Introduction
Russia has never tried to use leverage over me. I HAVE NOTHING TO DO WITH RUSSIA - NO DEALS, NO LOANS, NO NOTHING!-- Donald J. Trump, 11 January 2017
It's ridiculous that I wouldn't be investing in Russia. Russia is one of the hottest places in the world for investment.--Donald Trump, in a deposition, 2007
Russians make up a pretty disproportionate cross-section of a lot of our assets. We see a lot of money pouring in from Russia.--Donald J. Trump, Jr., 2008
Well, we don’t rely on American banks. We have all the funding we need out of Russia.--Eric Trump (reported), 2014
A. Getting Started
Donald Trump has always looked for new avenues for real estate investment. He has long been interested in Russia as a venue for his shady deals and ethically-bankrupt business practices. He began doing business (or seeking to do business) with Russians even before the Soviet Union collapsed. And happily for him, the fall of the USSR—an event which was a catastrophe in the eyes of Vladimir Putin—allowed an already deeply corrupt Russia to become a full-blown kleptocracy. The chief gangster in this kleptocracy is the Russian president himself, thought by many observers to be the richest person in the world.
Trump's associations with Russians began in the 1980s. Even before the USSR collapsed, Russian organized crime figures were involved in large-scale money laundering schemes. The easiest way to hide ill-gotten money is, naturally, real estate. The first instance of this involving Trump occurred in 1984. A Russian émigré named David Bogatin bought five luxury condos in Trump Tower on Fifth Avenue, at a cost of $6 million. Interestingly, Bogatin had come to America in 1977 with only $3 on him. Trump was so impressed he personally attended the closing on the property. Three years later Bogatin pleaded guilty to a gasoline-bootlegging scheme. Bogatin fled the country and the Federal government seized the condos. As it turns out Bogatin was a New York Russian mob figure. And he was connected to no less than Semion Mogilevich, the top boss of the Russian mafia. Mogilevich was feared by other mob figures, and was expanding his criminal organization in the United States.
Semion Mogilevich, boss of Bratva, the biggest player in Russian organized crime.
Soon after mob figure Bogatin bought condos in Trump Tower, Trump began looking to Russia itself:
Donald Trump’s attempts to bring his business to Russia date back to at least 1986, when he was seated next to Soviet Ambassador Yuri Dubinin at a luncheon. “One thing led to another,” Trump wrote in his [sic] 1987 book The Art of the Deal, “and now I’m talking about building a large luxury hotel across the street from the Kremlin in partnership with the Soviet government.”
Trump and then-wife Ivana, who speaks Russian, traveled to Moscow to scout out potential sites and “met with a lot of the economic and financial advisers in the Politburo,” according to Trump’s spokesman.
Trump's interest in a hotel in Moscow had waned near the end of 1988. His attention was being taken by the accelerating disaster he was undergoing in Atlantic City. But there was much, much more to come from the Russians.
In the late 1990s, as Trump was struggling to rebuild his fortune, events in Russia began to send serious money in Donald Trump's direction. For example, in 1997, Aleksandr Ivanovich Lebed, a retired Russian general and a significant figure in Russian politics, came to New York to solicit Trump's investment in Russia. Observers of their meeting have left us with this record of part of their exchange:
Trump introduced Lebed to Howard Lorber, who had accompanied him a few months earlier on his journey to Moscow, where they looked at properties to which the Trump moniker might be appended. “Howard has major investments in Russia,” he told Lebed, but when Lorber itemized various ventures none seemed to ring a bell.
“See, they don’t know you,” Trump told Lorber. “With all that investment, they don’t know you. Trump they know.”
Some “poisonous people” at the Times, Lebed informed Trump, were “spreading some funny rumors that you are going to cram Moscow with casinos.”
Laughing, Trump said, “Is that right?”
“I told them that I know you build skyscrapers in New York. High-quality skyscrapers.”
“We are actually looking at something in Moscow right now, and it would be skyscrapers and hotels, not casinos. Only quality stuff. But thank you for defending me. I’ll soon be going again to Moscow. We’re looking at the Moskva Hotel. We’re also looking at the Rossiya. That’s a very big project; I think it’s the largest hotel in the world. And we’re working with the local government, the mayor of Moscow and the mayor’s people. So far, they’ve been very responsive.”
Lebed: “You must be a very confident person. You are building straight into the center.”
Trump: “I always go into the center.”
