Trump’s sons lever­age ties es­tab­lished in cam­paign

The Washington Post Sunday - - FRONT PAGE - BY JONATHAN O’CONNELL, DAVID A. FAHRENTHOLD AND MATEA GOLD

new york — Don­ald Trump’s adult sons, who are over­see­ing a na­tion­wide ex­pan­sion of the fam­ily busi­ness dur­ing their fa­ther’s pres­i­dency, are en­vi­sion­ing ways that their ex­pe­ri­ences from the cam­paign trail can help them es­tab­lish a foot­ing in dozens of new mar­kets.

The idea is to move be­yond a fo­cus on lux­ury ho­tels in big me­trop­o­lises and build bou­tique prop­er­ties in a broader mix of cities, in­clud­ing some the Trump broth­ers came to know well dur­ing more than a year of in­ten­sive travel, fundrais­ing and grass­roots net­work­ing on the road to the White House.

“I got to see a lot of those mar­kets on the cam­paign,” Don­ald Trump Jr., the pres­i­dent’s

el­dest son, told The Wash­ing­ton Post in a re­cent in­ter­view from his of­fice on the 25th floor of Trump Tower. “I think I’ve prob­a­bly been in all of them over the last 18 months.”

The ini­tial plan is tied to the Trumps’ pre­vi­ously an­nounced new chain, Scion, which is be­ing de­signed as a less-cor­po­rate feel­ing brand of high-end ho­tels with a more af­ford­able per-room price point than the Trumps’ five-star prop­er­ties.

As with many ex­ist­ing Trump-branded prop­erty deals, the de­vel­op­ers would own the ho­tels while the Trumps would be paid li­cens­ing and man­age­ment fees.

The com­pany says it has signed at least 17 let­ters of in­tent with po­ten­tial de­vel­op­ers. It is tar­get­ing an ar­ray of cities such as Austin, Dal­las, St. Louis, Nashville and Seat­tle — and Trump Jr. said the cam­paign proved use­ful in forg­ing re­la­tion­ships with po­ten­tial new con­nec­tions.

“I met peo­ple along the way that would be awe­some part­ners,” he said.

The ex­pan­sion plan il­lus­trates how Pres­i­dent Trump’s po­lit­i­cal rise has the po­ten­tial to af­fect his busi­ness even as he and his sons prom­ise to ad­here to a strict eth­i­cal bound­ary be­tween the com­pany’s moves and the Trump ad­min­is­tra­tion. And it shows the in­her­ent chal­lenge in sep­a­rat­ing the fam­ily’s po­lit­i­cal work from its cor­po­rate in­ter­ests, with up­sides and po­ten­tial prob­lems.

Ex­tend­ing the Trump busi­ness into a greater clus­ter of Amer­i­can cities could bring po­lit­i­cal ben­e­fits for a pres­i­dent who has vowed to bring jobs and eco­nomic pros­per­ity to strug­gling com­mu­ni­ties. But it also comes as Trump has faced crit­i­cism from Democrats and ethics of­fi­cials for his de­ci­sion to re­tain his own­er­ship stake in the com­pany, a de­ci­sion that means he stands to per­son­ally ben­e­fit from its growth.

Build­ing new ho­tels, for ex­am­ple, could cre­ate is­sues — tax dis­putes, al­le­ga­tions of la­bor vi­o­la­tions or en­vi­ron­men­tal vi­o­la­tions — that re­quire fed­eral de­part­ments to con­sider cases that could di­rectly af­fect the pres­i­dent’s fi­nances. And while the Trumps have vowed to sign no new for­eign deals, pur­su­ing a raft of new do­mes­tic con­tracts from coast to coast means the Trumps are likely to en­gage in ne­go­ti­a­tions with pri­vate de­vel­op­ers, banks and in­vestors who see ad­di­tional ben­e­fits in do­ing busi­ness with the pres­i­dent’s com­pany.

“It’s just go­ing to add fuel to the fire that is al­ready burn­ing . . . with him hav­ing still a foot in both the board­room and one in the Oval Of­fice,” said Scott Amey, the gen­eral coun­sel of the non­par­ti­san watch­dog group Pro­ject on Gov­ern­ment Over­sight.

The White House did not re- spond to a re­quest for com­ment. The pres­i­dent in Jan­uary added a team of ethics lawyers to the White House Coun­sel’s Of­fice, while the com­pany hired a long­time Repub­li­can at­tor­ney tasked with en­sur­ing the Trump Or­ga­ni­za­tion min­i­mizes con­flicts of in­ter­est.

In in­ter­views, Trump’s adult sons waved off the idea that their plans cre­ated any po­ten­tial eth­i­cal prob­lems.

“There are lines that we would never cross, and that’s mix­ing busi­ness with any­thing gov­ern­ment,” Eric Trump said.

Don­ald Trump Jr. said that since the inau­gu­ra­tion, he has spo­ken with his fa­ther twice on the phone and once in per­son — when he and his brother at­tended the an­nounce­ment of their fa­ther’s Supreme Court nom­i­nee, Neil Gor­such. Eric Trump said he may ask his fa­ther how things are in the White House but would never dis­cuss gov­ern­ment or busi­ness af­fairs.

