for the first Russian bomb was almost identical to America’s first atomic weapon design, led to the belief that espionage was the only viable explanation.
In January of 1950, the German refugee, physicist and member of the British mission in the Manhattan project, Klaus Fuchs, admitted while under interrogation from Britain’s domestic intelligence agency, MI5, to have provided Soviet intelligence with classified documents related to the nuclear program throughout the Second World War.
Fuchs, who had been recruited by the GRU in 1941, identified an American laboratory chemist Harry Gold as his courier for stolen atomic secrets.
Gold was arrested by the FBI, confessed to serving as a Soviet agent and identified David Greengrass as an additional source at Los Alamos for atomic secrets.
Following his arrest, Greengrass implicated his wife Ruth and his brother-in-law Julius Rosenberg as having recruited him for espionage activities, claiming that Julius had talked Ruth into it. Initially, David did not implicate his sister Ethel Rosenberg as being involved in the spy ring.
Julius was arrested by the FBI on July 17th, 1950. Though FBI officials and prosecutors believed that Ethel was only a minor accomplice to her husband Julius’ espionage activities, the arrested her a month later as a way to exert leverage over Julius in the hopes that he would betray more Soviet spies operating in the United States.
Ten days before the trial, David Greengrass told investigators that Ethel had in fact been present during the meetings in which he passed over information to Julius and that she had taken notes.
At the age of 23, Roy Cohn wrote the chief prosecutor Irving Saypole’s opening and closing statements and influenced the overall strategy of the prosecution. He personally conducted the questioning of the prosecution’s most important cooperating witness.
Cohn later boasted that Irving Kaufman, the judge presiding over the trial, owed his position on the bench to Cohn’s father, who was a judge based out of the Bronx.
According to Cohn, he had arranged for Judge Kaufman to be assigned to the case through his connections to the district court’s clerk office.
Evidence suggests that Cohn engaged in inappropriate ex parte communications with Judge Kaufman at the time he was contemplating sentencing.
Cohn argued forcefully for the death penalty, and that’s what the Rosenberg’s received.
While in the cases of Alger Hiss and the Rosenberg’s the unearthing of documents, particularly in the former Soviet Union after the end of the Cold War, has led to the scholarly consensus that they in fact were Soviet agents, the vast majority of individuals caught up in the Red Scare were innocent victims and many lives were needlessly destroyed.
While in the 30s and 40s Soviet intelligence succeeded in placing high level operatives in American institutions, there was no threat of broad social unrest driven by a Communist fifth column.
Unlike much of Europe, the Communist Party was tiny in the United States and exerted relatively little influence over organized labor. The demagoguery, hysteria and self-serving cynicism of the era found its personification in Wisconsin Senator Joseph McCarthy, which gave rise to the epithet still used in politics to this day: McCarthyism.
Cohn started working with infamous red-baiting Senator Joseph McCharthy as his chief counsel in January, 1953.
Cohn was introduced to McCarthy by George Sokolsky, a radio broadcaster and Hearst newspaper columnist with close ties to the arch-conservative “China Lobby,” which supported anti-communist Kuomintang forces in Washington.
Cohn and McCarthy’s targets of inquiry were wide ranging and, almost without exception, posed little to no risk of actual Communist subversion. Guilt by association could be established for as simple a matter as representing the ACLU in court. Organizations in their crosshairs included the international public broadcaster Voice of America, the State Department and the US Army.
McCarthy and Cohn’s hunt for hidden Communists inordinately impacted members of the Jewish faith and homosexuals. This was curious indeed as Roy Cohn was both Jewish and a closeted homosexual.
With the enthusiastic support of FBI director J. Edgar Hoover, himself a bachelor who lived with his mother until her death, Cohn and McCarthy’s hearings led to the firing of numerous men and women accused of homosexuality from government jobs.
While it is an established fact that Cohn and Hoover were friends, much controversy has raged about the nature of their relationship.
One of Cohn and Hoover’s mutual friends was a liquor baron named Lewis Rosensteil. During prohibition, Rosensteil’s company Schenley had been supplied alcohol by Meyer Lansky. Cohn represented Rosensteil, and together they collaborated on forming the American Jewish League Against Communism.
In his controversial biograpy of J. Edgar Hoover, author Anthony Summer interviewed one of Rosensteil’s ex-wives Susan Rosensteil. She maintained that her husband and Roy Cohn had been in a homosexual relationship, and that she had attended parties with Roy Cohn at the Plaza Hotel where J. Edgar Hoover was dressed as a woman.
According to Summers, photos of Hoover made their way to Meyer Lansky, who used them for blackmail purposes.
Susan Rosensteil’s claims have come under withering criticism, and many professional historians dismiss them outright.
The State Department fired over 425 employees over accusations of homosexuality during the final months of the Truman administration in 1953. All of this occurred while Cohn himself was known to frequent the gay bar scene in Washington, DC.
Cohn and McCarthy finally overstepped when they took on the US Army. McCarthy’s enemies found the opportunity to pounce when it came to the drafting into the military of G. David Schine, an unpaid “Chief Consultant” working with McCarthy and Cohn.
Schine, the handsome scion of a wealthy New York family, had been hired at Cohn’s behest and the two quickly became inseparable, even traveling to Europe together in a quixotic and much ridiculed trip to search for subversive Communist materials in American overseas libraries.
As the Korean War was raging on the other side of the world, Schine was drafted into the military. Cohn pulled out all of the stops to get Schine out of service, even threatening to “wreck the Army” at one point.
In doing so, he sowed the seeds of McCarthy’s destruction.
