Report Don Jr Continues to Be a Sad Sad Man

Donald Trump Jr. listens as his father speaks at the Lincoln Memorial the night before the presidential inauguration. (Jabin Botsford/The Washington Post)

As Donald Trump Jr. tried to step from the shadow of his billionaire father, he forged a long-running business partnership with an energetic dealmaker from Utah who has been dogged by lawsuits, bankruptcies and business failures.

Don Jr. and Jeremy Blackburn got to know each other nearly two decades ago while touring the West in a helicopter in search of ranchland that the elder Trump might buy his son as a college graduation gift.

In 2009, Don Jr. and Blackburn started a company that they claimed would revolutionize low-cost housing around the world, using concrete panels to form prefab homes. They arranged millions in financing and bought a warehouse in an industrial neighborhood in North Charleston, S.C.

Over the next five years, the warehouse became a base of operations for multiple start-up firms launched by Blackburn and supported by Don Jr. But each of the businesses tumbled, leaving behind a trail of lawsuits, unpaid taxes, and angry investors and lenders.

The story behind Don Jr.'s association with Blackburn offers insights into his business record as his father steps into the presidency and he and his brother Eric assume control of the family's sprawling multibillion-dollar business empire. It also shows the difficulties the Trump brothers face in replicating their father's success.

Don Jr., 39, has spent most of his career working under the umbrella of the Trump Organization. His venture with Blackburn stands out as a rare foray when he tried to make it on his own.

But he never broke entirely free from his father's influence. He used the Trump name to open doors, attract investors and arrange financing. When the company owned by Don Jr. and Blackburn ran into trouble, the Trump Organization provided legal support and his father eventually bailed him out.

Don Jr. did not respond to requests for interviews. Alan Garten, general counsel for the Trump Organization, played down Don Jr.'s role, saying he had an ownership stake in only two businesses with Blackburn.

"He was a passive investor, and he lost money," Garten said. "I'm sure he wishes he didn't do it. He viewed it as a start-up with every intention of succeeding. It just failed."

Blackburn, 44, said he has had successes along with setbacks, noting that he has been involved in community work and housing programs. He told The Washington Post that Don Jr.'s role was limited and that the president's son "was not responsible for the failure" of their company, Titan Atlas Manufacturing. Blackburn said the operations were completely separate from the Trump Organization.

"Taking selected snapshots along the linear path of time can paint anyone in a bad way," Blackburn said in one of several emails to The Post, which were copied to the Trump Organization's general counsel. "The leader in baseball last year failed to get on base over 50 percent of the time, and that was the leader. Michael Jordan didn't make 50 percent of his shots (damn close though). Were they failures, does a highlight reel of all those misses and strikeouts show the true picture?"

Jeremy Blackburn was chief executive of Titan Atlas Manufacturing, a company that he and co-founder Donald Trump Jr. hoped would revolutionize low-cost housing. (Brad Nettles/Charleston, S.C., Post and Courier)

This account is based on a review of thousands of documents, including lawsuits, business filings, internal financial records and emails. The Post also interviewed more than a dozen business associates of Don Jr. and Blackburn.

The relationship between the two men dates to not long after Don Jr. graduated from the Wharton School at the University of Pennsylvania in 2000. He was exploring the Rockies, hunting and camping as he considered his next step. Blackburn, who had fledgling cattle and real estate businesses at the time, showed the young scion ranchland by helicopter.

"It was huge, one of the last big ranches in the West," said Douglas Durbano, a Utah lawyer and businessman who partnered with Blackburn and Don Jr. in a large real estate deal in South Carolina.

The two young men were a study in contrasts.

Don Jr. grew up in one of the most high-profile and flamboyant families in the country.

Blackburn was a striving former National Guard member whose father was a financial officer at a small Utah college.

They discovered that they shared a passion for hunting and kickboxing — and they both wanted to make their financial mark, according to records and interviews.

Don Jr. eventually returned to New York and took a job with the Trump Organization, helping oversee construction projects in Manhattan and abroad. He went on to assume control of the company's commercial leasing operation.

During that time, Blackburn launched a series of new companies, he has said. He dabbled in real estate, home mortgages, insurance and software development.

Court and business records show that Blackburn was entrepreneurial and that he sometimes pushed too far. In 2006, a federal judge presiding over a civil suit brought by an Alabama investor ruled that Blackburn and his associates had committed "fraud and misrepresentation" while promoting a workers' compensation insurance company that never got off the ground. Blackburn consented to the judgment and agreed to pay $750,000.

