Trump, page 41
He and Trump began a series of three or four meetings, frequently over breakfast. Then, at one point in October, when according to Rozenholc, he and Trump already had an oral agreement on the final terms, the lawyer suddenly raised a new subject. The Fischbein firm represented a troubled major national corporation, Allegheny, headquartered in Pittsburgh, that controlled several disastrous pieces of real estate, including a brand-new, vacant $90 million office building in Houston and a rundown Lexington Avenue hotel, the Dover. Allegheny wanted to find buyers for either property, and Rozenholc wanted Trump to consider them. Trump agreed to meet with a top Allegheny officer, Charles Home, and did, making a modest offer for the Houston building in late October. The deal—which would have resulted in a finder’s fee for the Fischbein firm—died.
The only tenant who had any idea these sidebar talks were going on was John Moore. When asked later what he thought about their propriety, Moore replied: “So what? I don’t give a damn about David doing a deal with Donald.” Moore said he didn’t talk to the tenants, or even the tenant committee, about it. “If I went to the committee with every little bit of information, it would be impossible—like a committee building a car.”
A week after these curious conversations, Trump finally sent Rozenholc a twenty-two-page contract on the 100 Central Park South purchase, prepared by Dreyer & Traub. The agreement contemplated Trump’s gaining approval from the attorney general to turn the building into a condo and his condo corporation then selling the residential portion to the tenants for a simultaneous co-op sale. The Fischbein firm was supposed to help obtain these approvals. Rozenholc agreed not to record the deal in real property records, sealing it from the public, and to withdraw all tenant complaints that were the foundation of the state and city cases. The agreement contained no provision for Trump’s payment of the Fischbein fees, indicating that Rozenholc fully expected to take the fees out of the vacant apartment resales.
However, when Rozenholc received his copy of the document, which specified an undetermined day in November for final execution of the agreement, it was accompanied by a description of another property, at 490 West End Avenue—a parcel Trump didn’t even own. Assuming it was some secretarial slipup, Rozenholc began calling Trump and Dreyer & Traub, but was given neither an explanation nor a replacement that actually covered 100 Central Park South. He kept badgering but finally realized that this was Donald’s way of backing out of the deal. Finkelstein was outraged; Fischbein was dumbfounded. But no one could get Trump to move.
No one ever determined precisely why Donald ultimately killed the deal he’d negotiated with Rozenholc and Finkelstein. But the most logical explanation was Mirabel’s nearly simultaneous bizarre letter announcing his premature “no harassment” finding. Trump released the letter to the Times with a statement of his own that seemed to connect it with the secretly doomed settlement. “I have no problem selling them the apartments,” he said, “as long as it is a fair deal, but nobody is going to use a harassment hearing—which we’ve already won—to try and gain additional leverage.” Stanley Friedman’s success at DHCR may have effectively eliminated Trump’s need to go forward with the sale Moore and Rozenholc had long craved.
In December of 1985, Charlie Foy, the supervisor in the city’s law department whose unit brought the city’s lawsuit on 100 Central Park South, was rocked by some very bad news—a message that seemed to come straight from Trump. Foy, who had authorized the filing of the lawsuit a year earlier, was preparing to leave his city position, enticed by an offer from a prominent real estate law firm, Dreyer & Traub. But the day after his farewell party at the office, he received a phone call from Jerry Schrager, the senior partner at Dreyer, who was by then personally involved in the 100 Central Park South settlement negotiations. Foy was surprised to hear from Schrager, since all his prior contacts with the firm had been with another senior partner.
Schrager abruptly withdrew the job offer, and, according to Foy, said that Dreyer would reconsider Foy’s hiring only after the city suit against Trump was terminated. When Fritz Schwarz, the corporation counsel who ran the department, was informed of this disturbing conversation, he called Schrager, and Schrager repeated the statement. Schwarz was so angry he talked with Foy about referring the matter to the Bar Association or the disciplinary committee or suing the Dreyer firm. Schrager asked for a meeting with Schwarz to discuss the dispute and when Schrager came to Schwarz’s office, he was accompanied by Trump’s new attorney on 100 Central Park South, the flamboyant Richard Golub, whom Trump had just lured away from Verina Hixon, the Trump Tower resident with whom he had been in a protracted legal war. A courtroom showman who once attacked an opposing male attorney as a “fat lesbian” and later implied that he lost his common-law marriage suit against actor William Hurt because the judge fell in love with Hurt, Golub arrived at the meeting with the very proper and influential Schwarz in a mink coat, a sneer on his lips. Though he had just moved from his client Hixon to her nemesis Trump, Golub launched into an ethics lecture for Schwarz’s benefit, a theatrical ruse that was a typical Golub tactic.