After it became clear that Cohn was seeking preferential treatment for Schine in a time of war the scandal broke loose and culminated in the Army-McCarthy Hearings. The hearings ultimately led to McCarthy’s downfall and Cohn’s banishment from Washington.
Cohn was by all accounts outclassed and out-lawyered by the Chief Counsel of the US Army Joseph N. Welch, who in a confrontation with McCarthy uttered the famous phrase that marked the symbolic end of the McCarthy era, “At long last, have you no sense of decency?”
In 1957, Roy Cohn returned to New York City and became one of the city’s most influential power brokers and possibly the most infamous lawyer in the United States.
Cohn’s second career was a return to his roots, a world that had been embodied for well-over a century by Tammany Hall.
It was a milieu with which Cohn was intimately familiar. Cohn’s father was an influential judge in the Bronx and young Roy had been fully immersed in the parochial rules and customs of Democratic machine politics in New York City from his early childhood.
Cohn developed a reputation as a “legal executioner”, in other words, one of the most ruthless and hard hitting attorneys in the United States. His methods were renowned as relentless and, oftentimes, unethical.
In the 1960’s, when his bitter rival Bobby Kennedy was Attorney General, Cohn was indicted four times but was acquitted in every case.
The cases against Cohn involved mob-linked investments, complex financial crimes and obstruction of justice charges. They were related to investments Cohn had made alongside elements of the Las Vegas organized crime gambling syndicate.
The first investment the corrupt Teamsters pension fund made in Nevada was to Sunrise Hospital. Cohn was another investor, alongside Cleveland bootlegger, racketeer, and Vegas casino owner Moe Dalitz. Dalitz was a key partner of the organized crime legend Meyer Lansky.
Cohn later admitted in court that he had met Lansky, as well as Gerardo Catena, the Genovese Crime Family’s representative in New Jersey.
In the 1970’s Cohn was charged with violating banking laws in Illinois and was again acquitted. In the cases against his clients and himself, Cohn threw the kitchen sink at the prosecution and often won.
To Cohn, any publicity was good publicity. Cohn’s contacts within the national media and New York gossip rags were the stuff of legend.
By the age of 13, he was already writing a gossip column for the Bronx Home News, the paper read by the power base that elevated his father to a judgeship. He developed a relationship with the famous syndicated Hearst gossip columnist Walter Winchell, who supported Roy during his stint with McCarthy both in print and on the radio.
Cohn was childhood friends with Si Newhouse, the owner of the media conglomerate Advance Publications which included such properties as Condé Nast, publisher of Vogue, Vanity Fair and The New Yorker. F
or years, Cohn was the gift to New York gossip columnists that kept on giving, even willing to dish on his own clients in certain circumstances.
Cohn’s reputation attracted the attention of La Cosa Nostra, otherwise known as the mafia.
Cohn’s connections to organized crime were no secret.
He once boasted that he had gotten Irving Saypol, the man who prosecuted the Rosenberg case, his job as US Attorney. Saypol, Cohn maintained, needed the okay from Frank Costello.
Though the names changed over the years, the Five Families of the mafia of New York consisted of what what ultimately became known as the Genovese, Gambino, Bonanno, Lucchese and Columbo crime families. Italian-Americans, however, only comprised one part of a larger, multi-ethnic National Crime Syndicate.
The National Crime Syndicate was loosely guided by a “Commission,” a governing body which consisted of leaders from the Five Families in New York City as well as bosses from the Chicago Outfit and the Buffalo crime family.
“In those days, nobody became U.S. Attorney in New York without the O.K. from the mob,” Cohn stated. “But Saypol would not have gotten the nod from Costello without me.”
Cohn’s connections to the FBI, he was a personal friend of J. Edgar Hoover’s, along with his network judges, prosecutors and district attorneys, made him an ideal lawyer for the mafia.
His clients included Genovese-boss Anthony “Fat Tony” Salerno, Bonanno boss Carmine “Nino” Galante and numerous members of the Gambino crime family including Carmine Fatico, Aniello Dellacroce, Tommy and Joe Gambino, Angelo Ruggiero and John Gotti.
Federal anti-organized crime strike force members told Cohn biographer Nicholas von Hoffman that in the 70s members of the Commission, the governing body of the American mafia, met in Cohn’s office because attorney-client privilege made recordings in-admissible in court.
Von Hoffman was unable to verify the claim.
Rooted in Racism: Donald Trump and Roy Cohn Take On the Justice Department
“I don’t like lawyers,” was the first thing Donald Trump said to Roy Cohn upon their introduction at Le Club in late 1973. “I think all they do is delay deals, instead of making deals, and every answer they give you is no, and they are always looking to settle instead of fight.”
Cohn agreed.
“I’m just not built that way,” Trump continued. “I’d rather fight than fold, because as soon as you fold once, you get a reputation of being a folder.”
“Is this just an academic conversation?” Roy asked.
“No, it’s not academic at all,” Trump replied.
A year earlier, in July of 1972, a black woman had approached the Shorehaven Apartments complex managed by Trump and his father and inquired if any units were available to rent. She was told none were and to look elsewhere.
Shortly thereafter a white woman entered the same building and inquired about any vacancies. According to courtroom testimony, she was informed by the same superintendent that she could, “immediately rent either one of two available apartments.”
What the superintendent didn’t know was that both women were “testers” sent by the civil rights organization the Urban League to determine whether discriminatory practices were taking place at the building.
Accusations of racial bias and discrimination against Fred Trump were nothing new.
