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Foiling a Good Walk

[NB: Check the byline, thanks! /~Rayne]

Don’t be surprised if Donald Trump decides to spend even more time at his golf courses between now and 2020. He should be worried if the courses will remain a part of the Trump organization let alone how much more time he can spend golfing in his lifetime.

At two points during the House Oversight Committee hearing this past Wednesday, Trump’s golf courses came up.

When Rep. Carolyn Maloney (D-NY) asked Michael Cohen about the “catch-and-kill” program by which Trump avoided being publicly exposed by his extra marital sexual partners, Cohen explained why he ended up financing the payment to Stormy Daniels (Miss Clifford).

Transcript (01:45:13) —

Cohen: Well, going back into the story as I stated when we — Allen Weisselberg and I — left the office and went to his office to make the determination on how the money was going to be wired to the IOLA, the interest on the lawyer’s account for Keith Davidson in California, I had asked Allen to use his money. I didn’t want to use mine. He said he couldn’t. We then decided how else we could do it and he asked me whether or not I know anybody that wants to have a party at one of his clubs that could pay me instead or somebody who may have wanted to become a member of one of the golf clubs. And I also don’t have anybody that was interested in that. And it got to the point where it was down to the wire. It was either we — somebody — wire the funds and purchase the life rights to the story from Miss Clifford or it was going to end up being sold to television and that would have embarrassed the president and it would have interfered with the election.

In his response, Cohen shares three different methods used to launder money, two of which would have gone through a Trump golf course. In a previous post examining profiteering and money laundering through a golf club, these same methods were mentioned as possibilities. A new member’s initiation fee could easily match the amount needed to pay off Miss Cliffords as could charges or fees for a single event held at a Trump course.

Given Cohen’s inability to say how many ‘catch-and-kill’ stories Trump or his organization had to pay off, it’s reasonable to suspect golf courses have been used this way to launder hush money let alone launder money for other purposes.

Toward the end of the hearing, Rep. Alexandria Ocasio Cortes asked Cohen about the property value of a Trump golf course after noting the exceptionally sweet deal Trump org received when developing the Trump Golf Links at Ferry Point, New York.

Transcript (04:50:13) —

Ocasio-Cortes: Thank you very much. The last thing here. The Trump golf organization currently has a golf course in my home borough of the Bronx and Queens. In fact, the Washington Post reported on the Trump links Bronx course in an article titled, ‘Taxpayers Built this Golf Course and Trump Reaps the Rewards’. Many learned that taxpayers spent $127 million to build Trump links in a, quote, generous deal allowing President Trump to keep almost every dollar that flows in on a golf course built with public funds. And this doesn’t seem to be the only time the president has benefited at the expense of the public. Mr. Cohen, I want to ask you about your assertion that the president may have improperly devalued his assets to avoid paying taxes. According to an August 21st 2016 report by the Washington Post, while the president claimed in financial disclosure forms that the Trump National Golf Club in Jupiter, Florida, was worth more than $50 million, he had reported otherwise to local tax authorities thaAt the course was worth, quote, no more than $5 million. Mr. Cohen, do you know whether this specific report is accurate?

Cohen: It’s identical to what he did at Trump National Golf Club at Briarcliff Manor.

Briarcliff offers a good example of Trump org’s treatment of municipal regulations as well as state and local laws. The course management damaged the local storm sewage system with unauthorized modifications, causing damage to residents’ and Ossining’s property. Goodwill was further damaged by years of fighting local tax assessments:

Nowhere has the conflict between the tax assessments on Trump’s properties and his claims of soaring value been more apparent than in Ossining, New York, where his lawyers argued to the city assessor that his Westchester County golf club was worth $1.4 million in 2015, less than a tenth of its appraised value. On the financial disclosure statement candidates are required to file, he valued it at more than $50 million. The city assessor’s office, which valued the property at $15 million, did not respond to a request for comment.

Trump and his organization fought the valuations of all Trump courses in Florida over the last handful of years as well as Mar-a-Lago and several small non-golf estates. The value of the Jupiter course, reported as $50 million on financial disclosure forms furnished to the government, was estimated by Palm Beach County at $19.7 million. But Trump org sued Palm Beach for a fifth time disputing the county’s valuation, electing to pay taxes on a property worth $5 million less than the county’s estimate.

