Crime in Progress

by Glenn Simpson;Peter Fritsch;

  Reporters would later portray Fusion as a political “oppo research” shop, but the Trump job actually marked a dramatic departure from its usual line of work. With a stable of reliable clients—law firms, big corporations, hedge funds—Fusion specialized in complex and often expensive corporate and legal investigation. What it offered was simple: Its researchers traced assets, dug through investments, and read the fine print of court and regulatory filings to help clients understand a complicated situation or get an edge on a competitor. Few political races lent themselves to that sort of work, and few campaigns cared to invest in real investigative work, opting instead to pour their money into TV ads.

  After nearly a decade in business, Fusion had dipped into national campaign politics only once before: in 2012, when the Republicans nominated Mitt Romney, a private equity tycoon with a long history in complicated deals and convoluted personal tax shelters. Romney was an ideal subject for Fusion research. Fusion spent more than a year deconstructing his decades-long history of opaque deals and easily accumulated wealth, findings that fed well into Barack Obama’s case against Romney as an out-of-touch plutocrat.

  Trump was an even more tantalizing target. Absent from that first outline to the potential Republican client, though, was any mention of Russia or any focus on the racier side of Trump’s record, which is to say his reputedly rich past with myriad women. Looking into people’s sex lives wasn’t Fusion’s strength.

  The final go-ahead to begin research on Trump came in a call from the client on Friday, September 11, while Simpson was in London. Fusion would be hired by The Washington Free Beacon, a conservative online publication backed by the hedge fund billionaire Paul Singer. He had been a big backer of Rudolph Giuliani and then George W. Bush but was reportedly no fan of Trump. Fusion’s Republican contact gave just a verbal thumbs-up, with no specific marching orders. That was how Fusion liked it. Some research clients try to dictate the objectives (and thus the outcome) of the research process, but Fusion prefers not to work that way. Better to have no preordained thesis and instead gather up everything at the beginning—on the theory that if you decide what you are looking for before you begin, you risk blinding yourself to unexpected things that come up and prove to be important.

  After just a few hours of cursory research, Simpson was struck by the scale of the task. The sheer abundance of lawsuits alone was mind-boggling. Fusion had done a lot of legal research over the years, and it had never encountered a person who had initiated or been the target of as much litigation as Donald Trump. A litigation search of a prominent businessman in his sixties or seventies might turn up a page or two of entries on a federal court database. When Simpson searched Trump’s name, his computer spat back two dozen pages of cases that ran the gamut from allegations of fraud to unpaid bills.

  Simpson ordered a used copy of Barrett’s long-out-of-print The Deals and the Downfall, the first of ten Trump books that, by the end of the month, formed the beginnings of a digital archive on Trump. As the books arrived at Fusion’s office, the spines and bindings were carefully removed using a sharp blade, and the loose pages were scanned and converted into text that could be easily searched: An instant library of thousands of pages of digitally searchable Trump literature.

  The negative news stories on Trump were almost as abundant as his lawsuits. His aborted 2012 presidential run had caused a few journalists to compile hurried overviews of his business past, cataloging a pattern of questionable business partners and interactions with the mob. A spurt of stories from years earlier, concerning Trump’s relationship to a convicted felon named Felix Sater, stood out from everything else. The earliest article, published on B1 in the local news section of The New York Times in December 2007, carried a mundane headline, “Real Estate Executive with Hand in Trump Projects Rose from Tangled Past.” It detailed Sater’s ties to the Mafia and his reinvention as a real estate executive working with Trump. Wayne Barrett had also penned a 2011 follow-up on Trump’s ties to Sater for The Daily Beast. The piece sought to explain why Trump didn’t run for president in 2012: “With lawsuits pending and shady partners, Trump’s business empire could not withstand the scrutiny of a presidential campaign.”

  Simpson’s interest was piqued. Sater did not appear to be your average criminal. The feds had accused him of large-scale money laundering and stock manipulation involving Italian organized crime. He was Russian-born and grew up in the rough-and-tumble émigré neighborhood of Brighton Beach, and his dad was a convicted extortionist with ties to local criminal gangs.

