Ruffin is the only person whom the president has invested alongside in a Trump-branded property
Image: Tim Pannell For Forbes
It’s two days after Michael Flynn resigned as national security advisor, and the news is wall-to-wall Donald Trump, with a heavy emphasis on his relationship with Russia. Questions abound. What did Flynn discuss with a Russian ambassador weeks before Trump became president? Did he lie about the conversation to Vice President Mike Pence? Who told him to call Russian diplomats in the first place? Was Trump himself involved?
Phil Ruffin sits inside the DJT restaurant, named for Donald J Trump, at the Trump International Hotel Las Vegas, and puts down a Trump-filled newspaper. “This stuff about him having financial investments all over Russia—that’s just pure crap,” he says. “I went to Russia with him. We took my airplane. We were having lunch with one of the oligarchs there. No business was discussed. Donald has no investment of any kind in Russia, nor has he borrowed any money from Russia. If he had a business deal there, he would have asked me to go join him.”
Ruffin’s unwavering trust in the president comes via 25 years of personal friendship and one very lucrative ongoing deal. Of Trump’s more than two dozen global business partners, none is closer to him than Ruffin. Most of Trump’s ‘partners’ are more like customers, who pay to put his name on properties and then give him a percentage of revenues. The only person whom the president has invested alongside in a Trump-branded property? Phil Ruffin.
“I couldn’t imagine a better partner,” says Eric Trump, who manages the Las Vegas hotel that his father owns in a 50-50 joint venture with Ruffin. “It was great to have two people at the level of stature that we had in that project: (a) My father and (b) Phil Ruffin. I think it gave tremendous credibility to the project, especially in the market where there were a lot of deals that, quite frankly, weren’t credible. I think that’s always a great thing. Who are you partners with? Phil Ruffin. Enough said.”
Ruffin’s office boasts a framed photo of him and the president inside Ruffin’s private jet, ready to chow down on hamburgers. Trump signed the photo, in his customary gold marker, “Phil—You are the greatest.” The love is mutual. When Ruffin, 82, married Oleksandra, a former Miss Ukraine who is 47 years his junior, Trump served as best man.
When the president flew to Mexico last August to meet with Mexican president Enrique Peña Nieto, he borrowed Ruffin’s jet, wary that the Trump name could pose a security liability. (Ruffin made sure the insurance company didn’t find out.) Today the billionaire buddies talk every other week or so, and sometimes the conversations turn to policy. “If something comes up, I’ll call him,” Ruffin says. “They’ll always put me through. But I don’t call unless it’s something important.”
When Ruffin married former Miss Ukraine Oleksandra, WHO’s 47 years his junior, Trump served as best man
Image: Tom Donoghue/Polaris/Newscom
Important to him, at least. Ruffin is particularly excited about the possibility that Trump’s plan to reboot the nation’s infrastructure could include reviving a stalled project to build a high-speed train between southern California and Las Vegas. That could bring millions of visitors to Sin City every year, offering a financial boost to Ruffin—and Trump. In addition to the hotel they already own, Forbes
has learned, Ruffin and the Trump Organization are also thinking of building a new casino just off the Strip. Ruffin says he mentioned the train project to Trump after he became president. “He said it sounds like a good deal, especially if it employs 80,000 people, but he didn’t carry it any further,” Ruffin says. And wouldn’t it be a good deal for Ruffin and Trump as well? “We would benefit some, but there are a lot of hotel rooms here. A lot of places they can go.”
The conversation troubles ethics experts. “If the secretary of transportation owned a casino in Las Vegas and they got involved in that project and decided whether that project should receive federal funding or not, I think the secretary of transportation would probably commit a criminal offense,” says Richard Painter, chief ethics lawyer in the George W Bush administration. “That statute doesn’t technically apply to the president. But that’s a perfect example of the type of situation that the president should not have conflicts of interest. If he does have conflicts of interest, he should avoid them, and he should not be invested in a casino in Las Vegas.”
Surely true. But the president’s partner in Las Vegas is Phil Ruffin. And Phil Ruffin has spent almost a half-century skirting or thumbing his nose at laws, rules and convention. He’s made $2.5 billion doing so—and he’s not about to stop now.
Ruffin is a true product of the West—he grew up in Wichita. He bagged potatoes at his father’s grocery store and wrestled in the 147-pound weight class at school. After he won the state championship, his father, who never attended a match, asked him if he was the one they were talking about in the newspaper.
Ruffin went off to college at Washburn University and was soon working the same long hours his father had, running a hamburger business with two schoolmates. Before long, each of them was making $1,000 a month. Ruffin dropped out, sold his interest for $29,000, moved briefly to Texas, and then returned to Wichita and the business his father had taught him.
In 1959, he bought a small market, and not long after, Kansas passed a law prohibiting grocery stores of more than 1,200 square feet from opening on Sunday. Unwittingly, the government had granted Ruffin, whose store happened to be 1,100 square feet, something of a once-a-week monopoly, and he plowed the profits into a mini-empire of 13 locations. When an oil company installed a self-service pump at one of his new Oklahoma stores, Ruffin, noticing an uptake in business, started installing them in Kansas, too.
One problem: Self-service pumps were illegal in Kansas. A fire marshal marched into a store one day and read Ruffin his rights. Ruffin took his case to court and, as he tells it, lucked out with a judge whose daughter pumped her own gas. The judge overturned the law, and in 1972, Ruffin found himself one of the first Kansas proprietors of self-serve gas. He acquired 63 locations across four states, then struck a series of deals that turned him into a billionaire.
First, in 1994, he agreed to a $50 million deal to lease all of his gas stations to the French oil company Total. He immediately leveraged the contract to secure a $20 million loan, which allowed him to buy the Crystal Palace Casino in the Bahamas. Why the gambling bug? “You can never tell when some guy is going to walk in and blow the money.” Ten years later he flipped the property for $147 million.