Trump org also appealed its tax bill for the Trump National Doral Golf Club; they’ve tried for each of the last five years to shave its tax liability with Miami-Dade county. They weren’t sucessful.

Briarcliff and the Florida golf clubs aren’t the only courses for which Trump’s organization claimed lower property values in order to avoid tax obligations.

Trump National Golf Course in Hudson Valley, New York, was assessed at $6 million; the organization claims the property is only worth $2 million. The Trump organization doesn’t own the real estate, operating instead as a lessee. It’s not clear if ownership factors into Trump org’s argument against paying higher taxes; the municipality charges the lessee, however.

The Bedminster course was used to claim a $39.1 million federal tax deduction in 2005 relying on a land conservation rule, and a deduction as farmland because the course kept a small number of goats on the premises.

The Los Angeles course may be the most confusing to make sense of its value. Trump said it was worth $264 million when it opened in 2006, claimed it was worth at least $50 million on federal financial disclosure filings, but only $10 million when filing property taxes in 2008.

While the average business makes a reasonable effort to reduce its tax burden, the Trump organization made it a pattern of habit, particularly with its golf course businesses. It’s odd that each course’s asset valuation established by a local municipality was questioned multiple years in a row, even when the municipality had already gone out of its way to provide unusual benefits to the Trump organization (ex. a long-term lease of county-owned property adjoining the West Palm Beach airport while allowing the course to contest the value the county assigned to the real estate).

The pattern of behavior was tightly entwined with asset inflation for other purposes. One reason was for bank loans, elevating the amount the Trump organization could borrow. Cohen testified that he knew Deustche Bank had received these arbitrary numbers.

Rep. William Clay (D-MO) asked about specific Trump organization financial statements from 2011, 2012, and 2013 Cohen had in his possession pertaining to Trump and his organization, with regard specifically to manipulation of asset values.

Transcript (01:48: ) —

Clay: Thank you…can you explain why you had these financial statements and what you used them for?

Cohen: These were used by me for two purposes. One was discussing with media, whether Forbes or other magazines, to demonstrate Mr. Trump’s significant net worth. That was one function. Another was when we were dealing later on with insurance companies. We would provide them with copies so that they would understand that the premium on the individuals’ capabilities to pay would be reduced.

It’s not clear whether Cohen meant individuals singular or plural. The proliferation of disparities between asset valuations reported by media, by members of the Trump family and organization, and by different government entities now makes more sense — the confusion allows easy misrepresentation of value for insurance purposes.

Transcript (04:43.46) —

Ocasio-Cortes: Okay, thank you. Secondly, I want to ask a little bit about your conversation with my colleague from Missouri about asset inflation. To your knowledge, did the president ever provide inflated assets to an insurance company?

Cohen: Yes.

Mr. Trump’s federal financial disclosure statements need to be audited for false statements if they were completed using manipulated asset data.

The House Oversight Committee now has testimony and evidence suggesting further investigation into bank and insurance fraud by Trump and the Trump organization is warranted.

But it isn’t the House Oversight Committee alone which should now investigate insurance fraud. While insurance in the U.S. must comply with federal law, it’s regulated at state level. Insurance commissioners and state attorneys general in each state where the Trump organization owns, operates, and insures businesses including golf courses should now review Trump’s insurers and policies. How did insurers write policies for Trump organization for so long given the disparities between property values established by municipalities and the asset values published by so many different media outlets?

It’s easy to see there’s a problem with the perception of Trump org’s asset valuations by comparing a few articles written about the golf courses. Outside Florida it’s not well known that Trump org doesn’t own the real estate underneath Trump International Golf Club, West Palm Beach, Florida. It’s even less well known that Trump org does not own the real estate beneath the Hudson Valley, New York course. Many articles reported, however, that these courses are wholly owned by Trump without any additional detail about what assets are included.

How has this gap in public knowledge been used?

The entire financial industry needs to take a good look at itself and consider how it may have been played. Cohen mentioned media outlets like Forbes coming to him for asset valuations which they published, replicating and dispersing deceit read most often by finance people. Because he appeared to own multiple golf courses in addition to other real estate, the perception of Trump’s wealth wasn’t adequately questioned.

