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Trump swam in mob-infested waters in early years as an NYC developer
















Investigations






Pat Boylan, left, of New York, plays a slot machine as construction worker Ron Hess of Galloway, N.J. rides past on a lift truck at the Trump Plaza Hotel & Casino in Atlantic City, N.J. (MEL EVANS/AP)







By Robert O'Harrow Jr. October 16 at 10:45 AM





Robert O’Harrow Jr. is a reporter on the investigative unit of The Washington Post. He writes about law enforcement, national security, federal contracting and the financial world.

















As billionaire developer Donald Trump became the toast of New York in the 1980s, he often attributed his rise to salesmanship and verve. “Deals are my art form,” he wrote.




But there is another aspect to his success that he doesn’t often discuss. Throughout his early career, Trump routinely gave large campaign contributions to politicians who held sway over his projects and he worked with mob-controlled companies and unions to build them.









Americans have rarely contemplated a candidate quite like Trump, 69, who has become the unlikely leader among Republican Party contenders for the White House. He’s a brash Queens-born scion who navigated through one of the most corrupt construction industries in the country to become a brand-name business mogul.




Much has been written about his early career, but many details have been obscured by the passage of time and overshadowed by Trump’s success and celebrity.





A Washington Post review of court records, testimony by Trump and other accounts that have been out of the public eye for decades offers insights into his rise. He was never accused of illegality, and observers of the time say that working with the mob-related figures and politicos came with the territory. Trump declined repeated requests to comment.






One state examination in the late 1980s of the New York City construction industry concluded that “official corruption is part of an environment in which developers and contractors cultivate and seek favors from public officials at all levels.”




Trump gave so generously to political campaigns that he sometimes lost track of the amounts, documents show. In 1985 alone, he contributed about $150,000 to local candidates, the equivalent of $330,000 today.




Officials with the New York State Organized Crime Task Force later said that Trump, while not breaking any laws, “circumvented” state limits on individual and corporate contributions “by spreading his payments among eighteen subsidiary companies.”



Trump alluded to his history of political giving in August this year, at the first Republican debate, bragging that he gave money with the confidence that he would get something in return.




“I was a businessman. I give to everybody. When they call, I give. And you know what? When I need something from them, two years later, three years later, I call them. They are there for me,” he said. “And that’s a broken system.”




As he fed the political machine, he also had to work with unions and companies known to be controlled by New York’s ruling mafia families, which had infiltrated the construction industry, according to court records, federal task force reports and newspaper accounts.





 No serious presidential candidate has ever had his depth of business relationships with the mob-controlled entities.






The companies included S & A Concrete Co., which supplied building material to the Trump Plaza on Manhattan’s east side, court records show. S & A was owned by Anthony “Fat Tony” Salerno, boss of the Genovese crime family, and Paul Castellano, boss of the Gambino family. The men required that major multimillion-dollar construction projects obtain concrete through S & A at inflated prices, according to a federal indictment of Salerno and others.





Salerno eventually went to prison on federal racketeering, bid-rigging and other charges. 



His attorney, Roy Cohn, the former chief counsel to Sen. Joseph McCarthy (R-Wis.), was one of the most politically connected men in Manhattan. He was also Donald Trump’s friend and occasionally his attorney. 



Cohn was never charged over any dealings with the mob, but he was disbarred shortly before his death in 1986 for ethical and financial improprieties.





“[T]he construction industry in New York City has learned to live comfortably with pervasive corruption and racketeering,” according to Corruption and Racketeering in the New York City Construction Industry,” a 1990 report by the New York State Organized Crime Task Force.



“Perhaps those with strong moral qualms were long ago driven from the industry; it would have been difficult for them to have survived. ‘One has to go along to get along.’ ”




James B. Jacobs, the report’s principal author, told The Post that Trump and other major developers at the time “had to adapt to that environment” or do business in another city.






“That’s not illegal, but you might say it’s not a beautiful thing,” said Jacobs, a law professor at New York University. “It was a very sick system.”






Business in his blood




Trump entered the real estate business full-time in 1968, following his graduation from The Wharton School at the University of Pennsylvania. He worked in Queens with his father, Fred Trump, who owned a development firm with apartment buildings and other holdings across the country. Donald, who had worked part-time for the firm for years, learned the business from the inside.





