While Donald Trump might be best known for his bouffant hair and Vegas-style design tastes, his apparent presidential ambitions—and obsession with President Obama’s birth—have thrust him into the political spotlight. In the media frenzy, his real claim to fame, being a wealthy and successful real estate tycoon, has been largely overlooked. But what’s behind his business dealings and reality television popularity—and is The Donald really as rich as he appears to be?
[In Pictures: 10 Smart Ways to Improve Your Budget.]
Upon closer inspection, a few cracks start to appear in his “rich guy” façade. Here are three reasons Trump might not be as wealthy he seems:
He has exaggerated his wealth before. Marcus Baram of the Huffington Post has uncovered multiple occasions where Trump has overstated his wealth. While he has claimed to have a net worth of over $3.5 billion, analysis by two banks place the value at far less than that, closer to $1 billion. In a deposition statement, Trump explained that he adds billions of dollars to account for the value of his “brand.”
The latest Forbes estimate puts Trump’s net worth at $2.4 billion, making him around the 150th richest person in the United States. Trump, though, continues to say that he’s worth about $7 billion.
In her column this weekend, The Washington Post’s Michelle Singletary predicts that Trump won’t actually run for president despite all of his talk, because doing so would require him to disclose certain details about his finances, including income, assets, and investments over $1,000, and debts over $10,000. Trump, she suggests, would not want to bare all, even for the glory of an official presidential run.
He has relied heavily on bankruptcy in the past. Trump has filed for corporate bankruptcy not once, but four times, most recently in 2009. All four bankruptcies are related to the casino and hotel resorts he runs through Trump Entertainment Resorts in Atlantic City. In an interview with Forbes, he described his bankruptcy filings as a valid business strategy, and pointed out that he’s not the first entrepreneur to make use of it. “Basically I’ve used the laws of the country to my advantage and to other people’s advantage just as Leon Black has, Carl Icahn, Henry Kravis has, just as many, many others on top of the business world have,” he told the magazine.
That might be true, but to plenty of Americans, bankruptcy seems like failure, and isn’t very presidential. At a time when budget deficits loom large, an over-leveraged celebrity is especially suspect.
His personal-finance advice isn’t so hot, either. In Why We Want You to Be Rich, co-written with Robert Kiyosaki in 2006, pre-financial crisis, the two celebrities offer tips on how readers can be just like them—but the book does more to boost the authors’ wealth than readers’. According to a review in Kiplinger's Personal Finance, the book “is a thinly veiled infomercial for more financial-advice products from Kiyosaki, Trump and their minions. They sell positive thinking and can-do haziness—specific details cost extra.”
The review goes on to argue that the book tries to scare readers into the thinking the middle class is dying, but that real estate investing can save you. That kind of advice might have resonated with readers in 2006, but in 2011, it sounds like snake oil.
That’s just the beginning of Trump’s turn as personal finance guru. He has also authored Trump: The Art of the Deal, Trump: How to Get Rich, and Trump: Think Like a Billionaire. (Notice a pattern?) Among his tips: When you hire beautiful young assistants to answer your phones, make sure they can also speak English. Needless to say, Suze Orman doesn’t have to worry about Trump taking over her market share.
There is one area, though, where Trump excels: Recovering from failure, which is an essential skill for leaders to have. Exactly two years ago, in May 2009, Trump experienced a very bad week: His magazine, Trump, was cancelled, and a judge rejected his claims that the book Trump Nation defames him by questioning his net worth. Yet instead of letting that bad news get him down, he pressed forward, continuing to promote his brand and reality show.
In an interview with Psychology Today, he explained how he rebounded from being billions of dollars in debt in the 1990s. “What helped is that I refused to give in to the negative circumstances and I never lost faith in myself. I didn't believe I was finished even when the newspapers were saying so... Defeat is not in my vocabulary personally or professionally.”
Those words also remind us of just how much Trump has overcome in his past—and warn us that it might be too early to completely write him off just yet.