Although the Trump hotels in Moscow never materialized, it is obvious that Trump's name was well-known among Russia's political and economic elite. This name recognition was to pay big dividends to Trump when the Russian stock market collapsed in 1998. Wealthy Russians began to seek safe haven in real estate investments. And a generous amount of that investment went toward Donald Trump's properties.
An impressive number of Russian oligarchs ended up living in Trump World Tower, near the United Nations building, which opened in 2001. As Bloomberg Business describes it:
When Trump World Tower at 845 United Nations Plaza began construction two decades ago as the tallest residential building in the country (90 stories), its most expensive floors attracted wealthy people getting their money out of what had been the Soviet Union. Trump needed the big spenders. He was renegotiating $1.8 billion in junk bonds for his Atlantic City resorts, and the tower was built on a mountain of debt owed to German banks. As Trump wrote in The Art of the Comeback, “It crushed my ego, my pride, to go hat in hand to the bankers.”
Trump’s soft spot for Russia is an ongoing mystery, and the large number of condominium sales he made to people with ties to former Soviet republics may offer clues. “We had big buyers from Russia and Ukraine and Kazakhstan,” says Debra Stotts, a sales agent who filled up the tower. The very top floors went unsold for years, but a third of units sold on floors 76 through 83 by 2004 involved people or limited liability companies connected to Russia and neighboring states, a Bloomberg investigation shows. The reporting involved more than two dozen interviews and a review of hundreds of public records filed in New York...
Eduard Nektalov, an Uzbekistan-born diamond dealer, purchased a 79th-floor unit directly below Conway’s for $1.6 million in July 2003. He was being investigated by federal agents for a money-laundering scheme, which involved smelting gold to make it appear like everyday objects that were then hauled to drug cartels in Colombia. Nektalov sold his unit a month after he bought it for a $500,000 profit. Less than a year later, Nektalov, rumored to have been cooperating with authorities, was gunned down on Manhattan’s Sixth Avenue.
Simultaneous with when the tower was going up, developer Gil Dezer and his father, Michael, were building a Trump-backed condo project in Sunny Isles Beach, Fla. “Russians love the Trump brand,” he says, adding that Russians and Russian Americans bought some 200 of 2,000 units in Trump buildings he built. They flooded into Trump projects from 2001 to 2007, helping Trump weather the real estate collapse, he says.
Trump Tower as a center for Russian (and other) gangsters.
If we look more carefully at the clientele that was attracted to Trump's real estate, certain facts stand out. Let's look more carefully at some of the more prominent investors:
Vadim Trincher, Russian mafia big shot, specialist in illegal gambling operations, who lived in a $5 million apartment in Trump Tower directly below Donald Trump's own residence.
Anatoly Golubchik, Trincher's partner. The two of them were operating an illegal gambling operation out of Trump Tower itself. Both Trincher and Golubchik were eventually charged, convicted, and sentenced. To quote the New York DA's office:
Preet Bharara, the United States Attorney for the Southern District of New York, announced that ANATOLY GOLUBCHIK was sentenced yesterday in Manhattan federal court to five years in prison, and VADIM TRINCHER was also sentenced today to five years in prison for participating in a racketeering conspiracy in connection with their roles as members of a Russian-American organized crime enterprise. GOLUBCHIK and TRINCHER were also each ordered to forfeit more than $20 million in cash, investments, and real property. They were charged in April 2013 along with 32 other alleged members and associates of two Russian-American organized crime enterprises in an indictment that included racketeering, money laundering, extortion, and various gambling offenses. [Emphasis added] GOLUBCHIK and TRINCHER were sentenced by U.S. District Judge Jesse M. Furman.
(Interestingly, Preet Bharara was fired by Donald Trump three months after Trump became president.)
According to an 84 (!) page Federal indictment, the gambling operation run by Trincher and Golubchik was protected by Alimzhan Tokhtakhounov, a Ukrainian-born Mafia Don who was a VIP guest at the 2013 Miss Universe pageant Trump hosted in Moscow.
Hillel (Helly) Nahmad, paid more than $21 million for the 51st floor of Trump Tower, where he ran a high stakes poker game that catered to millionaire and billionaire clients. Later sentenced to a year in prison.
Vyacheslav Kirillovich Ivankov: top Russian mob boss in New York beginning in 1992. Owner of a luxury apartment in Trump Tower, where the FBI tracked him down. "Ivankov disappeared and then turned up again in Trump’s New Jersey casino, the Taj Mahal. Ivankov’s phone book included a working number for the Trump Organization’s Trump Tower residence, and a Trump Organization fax machine...Ivankov was arrested in 1995 and sent to prison for conspiring to extort $3.5 million from two Russian emigres who ran an investment advice company in lower Manhattan. After his release he returned to Russia where he was assassinated."
