Donald Trump has a habit of stiffing contractors if he doesn’t like the work he has contracted them to do, and he is proud of it. The billionaire property developer says he sometimes refuses to pay bills from contractors he has hired and forces them to negotiate the final amount owed down. The miser is currently running at the top of the polls amongst Republican candidates for U.S. president.
“I’ve had many people that when they work for me they get very rich” says Trump, but adds “sometimes I renegotiate. I’ll do that with probably 10 or 15 percent of contractors.
A media investigation shows that over the last 30 years, Trump’s strategy has left some small business owners saying they have felt cheated and don’t want to ever work for him again. In several cases they have also faced large legal bills from subsequent court action.
The investigation reviewed more than 50 court cases and liens from contractors on Trump projects in Atlantic City, New York, West Palm Beach and Miami and interviewed dozens of people who have done construction jobs or legal work for him. Although most say they were paid in full “at least a dozen” say they were left out of pocket.
Although it is common for haggling in the construction industry to occur when the scope of the contract changes mid-stream, in many cases Trump decides the finished product is not worth the originally agreed-upon price.
Donald Gregory, general counsel for Washington based trade group American Subcontractors Association says that negotiating fees at the end of a job is not standard practice.
“It certainly isn’t the run of the mill activity, even in this post-recession environment that has probably brought some poor habits to the construction industry,” he says. “Some developers have made themselves very wealthy in this country by squeezing five or 10 percent out of folks.”
I know when I’m being overcharged,” Trump says. “Other people don’t and they’re suckers.”
In an opinion piece in the New York Daily News, Tama Starr, the president of Artkraft Strauss, describes designing an advertisement for Trump on a billboard the company owns near LaGuardia Airport in New York, and only being paid half of the bill by Trump. She says when Trump asked for the ad to be displayed for longer than the contracted time, sending in the payment he thought would go toward the extended period, Artkraft Strauss instead took the ad down, recouping its money.
Trump says he hadn’t wanted to pay the full amount because he was unhappy with the quality of the work, but would not comment on why he had then asked for the ad to be displayed for a longer period of time. Starr and the company’s vice president for design and engineering, Bob Jackowitz, deny ever hearing from Trump about his dissatisfaction of the ad.
On a larger scale, Trump had run-ins with individual contractors who worked on his Trump Taj Mahal casino project in Atlantic city. The hotel had been built before a recession brought Trump to near financial ruin, forcing him to take the Taj Mahal into bankruptcy. He requested to pay the contractors only 30 cents on every dollar he owed them. Charles Sperry, president of Baring Industries, which had a multi-million dollar contract to provide kitchen equipment for the project, says the contractors joined forces, eventually receiving 90 percent of what they were owed. Sperry says the amount covered expenses and wages, but there was no profit.
Trump blames the Taj Mahal problems on a financial crisis he faced, calling it “ancient history” and adds he has a good rapport and reputation among contractors. “I’m known as being a fast pay,” he says “The contractor’s love me.”
In 2007 Trump sued his lawyer Y. David Scharf, and his firm Morrison Cohen, for malpractice, claiming the firm treated him like a “cash cow”, charging him unfairly. The firm claims that Trump had asked for a discount because of his fame. The two parties came to a confidential settlement in 2009.
Trumps says Scharf “was overcharging me. I could feel it in my bones.”