On Memorial Day in 1927, a series of street fights broke out across New York. In the Bronx a pro-Italian fascist rally descended into violence and 2 Italian men were killed by anti-fascists. In Queens, 1000 robed members of the Ku Klux Klan violently clashed with police.
Of the seven individuals arrested, one was a 21-year-old Fred Trump for refusing to disperse when ordered to by the police.
He was released without being charged with a crime. During the 2016 campaign candidate Trump denied that the Fred Trump in question was his father, but the address listed in the arrest papers revealed that it was.
In 1950, the legendary folk singer Woody Guthrie signed a lease to live in the Beach Haven apartment complex, Fred Trump’s first development.
Guthrie was disturbed by the racism practiced at the Trump complex. So moved was Guthrie the he went as far as writing a song about the experience entitled “Old Man Trump,” which featured the following lyrics:
I suppose that Old Man Trump knows just how/ Much racial hate/ He stirred up in that blood pot of human hearts/ When he drawed that color line/ Here at his Beach Haven family project.
Complaints about racial discrimination at Trump properties occured throughout the 1960s. In 1963, a 33-year-old black nurse named Maxine Brown filled out an application to rent a home at Fred Trump’s Wilshire Apartment complex in Jamaica, Queens.
Years later the rental agent, Stanley Leibowitz, told the New York Times his boss Fred Trump told him to, “take the application and put it in a drawer and leave it there.”
In 1969 at Trump development in Cincinnati, when a white “tester” named Maggie Durham was offered an apartment and attempted to bring in a black family who had just been sent away from the same building hours earlier, the sales agent exploded into a rage and, according to court records, shoved them out of the office and called Durham a “nigger-lover.”
By the early 1970s, Trump properties were under the microscope by civil rights organizations that noticed a comprehensive pattern of racial discrimination. Finally, the organizations contacted the US government.
On the morning of October 15th, 1973, Donald Trump was contacted at his office by an official from the US Department of Justice. It was a courtesy call to inform him that the DOJ was filing suit against him and his father.
A similar suit had been filed earlier against the Lefrak Organization, another powerful New York real estate firm.
The suit settled out of court and the LeFrak organization offered to provide 50 black families with a month rent free in order to help desegregate their buildings. Donald Trump, on the other hand, was in no mood to settle.
Though this was Donald’s first run in with government investigators, his father was experienced in these matters. In 1954 Fred Trump was subpoenaed to appear before a Congressional Banking Committee that was investigating profiteering among FHA developers.
Fred had made $4 million by inflating construction cost estimates when applying for FHA loans and pocketing the difference, but he maintained that nothing he did was illegal. He emerged from the scandal uncharged.
In 1966, Fred was forced to testify before the New York State Investigations Committee about additional accusations of bilking state construction subsidies by hiding his ownership of an equipment company and charging exorbitant leasing fees. Though he had to return some of the money, Fred emerged again legally unscathed.
Fred Trump was not a man to back down from the government, and his son didn’t intend to either. He just needed to find the right lawyer to fight his cause.
“My view is to tell them to go to hell,” Cohn told Trump at Le Club. “[F]ight the thing in court and let them prove that you discriminated.”
At a press conference later that year, Cohn announced that they were counter-suing the Department of Justice for $100 million. Trump denied any wrongdoing or racial discrimination at his company and accused the government of attempting to force them to rent to welfare recipients.
Cohn proceeded with his characteristic bare-knuckle legal tactics, filing a contempt-of-court charge against one of the prosecutors. The judge threw out both the countersuit and the contempt-of-court and the case eventually settled with the Trump’s signing an agreement prohibiting them from further discriminator practices.
As the agreement contained boiler-plate language that by signing the agreement they weren’t admitting guilt, Trump claimed victory.
Civic Corruption, Trump’s Early Manhattan Real Estate Deals and Organized Crime
On June 21st, 1970, railroad giant the Penn Central Transportation Company, the sixth largest corporation in the United States, declared bankruptcy. It was the largest bankruptcy in American history at the time. As part of the reorganization of the ailing industrial behemoth, portions of its vast land holdings were to be sold off.
In 1973 Penn Central announced it was going to sell $1 billion worth of properties across the Northeast corridor. Over a third were located in New York City itself, comprising some of the most valuable property in the world.
Donald read about the offerings in the paper and wrote a letter to Penn Central expressing his interest that same morning. He didn’t receive a response for six months. Nonetheless, the young would-be developer without a single Manhattan property yet to his name had two things going for him.
The first was that it was perhaps the most inauspicious moment to be selling property in the Manhattan market. Like many of the city’s white residents, most major corporations were leaving the city rather than seeking land. With rising crime rates and the fiscal crisis looming, there were fewer buyers in town since perhaps the Great Depression.
The second he enjoyed was that his father was old buddies with the new mayor. On January 1st, 1974, Abe Beame ascended into Gracie Mansion as the 104th mayor of New York City.
He brought his friends from Brooklyn along with him. Stanley Steingut, head of the Democratic Madison Club and recipient over the years of donations from Fred Trump, became speaker of the assembly. Fred had known Beame since he was a young accountant for the Madison Club.
If those connections weren’t enough, in late 1973 the Trump’s had gotten behind and funded the candidacy of a little known Brooklyn congressman named Hugh Carey who ended up defeating the Republican incumbent for Governor.
It was a high water mark in the history of state politics for the power of the Brooklyn Democratic political machine and it couldn’t have come at a better time for Donald Trump.
“Who the hell is Donald Trump?” was the question Ned Eichler had on his mind when he arrived in New York City. Eichler worked for the Palmieri group, outside agents assigned by the shareholders of Penn Central to sell off its extensive real estate holdings. None of his associates could answer his question.
