Reprinted with permission from ProPublica.
by Derek Kravitz, ProPublica, Alan Huffman, special to ProPublica, and Matt Drange, Forbes
Last August, Mississippi’s governor introduced a local hotel developer to then-Republican presidential nominee Donald Trump at a $1,000-per-plate private fundraiser in Jackson. The developer, Suresh Chawla, had long been a campaign donor to the governor, Phil Bryant.
At the fundraiser, Chawla told Donald Trump and his son, Donald Jr., about his latest project: a boutique hotel in Cleveland, Mississippi, the home of a new museum devoted to the Grammy Awards.
Donald Trump told Chawla to “think grand,” according to Chawla.
Two weeks later, Chawla donated $50,000, roughly half to Trump’s campaign and half to the Republican National Committee.
By March — two months into Trump’s presidency — Chawla and his brother were on the 26th floor of Trump Tower for contract negotiations. By June, the Trumps and Chawlas had a handshake deal for not one but four Trump-branded hotels in Mississippi, signing the deal 10 minutes before a public announcement.
President Trump, who still owns his businesses, stands to financially benefit from the hotel partnerships while in office. Trump has put management of his businesses in a trust controlled by his sons. But, as we have reported, he can take money from it at any time.
When Trump pledged in January to separate himself from his businesses, he promised that his business would “not reference or otherwise be tied” to the presidency.
The Mississippi deal includes a four-star hotel called Scion at West End and three other, more affordable hotels. Those hotels are the first of a new brand the Trump family has announced that’s targeted to Trump’s political base: the patriotically themed American IDEA.
A promotional video for the new Trump American IDEA Hotel brand that aired at the announcement event describes it as a mid-scale chain — “flea market chic,” Trump Hotels CEO Eric Danziger says — and “rooted in local culture and history and powered by gracious hospitality.” The video was mostly snippets of stock footage, including an apple pie being placed on a table, fans rooting on a sports team at a bar, and an American flag wafting in the breeze, along with the new American IDEA brand logo: a light bulb.
As part of its Scion hotel project, the Chawlas have been approved to receive public financing in the form of a tax-abatement program from the Mississippi Development Authority, which provides money for new projects through sales tax revenue. They will pay no local property taxes for seven years. Dinesh Chawla said the tax break, which was approved by the local city and county governments in January, is available to any project that meets the necessary criteria, adding, “We got no special consideration.”
That tax break could be worth millions but won’t be finalized until the property is assessed later this year.
The deals are some of the first tangible examples of how the Trumps are turning their newfound political capital into business.
“What’s new here is that an elected official, in this case the president, stands to personally benefit from a business brokered by political connections while still serving in office,” said Kathleen Clark, a law professor at Washington University in St. Louis who specializes in government ethics.
The Trump Organization has said it is moving ahead on 39 different deals for hotels around the country. But the company hasn’t said where the hotels will be or who the Trumps will be partnering with.
ProPublica and Forbes have found details of six deals — the four with the Chawlas, and one each in Dallas and St Louis.
We are asking local journalists and interested citizens to help find and ferret out the facts on the remaining 33 deals. It’s important to know who the president’s family is in business with since it’s possible that Trump’s business interests could conflict with his day job of representing the American people.
After the Trump Organization announced the Mississippi deal with the Chawlas in June, we sought to document it from available public records and on-the-ground reporting.
Last summer, Bryant, Mississippi’s Republican governor since 2012, read a letter in a local newspaper describing how, in 1988, a Mississippi businessman named V.K. Chawla had reached out to Trump for a $428,000 business loan, according to the Chawlas. Instead of the loan, Trump offered advice in a 30-minute phone call, suggesting Chawla apply for a Small Business Administration loan.
Chawla got the loan and built a chain of 17 hotels across the Mississippi Delta. He died in 2005 and his sons, Dinesh and Suresh, took over the family business. Suresh Chawla and Parveen Chawla, Dinesh’s wife, have been donors to Bryant since his first gubernatorial campaign in 2011.
Bryant immediately saw an opportunity.
“[Bryant] called and said, ‘Is that true? That’s wild. I’m going to meet with his campaign.’ So he arranged a meeting for us,” Dinesh Chawla said in an interview.
The backstory behind the Chawla and Trump connection appealed to Donald Trump Jr. personally. “It makes his dad look good. He likes the hominess of it,” Dinesh Chawla said. “It sheds a positive light on his dad even though he’s not supposed to be involved and he isn’t involved.” The American IDEA brand was already in the works; the Trumps filed an application to trademark the name “American Idea” in April 2016 and “Idea Hotels” a month later.
Bryant’s office did not respond to requests for comment.
The Trump Organization declined to make the two executives who worked on the deal with the Chawla brothers available for an interview. A spokeswoman for Trump Hotels declined to respond to a list of emailed questions, including the timing of conversations with the governor and the locations for other hotels that have yet to be announced.
“While we are pleased to share this inspiring story, which is one of hundreds throughout Mr. Trump’s career as a business leader and mentor, the process of assessing and finalizing a hotel opportunity is complex and incredibly thorough,” the spokeswoman said in a written statement. “Much like every other hospitality company, it comes down to the actual business.”
The Chawlas will partner with Trump Hotels on two properties in Cleveland and two in nearby Greenville and Clarksdale. The Chawlas own several hotels in the three cities; Dinesh Chawla declined to say which will be adapted for American IDEA properties, citing the contract he signed with the Trump Organization.
Work has all but stopped at the new Scion hotel as a result of the new Trump Organization partnership, as the two parties work out the details, said Cleveland Mayor Billy Nowell. (Dinesh Chawla said those details primarily concern the hotel’s design; Trump Organization officials have asked for information about the community to incorporate into the decor and the Chawlas have scoured local archives to find such images, including those of local churchgoers from the 1950s and ‘60s.)
For its part, the city of Cleveland has primarily acted as “cheerleaders” for the new development, Nowell said. The Cleveland hotel carrying the Trumps’ Scion brand name is slated to open in March 2018.
Cleveland officials say the city is in sore need of more hotel rooms and welcomes the Trump projects. In addition to deferring taxes as incentive for the Chawlas to open the hotel, the tax abatement also requires that the project generate at least 10 full-time jobs, according to county documents. (Dinesh Chawla estimates the hotel will bring between 30 and 40 jobs to the small town.)
“When we have events like [Delta State University] ball games and at the Grammy museum, our hotels are full and people have to go to other towns,” said Judson Thigpen, head of Cleveland-Bolivar County Chamber of Commerce. “With this we’ll be able to recruit small conferences.” The city currently has fewer than 300 hotel rooms, and the Scion will have three complexes, with 100 rooms, he said.
The $20 million project is being built with $5 million in financing from Mississippi-based Guaranty Bank & Trust and will be managed by Trump Hotels in a partnership with Chawla Pointe LLC. All of the other American IDEA properties are existing hotels that will be adapted to the brand.
As for the other Trump-branded hotels, the Chawlas and Trumps have signed a franchising agreement, with the Trumps taking a cut of revenue and leaving the management of the buildings to the Chawlas. The approach is similar in other cities, where hotel operators have signed letters of intent with the Trump Organization.
Dinesh Chawla said he didn’t support President Trump during the campaign, largely because he didn’t think he would win. “I admire Hillary Clinton quite a bit,” he said. He says he voted for Obama in 2008 and 2012, in part, because he “stayed at our hotel.” (His brother, Suresh, said that he doesn’t understand President Trump’s travel ban. “The whole concept of what’s going on there … I kind of stay away from all that.”)
“We don’t do things based on politics,” Dinesh Chawla said. “It’s about business.”
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