Trump International Hotel Las Vegas
For years the New To Las Vegas world headquarters has compiled a list called It Didn’t Stay Here. The roster consists of folks big and small who found themselves in some kind of trouble elsewhere for something that happened in Las Vegas. It’s my cheeky refutation of “What Happens Here, Stays Here,” the celebrated tourist marketing slogan once promoted by the Las Vegas Convention and Visitors Authority. The list, which now tops 40 names, can be found nearby on this page along with underlying links to the original posts.
One of those big names is Donald J. Trump. I put him on years ago after a video surfaced of him partying in Las Vegas in 2013 with–Russians! Along with their cronies like Rob Goldstone. He’s the British publicist who several years later for his clients sent the now-infamous email lauding “Russia and its government’s support for Mr. Trump” to Donald J. Trump Jr. The note became public after Trump père became president in 2017, but the issue caused the family no small amount of problems in Washington, D.C. You know that story. The video is still posted on CNN’s website.
Just because one is already on the list doesn’t preclude a repeat appearance. Ergo Trump again. This time it’s because of a 222-page civil fraud lawsuit that New York State Attorney General Letitia James brought against Trump, family members and their businesses late last year in a New York state court. Part of the lawsuit involves alleged tax and valuation machinations by the Trumpers over their sole property in Las Vegas. Trump et al deny all wrongdoing. Trump himself called the lawsuit racist because, it seems, he is white and James is black.
The property is Nevada’s tallest non-casino building, the Trump International Hotel Las Vegas. The 64-story building, a combination hotel, condominium and timeshare opened in 2008, looms over the Las Vegas Strip depending on where one is standing even though up close it sits a little forlornly flanked by barren land a long block west of the Strip. Trump shares 50-50 ownership of the hotel, management company and unsold condo units with Vegas billionaire Phil Ruffin, now the richest man in Las Vegas.
The AG’s New York lawsuit alleges “staggering” fraud in the way the defendants presented finances and paid taxes. Some seven pages are devoted to describing what the AG calls the systematic overvaluation of Trump Las Vegas for instances when the Trumpers cranked out financial statements and undervaluation when it came time to pay Nevada property taxes. Ruffin is not a defendant.
I suppose Trump Las Vegas is in the New York lawsuit because the valuations appeared in inflated financial statements Trump annually gave to lenders (and at times, the media) in New York as the basis for getting loans. I’m not so sure what the stuff about low-ball valuations for Las Vegas property taxes has to do with New York besides sharpening claims of a fraud upon New York lenders. This passage in the lawsuit is a little technical and not all that well-written or even logical. But nevertheless the description is entertaining–and does the reputation of one Nevada tax agency no favors at all.
Prior to 2013, the lawsuit says, Trump’s 50% interest was omitted from his financial statements, perhaps because debt exceeded equity. But in 2013–despite the ongoing Great Recession, which especially hit Las Vegas–the Trumps needed a higher valuation for the annual financial statement to impress lenders and maybe the media. According to the lawsuit, Eric Trump, Donald Trump’s second son and the overseer of the Las Vegas operation, ordered some changes in valuation metrics. The projected time frame for selling all unsold condominium units was cut from 10 years to five years. Even though Hilton Worldwide’s Hilton Grand Vacations division a year earlier picked up a bunch of the units to use as timeshares for $400 a square foot, Trump valued the remaining inventory at from $528 per square foot–a one-year increase of 32%–to $724 in five years–an 81% increase. Discounting to present value, which would lower the reported asset value? Fuhgeddaboudit!
The result was a valuation of $123 million, even though there were fewer unsold units (more than 100 units had been sold) and the units still carried crushing but apparently un-emphasized debt. According to the lawsuit there were loans totaling $178 million on those units, implying a true value upwards of a negative of a negative $50 million. The AG says future statements for years kept raising the Las Vegas valuation despite lackluster condo sales, the main source of income.
Meanwhile, the Trumps were trying to keep Nevada property taxes down. So suddenly a discounted cash flow was employed, along with a declaration that it would take forever to sell the remaining units. These factors would lower the valuation on which property taxes would be based. On the hotel portion–on which, of course, the Trumpers publicly were characteristically enthusiastic–Trump tax counsel suddenly stressed Trump Las Vegas was a “first venture in the Las Vegas market of a stand-alone tower that is not directly located along Las Vegas Boulevard South [the Strip] and contains no gaming.”
According to the lawsuit, the Clark County Assessor’s Office and the Clark County Board of Equalization weren’t fooled and went with higher valuations leading to higher property taxes. But the Nevada State Board of Equalization overturned that on appeal. As a Trumps tax lawyer joyously reported to Eric Trump in an email included in the lawsuit, “We cleaned their clock … First comment from the Board was ‘this is a complex appraisal assignment, the taxpayer brought us an appraisal, that does it.’ Second comment from the Board was ‘move to approve the appraised number, second, all in favor, unanimous, thanks for coming.’ ”
The lawsuit says that Eric Trump in a deposition invoked his constitutional right against self-incrimination and refused to answer questions about his role in drafting some of the financial statements. While invocation of the Fifth Amendment can’t be used against a defendant in a criminal case, it can be in a civil case.
The New York AG’s civil lawsuit is completely separate from the ongoing suspense as we all wait to see if Trump gets indicted criminally by the Manhattan state district attorney in connection with the $130,000 hush money payment to porn star Stormy Daniels. It’s separate from the ongoing suspense as we all wait to see if Trump gets indicted criminally in Atlanta in respect of his efforts to overturn his loss of Georgia in the 2020 presidential election. It’s also separate from the ongoing suspense as we all wait to see the outcome of several federal grand jury investigations in Washington, D.C., into Trump’s handling of classified documents as well as efforts to overturn the 2020 election.
That adds up to an Alfred Hitchcock level of suspense.
At least Trump seems to face no criminal or even civil liability in Nevada, a state that politically hasn’t been terribly friendly to him. In his two races for president, he lost the state each time. This might partly go back to the 1980s and 1990s, when his ultimately unsuccessful effort to build a casino empire in my native New Jersey’s Atlantic City threatened to steal Las Vegas’s bacon. Or as simple as that 2016 campaign rally in Reno in which he mispronounced Nevada (the first A is short, not schwa) and then lectured his audience they had it all wrong.
But when it comes to the It Didn’t Stay Here list, Trump is the first official two-timer.
And once again, Nevada taxpayers get screwed.