The burden of his failures fell on investors and others who had bet on his business acumen.
In three interviews with The Times since late April, Mr. Trump acknowledged in general terms that high debt and lagging revenues had plagued his casinos. He did not recall details about some issues, but did not question The Times’s findings. He repeatedly emphasized that what really mattered about his time in Atlantic City was that he had made a lot of money there.
Mr. Trump assembled his casino empire by borrowing money at such high interest rates — after telling regulators he would not — that the businesses had almost no chance to succeed.
His casino companies made four trips to bankruptcy court, each time persuading bondholders to accept less money rather than be wiped out. But the companies repeatedly added more expensive debt and returned to the court for protection from lenders.
After narrowly escaping financial ruin in the early 1990s by delaying payments on his debts, Mr. Trump avoided a second potential crisis by taking his casinos public and shifting the risk to stockholders.
And he never was able to draw in enough gamblers to support all of the borrowing. During a decade when other casinos here thrived, Mr. Trump’s lagged, posting huge losses year after year. Stock and bondholders lost more than $1.5 billion.
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Mr. Trump told the commission in 1988 that he could rein in expenses, because conventional lenders were lining up to give him money at low interest rates. He said he abhorred junk bonds, which were then popular, because they carried a bigger risk of default and thus came with higher interest rates.
Within months, he reversed course, issuing $675 million worth of junk bonds, with a 14 percent interest rate, to finish construction and get the Taj open.
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Step 1 came in 1993, when his company sold more junk bonds, adding another $100 million in debt to the Trump Plaza casino. More than half of the new money went to pay off Mr. Trump’s unrelated personal loans.
Then, in June 1995, with the risk of being forced into bankruptcy just weeks away, Mr. Trump shifted ownership of the Plaza casino to a new, publicly traded company: Trump Hotels and Casino Resorts. In the initial public offering, 10 million shares were sold at $14. At the same time, the company also sold another $155 million in junk bonds, at a 15.5 percent interest rate.
A week after the initial public offering, the new company began using some of the almost $300 million it had raised to clear Mr. Trump’s personal debts.
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The company also bought the Trump Taj Mahal and Trump Castle — soon renamed the Trump Marina — shifting more of Mr. Trump’s debt to shareholders.
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In an August 1990 report, New Jersey regulators noted the “sheer volume of debt” on Mr. Trump’s holdings: $3.4 billion, including $1.3 billion on the casinos and $832.5 million in loans personally guaranteed by Mr. Trump. Regulators warned then that “the possibility of a complete financial collapse of the Trump Organization was not out of the question.”
The Taj Mahal missed its November debt payment. The Castle was also late. By December 1990, when Mr. Trump needed to make an $18.4 million interest payment, his father, Fred C. Trump, sent a lawyer to the Castle to buy $3.3 million in chips, to provide him with an infusion of cash. The younger Mr. Trump made the payment, but the Casino Control Commission fined the Castle $65,000 for what had amounted to an illegal loan.
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Under Mr. Trump, the company had a long history of making rosy revenue projections and never meeting them, Mr. Icahn’s lawyer argued.
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In retrospect, David Hanlon, a veteran casino executive who ran Merv Griffin’s Atlantic City operations at the time of the Resorts battle, said, Mr. Trump succeeded in repeatedly convincing investors, bankers and Wall Street that “his name had real value.”
“They were so in love with him that they came back a second, third and fourth time,” Mr. Hanlon said. “They let him strip out assets. It was awful to watch. It was astonishing. I have to give Trump credit for using his celebrity time and time again.”
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Mr. Trump now says he looks back on the period as his golden era in the casino business. “Early on, I took a lot of money out of the casinos with the financings and the things we do,” he said in a recent interview. “Atlantic City was a very good cash cow for me for a long time.”
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“He put a number of local contractors and suppliers out of business when he didn’t pay them,” said Steven P. Perskie, who was New Jersey’s top casino regulator in the early 1990s. “So when he left Atlantic City, it wasn’t, ‘Sorry to see you go.’ It was, ‘How fast can you get the hell out of here?’”
