Secret Empires: How the American Political Class Hides Corruption and Enriches Family and Friends by Peter Schweizer

Author:Peter Schweizer [Schweizer, Peter]
Language: eng
Format: epub, azw3, pdf
Publisher: HarperCollins
Published: 2018-03-20T04:00:00+00:00

11

A Real Estate Mogul Goes to Washington

President Trump is not the first person at the highest levels of government to own great quantities of real estate with the risk of massive conflicts of interest.

Penny Pritzker served as Obama’s secretary of commerce; her companies leased property to the federal government, built up a Washington, D.C., real estate empire during her tenure, and did regular business with foreign governments.

President Donald Trump is a real estate mogul with myriad properties, companies, and branding deals, who has children with more of the same. During and after his successful campaign and into his presidency, many have expressed alarm over his forgotten financial disclosures, his foreign income sources, his unwillingness to divest, and his practice of doing business with many entities that would have reasons to curry favor with the U.S. government. Some said it was an unprecedented situation to have a president with a wide array of global assets that make conflicts of interest inevitable.

Trump’s situation is not as unique to the executive branch as one might think from the current media. During the Obama administration, another real estate mogul with extensive holdings, Penny Pritzker, held power in the executive branch as commerce secretary. Pritzker’s business interests blurred in highly questionable ways with her role as public servant. Her story provides a blueprint for the type of transactions that Trump and his family should seek to avoid, and for which they should be monitored.

As a study in ethics, if not personality, introspective and reserved Penny Pritzker is a Trump prototype. The accomplished and hardworking heir to the Hyatt Hotels fortune, who has massive real estate holdings and a family engaged in a wide array of international businesses, Pritzker has already faced the sorts of ethics issues that Trump faces or may face. How she and the Obama administration handled her conflicts of interest offers a detailed model of failure from which the Trump administration could learn.

Pritzker’s and the Trumps’ lives have intersected in the past. In addition to being rivals and competitors, they were once partners. It did not end well.

Donald Trump’s first major real estate deal in New York was with the Pritzkers.

He bought an option to buy the old Commodore Hotel in 1977 for $1 for his first project in Manhattan. With the help of extensive tax abatements, he and his new partner, the Pritzkers, spent $100 million converting the dowdy Commodore into the glitzy Grand Hyatt, a development that signaled the revival of New York after the financial crises of the 1970’s.

But the two partners never really got along. Two arbitration proceedings failed to stem the bickering, and in 1993 Mr. Trump sued Jay Pritzker and the Hyatt Corporation. The company countersued seven months later. The two sides managed to settle their dispute in 1995, with the Pritzkers agreeing to pay Mr. Trump’s legal fees and to finance a $25 million renovation of the hotel.1

The Pritzker family has been compared to the Rockefellers and deemed “America’s Rothschilds” by Forbes.2

But they are far less known than either of those families to the American public.

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