He Got Trump Right, Then Things Went Wrong

Tom Barrack’s Colony Capital is struggling. His royal allies in the Middle East are boxed out. And his old friend Paul Manafort is behind bars

- Caleb Melby​​​​​​

For Fourth of July weekend 2015, Patrice de Colmont, the owner of Le Club 55 near St. Tropez, decorated his restaurant with U.S. and French flags. Among the wealthy Americans there nibbling crudités and sipping Domaines Ott was financier Tom Barrack, who’d brought employees from his investment firm, Colony Capital. Fellow titans stopped by his table to say hello, including Blackstone Group LP co-founder Stephen Schwarzman, former Citigroup Inc. Chairman Sandy Weill, and hedge fund manager Dan Loeb.

Barrack had invited his deputies to the French Riviera to lay the groundwork for the Los Angeles-based firm’s newest fund. Building on a history of dealmaking that included Fairmont Hotels; the Miramax film studio, co-founded by Harvey Weinstein; and Michael Jackson’s Neverland Ranch, Barrack aimed to raise $2.5 billion to buy distressed European real estate assets and generate returns greater than 15 percent, a confidential investor pitch obtained by Bloomberg Businessweek shows. The conversations that weekend bubbled with optimism.

A few weeks earlier, Donald Trump, one of Barrack’s oldest friends, had announced he was running for president. The two real estate investors met in the mid-1980s, and Barrack entertained the crowd with war stories of deals they’d done together. While the campaign was the butt of many jokes at Le Club 55, according to two people who were there, Barrack startled guests with a different take. He said he thought Trump’s brash, authentic style would take him to the White House—and that he’d make a better president than candidate. Even employees who’d spent decades helping their boss place counterintuitive bets called the prediction crazy.