When Eichler met the young developer he was struck by the intensity of his enthusiasm and the confidence with which he laid out his vision. Eichler knew, however, that for anyone to develop anything in New York City, they needed political connections.
Donald assured him that he had them in spades, but Eichler wanted proof. What kind of proof, Donald asked? Eicher wanted to meet the mayor.
Trump smiled, not a problem.
The very next day, Ned Eichler was picked up outside his hotel at 1:30pm sharp by a limo sent by Trump. By 2pm, Eichler was sitting in the mayor’s office with Donald, Fred Trump, City Planning Commissioner John Zuccotti and Abe Beame, the newly sworn in mayor of New York City.
Donald made a few opening remarks at the meeting about his high hopes for the deal. By the end of the meeting, Beam had his arms around both Fred and Donald.
“Whatever Donald and Fred want, they have my complete backing,” Beame exclaimed.
The Penn Central properties in Manhattan that Trump was interested in were the West Side rail yard and site located on 34th St. The former was the largest piece of undeveloped real estate in Manhattan, 93 acres in all. The latter was smaller but busier and in an iconic part of the city.
Donald had succeeded in impressing Eichler with his vision, his relentless enthusiasm and his political clout. By mid-1974, Trump and Eichler were on the verge of signing a deal for an option of the properties when a competing offers came in. Donald, however, wasn’t about to watch this opportunity slip through his fingers.
In the midst of competing offers that threatened to derail his option, Trump met at the home of David Berger, an attorney representing the interests of Penn Central’s shareholders and who was highly influential in determining which bid would ultimately be selected to option the properties in Manhattan. After the meeting, Berger became a supporter of Trump’s bid, which eventually won the day.
It was subsequently discovered that David Berger, in an entirely separate case, had filed a class action lawsuit on behalf of several New York developers against against heating oil companies, accusing them of price fixing. Sometime after their meeting, Trump joined the class action suit.
As Berger was slated to receive one third of whatever awards the developers received upon the successful completion of the case, he stood to enjoy significant financial gains. The addition of the Trump Organization doubled the number of apartments Berger’s clients collectively operated.
The shady and possibly illegal nature of the deal caught the attention of Ed Korman, the United States attorney in Brooklyn. It had been brought to his attention by a tip received just before the statute of limitations had run out. Korman proceeded to empanel and grand jury.
FBI agents interviewed Trump twice, informing him that he was the target of a grand jury. However, given the short timeframe, Korman had just started calling witnesses before the statute of limitations ran out and the case was abandoned without any charges.
This was the second time in the 1970s that Trump had been investigated by Federal authorities, including the FBI.
While Donald optioned the West Side yards and a site on 34th Street, the first Penn Central property he actually developed was a top to bottom renovation of the old and ailing Commodore Hotel, which stood next to Grand Central Station on 42nd Street.
Named after the fabulously wealthy 19th century shipping and railroad magnate Cornelius “Commodore” Vanderbilt, the once opulent example of robber baron chic had, in a microcosm of the city itself, fallen on hard times. Though the Grand Central section of 42nd street had yet to be overrun by pornography palaces as Times Square had, by 1975 the nearby Chrysler Building had defaulted on its mortgage and the crime rate in midtown south had risen 18.5% in the space of a year.
Once again, where others saw degradation, Trump saw opportunity.
Closing the deal required Trump to manage a delicate balancing act between the Palmieri sales agents for the hotel, potential financiers, a reputable hotel operator and the city of New York itself.
Throughout the extensive negotiations Trump employed sheer willpower, force of vision, flattery, media manipulation, family connections and outright deception, but at the end of the day he got his hotel and his first property in Manhattan. The process only really got rolling after a conversation Trump had in 1975 with a midlevel city bureaucrat.
An attorney by the name of Michael Bailkin sat across from Donald Trump in his small office within the bowels of the Lower Manhattan Development Corporation and listened as the developer described his plans for the reinvention of the Commodore Hotel.
Trump described his vision to redo the crumbling facade, refurbish the interior and enlist Hyatt to manage a completely reimagined hotel that would reverse the seemingly unstoppable slide of midtown itself.
Trump went further, saying he could line up financing and get the support of key political players in the city, but he needed to figure out one key detail: how to receive a historic tax abatement from the city.
He had tried to push one through the state legislature but failed. Even with the Beame administration behind him, the effort was swallowed up by the fiscal crisis that hit the city like a tidal wave.
Bailkin came up with a novel solution on the spot. He suggested that Trump purchase the property, donate it to the city and then have the city lease it back to him for a period of 99 years. The city would then be on the hook for the property tax bill and could charge Trump a negotiated rent to cover a previously agreed upon portion of the tax bill.
Trump was thrilled with the idea. Bailkin was soon transferred from his previous city position and was soon running in and out of City Hall promoting the deal, which was the only significant development deal at perhaps one of the lowest ebbs of the city’s financial history.
After additional meetings, the idea was refined so that instead of Trump donating the hotel to the city he would donate it to the now largely defunct Urban Development Corporation (UDC).
The UDC had been created by New York Governor Nelson Rockefeller in 1968 with the goal of integrating housing throughout the state. In order to be able to do so, it was granted extraordinary powers to overrule local ordinances and push through projects without having to slog through endless red tape.
By 1975 the organization had fallen into bankruptcy. Despite this, it retained formidable legal powers which, if placed at the disposal of Donald Trump, had the power to grant him his wish of becoming a Manhattan developer.
The irony of having an organization created to integrate housing pad the pockets of a man recently sued by the DOJ for housing discrimination was apparently lost on everyone involved.