Pointing an accusatory finger at the shaken victim, he accused Foy and the corporation counsel’s office of a “get Trump” attitude, contending that Foy had not told the Dreyer partners who interviewed him that he was associated with the Trump case and that if he had, they would not have hired him because it would have been a conflict of interest. Foy assured Schwarz that he had, in fact, told Dreyer of his association with the case.
But as Schwarz pointed out in a subsequent letter, any conflict issues could have easily been resolved if Dreyer had simply sought the consent of the city to hire him. “I continue to believe,” wrote Schwarz, “that the proper course for Dreyer & Traub would have been to call me to discuss the situation before withdrawing its offer to Mr. Foy.” Foy remained with the city, distancing himself a bit from the Trump case, and asked Schwarz not to pursue the Schrager matter, concerned that a public conflict with a mainline law firm could only damage him in the long run.
Taking the offensive against the city, however, was only part of the new Trump strategy. Trump had apparently decided to hire Golub to turn the 100 Central Park South litigation into the equivalent of a bloody street fight, and before the lawyer was through—which would be only a matter of a few months—he would spray charges in every direction, accusing Joyce Goldstein and Barry Port at DHCR of collusion and even accusing Fritz Schwarz’s office of improper ties to the Fischbein firm. His most outrageous stunt was a racketeering lawsuit he filed in federal court against the Fischbein firm, an extraordinary escalation of a dispute that only a few weeks earlier had seemed on the verge of settlement. Rozenholc found out about the $105 million lawsuit in mid-December 1985, when he was called by a New York Post gossip reporter who had been given a copy of the complaint before it was even served on the defendants. The luridly written document charged the Fischbein partners with efforts “to harass, extort, extract, and demand unreasonable payments” from Trump and other landlords.
Golub recounted a truncated version of Trump’s sessions with Rozenholc about the Allegheny properties, alleging that Rozenholc said he “wanted a piece of the action” and contending that Rozenholc acknowledged that a deal between them would be a conflict of interest. The Trump contention was that Rozenholc and his firm had agreed to settle the 100 Central Park South controversy if Donald agreed to the Allegheny deal. The Fischbein firm’s response never directly countered those allegations, though its legal position did not require them to. It simply argued that even if all of Golub’s charges were true, they constituted no violation of the racketeering statutes.
In addition to the Allegheny charges, the Golub complaint charged that Badillo had met Trump at a November 1984 party and that Badillo had warned him that the DHCR proceeding, which had yet to be announced, was “rigged.” Badillo supposedly urged Trump to settle, telling him there was no way he could win. Since Badillo was then serving as the chairman of the State Mortgage Agency (a separate but related body), the Trump complaint alleged that his warning had been an abuse of his public power. Golub also listed a supposed $50,000 bribe Moore and Rozenholc had offered a top Trump staffer and a fistfight that an associate in the Rozenholc firm had started with a Trump lawyer. As much as Donald and Golub may have relished the one-day news story these charges provoked, they had gravely miscalculated.
Fischbein responded by hiring Marty London, a partner in one of the city’s premier law firms, Paul Weiss Rifkind Wharton and Garrison. Not only did London seek an immediate ruling on the RICO charges, he demanded that court-ordered sanctions be imposed against Trump and Golub for having had the audacity to make them. U.S. District Court Judge Whitman Knapp was so incensed by the recklessness of the case and the apparent abuse of the RICO laws that he threw it out barely a month after it had been filed. Knapp kept the sanctions issue open pending an appeal to the Circuit Court, which Golub immediately filed.
