The Man Who Beat Donald Trump How Marvin Roffman told the truth, was punished for it—and then fought back.
When Trump's Taj Mahal went bankrupt, 253 subcontractors lost $70M. The analyst who did his job and warned investors was slandered and defamed by Trump. Lost his job and was unable to find another. But he prevailed in the end. And the sleazy conman had to pay.
... when Trump toyed with the notion of running for president on the Reform Party ticket, Roffman was asked about the potential candidacy. “If he runs the country like he rewards his shareholders, it is going to be a disaster,”
By Michael Kruse
April 25, 2016
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I’m telling you,” he said. “Trump is a brutal guy.”
This was March of 1990. Roffman was a veteran securities analyst. He had focused on the gaming industry in Atlantic City since the first casinos opened in 1978. He knew the market as well as anyone and had watched closely as Trump made a typically bold entrance with Trump Plaza and Trump’s Castle in 1984 and ‘85. Now the New York real estate tycoon was about to open his third casino, by far his biggest, most lavish and most shakily financed one yet, the Trump Taj Mahal. Roffman was skeptical. He told a reporter from the Wall Street Journal the Taj would fail.
What happened next was straight out of Trump 101. The “people I don’t take too seriously,” he had written in 1987 in The Art of the Deal, “are the critics—except when they stand in the way of my projects.” Roffman was in the way. Trump bombarded him with invective, threatened to sue his employer, demanded his firing and then publicly assailed him some more. That Roffman’s assessment was grounded in reality—that he would prove to be right—didn’t stop Trump from attacking Roffman. It was the reason for it.
Three days after the quote in the Journal, Roffman was fired. What happened after that, though, was unusual. In the long history of the leading Republican presidential candidate’s use of disparagement, intimidation and forceful warnings of litigation, there is no person quite like Roffman. He sued Trump and won a clear victory—a fat check drawn on a Donald Trump account.
How does one beat Trump? For Roffman, it took time and money, gumption and conviction. Trump v. Roffman was a noisy, blustery harangue in the court of public opinion. Marvin B. Roffman v. Donald J. Trump and Trump Organization, Inc., on the other hand, was a longer, fact-based slog in an actual court
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It was the middle of that March. “I know you’re down on the Taj,” Trump said over the phone from New York, according to Roffman’s recollection.
“He said, ‘I want you to see this property in its full splendor,’” Roffman recalled. “‘I’m going to have someone call you and arrange a tour of the Taj. And after the tour, I want you to call me. And I know what you’re going to tell me. You’re going to tell me you have just seen the greatest property ever.’ I swear to God. That’s what he said.”
The tour was set for March 20.
That morning, the Journal ran an article about Trump and the much-anticipated early April opening of the 1,250-room, 120,000-square-foot Taj, which had 70 eye-catching minarets on its roof and a payroll of some 6,500 employees. Roffman, then working for a Philadelphia brokerage firm called Janney Montgomery Scott, was quoted prominently.
“When this property opens,” Roffman told the Journal, “he will have had so much free publicity he will break every record in the book in April, June and July. But once the cold winds blow from October to February, it won’t make it. The market just isn’t there.” He called Atlantic City in general “an ugly and dreary kind of place.”
When Roffman arrived at the casino for his tour that day, Trump’s brother, Robert, stopped him at the door and cursed him—“I’d never heard so many four-letter words in my entire life,” Roffman told me at his house—and yelled at him to “get the fuck off the property.”
Back in Philadelphia, on the fax machine at Janney’s offices, a letter arrived from Trump Tower.
Trump in the letter called Roffman “hair-trigger” and “somewhat unstable in his tone and manner of criticism.” He continued, without regard for spelling: “For Mr. Roffman to make these statements with such definity is an outrage. I am now planning to institue a major lawsuit against your firm unless Mr. Roffman makes a major public apology or is dismissed. For a long while I have thought of Mr. Roffman as an unguided missle.”
