by Luke Harding
One topic of conversation was Trump’s latest Manhattan project, Trump SoHo.
Trump unveiled plans for the new forty-six-story glass tower and hotel during an episode of his show, The Apprentice. He failed to mention the fact that other people would be paying for the Spring Street building. One investor was Bayrock. Bayrock in turn teamed up with an Icelandic hedge fund, the FL Group, which contributed $50 million. Another partner was Tamir Sapir, a businessman from Soviet Georgia.
These equity cash flows into Trump’s newest branded property were mysterious. Bayrock had an opaque corporate structure. There were several tiers. The FL Group was based in the British Virgin Islands.
In common with Cyprus, Icelandic banks were a favored destination for Russian capital. There was speculation that Moscow interests might be behind the FL Group. Proving this—or disproving it—was difficult. The group was linked to a maze of shell companies whose ultimate owners were unknown. The FL Group financed two other large Trump projects, in Queens and Fort Lauderdale.
How much did Trump know about his Russian American business partners? The official answer, it turned out, was not a great deal. Trump insisted that he had no idea about Sater’s background. Actually, he scarcely knew the guy…
In September 2007 Trump, Arif, and Sater attended the launch party for Trump SoHo. A photo shows the three of them together, grinning. Two and a half months later The New York Times published an article revealing Sater’s colorful criminal past.
Asked for comment, Trump said the news surprised him: “We never knew that.” He added: “We do as much of a background check as we can on the principals. I didn’t really know him very well.”
Sater left Bayrock soon after the embarrassing piece was published. In 2009 he was sentenced for his role in the original stock scam. Sater told the judge he had “built a very successful real estate company, a Trump project,” and was sad to leave it. Sater’s long years of service to the FBI paid off. Instead of getting twenty years in jail, the usual tariff, Sater received a $25,000 fine.
While Trump was suffering from selective memory loss, Bayrock’s former finance director, Jody Kriss, was preparing a devastating complaint, the first of several in what would turn out to be years of bitter litigation. It alleged that Bayrock had funneled money from the FL Group to people outside the company.
The writ added: “For most of its existence it [Bayrock] was substantially and covertly mob owned and operated.” Arif and Sater had carried out “a pattern” of crimes, including fraud, tax evasion, money laundering, and embezzlement, it said. Sater and Arif denied this.
The writ didn’t suggest Trump was complicit. But its key allegation was clear: that post-Soviet speculators invested in Trump licensing deals primarily in order to launder money. Arif faced further difficulties when the Turkish police arrested him on a yacht in the company of several young women and charged him with running a prostitution ring. He was later acquitted.
In New York, financial disputes played out in courtrooms, with judges, attorneys, and multipage affidavits. They were measured in years and sometimes decades.
In Moscow, business feuds were fixed more bluntly. Ivankov, the ruthless vor, was deported in 2004 from the United States and extradited to Russia. Back home, he was acquitted on murder charges. He kept a low profile.
In July 2009 he went for lunch in a Thai restaurant. After an enjoyable meal he walked back to his car. From a neighboring rooftop an unknown person shot him in the stomach. The weapon was a sniper rifle.
Ivankov was laid to rest in Moscow’s Vagankovskoye Cemetery, plot 26, in a funeral attended by old-time members of Russia’s waning gangster brotherhood. He was buried next to his mother.
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It was 2011, the era of Barack Obama, and FBI agents were applying for a court warrant. They wanted to listen in on a suspect’s phone calls. Their target was Vadim Trincher, a poker player who was suspected of running an illegal gambling ring from his upscale New York apartment.
That Trincher was wealthy wasn’t in doubt. He had bought the suite in 2009 from another well-off Russian, Oleg Boiko, paying $5 million in cash. Trincher had filled his home with expensive furniture and a valuable silk rug. The question for the bureau was whether Trincher’s regular card-playing sessions constituted a federal crime.
