House of Trump, House of Putin2

by Craig Unger

  In 1994, Cohen had married Laura Shusterman, daughter of Fima Shusterman, a taxi entrepreneur who had pleaded guilty to defrauding the IRS.84 Meanwhile, Cohen’s younger brother Bryan had also married a Ukrainian woman, and Bryan’s father-in-law, Alex Oronov, was seeking investors for an ethanol business Oronov co-owned with Viktor Topolov. An oligarch whose associates were allegedly tied to the Ukrainian and Russian criminal underworlds, Topolov, according to Talking Points Memo, “had a one or two steps removed relationship with Russian underworld kingpin Semion Mogilevich.”85

  According to the FBI, Topolov’s conglomerate, Kiev-Donbas, employed three executives who were part of the Russian Mafia, including one enforcer who was tied to Mogilevich and admitted to taking part in at least twenty murders.86

  In New York, Cohen followed his father-in-law, Fima Shusterman, into the taxi medallion business, where they registered more than fifteen companies—Sir Michael Hacking Corp., Lady Laura Hacking Corp., Smoochie Cab Corporation—and ended up working with Simon Garber and Evgeny Freidman, two Soviet-born New York taxi barons, who managed part of Cohen’s fleet.87 By 2003, he claimed he controlled a fleet of two hundred cabs.88 Before the advent of Uber and similar services, taxi medallions sometimes sold for more than $1 million.89

  “Cohen associated himself with the most reckless and greedy players in the industry,” said Bhairavi Desai, the executive director of the Taxi Workers Alliance, a group that represents cabdrivers.90 “They have simultaneously worked to inflate the value of their medallions and rip off their drivers.”

  In 1999, Cohen received a check for $350,000 that was written by star hockey player Vladimir Malakhov.91 Under a sworn deposition, Cohen said he did not recall receiving the check and did not know why Malakhov might have paid him that sum. According to an article on Gordon, a Ukrainian news site, by Russian-American historian Yuri Felshtinsky, who co-authored Blowing Up Russia with Alexander Litvinenko, the $350,000 was intended for one of the leaders of the Izmaylovskaya Organized Crime Group (OCG), one of the oldest and most important Mafia gangs in Moscow. When Cohen was deposed and asked under oath if the signature endorsing the check was his, he replied, “I don’t know but it could be.”

  Then, asked why someone would have sent him the check, Cohen said, “ I have no idea.”92

  In the end, the Felshtinsky article concluded that the money was intended for one of the leaders of the OCG, Vitaly Yuryevich Buslaev, who was allegedly one of the gang’s five “kingpins.”93

  Gregory Ehrlich, a one-time friend of Cohen’s who is now estranged from him, invited Cohen to his wedding, and, according to the Wall Street Journal, overheard Cohen bragging that he belonged to the Russian mob.94 Ehrlich later said he did not believe Cohen had any such ties.

  Meanwhile, Cohen assembled a mini real estate empire of his own, part of which involved his and his family’s buying up numerous Trump apartment units, with his Ukrainian father-in-law buying at least four units and Cohen buying five.95 According to Rolling Stone, during a five-year period, Cohen and people close to him bought $17.3 million in Trump properties.96

  In February 2007, Trump complimented Cohen on the wisdom of his acquisitions. “Michael Cohen has a great insight into the real-estate market,” he told the New York Post.97 “He has invested in my buildings because he likes to make money—and he does.”

  Indeed, Trump was so impressed by Cohen’s insight that by May, he hired Cohen as an executive vice president at the Trump Organization, the same title held by three of Trump’s children, Donald Jr., Ivanka, and Eric.98 Now Cohen was working in the same building as his old buddy Felix Sater.