  Simpson went back on Amazon and ordered a copy of The Scorpion and the Frog: High Times and High Crimes, a lightly fictionalized 2003 memoir penned by Sater’s erstwhile business partner Salvatore Lauria. The book contained passages recounting Trump making boorish passes at women and told how Lauria and Sater ran stock scams out of an office located in a Trump-owned building at 40 Wall Street.

  More intriguing were several lawsuits that had been filed against Sater’s real estate firm, Bayrock Group, in Florida and several other states. Trump had done several projects with Bayrock and was named in the suits. Sater worked out of an office just one floor below the Trump Organization, in Trump Tower. Simpson pored over hundreds of pages of court records—from Fort Lauderdale to New York City. In depositions, Trump seemed to grow vague and evasive when asked about Sater and Bayrock, claiming he did not know Sater well and “never really understood who owned Bayrock.” These statements seemed like they must be lies, potentially provable lies, and they were made under oath. Lying under oath, particularly about unsavory activities or associates, is a major problem for candidates running for high office. Or at least it used to be. Simpson made a mental note to check whether they could prove Trump had lied.

  All this just on day one of the Trump work, or what became the newly christened Project Bangor, in keeping with Fusion’s practice at the time of naming projects for random cities. (While some firms and investigative agencies make sly allusions to the underlying subject of an investigation when naming cases, Fusion follows the more anodyne naming conventions of the British police.)

  Though it wasn’t clear at the time, the focus on Trump’s relationship to Sater would prove to be an early milestone in the Fusion project, as it began to orient the research toward Russia. But these early finds didn’t require much sophisticated sleuthing, just basic, early-stage homework.

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  The following week, Simpson and Fritsch began to assemble Project Bangor’s investigative team, with Jacob Berkowitz as the lead researcher. Berkowitz, a Maine native with a master’s degree in international relations, would come to serve as the project’s human hard drive. Insert into Berkowitz’s brain the name of a Russian oligarch and his three layers of barely connected offshore LLCs and the information stayed there, ready for instant retrieval. He was also an agile connector of dots, able to construct mental link charts showing relationships among various characters. Berkowitz would eventually become one of the foremost repositories of all things Trump and a sort of reference librarian for investigative journalists looking to untangle the mysteries.

  At the Republican debate on September 16, Trump declared his admiration for Putin and predicted that he would be on the warmest of terms with the former KGB officer. “I would talk to him. I would get along with him,” Trump said, pledging that if he became president, “we won’t have the kind of problems that our country has right now with Russia.” Trump’s comments stirred immediate interest within Fusion, because the more the team read up on Trump’s past, the more his expressions of fondness toward Moscow fit a pattern. For decades, Trump had shown a starry-eyed fascination with Russia, and he had been lured to travel there by the Soviet government in 1987, ostensibly to scout a potential Moscow project that never got off the ground. George W. Bush and Barack Obama had both boasted, at least for a while, of their ability to see the good hidden within Putin. But Trump had of
ten shown a genuine admiration for Putin’s leadership style and a desire to be friendly with, and respected by, the Russian leader. This pattern would become even more glaringly obvious in the months ahead.

  The following day, Simpson and Berkowitz engaged in a bit of Sater one-upmanship via email, tossing back and forth little findings as they combed through public filings and social media. Berkowitz: “He likes Trump on Facebook.” Simpson: “Nice house on Long Island.” Berkowitz: “Appears to be using a UPS box for his business address.” Sater also had a business card listing himself as “senior advisor to Donald J. Trump.”

  The sheer enormity of the Trump project raised the obvious challenge of where to start. Trump’s business past sprawled across decades and continents. The Fusion team quickly designed a research program that involved half a dozen people, both in-house and contractors, with an emphasis on people who knew their way around court records. Simpson and Fritsch would direct traffic and do their own digging. Berkowitz and another researcher were the main document collectors. Two outside specialists, including a lawyer and a professional archivist, began to dig through the national digital search engine for federal court cases, known as PACER, and to seek out other state and local court filings with promptings from Simpson and Berkowitz.