Felix Henry Sater, occupant of the 24th floor of Trump Tower beginning in 2002. Fortune magazine did a profile of him in October 2016:
Felix Sater is not a name that has come up much during the presidential campaign. That he has a colorful past is an understatement: The Russian-born Sater served a year in prison for stabbing a man in the face with a margarita glass during a bar fight, pleaded guilty to racketeering as part of a mafia-driven "pump-and-dump" stock fraud and then escaped jail time by becoming a highly valued government informant.
He was also an important figure at Bayrock, a development company and key Trump real estate partner during the 2000s, notably with the Trump SoHo hotel-condominium in New York City, and has said under oath that he represented Trump in Russia and subsequently billed himself as a senior Trump advisor, with an office in Trump Tower...
Sater has been profiled in the Washington Post, on ABC News and in several other outlets. But few have taken much note of him, presumably because Trump has said, under oath, [my emphasis] that he barely knew him. "If he were sitting in the room right now, I really wouldn't know what he looked like," he said in a deposition in November 2013. Asked how many times he had ever conversed with Sater, he said, "Not many." And asked about a previous BBC interview, in which he was questioned about Sater's mafia connections, Trump said he didn't recall the interview.
This past December Trump went further: "Felix Sater, boy, I have to even think about it," Trump told AP, referring questions about Sater to his staff. "I'm not that familiar with him."
End of story? Not quite. Looking into Trump's deals, FORBES has uncovered numerous e-mails and sworn statements that indicate Sater was closer to Trump, his organization and his children than previously revealed. Additionally, FORBES has connected three billionaire oligarchs from Kazakhstan to potential deals involving Trump and Sater.
Why does this matter? The story of Sater and the one involving billionaires quietly backing the Trump-Bayrock deals speaks to a key virtue of any good businessman--due diligence--that seems especially relevant for a candidate running on private-sector acumen and the need to do "extreme vetting" of those seeking to get into the country.
The Fortune profile goes on to directly contradict Trump's assertion that he hardly knew Sater. Sater and Trump worked together extremely closely. Trump's statements about Sater are among his more breath-taking lies.
An important point: All of the above listed figures have ties to the top Russian mob boss Semion Mogilevich. All. Some more detail about Mogilevich:
The FBI has credited the “brainy don,” who holds a degree in economics from Lviv University, with a staggering range of crimes. He ran drug trafficking and prostitution rings on an international scale; in one characteristic deal, he bought a bankrupt airline to ship heroin from Southeast Asia into Europe. He used a jewelry business in Moscow and Budapest as a front for art that Russian gangsters stole from museums, churches, and synagogues all over Europe. He has also been accused of selling some $20 million in stolen weapons, including ground-to-air missiles and armored troop carriers, to Iran. “He uses this wealth and power to not only further his criminal enterprises,” the FBI says, “but to influence governments and their economies.”
In Russia, Mogilevich’s influence reportedly reaches all the way to the top. In 2005, Alexander Litvinenko, a Russian intelligence agent who defected to London, recorded an interview with investigators detailing his inside knowledge of the Kremlin’s ties to organized crime. “Mogilevich,” he said in broken English, “have good relationship with Putin since 1994 or 1993.” A year later Litvinenko was dead, apparently poisoned by agents of the Kremlin.
Trump's Florida properties have also proven to be magnets for Russian investors. An investigation by Reuters turned up 63 Russians who had purchased luxury housing in Trump property, at a value of $98.4 million. To be fair, Reuters said it did not see evidence of any criminal wrongdoing on Trump's part. Still, the number is rather striking. Reuters also found: "The tally of investors from Russia may be conservative. The analysis found that at least 703 – or about one-third – of the owners of the 2044 units in the seven Trump buildings are limited liability companies, or LLCs, which have the ability to hide the identity of a property’s true owner. And the nationality of many buyers could not be determined. Russian-Americans who did not use a Russian address or passport in their purchases were not included in the tally."
Intriguingly, one of the residents of Trump's Florida properties, Pavel Uglanov, is close friends with a notorious figure, Alexander Zaldostanov. To quote Reuters: (He is) leader of the “Night Wolves” biker gang. The Wolves, and Zaldostanov personally, were made subject to U.S. financial and travel restrictions. The U.S. government said gang members stormed a Ukrainian government naval base and a gas facility during Russia’s annexation of Crimea.