Blackburn chalked up the matter to a business dispute that involved several partners and said he was put into a bad position because of his inexperience. He was 30 when the company started.

"I did not commit any fraud, but I did settle after the infighting destroyed an opportunity for this company," he told The Post, adding that he "did not understand the significance of the wording" when he agreed to the judgment.

Along with Durbano, Blackburn co-founded a small bank in Layton, Utah, in 2000 that was shut down by state regulators in 2009, records show. Blackburn has said he served on the bank's board for three years and sold his interest before the bank was shuttered. Federal auditors found "apparent violations of law and contraventions of policy associated with the institution's lending practices and insider transactions," according to a Federal Deposit Insurance Corp. inspector general's report.

Durbano and the bank's other owners sued regulators in state and federal court, arguing that the bank was illegally seized. Their appeal is ongoing.

In 2009, Blackburn teamed up with Don Jr. to form Titan Atlas Manufacturing, also known as TAM. Blackburn also arranged for an investment by a wealthy farmer he knew from Washington state. The farmer, Lee Eickmeyer, contributed nearly $1 million.

Don Jr. was a director of the company and Blackburn its chief executive.

The company paid $1.5 million for an old industrial warehouse on Pace Street in North Charleston.

The 157,000-square-foot warehouse was far from the glamour of a classic Trump family property. It was full of machinery that had belonged to a local company that fabricated concrete panels for construction. The low-slung metal structure had few windows and took months to put in order. It sat on land that for at least two decades had been contaminated with toxic sludge from manufacturing.

The local company hadn't found much success with the panels, according to a former employee, but Don Jr. and Blackburn began marketing them as a revolutionary way to build cheap, sustainable homes. The idea was to ship the panels in kits for easy assembly.

In late 2010, as the factory began operations and their ambitions soared, Don Jr. and Blackburn traveled to the Sonora region of Mexico to meet with the state's governor. Don Jr. was identified in a government news release as a representative of the Trump Organization.

In February 2011, they flew to Colombia and gained entree to the presidential palace. Photos show Don Jr. and Blackburn sitting across from President Juan Manuel Santos. Press reports said Don Jr. was there to talk about potential business deals; the Trump Organization later licensed the Trump name to a developer of a skyscraper in Bogota.

Don Jr.'s last name not only opened doors. It also helped draw in potential investors, according to former associates. A month after the trip to Colombia, Titan Atlas Manufacturing raised $3.4 million through the sale of securities, according to documents filed with the Securities and Exchange Commission.

Donald Trump Jr., left, and Jeremy Blackburn, second from left, discuss business opportunities with Colombian President Juan Manuel Santos, right, at the presidential palace in Bogota in February 2011. (Felipe Ariza/Office of the President of Colombia)

At this point, the company had only a handful of workers. Among them was the CEO's father, Kimble Blackburn. The elder Blackburn had lost his job at the college in Utah and spent time in prison for embezzling more than $150,000, according to published reports. His conviction was later expunged.

In March 2011, the Blackburns and four other warehouse workers posed for a photograph in front of a tractor-trailer loaded with concrete panels with a sign that read: "First TAM Kit shipped to Argentina."

Blackburn would later tout the reach of their operation.

"We had contracts in Mexico, Colombia, the Dominican Republic, Africa, Middle East," he said in a deposition.

But almost from the start, there were problems. The shipment to Argentina languished on the docks for more than a year, according to court records. The shipping company later sued Titan Atlas Manufacturing for the cost of the freight.

Titan Atlas Manufacturing also neglected to pay taxes, documents show. By November 2011, it was hit with the first of 18 state and federal tax liens totaling more than $100,000.

Blackburn told The Post that the liens are "not accurate." He said a "law firm specializing in tax matters has been reviewing and working with the IRS and state agencies to resolve them."

The same month it received the first tax lien, the company sought a loan from Deutsche Bank, a lender the Trump Organization often used. The bank arranged for a three-year, $3.65 million loan from DB Private Wealth Mortgage, a part of Deutsche Bank that, according to its website, caters to "ultra-high-net-worth individuals." The loan documents identified Don Jr. as the company's "key principal" and showed that he, Blackburn and Eickmeyer had personally guaranteed the loan.

By early 2012, the taxes, bills and other debts were piling up. Another source of financial pressure was a patent lawsuit filed by a competitor against Titan Atlas Manufacturing over the right to use the concrete panel technology.