Using information obtained from wiretaps the FBI sketched out a plan of Trincher’s contacts. One person he called was Alimzhan Tokhtakhounov, an ethnic Uzbek crime lord from Tashkent. Another was Helly Nahmad, a Lebanese American art dealer who owned a major New York gallery founded by his father.
The FBI spent two years monitoring the activities inside Trincher’s luxury apartment—number 63A. Its location? The fifty-first floor of Trump Tower.
Trump Tower was now a significant crime scene. Trump lived just three floors above Trincher, in a lavish triplex penthouse. Nahmad had purchased the entire fifty-first floor of the building, at a cost of $20 million, and funded gambling operations run by Trincher’s son Ilya.
Federal agents weren’t seeking to eavesdrop on Trump. Rather, their probe was directed at the Russian mob, who happened to be Trump’s almost-next-door neighbors.
In April 2013 the FBI raided Trump Tower in an operation in which thirty people were arrested. Trincher got five years in jail. A court heard that he laundered the profits of his gambling operation—some $100 million—through shell companies in Cyprus. The cash allegedly traveled via the Bank of Cyprus. Nahmad served five months in jail, as did another Russian connected to the case, Anatoly Golubchik.
The only person who managed to escape the net was Tokhtakhounov, whom the FBI termed a major authority inside Russian organized crime. He disappeared.
Tokhtakhounov led a picaresque life. He had spent time in various Soviet prisons, and one in Venice, and had lived in Germany and Paris. The United States accused him of bribing judges to fix the ice-skating competition during the 2002 Winter Olympics in Salt Lake City. He was on good terms with his fellow mafia bosses. He liked Putin. Of the late Ivankov, a friend for more than forty years, he said: “A legendary man. Very well-read. Interesting.”
Tokhtakhounov’s whereabouts were unknown until November 2013, when he was spotted in Moscow. According to Kommersant, Tokhtakhounov was seen at a major international event—the Miss Universe competition. He was sitting in the ground-floor auditorium, in the area reserved for VIPs, not far from Aras Agalarov and Donald Trump.
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The FBI raid had a postscript. The lawyer who approved the arrests in connection with Trump Tower gambling was Preet Bharara, U.S. attorney for the Southern District of New York. Bharara was Punjab-born, Harvard-educated, and a graduate of Columbia Law School. He would make numerous enemies in a starry, high-profile, conspicuous career, including the presidents of the United States and Russia.
Obama nominated Bharara to the post in 2009. Bharara immediately embarked on a high-profile crusade against corruption. He pursued banks, hedge funds, crooked traders, and politicians from both sides of the aisle. And Russians. One signal feature of his attorneyship was a willingness to pursue suspects who lived far away, in foreign jurisdictions.
Bharara examined the $230 million allegedly stolen in the Magnitsky case. Some of the money, it transpired, had been spent on New York real estate, including on a luxury condominium at 20 Pine Street, just a few blocks from Wall Street. The money had gone from Moscow via shell companies in Moldova to a holding company in Cyprus.
The company was called Prevezon and its owner was Denis Katsyv. It was Katsyv who hired Natalia Veselnitskaya to contest the case in New York. As The Guardian reported, there was also a Trump connection. Prevezon bought the Pine Street apartment from Lev Leviev, a billionaire tycoon and diamond mogul. In 2015 Leviev sold several floors of the old New York Times Building on 43rd Street in Manhattan for $295 million. The buyer was Jared Kushner.
Bharara’s investigations displeased the Kremlin. In April 2013 it barred him, together with seventeen other Americ
ans, from visiting Russia. Bharara carried on as before. The next month he closed down the Rasputin restaurant in Brooklyn, a gathering spot popular with alleged Russian crime bosses. Its owner was arrested for fraud.
It seemed unlikely that Bharara could prosper under Trump. In November 2016 the president-elect summoned him to Trump Tower. The meeting was apparently warm. Speaking afterward in the lobby, Bharara told reporters that Trump had asked him to stay on as U.S. attorney for Manhattan. He said he had agreed and had promised to work independently and without fear and favor, as before.