The case had an impact, however, in an arena far removed from Judge Knapp’s courtroom. The charges against Badillo and DHCR were interpreted in Albany as charges against Governor Mario Cuomo’s administration, since Golub had suggested that Badillo could rig the state enforcement proceeding. If these accusations, leaked to the newspapers, weren’t sufficient to infuriate Cuomo officials, Donald personally called Joe Spinelli, the state inspector general, and asked him to investigate DHCR, calling it “a corrupt agency.”
A former FBI agent, Spinelli wasted no time, undertaking the probe himself. He went to Fischbein’s offices and talked with everyone involved there. He questioned DHCR officials, pushing Goldstein and Port about the merits of a case that was theoretically still in progress. Spinelli also went directly to Trump, whom he met on March 17, 1986.
It was Spinelli’s second visit to Donald’s office. As an FBI agent, he had served a subpoena on him in the early eighties as part of the investigation of concrete union boss John Cody. Trump recognized him and recalled the Cody case. He joked that it was very important to him that this matter be settled to the satisfaction of the governor. “He might be president someday, and I might want to be an ambassador or something,” Trump said.
Then, as Spinelli recalled it, Donald began an hourlong rant about the tenant shakedown, the Fischbein firm, and corruption in DHCR. He repeatedly stressed that he would fight a DHCR harassment conviction in the courts forever, insisting that similar cases were routinely settled by the agency and tenants. He told the Badillo story, claiming that Herman had urged him “to sell the building to the tenants,” an action that Trump claimed “would result in Badillo’s law firm obtaining title to the property.”
Ironically, Trump’s prime DHCR target was Manny Mirabel, who he suggested was “a crook.” He cited Mirabel’s extraordinary October letter, which found no evidence of harassment, and argued that “the letter was the result of my contacting Stanley Friedman and requesting his assistance in this matter.” Donald’s anger at Mirabel may have been attributable to the deputy commissioner’s sudden change of attitude about the Trump case. Spinelli had been told by other DHCR officials that Mirabel had started “coming around” on the matter at about the time that Spinelli’s probe began.
One explanation for the shift in Mirabel’s position, aside from the sudden Spinelli probe, may have been the dramatic change that had occurred in Stanley Friedman’s life. On January 10, 1986, the borough president of Queens, Donald Manes, was discovered by police in a bloodied car, an apparent unsuccessful suicide. Manes was Friedman’s closest political ally and, as it turned out, covert business partner on major contracts with the city. While Manes succeeded in a second suicide attempt, Friedman wound up sentenced to nineteen years in federal and state prisons. The scandal was so explosive that the headlines and fast-paced state and federal probes ended Friedman’s influence within a week or two of Manes’s first attempt. He was of no use to Trump or Mirabel by mid-January; a month later, he was under indictment.
Since Friedman’s logs and diaries had not yet come to light, Spinelli knew nothing about the details of his involvement in the Trump affair. The investigator simply wanted to put to rest what seemed to him to be unproven charges and countercharges involving Badillo and DHCR. At the end of Trump’s harangue that morning, he pressed Spinelli to say just what he thought the state would do. “We’re going to have to go forward with the enforcement case,” Spinelli declared. His office wrote a closing memo five days later endorsing DHCR’s conduct and making no comment on the Badillo allegations. Donald finally got the message. The DHCR hearings were quietly resuming, ordered by the new housing commissioner Bill Eimicke, whose actions in effect overrode the adjournment prompted by Mirabel. And the newspapers were soon filled with stories about Mario Cuomo’s new running mate—Herman Badillo—the sacrificial lamb tapped by the governor to oppose the only Republican statewide official, Comptroller Ned Regan, a covert Cuomo ally.
So Trump sent a signal to DHCR that he was once again willing to talk settlement. He also sent two new negotiators into the fray—Susan Heilbron, a recent Trump recruit from the state’s Urban Development Corporation with close ties to the Cuomo team, and another new staffer, Tony Gliedman, the Koch housing commissioner Donald had bullied and sued over the denial of the Trump Tower tax abatement. The hiring of Gliedman—intended, apparently, to give Donald a top Koch insider for his West Side and other projects—would ultimately backfire when the mayor expressed open disdain at Gliedman’s willingness to work for a man who’d threatened him in the vilest terms. But Gliedman was the perfect mediator for the 100 Central Park South conflict since he was a longtime friend of Rick Fischbein’s and Bill Eimicke’s, who had once worked under him at the city housing agency. Finally emerging from the shadows in the negotiations over the building, Fischbein met for a drink with his old friend, and Gliedman, a natural conciliator with a soothing, accommodating style, pledged an eventual agreement. At last, there were key participants on both sides of the table who trusted each other.
