Merv (22 page)

He seemed taken aback. For the first time in half an hour he wasn’t speaking.

So I continued. “The way I see it, you have big interest payments to make,” pointing out the fact that he had already borrowed many millions of dollars to buy up the remaining Resorts stock. “I can wait. I’ll go back to L.A., and if it takes two years, that doesn’t matter to me.
I
don’t have any interest payments.”

Stone-faced, Donald said, “I want the Taj Mahal.”

I smiled and put out my hand. “Okay, it’s a deal.”

Clearly surprised that I would agree so quickly, he shook my hand while studying my face to see if I was really serious.

Our hands remained clasped when he added, “And I want the Steel Pier too.”

My expression didn’t change. Keeping my eyes locked on his, I said, “Done.”

Each of us got what he wanted. Donald wanted the Taj Mahal and I wanted Resorts and Paradise Island. Built in the early part of the century, Resorts Atlantic City had a storied history. Originally known as Haddon Hall, it became the first Atlantic City hotel-casino in the seventies, shortly after gaming was legalized there. The other major asset included in the deal was Paradise Island, the jewel of the Bahamas. It was a property that I was eagerly looking forward to owning.

Trump couldn’t understand why I wasn’t remotely interested in the Taj Mahal. Much later, after everything was over, I explained it to him: “Donald, that place had ‘sleepless nights’ written all over it. You’re a much younger man—you should be the one to finish it.”

In preparing to write this book, I reread Donald’s account of our deal, published twelve years ago under the title
Trump: Surviving at the Top
. I laughed out loud while reading his book until I realized—it was a novel! It
had
to be. What other explanation could there be for Donald saying that he’d given me an “honest appraisal” of the hotel-casinos that I “seemed so desperately to covet”?

First of all, I think you know by now that I’m not the “desperate” type. It’s just not in my nature. And let me tell you about what Donald means by “honest appraisal.” Before our deal was final, he took me on a personally conducted tour of Resorts. We were walking down a corridor—Donald, me, and his phalanx of giant bodyguards. (It seemed to make him crazy when people said hello to me first. And I’d say, “Donald, they can’t even
see you
behind those guys.”)

With a straight face, Donald said, “You know, Merv, for about fifteen million dollars you could really do a job fixing up this place.”

I thought to myself, He must think that I work for him. Only someone he’s paying would believe that bullshit.

But I said nothing and we kept on walking. In my estimate, that corridor
alone
would take about $15 million to repair. (It turned out later I was right.)

As a negotiating ploy, Donald speculated publicly that I wouldn’t be able to raise the additional financing necessary to close the deal. I couldn’t let him get away with that. We flew in all the outside directors of Resorts and put them in a room with my team from Drexel Burnham Lambert, then the top investment banking firm on Wall Street. Afterward, they told Donald that he’d better not try that again because Griffin has all the financing he needs.

For a time it looked to the world like our deal might yet fall apart. All the attention on what the press was calling the “War at the Shore” had resulted in posturing on both sides.

I was never concerned. Lord knows I’d experienced this sort of gamesmanship throughout my career. The only way to handle it is to stay focused on the bigger picture. All the blustering and name-calling was only a sideshow. My family and friends got tremendously upset by the things Donald said about me.

I just treated it with humor. I told the press, “If he doesn’t behave himself, I’m going to take the “T” off his name all over town.”

Finally, on May 27, we reached a truce. I signed off on a joint press release with Donald announcing the basic terms of our deal: he would give up control of Resorts and I would purchase his shares. That would give me temporary ownership of the Taj Mahal, which he would immediately buy back from me.

Even though we had an agreement in principle, a myriad of legal and financial issues still had to be resolved before the deal could be finalized. To oversee that process I needed a person who, above all, had the patience of Job.