This concord lasted until March, when Jeff Sessions requested that all forty-six U.S. attorneys appointed during the Obama era resign. Bharara refused. He was fired. Two months later his successor settled the Prevezon case on the eve of trial. The firm paid a $5.9 million fine. Veselnitskaya claimed victory. The sum was so slight “it looked like an apology from the [U.S.] government,” she said.
The deal seemed fishy, at least to sixteen Democratic senators who wrote to the Justice Department asking for an explanation. They wanted to know if the White House had interfered in an agreement described by one constitutional expert as “frankly outrageous.”
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Felix Sater and Michael Cohen, Trump’s lawyer, were old friends. They had known each other as teenagers. In 2015, in the early stages of his campaign, Trump had said of Sater: “I’m not that familiar with him.” Sater, it appeared, had disappeared from view.
Emails released to Congress, however, suggest that Sater was still in the thick of things. Not only was he plotting to get his old boss elected president, but he was also working to make Trump Tower in Moscow a reality. Sater’s playbook: Trump could use Moscow’s support to his political advantage, showing off his skills as a negotiator and deal-maker.
Sater was confident he could arrange everything. On November 3, 2015, he wrote to Cohen:
I will get Putin on this program and we will get Donald elected. We both know that no one else knows how to pull this off without stupidity or greed getting in the way. I know how to play it and we will get this done. Buddy our boy can become President of the USA and we can engineer it. I will get all of Putins team to buy in on this, I will manage this process.
We don’t have Cohen’s reply. But the emails lay out Sater’s plan for glory—a ribbon-cutting ceremony in Moscow and praise from Putin of Trump’s peerless business skills. To achieve this, Sater said he could show video clips to his Russian contacts of Trump speaking glowingly of Russia: “If he [Putin] says it, we own this election. America’s most difficult adversary agreeing that Donald was a good guy to negotiate.”
Okay, but who was going to put up the cash for Trump’s Moscow tower? Sater had a plan here, too. VTB, Russia’s state-run bank, had agreed to provide financing, Sater wrote. VTB was an eyebrow-raising choice. First, it was under U.S. sanctions. Second, it had interesting connections to Russian intelligence.
Sater added that it would be “pretty cool to get a U.S.A. president elected.” His anticipated reward for pulling off this great deed would be modest. He wished to be ambassador to the Bahamas. He told Cohen: “That my friend is the home run I want out of all this.”
So while Trump was out on the campaign trail speaking sweetly of Putin, his aides were seeking to win Russian government support for Trump’s long-cherished Moscow real estate project. Without it, Sater correctly understood, the tower would never get built.
All of this was happening in private. U.S. electors knew nothing of Sater’s Kremlin outreach scheme. Trump did, though. So did Cohen. Cohen said he talked to Trump about the Moscow tower three times. When it appeared that the project was faltering, despite a letter of intent, Cohen took a bold step. He sent an email to someone big: Putin’s press secretary, Dmitry Peskov. The email was a petition, a meekly phrased plea for help. It was sent in mid-January 2016.
Cohen wrote:
Over the past few months I have been working with a company based in Russia regarding the development of a Trump Tower-Moscow project in Moscow City. Without getting into lengthy specifics, the communication between our two sides has stalled.
As this project is too important, I am hereby requesting your assistance. I respectfully request someone, preferably you, contact me so that I might discuss the specifics as well as arranging meetings with the appropriate individuals. I thank you in advance for your assistance and look forward to hearing from you soon.
Cohen dispatched the email to a generic address, rather than to Peskov’s personal account. Nonetheless, the email would have been found and closely examined. The email’s recipient, Peskov, wasn’t only Putin’s long-serving mouthpiece—he was also in charge of the operation to compromise Clinton, according to the Steele dossier, and someone who saw Russia’s president practically every day.
Cohen insisted there was no collusion. And yet this is precisely what his email looked like: a direct (and covert) request for assistance from Team Trump to Team Putin. Was this politics or business or both? As always with Trump, it was hard to tell.