  The cases covered the gamut and included a plethora of material on Sater and Bayrock. They also went back well into the 1980s and Trump’s tumultuous years in the Atlantic City casino world. Many of the court files were stashed in remote archives or existed only on microfilm. In some cases, court clerks insisted that records had long been purged—which didn’t always turn out to be the case. But within a week or so, the tedious work of amassing the full repository of relevant court records was well under way.

  Team Bangor also began to delve into other curiosities that would crop up repeatedly in the months to come. For one, Trump’s legally required candidate financial disclosure forms raised many questions. There was one company listed in Delaware corporate records, “Chicago Unit Acquisition,” that appeared to be a vehicle for stashing debt or avoiding taxes. The forms also showed that most of Trump’s bank loans came from a single institution, Deutsche Bank. And Trump attributed huge round-dollar valuations to many of his properties, which struck researchers as made-up. Trump claimed in his filings to be worth more than $10 billion, but the evidence he proffered to support this was notably flimsy. It looked like a possible con job and potential violation of the Ethics in Government Act and the law prohibiting knowingly making false statements to the federal government.

  Trump’s reputation as a savvy billionaire was further belied by his creation of Trump University, a for-profit, unaccredited real estate training school that had drawn a raft of lawsuits and regulatory scrutiny before it shut down in 2010 after five years of operation. The school was an obvious scam. Why would a supposed mega-billionaire set up a fake university to con a few thousand strivers out of their meager life savings? There were really only two possible explanations, neither of them comforting: Either Trump wasn’t nearly as rich as he claimed to be and needed the money, or he was a pathological cheat who could not resist preying on the weak.

  As Fusion prepared a series of memos from public records on everything from Trump’s bankruptcies to his history of stiffing contractors, the Republican client latched on to the subject of Trump University, which was colorful and easy to understand. The Free Beacon wanted more on that. There were numerous ongoing fraud cases against the Trump Organization, with hundreds of scorned attendees and “students” as plaintiffs. Fusion harvested dozens of names to find anyone who wanted to speak out about their relationship with the business side of Trump. Among the victims of the school scam were a police sergeant, a former U.S. Army officer, and a Liberty University graduate. In all, the names of seventy victims possibly willing to speak went to the client. By October 4, Berkowitz and his colleagues had completed a first draft of a comprehensive twenty-page memo on the fraud allegations against the Trump Organization.

  Meanwhile, Fusion embarked on another task, assembling the first of its many timelines for Trump—a chronology of his bankruptcy cases and other litigation that would run to seventeen pages. At Fusion’s behest, a New York–based lawyer spent an afternoon at Barrett’s Brooklyn house, combing through sheaves of notes and old press clippings. The lawyer gathered up what seemed relevant and shipped it to the Fusion office via overnight mail.

  Among the cache was information gathered by Barrett regarding Trump’s alleged ties to the Philadelphia mob, his drafts, notes, and emails from various reporting projects, and filings from Trump’s $5 billion libel suit against one of Barrett’s journalistic disciples, Timothy L. O’Brien, for daring to write in his 2005 book, TrumpNation: The Art of Being the Donald, that Trump was not a billionaire. Trump had lost the case. That outcome was significant, as it suggested that Trump was either unwilling or unable to produce credible evidence in court that proved his claims about his wealth. Notably, one of Trump’s own witnesses in the O’Brien case was none other than convicted felon Sater, who in a deposition recounted taking trips with Trump and his children around the United States and abroad and being asked personally by Trump to testify in his case against O’Brien. Sater also acknowledged his own colorful criminal past, which didn’t make him much of a witness for Trump.