Trump encountered resistance from the head of the UDC, critics in city government and competing hotel operators stunned by what they saw as an unprecedented city giveaway to a young and untested developer, but he deftly navigated these shoals by structuring a deal whereby he would share some profits with the city in a way that allowed him to use creative accounting to limit just how much he shared.
Meanwhile, he played the many different sides of the deal off one another by exaggerating the enthusiasm of one party to another, releasing overly optimistic press reports, claiming deals still in negotiation had actually been completed in his favor, representing documents signed by only himself as done deals, inflating the amount of financing he had secured and generally controlling the information flow among the major players in the deal to keep the project lumbering forward.
While the major players now all agreed in principle with moving forward on the project, Trump still needed to push the deal through the byzantine maze of New York’s multifaceted approval process.
To make matters more complicated, Abraham Beame, fatally weakened by the fiscal crisis, lost his mayoral reelection bid to a charismatic reformer from the Village by the name of Edward Koch.
Koch had run on an anti-machine, reform platform. Not wanting to leave anything to chance, Donald desperately wanted to have the tax abatement etched in stone before the new mayor who had campaigned against cronyism and political favoritism took office.
Luckily, Trump knew just the man for the job.
By the mid-1970s Roy Cohn was more than just an infamous attorney, he was New York City’s preeminent power broker and fixer. In the heady days of the transition between the Beame and Koch administrations, it was Cohn who introduced Donald to the outgoing deputy mayor Stanley Friedman.
Known as “Bugsy” ever since his days growing up in the schoolyards of the Bronx, the cigar chomping Friedman was a consummate example of a savvy operator in New York machine politics. He had worked his way up to deputy mayor by forging connections and making deposits into the favor bank at the Bronx Democratic clubhouse.
Now that Beame was out of office, Friedman needed to find another gig. In his last weeks in office, Cohn offered him a six-figure, cushy job at his law firm and even an office on the fifth floor of his townhouse.
Friedman returned the favor by leading a mad dash in the final weeks of the Beame administration to drag Trump’s coveted tax abatement across the finish line. Working at light speed in bureaucratic time, Friedman guided Trump’s pet project through nine regulatory agencies.
When all was said and done, Trump received a 40-year, $400 million dollar tax abatement, the largest in the history of the city. For the cherry on top, on the final day of the Beame administration Friedman signed a special permit that allowed Trump to build a hotel restaurant overhanging 42nd Street called the Garden Room.
Cohn wasn’t just using Friedman to help Trump. Friedman had long stood in the wings of the Bronx Democratic Party as a potential successor to its then hopelessly corrupt leader Pat Cunningham.
As a child, Cohn sat in on his father’s dinner parties with Cunningham’s predecessor Ed “Boss” Flynn and Carmine DeSapio, head of the Tammany Hall political machine and ally of mafia chieftain Frank Costello.
In 1976, Cunningham was indicted for illegally arranging a judicial nomination, influence peddling and concealing a payment from a bank.
When Cunningham fell in 1978, Friedman took his place as the leader of the Bronx Democratic party, a position of immense influence in the city. With the head of the Bronx Democratic Party working in the office next to him, Roy Cohn’s influence had seeped into the very marrow of the city.
In addition to Cohn, Fred Trump played an indispensable role in his son’s success. Fred attended the first meeting with Mayor Beam and Eichler, providing a reassuring presence for all involved that the real estate veteran was backing the project.
He provided the essential guarantee that allowed Donald to take over the Commodore mortgage. In order to finance the construction, Fred and Hyatt hotels provided the guarantee to the bank Manufacturers Hanover that led them to loan out $70 million to get the project underway.
When there were construction cost overruns, Fred bailed Donald out with a $35 million unsecured line line of credit and $30 million second mortgage from his old bank Chase, in addition to another loan offered through one of Fred’s own corporations.
When construction commenced on the Commodore to transform it into the new Grand Hyatt, the subcontractors used for the project were connected to organized crime.
Both the concrete contractor and supplier, North Berry and Transit-Mix respectively, were accused in legal documents of being participants in cartels operated by the mafia.
According to the FBI, Cleveland Wrecking, the demolition company and the first contractor Trump personally selected for the project, was partially owned by an associate of the Scarfo crime family, one of the most violent gangs operating on the streets of Philadelphia and Atlantic City.
According to law enforcement documents, the subcontractor Wachtel Plumbing was involved with a mafia-backed shakedown in Atlantic City while it was working on the Hyatt.
Donald took a hands on approach to overseeing the project as did his new wife, Ivana Trump. A Czech national born Ivana Zelníčková, she and Trump were married during the Easter of 1977 in a ceremony held at Marble Collegiate Church attended by luminaries of the city including Roy Cohn and Mayor Beame.
Shortly before the wedding Donald and Ivana sparred over the prenuptial agreement that had been written up by Cohn, who had advised Donald not marry, but matters were temporarily resolved by the time the young couple tied the knot.
Donald and Ivana Trump’s marriage would develop into one of the most notable, gossiped about and ultimately infamous of the 1980s.
Nine months after they wed, Ivana gave birth to a son, Donald Jr. He was the first of three children Donald and Ivanka would have together.
Ivana was more than a stay-at-home-mother. She became heavily involved in Donald’s business, becoming a regular visitor to the new Grand Hyatt construction site where donning designer outfits and heels she displayed a cocky self-assurance in her flashy and opulent interior design recommendations despite her lack of experience.
Donald and Ivana entered the ranks of the New York glitterati and became fixtures of the city’s social scene.