I first heard about Tom Gallagher through William French Smith. Bill had served as Attorney General in President Reagan’s first term. After leaving Washington, he’d returned to his partnership in the prestigious California-based law firm of Gibson, Dunn & Crutcher. Right after I’d sold my company, I retained Bill and his firm to do some estate work for me.

Tom had joined Gibson, Dunn right out of Harvard Law School and quickly become the firm’s “fireman.” If there was something really difficult or unusual the firm needed done, he was always the one who put his hand up and volunteered. In the late seventies, Tom agreed to open the firm’s London office. Then, in the eighties, he was assigned to oversee the firm’s extensive Middle East practice from its office in Riyadh.

After having been overseas for the better part of nine years, Tom moved back to the United States in 1987 to Gibson, Dunn & Crutcher’s New York office. This was another challenge for “Fireman” Gallagher since Gibson, Dunn had always been a Los Angeles–based firm; New York City represented its last frontier.

The way Tom tells the story is that he was minding his own business in Manhattan when he got a call one day from Bill Smith.

“Merv Griffin is about to do something very large,” said Bill, with characteristic understatement, “and I think he could use your help.”

I called Tom my “conservative” lawyer. Not politically; he once worked in Washington as an aide to former California Senator John Tunney, a liberal Democrat. In terms of temperament, however, Tom is quite conservative—thoughtful, deliberate, unflappable. In other words, the perfect choice to do battle with Trump.

My other lawyer was Morris Orens, the attorney whom Dale Scutti had originally hired to find a “white knight” for Resorts. Orens and Gallagher were a study in contrasts. As high-strung as Tom was low-key, Morris became the “liberal” voice on my team, enthusiastically advocating the deal, even as Tom counseled caution.

The two of them in a room together put on quite a show. Tom, dressed conservatively in a dark suit, would sit at the conference table, methodically reviewing the pros and cons of various deal points, while Morris, chain-smoking and talking a mile a minute, would be pacing the room, urging me to damn the torpedoes and move full speed ahead.

In fact, the deal
did
move ahead through the summer months as Drexel Burnham commenced our funding. The plan was to sign the final contracts with Trump sometime after Labor Day.

Because gaming is a tightly regulated industry, one obstacle that remained was my becoming licensed by the New Jersey Casino Control Commission as a casino operator. Although this required an extensive background check and character references, I had no reason to expect that it would be anything more than a pro forma process. I’ve always been proud of my reputation and I’d left Robert Q. Lewis and Freddy Silverman off my reference list. No problem, right?

Wrong. But the problem wasn’t mine. It came from the last place I ever would have expected—my own team.

In mid-August I flew to New York from my ranch in Carmel Valley to participate in a series of East Coast financing meetings. I should have known it would be an ill-fated trip—nothing good ever comes from being in New York City during the sweltering heat of August.

The humidity hadn’t deterred people from coming to our bond sale presentation at the Helmsley Palace hotel in midtown Manhattan (maybe it even helped; we used a lot of Leona’s air-conditioning that day). Potential investors crowded into the meeting room to hear me, Mike Nigris, and Ken Moelis, managing director of Drexel Burnham, make our pitch for Resorts. It was a very successful presentation, resulting in major bond sales. In the next few months, similar gatherings in Boston and Atlantic City would complete our financing efforts.

After the Helmsley Palace meeting, I hosted a reception in my suite upstairs for the entire team, including my management group and the investment brokers from Drexel Burnham.

What happened next seemed like a harmless social faux pas on my part. Only later would I realize how serious it was.

I was working my way down the receiving line, thanking each person for his or her hard work on behalf of the Resorts project, when I reached a dark-haired man in his mid-forties whom I’d never met. I assumed he was either with Drexel or that he was one of the other attorneys working with Tom Gallagher in New York (indeed, after talking with Tom for months by phone, we’d only met face-to-face for the first time earlier that same day).

The man was introduced to me as Ernie Barbella. I said, “Hi, Ernie. Nice to see you. Who are you with?”

