Atlantic City Contractor Fraud: Systematic Nonpayment of Small Businesses and Workers
Last updated
USA Today and other outlets documented a decades-long pattern in which Trump companies refused to pay contractors, vendors, and workers after completion of their work. Affected businesses included a dishware supplier, a plumbing contractor, a piano bar operator, and hundreds of others. Trump's negotiating strategy, described by associates, was to refuse payment and force small businesses to accept pennies on the dollar rather than face litigation.
Overview
Donald Trump built his business reputation — and his television persona on The Apprentice — on the image of a tough but fair dealmaker. Multiple major journalistic investigations documented a different pattern: systematic refusal to pay contractors, vendors, and workers after completion of their work, leveraging the cost of litigation to force small businesses to accept partial payment or nothing.
USA Today identified at least 3,500 lawsuits over 30 years naming Trump or his businesses as defendants. Hundreds of those lawsuits involved contractors and vendors alleging they were not paid for completed work.
How the System Worked
Former Trump associates described a deliberate strategy: accept goods or services, then dispute their quality or find technical reasons to withhold payment. When the contractor demanded full payment, Trump's legal team would offer 30-50 cents on the dollar. The contractor — typically a small business — would face the choice of accepting the reduced payment or filing a lawsuit that could take years and cost more in legal fees than the original contract.
Many contractors accepted the reduced payment rather than fight. Those who did fight described courts eventually ruling in their favor, but by then their businesses were sometimes already damaged or destroyed by the cash flow disruption.
Atlantic City
The Atlantic City cases were particularly well-documented because Trump's multiple casino bankruptcies left paper trails. The Trump Taj Mahal, Trump Plaza, and Trump Castle all went through Chapter 11 proceedings, with contractors listed as unsecured creditors receiving pennies on the dollar — or nothing — in the reorganizations.
One documented case involved Edward Friel Jr., whose family cabinetry business did $400,000 in work for the Trump Plaza Hotel & Casino. Trump's company first said the work was not good enough to merit full payment, then made an initial lower offer. The Friel family, who had borrowed money to complete the contract, eventually sold the business.
The Six Bankruptcies
Trump's businesses went through six bankruptcy filings between 1991 and 2009, all related to his Atlantic City casino empire. Each filing left unpaid debts — with smaller creditors (contractors, workers, bondholders who were individuals) typically receiving far less than larger banks that had more leverage in the reorganization proceedings.
Trump has characterized the bankruptcies as savvy business decisions. The contractors whose businesses collapsed because of unpaid Trump invoices described a different experience.
Timeline
Sequence of events
January 1, 1985
Pattern begins with early Atlantic City projects
Contractors who work on Trump's Atlantic City casino projects begin reporting nonpayment or pressure to accept reduced settlements after completing their work.
November 21, 1990
Trump Taj Mahal bankruptcy
The Trump Taj Mahal files for Chapter 11 bankruptcy, leaving hundreds of contractors, bondholders, and workers with unpaid claims. This is the first of six Trump business bankruptcies, all of which left unpaid debts to smaller creditors.
June 9, 2016
USA Today publishes major investigation
USA Today publishes a comprehensive investigation documenting that Trump and his businesses were defendants in at least 3,500 lawsuits over 30 years, with hundreds involving allegations of nonpayment. The newspaper speaks with dozens of affected contractors.
June 9, 2016
Washington Post documents specific cases
The Washington Post publishes profiles of specific contractors: a dishwasher supplier owed $75,000, a piano bar operator, a plumbing contractor owed $1 million, and an architect who spent years fighting for payment. Multiple contractors say they were told directly that payment would not be made in full.
Sources
- ↑ Hundreds allege Donald Trump doesn't pay his bills — USA Today archived ✓
- ↑ Donald Trump's Business Decisions in Atlantic City Echo in Battered City — The New York Times
- ↑ Trump's Companies Involved in More Than 3,500 Legal Cases — NBC News archived ✓
- ↑ Donald Trump stiffed contractors and vendors leading to hundreds of legal battles — The Washington Post
Verification