Smitten with casinos, he headed to Vegas in 1998. Ruffin paid $165 million for the Frontier, an old cowboy-themed joint on the end of the Las Vegas Strip that had been undermined by a six-year labour strike. Ruffin met with the Culinary Union’s president and, in two hours, crafted a deal to settle the dispute for $6 million, more than the Frontier’s $5 million annual profit at the time. But once the picketers were gone, the Frontier’s profits doubled, and the Las Vegas real estate market was also booming. In 2004 and 2005, Ruffin started getting offers from the likes of Harrah’s and Wynn for more than $500 million. But Ruffin held out. Finally in 2007, he signed an agreement with an Israeli investment firm for $1.24 billion, seven times what he had paid for the place.
“He found the only guys in the world that would have paid it,” says Steve Wynn. “And then he looked at me with that usual sly ‘There you go, kid.’ Gives me a little punch in the arm. ‘Told you.’ And I’m standing there with my mouth open, saying, ‘If you are not the luckiest S.O.B. that ever walked.’”
Ruffin’s lucky streak was just getting started. A year after the sale, the US economy went into free fall. MGM was caught with more than $13 billion in debt and just $250 million of cash. But Ruffin had an estimated $1.1 billion war chest, which he used to pick up its Treasure Island casino for $775 million. “The history of Las Vegas is that great wealth was created when people bought low and sold high,” says MGM CEO Jim Murren. “But there are very few examples of people that bought low, sold high, and then bought low again.”
The partnership between Ruffin and Trump began over a dinner. The two had met previously in Trump Tower and explored their common interests in casinos and real estate, among other things. In 2005, Ruffin invited Trump to dinner in Sin City; with their respective much younger, more attractive wives, it became a double date. As an after-dinner treat, Ruffin suggested they go see a vacant stretch of land he owned, behind the old Frontier.
Impressed by the location, Trump agreed to buy half of the lot for $12.5 million. The two billionaires put down another $20 million apiece and secured a $523 million loan from a consortium of banks to build a condominium hotel. The project appeared to be an instant success, securing agreements for almost all of the 1,283 units before construction was even completed. But the building officially opened in 2008, just as the financial crisis was setting in. The buyers for all but 300 units backed out, leaving Ruffin and Trump saddled with more than $500 million in debt and a mostly empty building.
A distressed-assets lawyer suggested they declare bankruptcy. Trump refused, according to Ruffin. “Donald said, ‘No, no, no. This is not Atlantic City. This is Las Vegas—we’ll sell it,’ ” Ruffin recalls. They each pumped in more than $30 million over three years to keep it afloat.
Today the place is packed with a mix of Trump supporters, international tourists and travelling businessmen. Trump and Ruffin still own 398 condos in the building, worth an estimated $169 million.
The value of studio apartments in the building dropped an estimated 13 percent in the year after Trump declared his controversial candidacy but then increased 3 percent after his victory, according to a Forbes
analysis of recent sales. And the value of the penthouses, which Trump and Ruffin have mostly held on to, continues to climb.
Trump’s presidency creates additional complications. In January, a Trump lawyer stood at a press conference in Trump Tower and declared that any profits at his hotels from foreign governments would be siphoned off and given to the US Treasury. Eric Trump insists it’s already happening, but Ruffin says otherwise. “They’re not going to do that,” he says with a shrug.
And he expects the next four years will be good to a property that blares ‘TRUMP’ in 25-foot letters over the Strip: “There is no fall-off in business, for sure. The Trump name is still strong.”
Ruffin was with Trump on Election Night, as history was made. Fellow tycoons Wilbur Ross Jr and Carl Icahn were there as well, but unlike those two, Ruffin wants no part of Washington. “You can either take a government role or hang yourself in the morning,” he says. “I think I’d take the hanging.”
That doesn’t mean he eschews politics. From the day he built his fortune by dint of a Kansas blue law, he recognised the power of exploiting government policy. “I talked to Paul Ryan yesterday,” says Ruffin, of the Speaker of the House. “He thought there was going to be a 20 percent border tax. I think that’s too high.…What else did he say? He wanted $100,000 for other things. Called the Ryan fund. I gave it to him.”
Riding shotgun in a black Escalade as he cruises past the Trump International Hotel Las Vegas, 64 storeys of golden glass, he stares at his next big opportunity. “Slow down,” he tells his driver, pointing not to the tower but to a parking lot right next to it. “This starting right here is four acres.” Ruffin gazes at the empty patch of dirt. He owns the land separately from the Trump hotel, and it’s practically begging for new development. “The highest and best use for that would be a casino,” Ruffin says. “I can’t talk to Donald about it. It would have to be Eric or Donald Jr.” The distinctions can be confusing, even for Ruffin, who later adds: “I would want to do it with Donald—er, let’s say the Trump family.”
As with his grocery days, he’s mindful of government thresholds: Ruffin and Trump are committed to hanging on to at least 300 condos, the minimum number of hotel rooms required to operate a casino in Nevada.
And while in December Trump told his 17 million Twitter followers that he would do no new deals during his presidency, in a more detailed white paper released a month later, he prohibited only foreign partnerships. Domestic deals would proceed, subject to vetting. A new casino in Las Vegas, presumably carrying the same Trump brand as the hotel, would seem to meet the requirements, a notion that Eric Trump doesn’t dispel: “It would be an honour to do it with Phil because he’s a great guy.... The administration has nothing to do with us. We’re going to continue to do what we’ve done for a very, very long time.” That could mean a Trump return to the casino industry, and Phil Ruffin has every intention of being in the centre of it.