Roffman by this point had been a securities analyst for 25 years and at Janney for 16, developing a reputation as an outspoken, tell-it-like-it-is analyst. Trump had noticed, according to Roffman, calling on occasion to quiz him about competing casinos and other executives
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From Barron’s to Fortune, from Institutional Investor to Vanity Fair, from the New York Post to the Philadelphia Inquirer, Trump in the wake of Roffman’s firing unleashed a torrent of criticism against him, calling him “a bad analyst,” “a very unprofessional guy,” “a totally mediocre guy with no talent,” “not a good man,” “a man of little talent,” and “a disgrace to his profession.”
“I have a right to be a critic of a critic,” Trump said to Institutional Investor.
“Marvin Roffman was dismissed or was about to be dismissed six months ago, and I saved his job,” Trump told the Inquirer. He “called me crying, ‘Please, will you call the head of my firm? He respects you. You have power.’” Roffman’s retort: “He’s a liar.” Janney’s president told the newspaper Roffman’s job at that time “wasn’t on the line.”
In the September issue of Vanity Fair, the sniping having dragged on for some six months, Trump said: “Here’s a guy that used to call me, begging me to buy stock through him, with the implication that if I’d buy stock he’d give me positive comments.”
Was Trump accusing Roffman of fraud?
“I’m accusing him,” Trump said, “of being not very good at his job.” Roffman called the charge “unbelievable garbage.”
Roffman tried to find another job, and couldn’t. In his mind, Janney fired him mostly because it didn’t want to spend the money necessary to defend him against Trump in court. “You can argue how we tried to make peace with Trump,” Meyer had said in Institutional Investor. “But you’d like not to spend a quarter of a million dollars to defend yourself.” Roffman and his attorneys weighed the possibility of a retaliatory lawsuit.
As they did that, Roffman’s warnings about Trump and the Taj began to become reality. It was even worse than he had predicted. Accounting problems and malfunctioning slot machines marred the hyped launch of the Taj. In late April, the Journal reported on Trump’s financial squeeze. Forbes followed in May, downgrading by more than a billion dollars its estimate of Trump’s net worth. By June, Trump started missing loan payments and negotiating with his lenders for more lenient terms. His casinos were on their way to losing a combined $173 million for the year—$120 million of that was red ink from the Taj—and Trump owed $69.5 million to 253 subcontractors who had helped build the Taj. Trump was more than $3 billion in debt—owing $933 million to Citibank, according to the AP.
He went on ABC’s Primetime Live with Sam Donaldson the first week of May in an attempt to foster positive spin.
“What I own is trophies,” Trump said. “The Plaza Hotel’s a trophy. The Taj Mahal … that’s a trophy. A trophy doesn’t go down.”
“You can’t pay your bills with trophies,” Donaldson pointed out.
“I think you can pay your bills with trophies,” Trump shot back.
“Empire’s Fate Teeters on the Brink,” read the headline in Newsday in the middle of June.
“Do I feel vindicated?” Roffman told the Miami Herald. “That’s not the issue. The issue is if an analyst can’t say negative things after doing his homework, for fear he’ll ruffle some feathers, he’s not worth two cents. It’s an outrage. It disgusts me.”
Roffman had no intention of letting Trump off the hook.
In July, he sued Trump for libel and slander. In the initial filing of Civil Action No. 90-4511 in U.S. District Court in the Eastern District of Pennsylvania, Roffman’s attorneys said Trump had “wrongfully, intentionally and maliciously” gotten Janney to fire him. The suit sought a million dollars in damages for defamation and another million for “tortious interference with contractual relations.”
“I only hope that Mr. Trump will have money left when we get our judgment against him,” Roffman told the UPI.
His mother had died the previous Christmas, and his father was robbed at gunpoint in the delicatessen where he worked cutting meat, and Roffman couldn’t land another job—other brokerage firms, he believed, not wanting to hire him given the contentious situation with Trump. He lived off savings. He went on unemployment. Out-of-pocket health insurance, he told the Chicago Tribune, was costing him $180 a month. He turned over to Trump’s attorneys his tax returns. The police, he said, knocked on his door one day and informed him somebody was going through his trash, which Roffman interpreted as Trump representatives looking for dirt.