When he joined his father, Donald Trump examined the books and found tens of millions of untapped equity. Trump urged his father to take on more debt and expand the business in Manhattan. “At age twenty-two the young baron’s dreams had already begun to assume the dimensions of an empire,”  Jerome Tuccille wrote in a biography of Trump.




Donald Trump took over in 1971 and began cultivating the rich and powerful. He made regular donations to members of the city’s Democratic machine. 



Mayors, borough presidents and other elected officials often were blunt in their requests for campaign cash and “loans,” according to the commission on government integrity. Donald Trump later said that the richer he became, the more money he gave.





After a series of scandals not tied to Trump, campaign finance practices in the state came under scrutiny by the news media. In 1987, Gov. Mario Cuomo and New York Mayor Ed Koch appointed the state commission on government integrity and gave it subpoena power and a sweeping mandate to examine official corruption.




The commission created a database of state contribution records that previously had been kept haphazardly in paper files. It called on politicians and developers to explain the patterns of giving identified by the computer analysis.




Trump appeared one morning in March 1988, according to a transcript of his appearance obtained by The Post. He acknowledged that campaign contributions had been a routine part of his business for nearly two decades. He repeatedly told the commission he could not remember the details.





“In fact, in 1985 alone, your political contributions exceeded $150,000; is that correct?” Trump was asked.



“I really don’t know,” he said. 


“I assume that is correct, yes.”



A commission member said that Trump had made contributions through more than a dozen companies. 


“Why aren’t these political contributions just made solely in your name?”




“Well, my attorneys basically said that this was the proper way of doing it,” Trump said.




Trump told the commission that he also provided financial help to candidates in another way. In June 1985, he guaranteed a $50,000 loan for Andrew Stein, a Democrat who was running to be New York’s City Council president.





Six months later, Trump paid off the loan.




“I was under the impression at the time it was made that I would be getting my money back,” Trump told the commission.




“And when were you disabused of that notion?”



“When it was time to get my money back,” Trump said.



Asked whether he considered such transactions as a “cost of doing business,” Trump was equivocal. 



“I personally don’t,” he said. “But I can see that some people might very well feel that way, sir.”



Stein told The Post he did not recall the loan, but he said developers were close to city officials at the time.



“The Donald was a supporter, as well as a lot of the real estate people were,” Stein said. “They have a huge interest in the city and have their needs.”



Trump’s donations were later cited by the organized crime task force’s report as an example of the close financial relationships between developers and City Hall. 



“New York city real estate developers revealed how they were able to skirt the statutory proscriptions,” the report said in a footnote.


 “Trump circumvented the State’s $50,000 individual and $5,000 corporate contribution limits by spreading his payments among eighteen subsidiary companies.”



Trump, then in his early 40s, said he made some donations to avoid hurting the feelings of friends, not to curry favor.



“[Y]ou will have two or three friends running for the same office and they literally are all coming to you asking for help, and so it’s a choice, give to nobody or give to everybody,”  according to his testimony at a 1988 hearing by the New York Commission on Government Integrity.




John Bienstock, the staff director of the Commission on Government Integrity at the time, recently told The Post that Trump took advantage of a loophole in the law.




“They all did that,” Bienstock said. “It inevitably leads to either the reality, or the perception, that approvals are being bought by political contributions.”




Heady days for crime cartels



As his ambitions expanded in the 1970s and 1980s, Trump had to contend with New York’s Cosa Nostra in order to complete his projects. 



By the 1980s, crime families had a hand in all aspects of the contracting industry, including labor unions, government inspections, building supplies and trash carting.



“[O]rganized crime does not so much attack and subvert legitimate industry as exploit opportunities to work symbiotically with ‘legitimate’ industry so that ‘everybody makes money,’ ” according to the organized crime task force report. 


“Organized crime and other labor racketeers have been entrenched in the building trades for decades.”



In New York City, the mafia families ran what authorities called the “concrete club,” a cartel of contractors that rigged bids and squelched competition from outsiders. They controlled the Cement and Concrete Workers union and used members to enforce their rules.