  Once Cohen began working for Trump, his pronouncements only enhanced his reputation as a hard-nosed fixer—as Roy Cohn 2.0, his new pit bull. “If somebody does something Mr. Trump doesn’t like, I do everything in my power to resolve it to Mr. Trump’s benefit,” he told ABC News in 2011. “If you do something wrong, I’m going to come at you, grab you by the neck and I’m not going to let you go until I’m finished.”99 Fittingly, perhaps, on Twitter, his hashtag would become #secretaryofloyalty.100

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  And so, all the strands had started to come together: There was a booming real estate market. There was Vladimir Putin’s festering bitterness about his country’s humiliating Cold War defeat. There were Putin’s dreams of reviving Russia’s imperial glory. There was the newly globalized post–Cold War version of the Russian Mafia, still very much a state actor in league with Russian intelligence. There were untold billions of dollars in flight capital in anonymous shell companies in Cyprus, the Channel Islands, Panama, and other havens for dark money. There were sumptuous chateaux, villas, dachas, and estates, one bigger than the next; gigantic yachts; private jets; and all the rest, all part of a new culture of unimaginable greed.

  And finally there was Donald Trump, emerging from a decade of litigation, multiple bankruptcies, and $4 billion in debt, to rise from the near-dead with the help of Bayrock and its alleged ties to Russian intelligence and the Russian Mafia. “They saved his bacon,” said Kenneth McCallion,101 a former federal prosecutor who filed suit against Mogilevich, Paul Manafort, Ukrainian oligarch Dmitry Firtash, and others on behalf of former Ukrainian prime minister Yulia Tymoshenko.

  But Trump’s rescue by the Russians was not cost-free. By working with Bayrock, McCallion says, Trump may well have been performing gigantic favors for Vladimir Putin without even knowing it. Indeed, in 2016, Trump’s political adversaries commissioned Christopher Steele, a former MI6 agent, to dig up opposition research on Trump, and among the most astonishing allegations in the infamous thirty-five-page Steele Dossier, which alleges Trump has been severely compromised by Russia, is that Trump unknowingly regularly supplied intelligence to Vladimir Putin.

  On the face of it, Steele’s allegation seems absurd to anyone familiar with Trump’s insistent tweeting, impulsive outbursts, and scores of outrageous indiscretions. Who could possibly believe he had the discipline necessary to carry out such a daring intelligence operation?

  On the other hand, Steele’s dossier specifically said the intelligence in question was about “the activities of business oligarchs and their families’ activities and assets in the US, with which PUTIN and the Kremlin seemed preoccupied.” That kind of intel was crucial to Putin, because his relationship with the oligarchs often seesawed back and forth. Putin oversaw them with an iron fist, and when they fell out of favor, they either toed the line or ended up being purged (media executives Vladimir Gusinsky and Boris Berezovsky), being jailed (Yukos Oil’s Mikhail Khodorkovsky), and/or dying under mysterious circumstances (Berezovsky).

  Thanks to Bayrock, McCallion suggests, the future president was indirectly providing Putin with a regular flow of intelligence on what the oligarchs were doing with their money in the US. “I believe that Christopher Steele was right,” says McCallion. “Initially, Trump wasn’t that important to Putin. But now that Trump was getting investments from the Russians, Putin could keep track of where their money went because Bayrock kept a ledger that Moscow likely had access to. It was not just about buying condos, which was the tail wagging the dog. It was direct capital investment into various Trump projects.”

  In other words, for example, if capital came in to Bayrock from Iceland’s FL Group, as it did for Trump SoHo, Putin would likely know. “Putin didn’t stop the expatriation of billions of dollars because he benefited from it,” said McCallion,102 “but it was a serious problem for the Russian economy. Billions of dollars were going out and he really wanted to keep track of it for a variety of reasons, to see what the financial strength was of the oligarchs.”

  If the Sapir Organization, or the Trio behind the Eurasian Natural Resources Corporation—Mashkevich, Chodiev, and Ibragimov—or Lev Leviev invested a few hundred million or so, Vladimir Putin would know. He would know if Felix Sater was trying to strike a deal with Mirax’s Sergei Polonsky. He would know about money that was being laundered through the purchase o
f condos in Trump SoHo and other developments. He would know about Tevfik Arif’s various adventures. And, through Chabad, he would have access to even more information about his oligarchs.

  Nor is McCallion the only one who believes Steele might be right about Trump’s inadvertent funneling of intelligence to Putin. “If you read the Steele Dossier about Trump providing information on Russian money and oligarchs,” says John Sipher, “maybe that is Felix Sater finding out where Russian money is coming in from and relaying it back to Russia. Maybe he is the go-between. I don’t know.” Of course, Sater has repeatedly denied any such allegations.