Alexander Zaldostanov
An aide to Zaldostanov did not respond to questions from Reuters. The group, in interviews in Russian media, has denied storming the base and the gas facility.
Zaldostanov has had multiple meetings with Putin, according to the Kremlin’s website. The Russian president awarded Zaldostanov the country’s “medal of honor” in 2013."
And back in New York, Trump's sales to Russians were going swimmingly. USA Today did a survey of court cases, legal documents, and government documents and found the following:
The president and his companies have been linked to at least 10 wealthy former Soviet businessmen with alleged ties to criminal organizations or money laundering.
Among them:
• A member of the firm that developed the Trump SoHo Hotel in New York is a twice-convicted felon who spent a year in prison for stabbing a man and later scouted for Trump investments in Russia.[Sater, see above]
• An investor in the SoHo project was accused by Belgian authorities in 2011 in a $55 million money-laundering scheme.
• Three owners of Trump condos in Florida and Manhattan were accused in federal indictments of belonging to a Russian-American organized crime group and working for a major international crime boss based in Russia.
• A former mayor from Kazakhstan was accused in a federal lawsuit filed in Los Angeles in 2014 of hiding millions of dollars looted from his city, some of which was spent on three Trump SoHo units.
• A Ukrainian owner of two Trump condos in Florida was indicted in a money-laundering scheme involving a former prime minister of Ukraine.
Trump's Russian connections are of heightened interest because of an FBI investigation into possible collusion between Trump's presidential campaign and Russian operatives to interfere in last fall's election. What’s more, Trump and his companies have had business dealings with Russians that go back decades, raising questions about whether his policies would be influenced by business considerations.
Trump told reporters in February: "I have no dealings with Russia. I have no deals that could happen in Russia, because we’ve stayed away. And I have no loans with Russia. I have no loans with Russia at all."
Yet in 2013, after Trump addressed potential investors in Moscow, he bragged to Real Estate Weekly about his access to Russia's rich and powerful. “I have a great relationship with many Russians, and almost all of the oligarchs were in the room,” Trump said, referring to Russians who made fortunes when former Soviet state enterprises were sold to private investors. [My emphasis]
And I want to make a special note of this: Paul Manafort, Putin ally, has a residence on the 43rd floor of Trump Tower. We will have much more to say about him later.
And lest we forget: Trump sold his gaudy Palm Beach, Florida residence, acquired for $41.3 million, to a Russian businessman named Dmitry Rybolovlev. Rybolovlev paid $95 million in 2008, giving Trump a handsome profit on a property he had owned just a few years. And who is this Russian? One of the richest people in Russia, one with a past that is largely shrouded in mystery. The timing of his purchase was interesting, 2008 being the year the world economy hit a huge setback.
Astonishingly, Rybolovlev had his new house torn down. And in 2013, Business Insider reported that Rybolovlev was the biggest shareholder in the Bank of Cyprus, owning 9.9% of the company. The Bank had an...interesting relationship with Russia. And one of the directors of The Bank of Cyprus, who did business with Russian oligarchs, was Wilbur Ross, Trump’s Commerce Secretary. From The Guardian:
Wilbur Ross, the Trump administration’s new commerce secretary, presided over a deal with a Russian businessman with ties to Vladimir Putin while serving in his previous role as vice-chairman of the Bank of Cyprus.
The transaction raises questions about Ross’s tenure at the Cypriot bank and his ties to politically connected Russian oligarchs. It comes amid confirmation by the FBI that it is investigating possible collusion between the Trump campaign and Moscow to influence the outcome of the presidential election.
In 2015, while he served as vice-chairman of the Bank of Cyprus, the bank’s Russia-based businesses were sold to a Russian banker and consultant, Artem Avetisyan, who had ties to both the Russian president and Russia’s largest bank, Sberbank. At the time, Sberbank was under US and EU sanctions following Russia’s annexation of Crimea. Avetisyan had earlier been selected by Putin to head a new business branch of the Russian president’s strategic initiative agency, which was tasked with improving business and government ties
Dmitry Rybolovlev and Trump’s Florida mansion, which he bought and promptly tore down.
We have already encountered the name of a company associated with Trump and Russia: The Bayrock Group. This organization also has a very interesting history, to say the least. The Bayrock Group operated two floors beneath Trump's office in Trump Tower. As Bloomberg reports,
Bayrock partnered with the future president and his two eldest children, Donald Jr. and Ivanka, on a series of real-estate deals between 2002 and about 2011, the most prominent being the troubled Trump Soho hotel and condominium in Manhattan.