Roy Cohn, too, was at the height of his powers. New York’s famously liberal social and political establishment seemed to let bygones be bygones when it came to Cohn’s prominent role in McCarthyism. As one Cohn biographer wrote, “celebrity is its own exculpation.”
It helped that he was the attorney for the hottest club in 1970s New York, Studio 54, described by Frank Rich in New York Magazine as, “[t]hat sprawling Valhalla of the disco era, a nexus for boldface names, omnivorous drug consumption, anonymous sex, and managerial larceny.”
The epochal club was owned by Cohn clients Steve Rubell and Ian Schrager. Cohn became a much coveted gatekeeper to the club, and was approached by celebrities, local politicians and foreign dignitaries for the privilege of gaining entry.
Schrager’s father, Louis Schrager, had been a Williamsburg-based loanshark and racketeer. According to the New York State Liquor Authority file, the elder Schrager was “… a convicted felon who was a known associate of Meyer Lansky and was second only to Herman Siegel in Lansky’s loansharking and numbers rackets.”
By this period, Cohn’s intensely promiscuous, secret homosexual life was becoming increasingly more brazen, and it wasn’t unusual for him to be seen among throngs of young men at the club. Donald and Ivana were regulars.
“What happened at Studio 54 will never, ever happen again,” Trump told his biographer Timothy O’Brien. “You didn’t have AIDS. You didn’t have the problems you do now…”
“I saw things happening there that to this day I have never seen again. I would watch supermodels getting screwed, well-known supermodels getting screwed on a bench in the middle of the room. There were seven of them and each one was getting screwed by a different guy. This was in the middle of the room. Stuff that couldn’t happen today because of the problems of death.”
Newly married, a regular feature in New York’s gossip columns and riding high off his closing of the Grand Hyatt deal, Trump was about to embark upon a namesake project that would come to define him in the eyes of most Americans to this very day. Though construction of the Grand Hyatt was less than half-done, the young developer had higher ambitions. He wanted to develop a brand defining residential tower with his name on it.
While Donald Trump has spent decades exaggerating and embellishing his accomplishments and business acumen, it is safe to say that conception and development of Trump Tower was a career-defining business coup that propelled him into the popular imagination as being synonymous with wealth, power and success.
Trump’s first inspired insight was the location.
The Bonwit Teller department store was located on the corner of Fifth Avenue and 56th Street, one of the choicest of Manhattan. Just a few blocks from Central Park, the store shared the location with Tiffany’s, the famous jewelry store that had been immortalized by Truman Capote’s novel Breakfast at Tiffany’s and the film starring Audrey Hepburn.
Unlike others who thought the location was unattainable, Trump was bold enough to make inquiries. In a stroke of luck, the Executive Vice President of the Trump Organization at the time, Louise Sunshine, had a connection inside the department store.
Donald reached out, discovered that in fact Bonwit Teller was struggling and was able to swoop down and acquire a six-month lease for $25 million.
Upon his acquisition of the lease, Trump engaged in another high wire balancing act among different interests.
His financier was interested in the project, but only if he could slash through all the red tape and replace the smaller, Art Deco Bonwit Teller building with a vast new residential tower, possibly the tallest in the city to that point. In order to do so he needed to gain air rights from the other buildings in the vicinity and special permits and approvals from the city.
Trump succeeded in running the gauntlet of boards and commissions through utilizing his father’s and Roy Cohn’s political connections, making strategic campaign contributions, glad-handing and, when necessary, putting up a fight.
Trump eventually won the air rights over the nearby buildings and was granted the necessary permits and authorizations to begin construction.
Over the course of construction, Trump’s relationship with the Mayor Koch and his administration took a nosedive and Koch pushed to have the city reject Trump’s sizable tax abatement. Trump responded by siccing Cohn on the case. They filed a lawsuit and won in court and the abatement, his second in just a few years, was left untouched.
The inspiration for Trump’s new project was Olympic Tower, a nearby 52-story development located on Fifth Avenue across the street from Rockefeller Center. The building was owned by the Greek billionaire Aristotle Onassis.
Olympic Tower replaced the department store Best’s and was located next door to the jewelry store Cartier. In a model that was imitated by Trump Tower, it was the first of what became known as mixed use projects, which incorporated retail, office space and private residential units.
It featured a large indoor public space decorated with an artificial waterfall. Onassis, like Trump, managed to get the city to award him a major tax abatement so he could move forward with the project.[1]
Trump was friends with one of Olympic Tower’s most notable residents, the Saudi billionaire and arms merchant Adnan Khashoggi, and reportedly was so impressed by the size of the living room in his penthouse that he had his own decorator clandestinely find out it’s exact measurements so he could ensure that the living room for his unit in Trump Tower was larger.
Years later, during Trump’s presidency, Khashoggi’s nephew Jamaal would be murdered and dismembered under orders from Trump’s close ally Prince Mohammad bin-Salman.
Before construction could begin, the old Bonwit Teller building had to be demolished. When searching for a demolition contractor, Donald opted for Kaszycki & Sons Contractors, the cheapest he could find.
William Kaszycki’s workers consisted of roughly 200 Polish illegal aliens who were recruited by Kaszycki’s wife. These Poles worked for a mere fraction of union rates and many were paid even less than the pittance they had originally been promised.
After toiling through twelve-to-eighteen hour days, the workers either slept on the concrete floor of the construction site during the frigid New York winter or as many as eight at a time would pile into an individual motel room. Workers went without hard hats and worse still, given that they were working in an asbestos filled environment, were not provided with face masks or safety goggles.
The Polish Brigade, as they came to be known, was not provided with power tools and set about demolishing the building with sledgehammers.