It will hurt not only municipalities if Trump org golf courses were to suddenly cease operations.

This is an open thread.

If It’s The Weekend, It Must Be Golf

[NB: Once again, check the byline. /~Rayne]

It’s Saturday. This must be our time to gaze with longing on the verdure only golf courses grow — and by verdure I don’t mean the fairways, tees, or greens.

I mean good, old American currency.

My father learned to play golf when I was a toddler living out west. It was a way for a geeky dude who was neither white nor monied nor born in California to inject himself into corporate culture. He won’t admit to it but belonging by playing with guys from work did this for him — a little brown dude from an impoverished background became one of them if only as long as he strove to beat their asses on the golf course.

Golf has been one of only two pricey hobbies my father had. The other has been rebuilding vehicles but the means by which he did the rebuilding was so inexpensive — scrabbling for used parts, reading manuals in libraries — my mom didn’t mind the expense. She’d just roll her eyes as he’d wander off to tinker in the garage during the winter months.

Golf wasn’t quite the same. Clubs, bags, balls, shoes, attire, tee times, transportation, all these things couldn’t be done on the cheap. He played twice a week at least during warmer months; once during the week with a league, at least once on weekends. We kids loved it when he played on Sundays as well as Saturdays because it meant four hours without dad driving us bonkers with some yard work or maintenance chore. Dad’s playing golf? Woohoo! Flip on the television and make like a vegetable for those precious four hours.

I can’t imagine what it must have been like to be the Trump kids. Imagine a father who never really decompresses because his favorite past time is also his business. There’s no escape, no relief. While I condemn Donnie Jr.’s wretched hobby killing animals for sport, I can understand why he does it now.

There’s something very Oedipal for Donnie Jr. about traveling a long way from his father’s sphere and cutting the tail off a large-assed, slow-moving beast, if you think about it.

Imagine how the Trump’s kids’ father’s relationship to golf must have skewed their perceptions about so many things.

Because of my dad I’d grown up seeing golf as decompression time and a means to hang with co-workers though as a woman this had a slightly different utility. It also became a way to get to know in-laws who were hardcore golfers.

And it was the in-laws who changed my perception of golf, and of money.

My dad never belonged to a club. He’s always played at public courses or joined leagues which didn’t require a club membership. As I learned to play and began to golf regularly, I didn’t join either. It simply never occurred to me to join a club until I began playing with in-laws.

They were members, and members at clubs across the country. They’d been members their entire adult lives at the local country club and then they joined courses in Florida. This was a completely different experience for me; I can only liken it to feeling like Danny Noonan in Caddyshack, knowing one’s way around golf clubs but not the club.

(An aside: There’s something here about belonging to a tribe and being an outsider that I can’t quite wrap words around. Keep it in mind as you think about the narcissist Donald Trump and his origins.)

But even my in-laws’ experience, as informative as it was for me, wasn’t Trumpish. It was still a social experience which overlapped with business only because their first membership was in a small town where anybody who owned a business had a social membership if not a full golf membership at the country club. A small business owner would meet both vendors and customers alike over drinks or golf all the time, or dinner and dancing at social events during long, cold winters. But there was still some separation between business and pleasure once they left the country club. There was some greater social obligation besides helping other club members; these people dug each other out of snow banks and babysat each others’ kids. They went to the same churches and fundraising potlucks.

Not so for the Trumps, and increasingly so as Donald Trump invested less money in real estate developments and more into golf course-centered developments.

Look at how Trump’s relationships are characterized. In advance of Brett Kavanaugh’s nomination he spoke with “friends and some external advisors” about his choice; at Mar-a-Lago he’s consulted with a “friend and confidante” who “roped in two other friends” to weigh in on Veterans Affairs. There’s no daylight between the people he considers his friends and the members of his golf course clubs, nor external advisors for that matter. How can the public tell them apart without a score card?

