The father of 2016 Republican Party presidential candidate Donald Trump--Fred Trump [II]--was, coincidentally, subpoenaed to testify before the U.S. Senate Banking Committee in 1954, when that committee was investigating how Federal Housing Administration [FHA]-financed builders and real estate developers apparently made windfall profits from FHA mortgage gouging during the 1940's and early 1950's. As former Village Voice reporter Wayne Barrett's 1992 book, Trump: The Deals and The Downfall, recalled:
"...By the time the...Federal Housing Administration [FHA[ Scandal finally receded in 1956, the Senate Banking Committee had likened it to Teapot Dome...The description proved apt when $51 million [equivalent to around $450 million in 2015 dollars] in mortgage gouging was identified during an FBI random survey of 285 projects.
"Fred Trump was subpoenaed before the [U.S. Senate] Banking Committee in July of 1954 and grilled about the millions in profit he had expropriated from Beach Haven...Questioned by the committee's counsel, William Simon, Trump conceded he'd paid only $180,000 underlying Beach Haven, but got the FHA to put an appraised value without improvement, of $1.5 million on it. He then gave the land to a trust in his children's name and, using the inflated value, charged the Beach Haven project $60,000 a year rent for the land for 99 years...
"Simon moved on to the windfall Trump took on the mortgage proceeds. The committee had established that Fred [Trump] had loaned $729,000 of the excess proceeds from the mortgage to affiliated corporations and kept another $3 million in the bank. This excess, which Trump acknowledged was actually over $4 million on a $16 million mortgage, was the difference between the amount he originally obtained through FHA, based on his pre-construction estimates, and the actual cost of construction. Trump conceded that he'd paid no taxes on the proceeds he was keeping and that he'd invested some of them already...
"...The [U.S. Senate] Banking Committee and FHA findings assailed the inflated cost estimates that had enriched Fred [Trump] and dozens of other builders as `outright misrepresentation.' The final report charged that the developers had `saddled tenants with the burden of meeting not only legitimate costs' but paying rents to cover the unexpended portion of the federal loans that the builders had pocketed. The investigators also condemned the `fictional division of single projects into two or more projects' to sidestep the $5 million limit on insurable mortgages, a tactic Fred [Trump] employed at both Shore Haven and Beach Haven...
"...Fred [Trump] was...threatened with a federal takeover of Shore Haven, where the Beach Haven mortgage scams exposed at the hearings had been tried first..."
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