  Regardless, Sipher and other undercover CIA operatives in Moscow were told that the Russian Mafia was simply not in their purview. “In fact, when you arrived in Moscow, agents were given operational directives that explicitly told them to stay away from them,” Sipher said.103 “To Trump’s people, it was like a moth to a flame.”

  That left the FBI as the most powerful remaining bulwark against the Russian Mafia. But the FBI was infatuated with Felix Sater, raving about his contributions to national security, as Bayrock allegedly laundered huge sums of Russian money.

  Many questions about the FBI’s interaction with Sater remain unanswered, but one gauge of its relationship to the Russian Mafia can be seen in the trajectory of former FBI director William Sessions. Once one of the premier law enforcement officers in the nation, in 1997, Sessions had gone to Moscow to address the issue of the Russian Mafia. “I believe we can beat organized crime,” he told the assembled crowd.104

  But ten years later, back in private practice, Sessions had moved in another direction. Just as Bob Dole and Jack Abramoff and Tom DeLay and Barbour Griffith & Rogers had jumped on the Russian gravy train, William Sessions decided to take on a Russian client. In this case, the client had been charged with racketeering and was trying to negotiate a deal with the US Department of Justice, and was so powerful that he not only had made the FBI’s “Ten Most Wanted” list, but had now gotten a former FBI director, William Sessions, to represent him.105 Sessions’s client, of course, was Semion Mogilevich.

  In the end, Mogilevich did not get the plea deal he wanted. But the mere fact that the former head of the FBI had a client who, according to the US Department of Justice, represented an enormous national security threat provides a sense of how deeply the Russian Mafia had penetrated America’s defenses.

  What would be worse, of course, was if the Russian Mafia somehow managed to go even further and breach the White House. All of which seemed extraordinarily far-fetched. Even though Trump had expressed his presidential ambitions by this time, no one took him terribly seriously.

  As for what Trump thought when he took stock of Putin’s presidency in Russia, that was open to speculation, but increasingly it looked as if he liked what he saw. “He saw a guy who a) can be president for life basically, and b) is worth about $200 billion,” said Kenneth McCallion. “So Trump had to be thinking, ‘Why not here?’”106

  CHAPTER FIFTEEN

  PUTIN’S REVENGE

  On April 25, 2005, in his annual address to the nation, Vladimir Putin called the demise of the Soviet Union “the greatest geopolitical catastrophe of the twentieth century.”1 More than a mere sound bite that romanticized the deceased communist state, Putin’s pronouncement could be seen as his reassertion of the idea that Russia must fulfill its great imperial destiny. All of which portended renewed conflict—in one form or another—with the West.

  Which should have surprised no one. Even before the Soviet Union took its last breath, Eastern Bloc satellites had started to abandon Russia. First, in 1990, what had formerly been East Germany reunited with the Federal Republic of Germany and became part of NATO. That included Dresden, Putin’s old haunt. In 1999, three former communist countries—Hungary, the Czech Republic, and Poland—joined NATO. After that, Western officials repeatedly assured Russia that NATO would not expand to the east2 but broke their pledge. By the time of Putin’s speech in 2005, seven more Eastern Bloc countries—Bulgaria, Estonia, Latvia, Lithuania, Romania, Slovakia, and Slovenia—had joined NATO. Albania, Croatia, and Montenegro followed.3

  For Putin, however, the red line was Ukraine—a nation of more than forty million people that is Russia’s breadbasket, an essential trade partner, and Russia’s biggest buffer with the West. Under no circumstances would Putin allow it to fall to the West. Yet Ukraine’s Orange Revolution of 2004 had posed a grave threat to Putin’s control.

  The protests had their genesis in a crisis that began in September 2000 when Georgian politician and journalist Georgy Gongadze, a prominent critic of President Leonid Kuchma’s administration and its close ties to Putin, wrote a story, “Everything About Oleksandr Volkov,” published on the Ukrayinska Pravda website, tying Volkov, a top Kuchma adviser, to the Russian Mafia.