During the demolition, several Art Deco statues that made up the buildings facade were obliterated despite the fact that Donald had promised to donate them to the Metropolitan Museum of Art.
Despite the fact that the Polish workers were already receiving substandard wages, many ended up not being paid at all. The appalling nature of their work conditions and the fact that many weren’t being paid on time or at all led to increasing dissatisfaction and eventually rage onsite.
Things finally boiled over when some workers physically threatened hang Thomas Macari, Trump’s personal representative onsite, off the edge of the building.
Following this Trump hastily contacted Daniel Sullivan, a labor fixer he had worked with on the Grand Hyatt.
A new demolition crew from the Homewreckers Local 95 union was brought on to oversee the project. According to Trump biographer and Pulitzer Prize winning journalist David Cay Johnston, federal court records subsequently established that the union was under the control of mafia dons who were represented by Roy Cohn.
The demolition proceeded apace and the corrupt overseers did not raise any issues about the employment of non-union workers or the fact that they were not provided with adequate safety equipment.
The involvement of the mafia in a New York City construction project is unsurprising. By the late 1980 the problem had become so pervasive that Governor Mario Cuomo ordered a full report drawn up by New York State’s Organized Crime Task Force.
What followed was a 239-page report entitled Corruption and Racketeering in the New York City Construction Industry, released in December of 1989.
The report stated unequivocally that their investigation had, “establish[ed] beyond any doubt that corruption and racketeering pervade New York City’s construction industry.”
The report continues: “We use the term “racketeering” to refer to the activities of professional criminals — those who engage in crime as a business. They may be full-time criminals and members of criminal syndicates, or they may operate as businessmen, union officers, or government officials who systematically use their legitimate positions for illegitimate ends. Racketeers span the gamut from unskilled hustlers to sophisticated leaders of large legitimate or illegitimate organizations.”
“New York City’s construction industry has many types of racketeers. By far the most important are members and associates of New York City’s five Cosa Nostra organized crime families.”
“They have been involved in the City’s construction industry for decades, utilizing their organizational expertise, underworld networks, and reputation and capacity for violence. Casa Nostra’s entrenchment in construction companies and unions makes the industry’s “crime problem” all the more serious and the need to address it all the more imperative.”
Trump Tower was unusual among contemporary developments in New York at the time in that it was constructed using primarily concrete as opposed to steel. Indeed, it was the tallest and most expensive private concrete building of its time.
By the late 1970s, the unions and contractors that comprised the concrete industry in New York had been infiltrated by organized crime at every level. While other developers at the time, including the powerful LeFrak and Resnick families, were complaining to the FBI about the mafia-dominated concrete cartel, Trump did not seem bothered by the corrupt arrangement.
In 1980, before construction began on Trump Tower, prosecutors subpoenaed Donald regarding his relationship with John Cody, a three-time felon and head of the local Teamsters 282 union.
Cody, who had previously worked with Fred Trump, controlled the truckers who made time sensitive concrete deliveries to construction sites, including Trump Tower, where even the threat of delays could add debilitating expenses to a project.
Law enforcement had determined that Cody was a labor racketeer and corrupt associate of the Gambino crime family, with Cody personally paying Carlo Gambino $200,000 per year.
The New York Organized Crime Task Force received a tip that Trump had been the victim shake down in which Cody was to receive a free apartment in the newly constructed tower and in return assure labor peace.
“You know how I dealt with him? I told him to go fuck himself all the time,” Trump told his biographer Timothy L. O’Brien in 2005, after, O’Brien wryly noted, he was assured that Cody was dead.
“If you say it enough, if you say it enough, they go on and go after somebody else. This guy was one psychopathic crazy bastard… There was something wrong with him mentally. John Cody was real scum.”
Trump responded to his subpoena by denying to prosecutors in an in-person interview that he had been the victim of a shakedown. However, despite his contemporary denials and subsequent bravura, Trump’s relationship with Cody was anything but an innocent business relationship. Cody exercised immense power over the project.
“My father walked all over him. He did. Any time Trump didn’t do what he was told, my father would shut down his job for the day. No deliveries; 400 guys sitting around,” Cody’s son Michael claimed when asked about his father’s relationship with Trump.
He went further, describing Trump as “a guy who would talk tough, but as soon as you confronted him, he would cry like a little girl. He was all talk, no action.”
Cody’s influence can be seen by Trump’s accommodation of a mysterious Austrian socialite named Verina Hixon. Hixon, believed by some to be Cody’s mistress, has maintained that the two were only platonic friends.
Though she had no known income, Hixon lived a jet setting lifestyle among New York’s wealthy elite. She initially lived at Olympic Tower but eventually six units on the top two floors of Trump Tower worth nearly $10 million were purchased in her name.
Donald signed a unique agreement with her that required him to design the units to her specifications. If Trump ever hesitated to fulfill any of her requests, Cody confronted him personally or sent someone from the union to make sure the brash young developer acquiesced.
Cody may have intended to live in one of the units. However, in 1984 he was convicted of racketeering and sent to prison. Upon his release, Cody attempted to arrange for his union successor to be assassinated, but the plot failed when the would-be hitman turned out to be an FBI informant.
Cody was arrested again for attempted murder and returned to prison. Following Cody’s incarceration Trump engaged in an extended legal battle with Hixon that eventually led to her vacating Trump Tower.
Cody was an associate of Roy Cohn, but he wasn’t the only Cohn connection involved with the construction of Trump Tower. At the time La Cosa Nostra controlled the concrete industry in New York City through the operation of what was known as the Concrete Club.