Three law firms hired to handle the litigation abandoned the case because they had not been paid, court records show.

A fourth firm was also about to back out over legal bills when Blackburn claimed a check was in the mail. He emailed the firm, Mendelsohn Drucker, with what he said was a postage tracking number.

But Mendelsohn Drucker did not receive the money and the firm eventually sued Titan Atlas Manufacturing for $400,000 in outstanding bills. During that lawsuit, U.S. District Judge Michael M. Baylson found that Blackburn had sent no money despite his promises. Baylson wrote that TAM had "engaged in fraudulent conduct to induce counsel to continue to represent it," a move that he said was "willful, culpable and deserving of significant sanction."

In January 2013, after Mendelsohn Drucker indicated that it was going to include Don Jr. as a defendant in its lawsuit, Garten, the Trump Organization general counsel, sent a letter threatening to file an ethics complaint against an attorney at the firm.

The case was eventually settled.

Blackburn blames TAM's troubles on the patent lawsuit, which was settled by the company for $2 million.

"I surely did not understand at the time the ability of larger, better-capitalized companies to drain and then destroy competition through an ongoing and extensive legal attack," he told The Post. "Defeat by attrition became unavoidable. Sometimes the merits don't matter, the ability to stay in the fight does. I paid a heavy price for these mistakes."

The studio deal

In 2013, a potential bonanza appeared for Don Jr. and Blackburn.

Matthew Mellon, a member of the New York City branch of the wealthy Mellon family, introduced Don Jr. to Manu Kumaran, a movie producer from India, Kumaran told The Post. Kumaran wanted to build the largest movie studio in the United States and was looking for investors. The $700 million "Studioplex" planned by Kumaran's company, Medient Studios, would be a campus-style complex with more than a dozen sound­stages, an amphitheater, a hotel and living spaces for production workers over more than 1,500 acres on the outskirts of Savannah, Ga.

Medient, a publicly traded company, needed a builder. Don Jr. suggested that Kumaran consider using Titan Atlas Manufacturing's concrete technology. In early 2013, Don Jr. introduced Kumaran and Blackburn, and began arranging a tour of the Pace Street warehouse.

"Manu did you have a chance to touch base with Jeremy," Don Jr. asked in a Feb. 28, 2013, email to Kumaran obtained by The Post.

Don Jr.'s emails contained the subject line "Visit to Titan Atlas" and his title as "Executive Vice President of Development and Acquisitions" with the Trump Organization.

"Hey Donald," Kumaran wrote back. "Unfortunately I don't have Jeremy's coordinates. Am standing by to get in touch with him at your convenience."

Kumaran said Don Jr. ultimately decided not to invest. But Kumaran said he still thought Blackburn could help him, even though Blackburn had no experience building movie studios.

In May 2013, while the studio deal was percolating, Blackburn filed for personal bankruptcy in federal court in Salt Lake City. His $6.4 million in debts included the $3.65 million Deutsche Bank loan to Titan Atlas Manufacturing and the $750,000 judgment against him for civil fraud in 2006.

Kumaran told The Post that he had no idea that Blackburn was in financial difficulty.

On July 19, 2013, as Blackburn's bankruptcy case was pending, a new company began operating in the Pace Street warehouse. It was called Titan Atlas Global, also known as TAG, and had been created by Durbano in Utah.

On paper, TAG was a new company free of the debts that Titan Atlas Manufacturing had accrued. But TAG marketed the same concrete-panel kits at the same website address, and it had some of the same workers, including Blackburn and his father.

Don Jr. leased the warehouse and the manufacturing equipment to TAG, but he was not an owner of the new company.

On Nov. 14, 2013, Blackburn was granted bankruptcy protection and his personal liability for the $6.4 million in debts was discharged. Blackburn became chief executive of Titan Atlas Global. It had a new group of investors, including a dentist in Fargo, N.D., and a Wall Street banker.

"I did not start TAG," Blackburn wrote in an email, without providing details. "I was recruited and joined many months after it was started."

In March 2014, Blackburn closed the deal to build Medient's studio complex. A new Titan Atlas Global subsidiary, Shore Development and Construction, was to oversee construction. Medient highlighted that fact in statements to investors.

"We have considered some of the world's largest construction companies to build the Studioplex," Kumaran said in a news release. "TAG technology is green, represents a quantum leap in cost and time efficiencies in construction and is supremely robust — capable of withstanding over 300 mph winds, 9.1 Richter scale earthquakes and is entirely fire resistant."

