Trump decries licensing firm’s claims

The Donald signed the commission checks, but said they were sent by mistake

TRD New York /
Apr.April 12, 2013 03:00 PM

The uniquely coiffed real estate mogul Donald Trump had barely a hair out of place as he testified in court today, explaining that ALM Unlimited, a New York City-based licensing firm, was not entitled to any commissions from a 2003 deal involving his branded clothing line.

ALM has alleged that it arranged a deal between Trump and apparel giant PVH, formerly known as Phillips-Van Heusen, earning a 22.5 percent commission on royalties to start with and later a 10 percent commission on royalties received from the sale of shirts and neck ties. But Trump improperly stopped payments to the company in 2008, ALM alleged.

The line brought in more than $3.2 million in royalties between 2005 and 2007, according to ALM.

Trump, who was instructed by the judge to keep his answers concise, seemed to fight the urge to speak at length at the hearing, held today in state court in Manhattan.

While he acknowledged in court that ALM made the initial introduction to PVH, the company’s role was insubstantial, his attorneys have said. Indeed, in a bizarre stroke, Trump gave Regis Philbin some of the credit for the relationship, since the former television host had recommended PVH to him.

“The 22 percent is referring to the monies they said they were going to bring in but they didn’t bring in,” Trump told the court.

Trump also admitted that his company paid ALM a considerable sum in commissions between 2004 and 2008 — a total of $300,000, according to ALM — but he maintained that the checks were sent incorrectly, despite his signing off on them. It was “physically impossible” for him to thoroughly review every invoice and check that crossed his desk, he repeatedly told the court.

“Mr. Trump signs thousands of checks every week,” Alan Garten, an attorney for Trump, told The Real Deal. “There’s no reason [these checks] would have stood out.”

When asked what ALM was entitled to, Garten said, “Legally, nothing.”

The contract allowed for commission payments, he said, but only if ALM met certain criteria, which it did not. Trump was still willing to pay a smaller commission based on the introduction but the parties could not agree on terms, Garten said.

Jay Itkowitz, an attorney for ALM, was puzzled that Trump could have mistakenly approved so many checks.

“It’s strange that [this is] the head of an organization who, once a week during the television season, fires someone for doing something wrong or not meeting standards,” he said, referring to Trump’s show “The Apprentice.”

“His position in this case is that his accounting department and his trusted employees presented him with checks that were reviewed at various levels and he signed them,” Itkowitz said. “Now he’s saying it’s all a big mistake. Ultimately, whether that’s a big mistake is going to be decided by a jury.”

A New York State Supreme Court judge ordered the case to trial earlier in January, after the parties failed to come to a settlement. Garten said a settlement at this stage would be very unlikely.

Trump’s testimony will continue on Monday.

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