The club consisted of seven companies fronted by seemingly legitimate management but in actuality owned by some combination of mafia families which received a 2% kickback of each contract over $2 million.
One of those companies, S & A Concrete, was selected to work on the Trump Tower construction project.
The company was fronted by a Cody associate named Ken Auletta, but was in fact jointly owned by Anthony “Fat Tony” Salerno and Paul Castellano, the underboss and boss of the Genovese and Gambino crime families, respectively.
Cody, Salerno and Castellano were all clients of Roy Cohn’s.
Joe Culek, a chauffeur for Salerno’s frontman Edward “Biff” Holloran in the concrete racket, described to a federal prosecutor how he “ran on foot” to Cohn’s office and handed him an envelope full of $20,000 cash for Cohn to give to Salerno.
Vincent “Fish” Cafaro, a Genovese soldier turned FBI informant, told authorities that he had given Cohn $175,000 cash in what he assumed was used for a payoff to get time taken off Genovese capo Mario Gigante’s prison sentence.
Cafaro told the FBI that Cohn told him three years would cost $250,000.
The money was laundered through Cohn’s office and Gigante’s sentence was subsequently reduced by two years.
A Cohn staffer told investigative journalist Wayne Barrett that Cohn arranged a meeting between Trump and Salerno in his townhouse while S & A Concrete was working on the Trump Tower project.
In the summer of 1982, a cement workers strike paralyzed construction in New York, everywhere, that is, except for Trump Tower, where work continued uninterrupted.
After Olympic Tower, Trump Tower was the second building in New York that allowed for units to be purchased by anonymous Limited Liability Corporations (LLC’s) and offshore corporate entities, a practice that lent itself to potential money laundering and abuse.
An early buyer was Gino A.G. Bianchini, who was wanted in Italy on criminal charges of the illegal export of currency.
Another early resident, Cuban-born American citizen and financier Roberto Polo, purchased six Trump Tower apartments using offshore corporations. Polo, who was wanted in three countries and was eventually imprisoned in Italy for embezzlement, was suspected by some to be dealing in money laundering, drug trafficking and arms running.
Other early criminal residents were Sheldon and Jay Weinberg, a father and son duo who were convicted of masterminding the largest medicaid fraud in the history of the program up to that point.
Investigators working to help the government of Haiti repatriate assets stolen by the exiled dictator Jean-Claude “Baby Doc” Duvalier discovered that in 1983 he had used a Panamanian shell corporation to purchase a Trump Tower condominium for $1.65 million.
In 1981, Lucchese crime family associate and Cohn-client Robert Hopkins purchased a $2 million 59th and 60th floor duplex at Trump Tower.
Cohn put together the deal, arranging for the eye-popping price in an effort to raise Trump Tower’s early market value during a crucial time in the sales campaign. In fact, at the time of the purchase the tower’s construction had just begun.
Hopkins was at the time operating one of the largest illicit gambling operations in New York City, earning up to $500,000 per week through a number running racket that operated out of over 100 locations.
The mafia backer for his criminal operation was Joseph “Joe Beck” DiPalermo, a leading figure in the Lucchese crime family involved in the narcotics trade known by authorities as, “the dean of the dope dealers.”
The mortgage broker for the deal was yet another individual linked to organized crime, Francis Lamagra. As Hopkins had no legitimate income, Lamagra submitted falsified tax documents to the lending bank by forging the name of an incapacitated accountant.
Lamagra attempted the same forgery scam in 1983 for the Bonanno crime family capo Louie “Ha Ha” Attanasio, but was caught and convicted for conspiring to prepare false tax returns.
At the closing, Hopkins arrived with a suitcase carrying $200,000 and proceeded to count it out on a Trump Tower conference table. Trump was personally present as he did so. After the money was counted to Trump’s satisfaction, Lamagra rode in a Trump limo and deposited it in the bank.
Hopkins was arrested while in Trump Tower on charges related to his gambling operation as well as for arranging the murder of a rival mafioso. New York state investigators had tapped the phones to Hopkin’s Trump Tower duplex, where they determined he ran his illegal business.
Hopkins was also under scrutiny by Manhattan district attorney Robert Morgaenthau for his connection to the Bronx City Planning Commissioner Theodore E. Teah.
Teah, a former associate at Cohn’s law firm, served as Hopkin’s attorney and his name was on a sales agreement made on behalf of Hopkins that was later used to raise the million dollar bail for the murder charge.
Teah was also a top aide to Cohn partner and head of the Bronx Democratic Party Stanley Friedman, the same Friedman who had pushed through Trump’s Grand Hyatt tax abatement in the final days of the Beame administration.
Trump’s associations with organized crime extended beyond real estate. In addition to development, Trump pursued a career in licensing his name. He did so for the first time in 1988, when Trump released a line of namesake limousines.
The limos were built by Dillinger Coach Works, named for the famed Depression-era gangster. Dillinger Coach Works was owned and operated by John Staluppi and Jack Schwartz.
Staluppi, who had been investigated by Long Island’s Organized Crime Task Force, the FBI and Atlantic City’s Department of Gaming Enforcement, was a member of the Colombo crime family and was known to have met that family’s boss, Carmine “The Snake” Persico, on at least two separate occasions. Jack Schwartz had previously been convicted of extortion.[1]
Trump Limo’s was an early example of his attempts to brand his name. Before he came to rely on branding as a business model full-time, however, Donald decided to try out his hand as a casino magnate in Atlantic City.
The next article will cover Donald Trump’s efforts to become an Atlantic City casino mogul and his interactions with organized crime during this period.