Nearly every major project in Manhattan during that period was built with mob involvement, according to court records and the organized crime task force report. That includes Trump Tower, the glittering 58-story skyscraper on Fifth Avenue, which was made of reinforced concrete.



“Using concrete, however, put Donald at the mercy of a legion of concrete racketeers,” according to Trump: The Deals and the Downfall” by investigative journalist Wayne Barrett.






For three years, the project’s fate rested in part with the Teamsters Local 282, the members of which delivered the concrete. 



Leading the union was John Cody, who “was universally acknowledged to be the most significant labor racketeer preying on the construction industry in New York,” according to documents cited by the House Subcommittee on Criminal Justice in 1989. Using his power to disrupt or shut down major projects, Cody extracted millions in “labor peace payoffs” from contractors, the documents said.



“Donald liked to deal with me through Roy Cohn,” Cody said, according to Barrett.






Trump was subpoenaed by federal investigators in 1980 and asked to describe his relationship with Cody, who had allegedly promised to keep the project on track in exchange for an apartment in Trump Tower. Trump “emphatically denied” making such a trade, Barrett wrote.




Cody was later convicted on racketeering and tax-evasion charges.





The mob also played a role in the construction of Trump Plaza, the luxury apartment building on Manhattan’s east side. The $7.8 million deal for concrete was reserved for S & A Concrete and its owners, court records show. The crime families did not advertise their role in S & A and the other contractors. But it was well known in the industry.


“They had to know about it,” according to Jacobs, the lawyer who served on the organized crime task force. “Everybody knew about it.”






While these building projects were underway in the early 1980s, the Federal Bureau of Investigation and New York authorities carried out an unprecedented investigation of the five New York crime families. 




Investigators relied on informants, court-authorized wiretaps and eavesdropping gear. Over five years, they gathered hundreds of hours of conversations proving the mob’s reach into the construction industry.




On Feb. 26, 1985, Salerno and 14 others were indicted on an array of criminal activity, including conspiracy, extortion and “infiltration of ostensibly legitimate businesses involved in selling ready-mix concrete in New York City,” the federal indictment said. Among the projects cited was Trump Plaza. Salerno and all but one of the others received terms of 100 years in prison.





Trump also dealt with mob figures in Atlantic City, where he was pressing to go into the casino business, according to court records, gaming commission reports and news accounts. One of these figures, Kenny Shapiro, was a former scrap metal dealer in Philadelphia turned real estate developer on the Jersey Shore. Shapiro also was an associate of the Scarfo crime organization, serving as a financier of mob activities in south Jersey and Philadelphia, according to a report by New Jersey authorities.





Shapiro worked closely with Daniel Sullivan, a Teamster who also was an FBI informant, documents show. Trump’s brother once described him as a “labor consultant” on Trump projects in New York.




Shapiro and Sullivan leased land to Trump for the Trump Plaza Hotel and Casino. They also agreed to help bankroll the campaign of a Michael Matthews, a mayoral candidate the mob considered to be friendly to its interests. Matthews was elected, but he later went to prison on extortion charges related to an FBI sting operation and a $10,000 bribe.



After questions surfaced about the mob’s possible involvement in Trump’s proposal, the state gaming commission delayed approval of Trump’s casino license and eventually told him to buy the land outright to avoid trouble. In commission hearings, Trump defended Shapiro and Sullivan, according to TrumpNation: The Art of Being The Donald.”




“I don’t think there’s anything wrong with these people,” he said. “Most of them have been in Atlantic City for many, many years and I think they are well thought of.”




Records show Trump was aware of mob involvement in Atlantic City. In confidential conversations with FBI agents who contacted him about his casino deal, Trump said “he had read in the press media and had heard from various acquaintances that Organized Crime elements were known to operate in Atlantic City,” according to a copy of a an FBI memo obtained by the Smoking Gun.




Trump told the FBI that
“he wanted to build a casino in Atlantic City but he did not want to tarnish his family name.”










Alice Crites contributed to this report.









http://www.washingtonpost.com/investigations/trump-swam-in-mob-infested-waters-in-early-years-as-an-nyc-developer/2015/10/16/3c75b918-60a3-11e5-b38e-06883aacba64_story.html



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