Rozenholc introduced the purchase notion again, but it was quickly rejected. The state, now intimately involved in the talks, would not be a party to a forced fire sale. Instead, the basic framework for the agreement was similar to the one Donald had laid out at the Brook lunches almost a year and a half earlier: a mutual withdrawal of the legal cases (including the sanctions hearings) and a commitment by Trump to modernize the building and run it fairly. There was much more to the ultimate settlement terms than the original Trump formula, but the underlying assumption of the talks had shifted from sale to safeguards, a transition never made in the two earlier settlement scenarios.
The primary tenant concern by now was for a mechanism to guarantee protection from harassment long into the future, and Eimicke eagerly provided that mechanism. In an unprecedented move, he agreed to add his signature to the agreement between the two parties and to supervise Trump’s overall compliance for five years, with DHCR also promising to monitor apartment repairs indefinitely. On Trump’s side, Eimicke agreed to issue an order terminating the state proceeding on the legal terms Donald had long demanded. Eimicke’s and Spinelli’s extraordinary roles, compelling the settlement, were a direct result of the governor’s sudden personal interest in the dispute, according to several sources close to the negotiations.
In the end, Trump paid the Fischbein firm $700,000 in fees, including its costs in the racketeering case. The approximate amount of Trump’s legal expenses over the course of the five-year war, cited by numerous participants, was from $3 to $4 million. Trump also agreed to permit the tenants to participate in the choice of a new management firm and to forgive the first three months of rent for all tenants in 1987. If he or any subsequent owner tried to co-op the building, he could only proceed under a noneviction plan (this agreement ran with the title for the building). Trump even consented to grant the Tenants Association power over his future rights to bring eviction actions should the building remain a rental, as it has. For his part, Donald achieved his two primary objectives: He avoided an harassment conviction, getting the case dismissed, and he kept his building. He also got the Fischbein firm to back off the demand in federal court for a sanction hearing against Golub and him—the threat of which had become just one more pressure pushing Donald to the settlement.
The agreement was executed in December 1986, just a month after Cuomo’s reelection and Badillo’s thunderous defeat. While Cuomo never raised the funds for the Badillo comptroller campaign that he had promised, the Trump bailout of Badillo’s troubled firm, arranged by top aides to the governor, looked like a welcome substitute.
Within two weeks, the Fischbein firm shattered into pieces. Rozenholc left with several associates to start his own practice, while Fischbein and Badillo remained together. Fischbein hung a blue T-shirt in his office boasting “I was sued by Donald Trump for $105 million,” and he and Rozenholc began to compete for credit as the lawyer who had defeated Donald Trump.
The old friends had stopped talking altogether months earlier; the parting was a bitter culmination of the rancor between them. Fischbein was upset to learn that Rozenholc had side business deals with clients he had not been told about; lone wolf Rozenholc wanted to run his own one-man show. The long-festering 100 Central Park South dispute, and Rozenholc’s unusual ties to Moore, had been just one of many factors that had damaged the relationship. Fischbein suspected that the tenant war could have ended months earlier and feared that the Moore-Rozenholc intrigue had helped keep it alive.
In the aftermath of the settlement, Moore moved the Tenants Association business to Rozenholc’s firm and the two continued, over the years, to float bids in Donald’s direction for a tenant takeover of the building. While they never garnered this ultimate prize, Rozenholc’s publicized defeat of Donald became his calling card, even attracting clients like Verina Hixon. Moore at least got the psychic reward he’d sought all along—a hero of his social set, he was recognized and cheered by supporters when be swaggered into a tony club in Palm Beach, where he liked to vacation and where the King of Mar-a-Lago was scorned. Donald, he claimed, had dangled a six-figure job in his direction at one point, but he had declined. He couldn’t have accepted it and remained, when everything was over, his smug self.