“Will we ever talk about tax pol­icy? Will I ever ask for any­thing that could oth­er­wise ben­e­fit the busi­ness? Ab­so­lutely, em­phat­i­cally not,” Eric Trump said. “He has no need to know what we’re do­ing, and I cer­tainly don’t need to know what they’re do­ing, and I don’t want to.”

The Trumps’ point man on the ex­pan­sion is Eric Danziger, an ex­pe­ri­enced ex­ec­u­tive who was hired in 2015 af­ter pre­vi­ously over­see­ing ex­pan­sions at Carl­son Ho­tels World­wide, Star­wood Ho­tels and the former Wyn­d­ham In­ter­na­tional.

One of the first Scion projects is slated to open in Dal­las, where a Turk­ish-born de­vel­oper aims to open a sleek glass six-story ho­tel as part of a $50 mil­lion mixe­duse down­town de­vel­op­ment. The Austin, Cincin­nati, Den­ver, Detroit, Nashville, Seat­tle and St. Louis ar­eas are also pos­si­ble tar­gets, ac­cord­ing to re­ports by Bloomberg News and busi­ness trade pub­li­ca­tions.

The Trumps de­clined to say what other cities they were ex­plor­ing for projects but said they were ac­tively seek­ing con­tracts in many places.

Danziger, speak­ing last month to Skift, an in­dus­try pub­li­ca­tion, called Scion a “four-star lifestyle brand” with wide ge­o­graphic ap­peal.

“That kind of brand can be in ev­ery city — ter­tiary, sec­ondary,” he said. “So, how many is that? The op­por­tu­nity is for hun­dreds.”

Be­cause of the pro­hi­bi­tion on for­eign deals, Danziger said the com­pany is “go­ing to have full fo­cus — in­stead of some fo­cus — on growth do­mes­ti­cally of both Trump and Scion.”

The ex­pan­sion will not be easy, ac­cord­ing to an­a­lysts. The Trumps will be en­ter­ing a crowded mar­ket­place of new ho­tel lines from Mar­riott, Hil­ton and Hy­att de­signed to ap­peal to a broad cross-sec­tion of cus­tom ers, said Michael J. Bel­lis­ario, a se­nior re­search an­a­lyst with the firm Robert W. Baird & Co.

“There are so many more com­peti­tors out there to­day,” Bel­lis­ario said.

For the Trumps to dis­tin­guish their projects from their com­peti­tors, they will need to be choosy about lo­ca­tions, Bel­lis­ario said. “You’ve got to be on the right street cor­ner in the right mar­ket. You can’t open th­ese ho­tels in Topeka, Kansas,” he said. “So when you think about that, how big can the new line get?”

The plan is a big test for the younger Trumps.

Just as Don­ald Trump stepped out from his fa­ther’s shadow in the 1970s to build the fam­ily real es­tate busi­ness into to­day’s world­wide col­lec­tion of golf cour­ses, ho­tels, condo tow­ers, branded mer­chan­dise and other com­mer­cial hold­ings, now Don­ald Trump Jr., 39, and Eric Trump, 33, have a chance to make their mark.

Along with their sis­ter, Ivanka, who de­parted the com­pany when their fa­ther en­tered of­fice, the broth­ers have long served as ex­ec­u­tive vice pres­i­dents.

Be­fore their fa­ther ran for pres­i­dent, the three sib­lings helped ex­pand the firm from fo­cus­ing on New York to in­clud­ing the man­age­ment of lux­ury ho­tels in top U.S. cities and seven coun­tries, plus more than a dozen golf cour­ses.

The fruits of that work are still com­ing, as last month the com­pany opened a new golf club in Dubai and last week held a grand open­ing for a new ho­tel-con­do­minium tower in Van­cou­ver, B.C.

A ma­jor tran­si­tion for the sons is tak­ing over a com­pany in which the force be­hind ev­ery Trump com­pany of­fer­ing — whether it was sell­ing ho­tel rooms, of­fice build­ings, golf out ties or raw steaks — was Don­ald Trump him­self.

In in­ter­views, Trump Jr. and Eric Trump said they con­sider them­selves pro­tec­tors of the Trump brand, an ef­fort they said is some­times mis­un­der­stood. Crit­ics viewed the an­nounce­ment of Scion dur­ing the cam­paign as a move away from the Trump name. The fam­ily’s in­tent was the op­po­site; since they view the name Trump has a stan­dard for lux­ury that ought to be in­su­lated, they will use other brands for less pricey prod­ucts.

“We would never want to di­lute the real es­tate brand by go­ing into ter­tiary mar­kets that can’t sus­tain the [lux­ury] prop­er­ties as we build them,” Eric Trump said. “A lot of ho­tel com­pa­nies have got­ten this wrong.”