During the years that Bayrock and Trump did deals together, the company was also a bridge between murky European funding and a number of projects in the U.S. to which the president once lent his name in exchange for handsome fees. Icelandic banks that dealt with Bayrock, for example, were easy marks for money launderers and foreign influence, according to interviews with government investigators, legislators, and others in Reykjavik, Brussels, Paris and London. Trump testified under oath in a 2007 deposition that Bayrock brought Russian investors to his Trump Tower office to discuss deals in Moscow, and said he was pondering investing there.
Bayrock was founded by Tevfik Arif, a Soviet-born Turkish businessman. According to multiple sources, Arif spent 17 years working for the USSR's Ministry of Commerce and Trade. Felix Sater was Arif's right-hand man. The Financial Times had this to say about Trump's relationship to Arif:
The Republican presidential nominee and Bayrock were both based in Trump Tower and they joined forces to pursue deals around the world — from New York, Florida, Arizona and Colorado in the US to Turkey, Poland, Russia and Ukraine. Their best-known collaboration — Trump SoHo, a 46-story hotel-condominium completed in 2010 — was featured in Mr Trump’s NBC television show The Apprentice.
Yet when Mr Trump testified under oath in 2011 about his relationship with Mr Arif’s company, he confessed that he found his partners puzzling. Mr Trump said he knew what they did. But he said he was unsure of exactly who they were.
“I don’t know who owns Bayrock,” Mr Trump said. “I never really understood who owned Bayrock. I know they’re a developer that’s done quite a bit of work. But I don’t know how they have their ownership broken down.”
Mr Trump’s Bayrock blind spot gains significance in the context of this year’s presidential race. Mr Trump has taken a stance on Russia that is at odds with US political orthodoxy — praising President Vladimir Putin’s leadership skills and saying he would consider lifting sanctions imposed on Russia after its 2014 annexation of the Crimean peninsula in Ukraine. Critics have asked whether Mr Trump’s business interests might be colouring his policies.
Mr Trump has responded by saying he has “zero investments in Russia”. But that is not the whole story. In recent years, Mr Trump has worked diligently to forge alliances with Russia-connected businessmen that would position him to profit from capital pouring out of the former states of the Soviet Union, and to seek opportunities in those locales. If no deals followed, as was often the case, it was not for a lack of trying.
Mr Trump’s Bayrock connection reveals the risks he took along the way. By his own admission, he agreed to serve as the public face of a murky business. Court records in cases involving Bayrock only underscore the company’s complexity. When Winston Churchill called Russia “a riddle wrapped in a mystery inside an enigma,” he might as well have been talking about Mr Arif’s operation.
Bayrock’s founder boasts a résumé reflecting the topsy-turvy business world that took shape following the fall of communism. Born in Kazakhstan, Mr Arif, 63, worked in the food and hospitality unit of the Soviet commerce and trade ministry before operating an export-import business, building hotels in Turkey and heading to New York as the century began to develop property in the borough of Brooklyn.
There were bumps along the way. In 2010, Mr Arif was arrested in Turkey on charges he helped arrange an orgy on a yacht that had once belonged to the country’s founder, Mustafa Kemal Ataturk. In 2012, the charges were dropped, a company spokeswoman says. Today, Mr Arif is believed to be living in Turkey. His spokeswoman said he was the “sole owner” of Bayrock during the time it did business with Mr Trump. She declined to provide details, citing litigation and confidentiality agreements.
Should we mention Donald Trump Jr's six visits to Russia in the span of 18 months in 2007 and 2008, hoping to secure properties in Moscow, St. Petersburg, and Sochi? Should we mention Trump bringing the Miss Universe pageant to Moscow, with partial financing from a Russian billionaire? Trump's statement to David Letterman that, “I’ve done a lot of business with the Russians” ? Or Trump's relationship to Aras Agalarov, Russian billionaire who may have given direct aid to Trump's campaign (an issue we will pursue elsewhere)? Or Trump's tax lawyers, who are strongly tied to Russian business interests? Or the Trump business partner who got hundreds of millions of dollars in financing from a state-run Russian bank?
Speaking of banks, I should mention that Deutsche Bank has such interesting connections to both the Russians and to Trump that I’m giving them their own separate diary.
MUST READ ARTICLE: Trump’s Russian Laundromat, from The New Republic. Here’s a video about it:
NOTE: See these EXCELLENT diaries by ian douglas rushlau:
