Trumps and Kushners Cut Ties on Hotel Deals That Raised Eyebrows
Posted June 21, 2018 3:38 p.m. EDT
The Trumps and the Kushners are parting ways — not the White House power couple Ivanka Trump and Jared Kushner, but their family businesses on hotel collaborations in New Jersey, according to people briefed on the situation.
Kushner Cos. and the Trump Organization recently dropped plans for the Trumps to manage an oceanfront hotel the Kushners are building at the Jersey Shore. The companies also terminated an arrangement that had the Trumps managing a hotel outside New York City in Kushner’s childhood hometown, Livingston, New Jersey.
Ethics watchdogs had taken aim at President Donald Trump and Kushner, the president’s senior adviser and son-in-law, for retaining stakes in their family businesses while the companies were financially entangled in New Jersey. The families’ deal-making, the watchdogs suggested, could have influenced Trump’s judgment about Kushner’s role in the administration. And Bobby Burchfield, the Trump Organization’s outside ethics adviser, had also asked questions about the potential collaboration with the Kushners on the Jersey Shore property.
While both sides were in agreement about the decision to forgo the deals, it is the latest frustration for the Trump Organization. Although the Kushners represented only a fraction of the Trump Organization’s overall business, the Westminster Hotel, the Kushner-owned property in Livingston, was one of the few new ventures undertaken by the Trump Organization since it adopted new ethics restrictions after Trump’s election. The company earned $20,000 in fees for managing the hotel for part of last year, according to the president’s financial disclosure last month.
The Trumps have introduced two new, more affordable hotel brands in the last couple of years, Scion and American Idea, but have announced only one partner in the endeavors, in the Mississippi Delta. And in the 17 months since the president took office, the owners of struggling Trump hotels in Toronto and New York paid the Trump Organization millions of dollars to remove the family moniker from the properties. A feud with a hotel owner in Panama led to the Trump name’s being pried off with a crowbar.
The Trump Organization and Kushner Cos. declined to comment for this article, but the head of the Trump Organization’s hotel division, Eric Danziger, said this year that the pipeline of current deals was “still very active,” and that he continued to line up new Scion and American Idea hotels.
The Trumps and the Kushners first teamed up around the time of the election on a Trump-branded residential project in Jersey City. There is no indication from disclosure statements that the building, owned by the Kushners, is producing fees for the Trump Organization, though the name remains in place.
The Trump-Kushner partnership in Livingston was unusual from the start. It was the first hotel the Trumps managed that did not carry their name. And its suburban location contrasted with the five-star urban high-rises synonymous with the Trump hotel brand, though the Trumps had hotel management experience that the Kushners lacked, and the family connection helped bring them together.
The first sign of change came late last year, when Kushner Cos. hired a new executive, Will Obeid, to help run its hotel operations. Kushner’s father, Charles, then broached ending the Westminster Hotel deal with the Trumps this year, according to the people briefed on the situation, who spoke on the condition of anonymity because the discussions were private.
The split at the Westminster came as Obeid planned to take the Kushner hotel business in a new direction, the people said, and as the Trumps and the Kushners had differing strategies for handling potential union negotiations. While the Trump Organization offered to help work out a deal with the union, Kushner Cos. preferred a different approach.
Around that time, Kushner Cos. also voiced reservations about the Jersey Shore collaboration, according to the people briefed on the decision. Those concerns were raised after the private talks between the two companies were reported by The New York Times in March, drawing scrutiny from ethics watchdogs and compounding public opposition in the town.
The long-running discussions between the Trumps and the Kushners — the companies signed a letter of intent about two years ago to team up on the deal — had initially called for the Trump Organization to manage a hotel in Long Branch, New Jersey, and brand it as a Scion.
Burchfield, the ethics adviser, who is a lawyer in Washington, had asked how the Kushners planned to finance the deal, Danziger has said. The Kushners have a history of soliciting investments from companies linked to foreign governments. And if a hotel branded and managed by the Trumps received foreign government funding, it could test the Constitution’s emoluments clause, which essentially prohibits the president from accepting certain gifts from foreign governments.
One potential solution, the companies decided, was to initially limit the Trumps’ involvement to a behind-the-scenes role, as they had at the Westminster, according to the people briefed on the discussions, who were not authorized to speak publicly about private negotiations.
But this spring, Kushner Cos. expressed concern to the Trump Organization about the public scrutiny of the arrangement, the people briefed on the situation said, and eventually the Trumps and the Kushners agreed to part ways.
The Kushners’ role in the Long Branch project also had consequences for the city’s longtime mayor, Adam Schneider, a Democrat, who along with the city council approved $20 million in redevelopment area bonds to support the Pier Village development and was voted out of office last month. During Schneider’s re-election campaign, opposition mailers and flyers highlighted his cooperation with the Kushners: One, which pictured him with various Kushner executives at a recent groundbreaking, read, “Mayor Schneider — Looking out for them.”
Schneider, a critic of the president, dismissed the attacks as “nonsense,” but he was defeated in a landslide. “After having been in office for 28 years, you piss off a few people along the way,” he said.