  The emerging picture of a faux billionaire scam artist who consorted with criminals caused Fusion to kick the paper chase into high gear. The accumulated lawsuits all began to sound somewhat the same, indicating an increasingly obvious pattern. A Trump development would begin with great fanfare, Trump and his children proudly proclaiming their extensive personal involvement and the Trump Organization’s stake in the project, as well as extolling the intense early buyer interest and sales. Eventually, the project would fail, the sales claims would turn out to be hype, and the investors and partners would sue Trump. Then Trump would claim he was not the developer, merely a licensor. This happened from New York to Florida to Panama.

  The forty-six-story hotel and condo complex in Manhattan known as Trump SoHo, developed with Sater starting in 2006, followed this pattern. In 2011, amid a fraud investigation by the Manhattan district attorney, Trump and his co-defendants agreed to settle a civil suit by Trump SoHo customers and refunded most of the project’s more than $3 million in deposits. The plaintiffs had alleged that Trump, along with his son Donald Jr. and daughter Ivanka, had defrauded buyers by exaggerating early sales figures in an effort to lure more buyers to the failing development. The use of dubious “pre-sales” hype as a pretext to secure more buyers and financing was a hallmark of Trump projects, Fusion would come to learn.

  A classic example was Trump’s Fort Lauderdale project, in which Trump initially said he was an investor in the project but then later claimed under oath that he couldn’t remember saying any such thing. So was he an investor? “Well, not an investor per se,” Trump said. “They gave me an interest that allowed them to pay me fees.” Asked if he’d been an investor in any of his many other projects, Trump insisted he was not. “I can’t think of any,” he claimed. “I mean, in Miami we’re a licensor…in Toronto, we’re a licensor.” That would have been news to many people who had bought Trump’s condos in those places.

  This sort of pattern recognition is one of the core methods in an investigation based on public records. All data and documents have a story to tell. But understanding what that story means can be a challenge. Was Trump’s string of failures just a run of bad luck, or was it in some way orchestrated? Did Trump care if his projects all failed? Did he actually intend to fail? Did he care who he did business with? To Fusion, it had begun to appear that Trump either was oblivious to possible fraud in his projects or may have adopted systematic fraud as his late-career business model. In either case, it was disturbing behavior for a possible future U.S. president.

  Telling the difference between a series of coincidences and a conspiracy is tricky. But a
s time went by, the intentional-fraud scenario began to seem increasingly possible, given the mounting evidence of Trump’s career-long history of dealings with people associated with organized crime. In many organized crime business ventures, insiders plan from the start for the business to fail, using the venture as merely a means of tapping and then absconding with lines of credit or bank loans, diverting the company’s assets, or simply fleecing investors who come along later. These recurring failures had the hallmarks of many Mafia schemes in New York in the 1980s and ’90s, when Trump did business with Italian organized crime figures.

  Trump’s criminal ties were explored at length in an October 16, 2015, Washington Post story that married some of the material accumulated by Fusion on Trump’s Mafia ties to the paper’s own research and interviews with former FBI agents. “No serious presidential candidate has ever had Trump’s depth of documented business relationships with mob-controlled entities,” the story observed. The report featured prominently in the paper but made barely a ripple in the increasingly heated primary campaign. Trump’s Republican opponents ignored it, as did other news outlets. The client was frustrated the story didn’t get more pickup but thought it was a good start.

  Fusion’s partners were surprised by the lack of reaction. In normal elections, revelations of this kind usually spark days of coverage and attacks by rivals. You had to go back to John F. Kennedy to think of a candidate with such close ties to organized crime. Fusion, though, knew from its contacts that more on that front was coming as other reporters began to dig into Trump’s transition in the 1990s from ties to the Italian Mafia to links to the Russia mob. As the power and influence of La Cosa Nostra in New York City waned in the 1980s and ’90s under relentless law enforcement pressure, organized crime figures from the former Soviet Union increasingly took over rackets like prostitution and drugs and also moved in on the casinos of Atlantic City. This shift was chronicled by another Village Voice investigative reporter, the late Robert Friedman, in his book Red Mafiya: How the Russian Mob Has Invaded America. First published in 2000, the book would become a reference for Fusion researchers working to understand and map Trump’s milieu.