Trump Castle Admits Gaming Law Violation
The Trump Castle Casino Resort, admitting that a $3.5-million loan from Donald J. Trump’s father violated state gaming laws, has agreed to a $30,000 penalty, officials said Tuesday.
In other developments Tuesday, the developer:
* Announced plans to convert most of New York’s swank Plaza Hotel into luxury condominiums.
* Reached a final agreement on restructuring the debt at his glitzy Taj Mahal casino in Atlantic City.
In December, Fred Trump, through his lawyer, bought 700 gray gambling chips without intending to gamble. The purchase of the $5,000 chips gave the casino enough cash for an $18.4-million interest payment.
A spokesman for the Division of Gaming Enforcement said Fred Trump has agreed to apply for a license that would allow him to lend money to the casino. He would then be able to make a similar loan in June, when the casino’s next interest payment is due.
Under the settlement, Trump Castle can continue to use the elder Trump’s money, but will pay $30,000 to the state.
The settlement must be approved by the Casino Control Commission, which may consider it in May.
The Castle, like other Trump properties, has been suffering from cash-flow problems. Converting the Plaza into condos is expected to bring Trump about $750 million, nearly double the $390 million he paid for the hotel three years ago. That money would help in the flamboyant entrepreneur’s efforts to reduce enormous debts on his collection of other properties, which range from Florida condos to the Taj Mahal and two other Atlantic City casinos.
The plan must be approved by the New York state attorney general, who has not received any written proposal, a spokesman said.
Trump’s plan would sell 800 of the Plaza’s 813 rooms as condos. The millionaire developer said he intends to keep the other rooms for his own use. Owners would have the option of renting the condos as hotel rooms and reaping the profits, he said.
The units would be sold for an average $1,500 a square foot, compared to the average price of $500 per square foot for condos with similarly posh addresses.
Meanwhile, Trump’s agreement Tuesday with Taj Mahal bondholders was a refinement of a settlement announced last November, said Robert Miller, an attorney for the investors.