Bill Foley, an Atlanta-based architect who designed the 700-acre Pinewood Studios in Atlanta, was brought on to help Blackburn. Foley told The Post that he became alarmed after a few conference calls. Titan Atlas Global's concrete panels could not work acoustically for a movie studio, he said.

"We quickly saw that Titan Atlas Global didn't have anywhere near the firepower to do any project that size," Foley told The Post. "They had no background at all in stage production."

The studio deal eventually felt apart.

In June 2014, Kumaran was pushed out of Medient amid concerns about his financial management. In September 2016, the SEC accused Kumaran and two other Medient executives of stock fraud, alleging in a lawsuit that they used news releases that misled investors about the project's construction.

Kumaran, who now lives abroad, defended the project.

"It was absolutely not a scam," he told The Post. "The plan didn't come to fruition but that's not because the plan did not have legs."

The SEC investigation is continuing.

As the studio deal died, the older firm, Titan Atlas Manufacturing, was still on the hook for the $3.65 million loan from Deutsche Bank that Don Jr. and his partners had personally guaranteed. In November 2014, days before the loan became due, Don Jr.'s father stepped in. A new Trump company called D B Pace Acquisitions purchased the loan from the bank and inherited the mortgage on the warehouse as collateral.

The next month, D B Pace foreclosed on the property and eventually took ownership of the warehouse. The move kept the warehouse in family hands and beyond the reach of creditors.

Eickmeyer, the farmer who had invested $950,000 in Titan Atlas Manufacturing, was furious.

In court documents, he alleged that D B Pace was "acting as an alter ego" for Don Jr. and his father. Eickmeyer said they had "participated in a civil conspiracy" to keep him from getting his money back. Eickmeyer did not respond to a request for comment.

Garten said the Trumps were not conspiring but acting independently in their own interests.

"The transaction was completely arm's-length," he said.

According to his most recent personal financial disclosure form, President Trump still owns the Pace Street warehouse, where Don Jr. and Blackburn started out. Most of the space in the warehouse — 114,500 square feet — had been leased to an industrial textile company. In April 2016, the company sued, alleging that leaks in the roof caused $4.5 million in damage.

In a recent court filing, D B Pace said it was not responsible for the alleged damage, because it occurred before the firm took ownership of the building.

D B Pace has also tried to take advantage of a South Carolina program that would shield it from responsibility for pollution caused by previous landowners. To qualify, D B Pace told the state that it had no ties to any prior owner of the warehouse, including Titan Atlas Manufacturing. But state regulators recently asked about the Trump family's ties to both TAM and D B Pace, according to the New York Times.

The hospital deal

Don Jr., Blackburn, Durbano and others had invested in yet another company in North Charleston that was running into trouble. In early 2014, the company, Chicora Gardens, paid $5 million for an abandoned Navy hospital that the city owned in a depressed part of town, according to court and corporate records.

Don Jr. owned just 10 percent of Chicora, but municipal officials were hopeful that his involvement might lead to a larger investment by the Trump Organization, Durbano told The Post.

The plan was to renovate the 400,000-square-foot building and lease it to the Charleston County government for a social services hub. Chicora borrowed $15 million from an investment fund in Boston to do the work.

But when it was time for the county to move into the space, the building was not ready. The county backed out of its lease in March 2016, followed by other tenants.

Dawes Cooke, the county's attorney, told The Post that Chicora "may have bitten off more than they could chew on this project."

Two months after the lease cancellation, Chicora filed for bankruptcy under Chapter 11, which allows a company to reorganize its debts and stay in business. The case is still playing out in a federal court in South Carolina, with Chicora, its lender and county officials all pointing fingers.

Chicora listed its main asset as the old Navy hospital, which was appraised at $38 million if the leases are enforced. Its liabilities were listed at $22 million.

Durbano defended Chicora's project as an earnest effort to improve a run-down building.

Drawing on direct experience working with Don Jr. and Blackburn, Durbano said they are "very pleasant, forthright, honest." He said he cannot explain the repeated failures.

"The answer is, I don't think anyone knows. Maybe it was the economy. Maybe it was the litigation," Durbano said. "Sometimes you just run out of cash."

Alice Crites contributed to this report.

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Source: https://www.washingtonpost.com/investigations/donald-trump-jr-stumbled-while-trying-to-make-a-mark-in-the-business-world/2017/02/04/363ce654-d84b-11e6-b8b2-cb5164beba6b_story.html

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