Both sons worked for their fa­ther start­ing at young ages, do­ing land­scap­ing and other la­bor on his projects.

A Univer­sity of Penn­syl­va­nia grad­u­ate, Trump Jr.’s first as­sign­ment at the com­pany was to work with ex­ec­u­tives at New York City real es­tate projects.

Eric Trump joined af­ter grad­u­at­ing from Ge­orge­town in 2006. He has over­seen the Trump Win­ery near Charlottesville and worked on the Trump ho­tel in Las Ve­gas, where he de­vel­oped a rep­u­ta­tion as a hands-on ex­ec­u­tive.

“If there’s a prop­erty tax is­sue or any lit­i­ga­tion, he flies into Las Ve­gas and takes care of it,” said Phil Ruf­fin, a casino mogul who is the Trumps’ part­ner in the Las Ve­gas pro­ject. “He hires the lawyer. If there are any cap­i­tal im­prove­ments, he ap­proves them. He is very en­er­getic like his fa­ther — he will just work night and day.”

With their fa­ther in charge, there was an in­for­mal divi­sion of la­bor among his three el­dest chil­dren, gov­ern­ing which projects each swooped in to help.

Ivanka Trump cre­ated her own brands of shoes, jew­elry, hand­bags and coats. She took the lead on some of the Trump Or­ga­ni­za­tion’s most prom­i­nent re­cent projects, such as the $212 mil­lion D.C. ho­tel, which had its soft open­ing in Septem­ber.

“I’m prob­a­bly the most ob­vi­ously like [Trump Sr.],” Ivanka Trump said in a 2011 com­pany video ti­tled “Trump: The Next Gen­er­a­tion.”

“In cer­tain ways,” she added, “Eric is very sim­i­lar to him in terms of his love of con­struc­tion and build­ing. And Don has his sense of hu­mor.”

The Trumps’ planned cor­po­rate ex­pan­sion comes as the pres­i­dent has faced in­tense crit­i­cism from Democrats and ethics ex­perts for his con­tin­ued own­er­ship in­ter­est.

A lib­eral watch­dog or­ga­ni­za­tion, Cit­i­zens for Re­spon­si­bil­ity and Ethics in Wash­ing­ton (CREW), has sued Trump, ar­gu­ing that his ho­tel op­er­a­tions vi­o­late a con­sti­tu­tional pro­vi­sion bar­ring the pres­i­dent from ac­cept­ing gifts or pay­ments from a for­eign gov­ern­ment. Some Democrats have ar­gued that Trump’s in­ter­na­tional trade­marks, in­ings, clud­ing one long-sought reg­is­tra­tion granted in Fe­bru­ary by China, also vi­o­late the Con­sti­tu­tion’s emol­u­ments clause.

Trump has called the CREW law­suit “to­tally with­out merit.”

Amey, of the Pro­ject on Gov­ern­ment Over­sight, said there were ways for the Trumps to avoid po­ten­tial do­mes­tic con­flicts re­lated to the ho­tel ex­pan­sion. He said they could put the ho­tel busi­ness un­der an­other cor­po­rate struc­ture, which does not in­volve a trust di­rectly owned by the pres­i­dent him­self.

“There are so­lu­tions to solv­ing this; there doesn’t seem to be a will and a de­sire to do that within the White House,” Amey said.

The adult Trump broth­ers say they are tak­ing ethics con­cerns se­ri­ously and are do­ing ev­ery­thing nec­es­sary to avoid dis­tract­ing from their fa­ther’s work as pres­i­dent.

“Have I used him as a sound­ing board in the past? One hun­dred per­cent,” Trump Jr. said. “Have I learned a lot from him? Couldn’t have had a bet­ter men­tor. But he’s got real stuff he’s got to deal with. Th­ese are real peo­ple’s lives . . . . So this no­tion that he is still run­ning the busi­ness from the White House is just in­sane.”

Trump Jr. scoffed at the idea that his fa­ther might have some­how viewed run­ning for pres­i­dent — spend­ing mil­lions of dol­lars of his own money to run against more than a dozen Repub­li­can chal­lengers and Demo­cratic pres­i­den­tial nom­i­nee Hil­lary Clin­ton when few pun­dits gave him a chance to win — as a mon­ey­mak­ing en­deavor.

“That’s not a get-rich-quick scheme,” he said. “That doesn’t make any sense what­so­ever.”

“He has no need to know what we’re do­ing, and I cer­tainly don’t need to know what they’re do­ing, and I don’t want to.” Eric Trump, as­sert­ing that he would never dis­cuss gov­ern­ment or busi­ness af­fairs with his fa­ther

ISAAC BREKKEN/AS­SO­CI­ATED PRESS

Don­ald Trump, then a can­di­date for the Repub­li­can pres­i­den­tial nom­i­na­tion, is flanked by his sons Eric Trump, left, and Don­ald Trump Jr. dur­ing the Out­door Sportsman Awards on Jan. 21, 2016, in Las Ve­gas. Trump’s sons are seek­ing to grow their new ho­tel chain called Scion.

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