While the Trump University lawsuit has been getting the lion's share of the media, there is other litigation involving Trump that is currently in deposition stage.  It involves Trump's luxury hotel project in Washington, DC, which is set to open in a month.  The Old Post Office Pavilion, which is on Pennsylvania Avenue between the White House and Capitol Hill, dates from 1899.  Built in the Neo- Romanesque style, its clock tower is a well-known DC landmark. In a competitive bidding project, the federal government gave a long-term lease to the Trump Organization in 2013.

This litigation began when both of the celebrity chefs who had contracted to operate restaurants in the hotel complex, Jose Andres and Geoffrey Zakarian, withdrew because of Trump's comments on illegal Mexican immigrants. They each cited that Trump's comments would hurt their ability to both attract customers and retain quality staff.  Trump sued the chefs for breach of contract.  Both chefs countersued. (Timeline here)

The suit against Zakarian is the one in which depositions have been taken.  Zakarian is a regular on several shows on the Food Network and is one of the stable of celebrity champions of Iron Chef America.

I don't know much about Andres except for his reputation as a chef. I have watched Zakarian judge shows on the Food Network. I don't like him because he oozes arrogance, but as a judge I came to admire that he has no time for excuses and seems to be turned off by any contestant who seasons an offering with flattery of the judges. Zakarian is also a well known as a libertarian who has been interviewed by Reason magazine.  In the interview he is highly critical of US Labor Laws and various regulations that affect the food and hospitality industry.

Trump may have met his match in Zakarian.  No novice when it comes to controversial lawsuits, Zakarian filed for personal bankruptcy after former employees filed a class action suit against him.  The assistant chefs and line cooks at a restaurant Zakarian had run alleged he failed to pay overtime, violated other labor law and violated his fiduciary duties. Zakarian's investment partners took the side of the former hired help, alleging that Zakarian improperly paid his wife as a marketing consultant, used the business credit card for personal expenses and comped an unusually high percentage of meals at the restaurant to associates of his other ventures, friends and family.

Since the main issue in both of Trump's suits is alleged financial damage to the renovation project, the ownership structure, financing and income projections for that project are now all subject to the legal discovery process.  A decade ago Trump discovered in his lawsuit against the journalist who reported Trump's net worth at a far smaller number than the one Trump claims that the discovery process can be painful for the plaintiff as well as the defendant and he dropped the case.

One of Trump's claims in his lawsuits seems inconsistent with the high value he places on his own name as a brand in his financial disclosure statements. It is also at odds with his use of the construction site as a backdrop for one of his political rallies.

Among Trump’s claims in both lawsuits is that he, in fact, had nothing much to do with the hotel development, which he turned over to his son and daughter, Donald Jr. and Ivanka. Therefore, he says, nothing he has said personally could possibly be relevant to the fortunes of his business tenants.

The renovation project was already controversial long before these lawsuits.  In winning the bid for the renovation, Trump promised both a joint venture with a well known a private-equity firm and the guidance of an architect known for being sensitive to preservationists' concerns when renovating historic projects.  The promised architect was dropped from the project soon after the GSA awarded the lease to the Trump Organization.

Colony Capital, a venture capital firm, whose head, Thomas Barrack, was a speaker at the Republican National Convention, pulled out of the Post Office Renovation deal only one week after the convention.  Colony's reasons

“Colony exited the joint venture after the project’s timeline became too long for the firm. As the project evolved, cheaper sources of capital for longer term investment became available to Trump. Colony simply could not compete with more attractive financing.”

The Trump Organization says it is now self-financing the hotel with $42 million of its own money and a loan of $170 million from Deutsche Bank, according to the report.

Trump's initial investment in this project was only $2.4 million, a bit over 1% of the total amount needed.   Some of the business media accounts of Colony Capital's withdrawal placed the word "purportedly" before the term "its own money" when describing the Trump Organizations increased equity interest.   The lease with the federal government is the collateral for the bank loan.

One of the items that came out of recent depositions in the Zakarian lawsuits involved the Trump organization's financial projections.  Those projections may be related to why their joint venture partner left the deal. Venture capitalists prefer to commit their money to shorter-term deals.

Lenders were told the hotel could earn millions of dollars more than the more conservative, internal estimates, the financial analyst, Raymond Flores, testified. He said those internal projections “generally tend to err on the side of being pretty conservative.”

Later he said, “And then there are other projections where, you know, we’re pitching to a lender or an equity source, where it’s rosier.” With these projections, he said, “we’re pushing the boundaries of — we’re pushing ranges of reasonability at those — at those projections to show, you know, what the hotel could be.”

Multiple sets of financial figures for the same property is not a new practice for Trump.  The three Trump golf courses for which income figures are on the public record, those in Scotland and Ireland, all report loses on recent filings. Yet in his financial disclosure filed with Federal election officials all three properties are shown as currently profitable.   According to Bloomberg, which interviewed Trump on his foreign investments and licensing agreements in February,

Trump said in the interview that the amounts listed in his financial disclosures are based on "projected future income."

At least some of those future earnings appear to be based on the potential development of properties adjacent to the golf courses for homes and resort hotels. That old saw Don't count your chickens before they are hatched comes to mind.   As a retired CPA what next came to mind is this:  Google the phrase SEC overstating income. The CEOs, CFOs and other responsible parties of publicly traded entities who engage in similar practices do nor prosper.

Trump's current business income was also questioned in the depositions. It has been reporter Donald Trump believes that running for president has been good for his bottom line.  

He said so under oath during a deposition he gave in a lawsuit stemming from a dispute over his soon-to-open Washington luxury hotel.

“I think people like politics. And they like to be around the name and maybe me,” Trump said in the deposition obtained by The Washington Post on Friday. “I think people really dig it.”

During the more-than-two-hour session in June, Trump noted that a manager at one of his properties in Palm Beach said the presidential run has helped contribute to “the best year we’ve ever had.”

But there are other statements during that session that seem inconsistent, according to the Washington Post story on the depiosition.

At other points in the deposition, Trump seemed to play down his campaign’s impact on his business and said he doesn’t think it matters “one way or the other.” He added that he had not spoken to his executives about the effect the campaign has had on his companies.

Trump admitted his comments have also hurt him with some business deals. His relationship with Macy’s has been terminated, he said, as well as his relationship with the mattress manufacturer Serta.

But he said he was still in demand. Trump said NBC wanted to renew his TV show “The Apprentice” but it was his decision, not the network’s, to discontinue the show. Trump said he was unable to do the show while on the campaign. “They wanted to renew me very badly on ‘The Apprentice,’ ” he said.

Trump was in an awkward place when being deposed.  He can't admit traffic to his high end properties is down, especially in blue states, because that would concede the issue that the chefs used to renege on.  It is also possible that the demand for his TV show may be up.  Far more of the voters he is targeting are likely to be in the audience of a reality TV show than patrons of a Trump hotel or golf course.

Political controversy often isn't good for business, especially in the long run. There maybe a flurry of support in the beginning, as supporters circle the wagons. But in the long run alienating a significant slice of the customer base usually hurts business.  I recall the statement of the holder of one of the strongest personal brands in America, Michael Jordan, when he declined to endorse a black Democrat for statewide office in his native North Carolina.  "Republicans buy shoes, too."

Do populists play golf and stay in luxury hotels?