  A high-level oligarch himself, Volkov was one of several people close to Kuchma who had helped Dmitry Firtash get established in the Ukraine energy trade, allegedly with Mogilevich.4 In addition, Volkov had begun partnering with Boris Birshtein, Sergei Mikhailov, and Semion Mogilevich as early as 1994, according to All Is Clouded by Desire: Global Banking, Money Laundering, and International Organized Crime, by Alan A. Block and Constance A. Weaver.5 He was “such a scary guy,” the authors write, “that hardly anyone in the Ukraine who wasn’t a crook would utter his name.”6

  And now, Gongadze was reporting that Volkov had foreign bank accounts with $15 million in them, $5 million of which allegedly came from Seabeco, the company Boris Birshtein ran with Alex Shnaider, Alexander Mashkevich, and Patokh Chodiev.7

  But on September 16, 2000, after his exposé of Volkov was published on Ukrayinska Pravda, Gongadze disappeared. Shortly afterward, Deputy Interior Minister Mykola Dzhyha announced that, among other theories, authorities thought Gongadze might have staged his own abduction.8 That turned out to be incorrect. Two months later, his decapitated body was found about seventy miles outside Kiev.9

  Gongadze’s murder has never been solved, but there is reason to believe someone at the highest levels of the Ukrainian government orchestrated his assassination. One key piece of evidence comes from clandestine tape recordings made by Mykola Melnychenko, a former bodyguard to President Kuchma, who secretly recorded five hundred hours of conversations in Kuchma’s office between 1999 and 2000.10 Among them is a conversation with Ukrainian secret service chief Leonid Derkach.11 As reported by Radio Free Europe/Radio Liberty, in the Melnichenko tapes President Kuchma says, “I’m telling you, drive him [Gongadze] out, throw him out. Give him to the Chechen’s [expletive], have him become a hostage, let them pay a ransom for him.”

  To which another voice, believed to be that of Interior Minister Yuriy Kravchenko, replies, “We will think it through. We will do what is needed. . . . I was told today that we are preparing a program for him. We are studying his movements, where he goes. We need to learn this and then we will act.”

  President Kuchma denied that any such surveillance of Gongadze took place, and maintained that the Melnichenko recordings made in the president’s office are fakes.12 However, in 2001, a former FBI forensic expert at Bek-Tek, a private audio lab in Virginia, determined that the audio recordings regarding the surveillance of Gongadze were genuine. Later, in 2002, according to Radio Free Europe/Radio Liberty, the FBI came to the same conclusion when it examined a different segment of the recordings.

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  Gongadze’s murder was the first of dozens, many of which remain unsolved, in which journalists and others who were investigating Putin’s kleptocratic tribute system were mysteriously killed. According to the Committee to Protect Journalists, no fewer than seventy journalists have been murdered in Russia and Ukraine between 1992 and 2018.13 These were the men and women who had been reporting on how Putin’s system enriched his cronies, various oligarchs of his choosing, and mobsters.

  American journalists were not immune. On the night of July 9, 2004, Paul Klebnikov, the forty-one-y
ear-old editor of Forbes Russia and the author of Godfather of the Kremlin: The Decline of Russia in the Age of Gangster Capitalism, left his Moscow office at about ten p.m. He headed toward the subway when a car drove slowly by with someone firing nine shots at him. Klebnikov died in the hospital.14

  The murder, which is still unsolved, has been described as a contract killing that, according to the publisher of Forbes Russia, was “definitely linked” to Klebnikov’s journalism.15 Some observers have suggested the attack was triggered by a recent Forbes story on the hundred richest people in Russia. Others suspected Boris Berezovsky of being behind the murder. Richard Behar, an investigative reporter with Forbes and a longtime friend and colleague of Klebnikov’s, said the chief Russian investigator on the case told him, “I have testimony that [Boris] Berezovsky put a contract out on Klebnikov—from a person to whom Berezovsky spoke.”16

  But the case remained unsettled. Behar told Klebnikov’s family that if Paul were alive today, “he’d be able to solve his own murder. That was the irony and tragedy. If he was alive, he’d be breaking more ground on Trump-Russia than any other individual reporter. I have absolutely no doubt of that. He was way, way out in front on so many things.”17