Ernie looked at me kind of funny. Thinking that I’d made a mistake in not knowing who he was, I quickly said, “I have to apologize, I’m meeting people for the first time. I’m sorry if I don’t recognize you. I know I probably should.”

Looking uncomfortable, Barbella said, “Well, I’ve been working with Mike Nigris on your bond sale. Mike and I went to school together.”

“Oh, that’s terrific,” I replied. “I’m sorry I haven’t met you before, Ernie.” Then I moved on down the line.

This awkward exchange was witnessed by several people from Drexel Burnham who found it quite disturbing. For months, Ernie Barbella had been participating in the meetings that decided how the deal would be financed. He’d presented himself, with Mike Nigris’s approval, as a key member of my team. So it came as something of a shock to Ken Moelis and the Drexel group that I had no idea who Ernie Barbella was.

Just before meeting Barbella, I’d welcomed a new member of the Griffin Group with whom I
was
familiar. Like Mike Nigris, thirty-year-old Larry Cohen had been with Paneth, Haber & Zimmerman, the accounting firm that had handled my business for many years. While there, he was integrally involved in the sale of my previous company to Coca-Cola. During the negotiations, Larry had so impressed the executives at Columbia Entertainment that they offered him a job after the sale was finalized. Larry had been at Columbia for two years when my bid to acquire Resorts was announced publicly. Mike Nigris, realizing that we would need to build up our infrastructure, recruited his former colleague to come aboard as chief financial officer of the Griffin Group. I was delighted to see Larry again and gave him a hug to welcome him back to the fold.

Now we come to the part of the story that I always refer to as “Trenton, we have a problem.”

After the bond sale presentation, I had returned home to Carmel Valley. About a week after the New York event, I received a phone call from Ken Moelis of Drexel. The call was unusual both for its timing—Sunday afternoon—and because Ken, who was normally very upbeat, sounded ill-at-ease.

“Merv,” he asked hesitantly, “have you done any background checks on the people who are coming into the company with you, specifically, Michael Nigris?”

“No, why?”

“I don’t think he can pass muster with the New Jersey Gaming Commission.”

I was stunned. “What are you talking about, Kenny? What’s wrong with him?”

Ken wasn’t comfortable making accusations. “I really can’t say, Merv. Just check it out as soon as you can.”

I called Tom Gallagher immediately. His wife, Mary, answered the phone. It was dinnertime in New York and I apologized for interrupting them on a Sunday evening. When I told him about Ken’s cryptic call, he was silent for almost a full minute. I’d never heard Tom, who is such a positive person, sound so troubled.

We agreed that the next step was to do a LexisNexis search (a service that retrieves legal documents and news articles) as soon as possible. It didn’t take long to discover some significant red flags. Nigris and Barbella had been involved in some questionable financial dealings, unrelated to Resorts or any of my business interests. Tom, whose initial shock had quickly given way to steely resolve, said firmly, “We’ve got a big problem. As soon as we pull all of the documentation together, you need to come back to New Jersey and meet with the Gaming Commission.”

It took a week for Tom to gather the information that we would present to the investigating arm of the New Jersey Gaming Commission. During that week I had barely spoken to Mike Nigris and, of course, I didn’t tell him that I’d be coming east again so soon after my last trip. I’m not a cloak-and-dagger guy by nature, so this was very difficult for me. Although he wasn’t a close friend, Mike had been a trusted employee and advisor for a long time. I was extremely reluctant to believe that he would do anything wrong.

On Friday I flew to Atlantic City to meet with Tom and some of his colleagues from Gibson, Dunn. From public records, they’d pulled together some pretty damaging information, most of it concerning Mike’s college roommate, the mysterious Mr. Barbella. It became clear that he had associations with people alleged to be members of the Gambino crime organization. We would later learn that Barbella, along with various friends and family members (and I’m using the term “family” in the broadest sense), had bought up blocks of Resorts International stock, based on inside knowledge of my intention to offer $35 per share.