In evidence to Congress Cohen said that Peskov didn’t answer—or at least that he couldn’t recall a reply. The tower plan was shelved, he said. As for Sater’s emails? They were salesmanship and “puffery.”
A year later, in January 2017, Sater and Cohen were involved in another clandestine joint endeavor, this time involving Ukraine. Cohen went to see Trump in the White House. He hand-delivered the plan to Michael Flynn, shortly before Flynn resigned as national security adviser, The New York Times reported. It envisaged Russia obtaining a lease on Crimea, for fifty or one hundred years. Sater drafted the document with the assistance of a Ukrainian deputy, Andriy Artemenko. The Cohen-Sater proposal didn’t go off. Had it done so, it would have pleased the Kremlin.
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For four decades Trump’s property empire effectively functioned as a laundromat for Moscow money. Funds from the former Soviet Union poured into condominiums and Trump apartments. Even as Trump was campaigning in Iowa and New Hampshire, his associates were chasing Kremlin permission—and cash—for the candidate’s elusive Moscow tower.
A Reuters investigation found that at least sixty-three individuals with Russian passports or addresses bought $98.4 million worth of property in seven Trump-branded towers in Florida. The true figure was probably higher. Nearly one-third of all units were sold to limited liability companies, whose buyers were unidentified.
Trump Tower even offered a refuge for Russian gangsters. Back home, the population of old-school vors was declining, not unlike the woolly mammoths that once roamed the Siberian plains, as Putin’s bureaucratic state took over their territory. New York, by contrast, provided a place of safety and a base for international operations.
Undoubtedly, Russian money helped Trump’s bottom line. But it was another source of revenue that kept Trump’s finances afloat at a time when the global financial crash threatened to drown him.
This money was respectable. It came from a bank. It came from Germany. Or did it?
11
The Strange Case of the German Bank
2011–2017
Moscow–New York–Frankfurt
Woah, party now
Too much money in the bank account
Hands in the air make you scream and shout
—TIMATI (Russian rap star), “Welcome to St. Tropez”
The tone was weary exasperation. The sort of exasperation you might deploy when faced with a capricious and badly behaved child. One who agrees to do something but who then reneges on the promise, big-time, and blames everyone else, while screaming and throwing toys from his stroller.
The man-child in this case was Donald Trump. The fed-up reproving parent was Deutsche Bank, Trump’s New York creditor. At issue was a very large sum of money that Trump borrowed from the German bank in 2005 to fund the construction of the Trump International Hotel & Tower in Chicago. Trump had personally guaranteed to repay the $640 million debt.
Since then, a global financia
l crash had arrived. In late November 2008, the bank’s attorney, Steven F. Molo, wrote a motion for summary judgment. Against the backdrop of crisis Trump had defaulted on payment, with $330 million still outstanding. Deutsche was seeking an immediate $40 million from the tycoon. Plus interest, legal fees, and costs.
One had to be a little awed by Trump’s nose-thumbing response. Even by his sophistical and treacherous standards it was quite something. Instead of paying up, he countersued. In a complaint to the Supreme Court of New York, in the county of Queens, Trump wrote that he had no intention of paying back the outstanding loan. He described the world crisis as a “once-in-a-century credit tsunami” and an “unforeseen situation.”
According to Trump, the crash was a force majeure event. He argued that Deutsche Bank had co-created the financial downturn. Or as he put it: “Deutsche Bank is one of the banks primarily responsible for the economic dysfunction we are currently facing.”
Therefore, he was not obliged to pay back any money.
Therefore, Deutsche Bank owed him money.
He wanted $3 billion in damages from Deutsche Bank.
The German bank’s next move was an affidavit. Molo drew up a withering document, which was filed in New York. In a section ironically titled “Trump: The Guarantor,” the attorney contrasted Trump’s frivolous writ with his long career of boasting about how rich he was.
It began:
Trump proclaims himself “the archetypal businessman, a deal-maker without peer.” Trump has stated in court he is worth billions of dollars. In addition to substantial cash, personal investments and various other tangible assets, he maintains substantial interests in numerous extraordinary properties in New York and around the country.