In the social circle where golf course and country club memberships are the norm, they really don’t think of the membership fees as access as those outside the circle do. They treat it like ownership in a condominium, and in a way it is — ownership of membership status is an asset which can be sold or passed on to heirs and assigns. There’s generally a cap on memberships in a club — what would be the point if there was no limit to the people who could join? The facilities could be overwhelmed.

Unlimited membership numbers would also reduce the value of the club’s cachet; exclusivity adds value to membership by limiting supply.  It’s Business 101, baby, among the very first things taught in B-school’s indoctrination: if the supply decreases, the price increases. This circle doesn’t even say this; it’s the air they breathe, in their genes.

Trump’s friends don’t see the problem with his consulting them and allowing them to weigh in on governance because they are nearly family — they share this same air, possess the same genes.

Those of us on the outside see this differently. Now we see a family like that in organized crime. We see people who do things for each other, take care of each other, by granting access to resources because of their invested relationship and common interests.

But those resources aren’t theirs — they’re ours.

We fund the Veterans Administration and Veterans Affairs. We elect people who legislate the means by which these functions are administered. We did not elect Ike (who shot a 73, nice game on the back nine) or Bruce (had to take a drop on that last hole, but a nice round), or Marc (developed a nasty slice, needs to spend some time with the club pro) to oversee and direct these public services.

We know absolutely dick about these three guys except that they are friends of Trump and members at Mar-a-Lago.

I made up the modifiers about their golf games but you can see how this stuff works in their world. We’re just abstract fungibles to them, like the stray leaf to be brushed off the 18th green so as not to come between the ball and the cup.

Even Trump’s kids are just abstracts, valued only when they have something to contribute to the rest of the club family.

Hold this last thought about the abstract fungibles. We may start our next round on that tee.

A Good Walk Foiled

[NB: You should check the byline as always, though nobody else here at emptywheel is stupid enough to write about golf but me. /~Rayne]

The title of this post is an homage to an informative piece of work about the business of golf, A Good Walk Spoiled, written by sports writer John Feinstein. The book was published in 1995 before Tiger Woods turned pro, driving golf into a boom in tandem with the dot com explosion and the crazy amount of expendable income a certain class of people had to spend on the sport.

A Good Walk Spoiled also preceded the rise of Trump-owned and branded golf courses by a few years. Trump built his first course in 1999, the Trump International Golf Club, West Palm Beach, Florida. On brand with Trump’s litigiousness, the land was acquired after a lawsuit against Palm Beach County. Without pulling up the relevant suit and land records it’s hard to tell exactly how Trump obtained the 350 acres which became Trump’s first course. It’s certainly not clear from this interview:

In 1985 you bought Mar-a-Lago (Trump’s Florida home, a landmark that had been the estate of cereal heiress Marjorie Merriweather Post, wife of E.F. Hutton). How did that happen?

Mar-a-Lago was on the market for about five years, but they wouldn’t sell it to me. Now, they had already sold the beach in front of Mar-a-Lago–stupidly sold it–so I bought that, and then the other potential buyers didn’t want the place so much. Especially after I announced a horrendous project for that beach: big houses between Mar-a-Lago and the ocean. Did I really plan to build those houses? No. But it worked. Once I had the beach, I had them, and they sold me Mar-a-Lago. I got a good deal.

After I got it, I was annoyed by the planes going over to Palm Beach International Airport. So I sued the county. They wound up settling, and I got 350 incredible acres–the land that’s now Trump International Golf Club (An attorney for Palm Beach County says the settlement was unrelated to the land). Which has a quite expensive exit from the highway, by the way. The state’s spending $400 million on a highway (Widening and improving interstate 95), but didn’t build me an exit, and I put up quite a fuss about that. They ended up building a $30 million exit (Florida Department of Transportation says the exit cost even more $40 million) that goes to my $45 million course.

Right from the beginning of his current 17-course golf empire, the means and methods by which he operated them were sketchy.

It doesn’t help that the media has given him a pass so many damned times, even in this particular bit of sports writing. What was the settlement really about? How did Trump really acquire the land? It’s waved off in fourteen words enclosed in parentheses and that’s it. The same kind of wave off The New York Times gave him in coverage of their interview with him yesterday, 11 years after Trump’s bullshit explanation to Golf.com.

And I do mean bullshit. Read the rest of that Golf.com article and see if your eyebrows don’t elevate from the reek.

Especially the bit about playing golf with a banker.

Trump is playing golf right now, unsurprisingly, having traveled to his resort Mar-a-Lago for the weekend. I’m disappointed in one of his golf partners. Jack Nicklaus is a Republican and therefore no surprise as one of Trump’s playmates today. But Tiger Woods? Really, Tiger?

I get that Tiger may feel an affinity for someone who loves golf as much as Trump does, but you’d think Tiger would be smart enough to see the handwriting on the wall and the risk to anyone’s personal brand if they’re too tight with Il Douche.

Maybe Tiger’s going along to get along as far too many people have with Trump all his adult life.

In which case today’s round is just a good walk foiled.

Treat this as an open thread.

ADDER — 2:22 p.m. ET —

His moochery bilking us of our tax dollars to promote his golf course disgusts me to no end.

I hope he is counting his golf swings. It would be sweet justice to see one or more of his courses seized if investigations reveal he has defrauded us.

Golf for Fun and Profit(eering)

Before reading too far along into this post, take note: this is NOT a post by Marcy or bmaz and it’s speculative.

It’s also the closest thing I may come to Trash Talk on a sunny Saturday afternoon here in the great white north where outdoor temperatures hover in the single digits. Going outside one risks frostbite and snowblindness.

In other words it’s a perfect day to indulge in flights of fancy, imagining a stroll over the velvety greens and fairways of a lush, high-end golf course, pondering the moola one might rake in from an imaginary money laundering operation at the same time.

I spent some time with a friend who works in the golf industry talking about all the ways one might profiteer from running a golf resort. Neither of us are criminals so our ideas might not make the most sense to seasoned professional crooks. But after looking at the myriad ways in which one could make an unreported (read: illicit) profit and clear money out the door, I don’t know why I don’t buy a golf course because DAMN. There’s a lotta’ gold in them thar sand traps.

We asked ourselves this simple question: if one owned a luxury private golf course club or resort, how could they launder money or make unreported income?

Membership fees

  • Charge member fees only certain people can afford to pay, the kind of people who expect to pay a lot for golf, who can afford it, and who may desire a certain amount of privacy and service incumbent with such fees.
  • Social membership fees for non-golfers who want to participate in club events, high enough to keep out all but the class of people who fit with the golf and corporate members.
  • Corporate member fees assessed to businesses who want to treat their management class employees. Assess them at a slightly higher level because the business benefits from access to members.
  • Overseas member fees, again at a higher level for a different class of service (ex. foreign language staff).
  • Phantom fees assessed to false identities.

That last one is pure gravy. Who’s going to check on whether these memberships are attached to real people or fronts?

Member minimum purchases
Membership-based clubs charge a monthly minimum purchase fee in order to support operations like their cafe and restaurants when course business is slow. If a member doesn’t buy minimum of $200 worth of meals or drinks in a month, for example, they will be charged that amount. It encourages buying more than the minimum for value-sensitive members.

But it’s also a means to keep out certain people while offering an opportunity to make easy money. Think about that phantom member — let’s say they paid $50,000 to join the club. They also have to pay $200 per month in minimums. Different and higher level of membership? Different, higher level of minimum monthly purchases fees.

Premium services
Come on, think about it. Certain classes of members can ask for almost anything, especially if they wave some cash around. Who’s going to monitor whether any of these services are legal or otherwise?

Club or Course Events
First you must be a member. Then you have to pick from a menu of services you want provided for your Acme Corporation Annual Golf Outing. Of course you can only choose from the club’s or course’s list of pre-approved vendors, from hospitality tents to extra waitstaff. There are set-up and breakdown fees.

And it’s all made so very easy for a member to pay with one check, wire transfer, or crypto-currency transaction.

Again, who’s going to check this for legitimacy? To a bank it looks like a pretty typical event charge, no need to submit a Suspicious Activity Report (even easier if you do business with ‘friendly’ banks).

Oh, it’s a pity, too, when your event fees are non-refundable in case of rain.

Operating Expenses
Every product or service a course needs from sprinkler maintenance to grass fertilizer, golf cart repair to staffing, janitorial services to kitchen equipment, can be purchased from a (shell) company which manages all the contracts — so to speak — and then invoices the course.

Naturally the convenience of working with a single third-party might cost anywhere from 10 to 100% more but who’s counting?

Golf Course Adjacent Real Estate
A luxury course helps retain property value; who doesn’t want to wake up every morning and look out onto a fabulously maintained expanse of greenery, assured of quiet, likely within a secure, gated community? Buyers will pay a premium for this, especially for just the right house, and they’re the kind of people who pay in cash.

Insurance
Sh-tuff happens all the time in a business where clients engage in sports and where alcohol is served. A business needs insurance. What a coincidence there are many ways to benefit from having ‘good’ insurance.

These are the obvious ways one might use to make a little something extra through golf course and club ownership. But a special kind of owner might also have a few more opportunities.

What if some of the members’ personal information could be collected and sold? What if those same members could be induced, shall we say, to part with some cash to keep personal information private?

What if access to certain members and their businesses could yield a finder’s fee, for lack of a better term? Or maybe a percentage off the top of every transaction once new business partners paired up and began transactions?

We never call it kickbacks or inflated invoicing, of course.

This is all we came up one snowy afternoon, daydreaming about golf.

But the one most important factor about owning a high-end golf course and club for profit? There’s very little regulation.

Not like hotels — you can see the amount of regulation on room rentals on the back of most hotel room doors.

The course might have to adhere to state and federal regulations regarding chemicals applied to the greenery but if a course owner has sufficient pull those regulatory inconveniences won’t be a problem.

Same with undocumented staff or contractors.

Can’t get too carried away with insurance matters but again, clout will help.

And the average rich dude has a minimum expectation from food and beverage service well above the minimum a state or local agency might expect.

But who’s going to insist on looking at the books if the business pays some taxes based on its reported income and the income doesn’t look out of line with other businesses in its class?

Even when the total number of golfers has plummeted by 20-25% over the last 10 years?

Now imagine what one could rake in if they could afford to buy multiple golf courses.

All I can say is FORE!

 

Treat this as an open thread.

Summer Sports: What’s Good This Weekend?

[graphic: chrisinplymouth via Flickr]

[graphic: chrisinplymouth via Flickr]

I admit it freely — I’m the least sportif member of the Emptywheel team. As years have gone by, sports have lost their shine for me. The full-body contact of politics has been far more interesting.

But I need to get that shine back. My oldest is in a relationship with a sportsy guy, and I need to be able to talk with him without trying too hard and sounding like a total moron.

So, help a girl out. Auto racing. Baseball. Golf. That’s all that’s in my cable channel lineup right now, and I can’t muster enough excitement. Tell me what you think I should look for to get heated up about one of these, and is there something really juicy going on tomorrow?

— NHRA in Briston, TN on ESPN right now looks much as it did over the past couple decades. Is there some big technological breakthrough that makes these races different now than they were pre-2000? Fill me in.

— Folks in my other social media about were using lots of shouty caps about baseball and some guy named Scherzer. What happened? Which is/was the better game to watch: Detroit Tigers v New York Yankees, or LA Dodgers v SF Giants?

— And Tiger Woods has no game left they say, missing the cut at the U.S. Open. I did see this much in my timeline. I imagine poor Papa Earl is rolling in his grave, saying he was right that Tiger could only be stopped by a woman. I think it was the comprehensive use of word, “woman,” as in all women. Tiger hasn’t really had it together for any length of time since his marriage fell apart. Besides the current golden boy McIlroy, who else should I watch at the U.S. Open?

Golf has a little more appeal for me this summer. I used to play until a handful of years ago, when it just wasn’t fun any more. I lost my game, too, couldn’t spend enough time on the course. But now my youngest has landed his first job as bag boy at the nearby club. When he comes home after his shift it’s a hoot to listen to him describe navigating his inaugural work experience, let alone hear all the goofy things that happened to him on the job.

Like today, his first Saturday morning opening the course — he sent me a text mid-shift that read, HOLY TIPS. Came home with a wad of bills in his pocket, yelling how much he loved old dudes who played golf.

Now for this I can worked up.