Trump’s “defamatory statements have effectively ‘blackballed’ Roffman from gainful employment in his chosen profession,” Roffman’s attorneys argued in court filings. “… while Roffman’s comments about the Taj Mahal may have been too painful for Trump, they were necessarily illuminating, and designed to protect the investing public and the integrity of the financial market. For this, the Court should not permit Roffman to suffer at the hands of a vindictive and vengeful Trump.”
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In late April 1991, though, a year and a month after the comment that precipitated the dispute, Trump settled the case. Roffman already that March had won $750,000 from Janney, his former employer, after a separate arbitration hearing. A confidentiality agreement prohibits Roffman from discussing the final sum from Trump—“I’ve never told anybody,” he said—but he did say he had turned down previous offers. The AP reached Roffman. He was so satisfied he slipped into third person. “All I can say is Marvin Roffman is extremely happy with the settlement,” he said.
In June 1992, a year after Trump settled with Roffman in court, Trump sent a note to Roffman. "Despite our past differences I greatly appreciate your recent nice comments," he wrote. | Matt Roth for Politico Magazine
“I wouldn’t have settled, if he wasn’t happy with it,” Martin Sobol, one of Roffman’s attorneys, told me on the phone. The suit, said James Schwartzman, another of his attorneys, was “very successfully concluded.”
“It all worked out very well,” Trump said in a statement to Politico. “He turned out to be a very nice guy.”
A month after the settlement, the Taj entered Chapter 11 bankruptcy proceedings.
In October, in a speech to the New York Society of Security Analysts, Roffman took the opportunity to gloat. “I think I have a little bit more net worth than Donald Trump does,” he said, according to the Inquirer.
“I did not come here to bury Donald Trump,” he added. “He does a pretty good job of that himself.”
Roffman opened his own money management firm—the money from his legal victories certainly helped—and he hung in his office an enlarged copy of the original letter from Trump.
He published a book in 1994.
“Events proved my Taj prediction to be accurate,” Roffman wrote. “Trump’s empire was on the verge of crumbling when he turned his situation around through refinancing deals with bondholders and bankers that saved him hundreds of millions of dollars. I’m happy to say that although my willingness to speak out cost me my job, it saved millions for the Trump bondholders who listened. … The numbers I used to back up my words held together. Trump’s numbers didn’t. My emphasis on fundamentals—investment basics such as making sure that bonds have strong companies behind them—enabled me to recognize before anyone else the shaky state of Trump’s casinos.”
“It was No. 3 on the best seller list in the Philadelphia Inquirer,” Roffman said. “I was very happy about it.”
The title of the book incorporated his antagonist’s famous name.
Take Charge of Your Financial Future: Straight Talk on Managing Your Money From the Financial Analyst Who Defied Donald Trump.
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Back in 1999, when Trump toyed with the notion of running for president on the Reform Party ticket, Roffman was asked about the potential candidacy. “If he runs the country like he rewards his shareholders, it is going to be a disaster,” he said at the time to the New York Daily News.
During the course of our conversations, at his house and on the phone, Roffman said Trump had a “terrible temper” and called him “a weasel” and “a creep” and “an absolute disaster” when it came to owning casinos.
Election 2016, though, has spit out an odd, unexpected mixture of options. It has put Roffman in a position that would have been unthinkable for most of the last quarter-century.
“Trump is sort of like a breath of fresh air,” Roffman told me. “He’s not like normal politicians. He doesn’t say things that are politically correct.”
Was Roffman, a registered Republican, saying he would vote for Trump over Hillary Clinton in that prospective general-election matchup in November?
“I actually think Trump would be so much better than Hillary. No question in my mind. None,” he said. “This is really serious stuff here. If Hillary gets elected, it’s really like Obama’s third term, and I’m not happy with where the country is headed.”
For Roffman, Tuesday’s Delaware primary is more complicated. Would he vote for Trump?
“I, I, I, I—I don’t think so,” he said.
So Ted Cruz? John Kasich? He couldn’t say, or wouldn’t.
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Read more: http://www.politico.com/magazine/story/2016/04/donald-trump-marvin-roffman-casino-lawsuit-213855#ixzz46t25yct5
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