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not the donald
Jan 20, 2020
top notch I just wish it were fiction so I wouldn't feel so guilty liking this
Jan 8, 2020
Dec 2, 2019
Oct 16, 2019
amazing, should be on an even bigger platform
J W Poplin
Aug 1, 2019
Trump Team Online
Donald Trump is famous — and infamous — for his use of Twitter and Facebook. But particularly since the pandemic forced him to largely swear off his favorite mass, in-person rallies, his campaign has been amping up the use of another form of alternative media: YouTube and podcasts.
The president’s most recent sit-down interview? As it happens, it occurred last week on “Triggered,” a YouTube program hosted by his namesake son. In a conversation in the White House’s map room, Trump Jr. quizzed his dad about everything from who his favorite child is to whether aliens exist — to a Fox News report that Osama bin Laden wanted to assassinate President Barack Obama so that Joe Biden would ascend to the presidency.
This was no ordinary campaign video, nor was it a random question, this week’s episode of “Trump, Inc.” makes clear. “Triggered” followed the exchange about bin Laden with a campaign ad that repeated the same point, showing how closely the program’s conversations are tied in with campaign talking points. “Trump, Inc.” explores the Trump campaign’s universe of podcasts and YouTube shows, which has expanded since the coronavirus began locking down huge swaths of the country. (The campaign did not respond to requests for comment.)
Sure, every major candidate has a podcast. Hillary Clinton had one. Biden has one, though it hasn’t been updated since mid-May. But unlike those dutiful and largely ignored offerings, “Triggered” is part of a growing constellation of shows. There’s the campaign’s official podcast, hosted by Trump’s daughter-in-law, Lara. (Kayleigh McEnany used to fill in occasionally as host before being promoted to White House press secretary.) And there’s “The Right View.” Just imagine “The View,” conducted entirely on Zoom, if Meghan McCain was considered too liberal to be on the panel and if no one ever disagreed. The programs have combined to create something of a Trump media network, one that takes the president’s bellicose messaging and transports it to an environment of family, friendship and banter.
People are starting to pay attention. Nightly programming of the unofficial Trump Network reaches upward of a million viewers each week. It’s a realm dedicated to reinforcing even the president’s most incendiary ideas — with no pushback, skepticism or difference of opinion.
To learn more about how the programs lay out their views of everything from bin Laden assassination plots to the controversy over vote by mail, listen to this week’s episode of “Trump, Inc.”
|Jun 24, 2020|
When Congress was considering passing the more than $2 trillion coronavirus bailout two months ago, President Donald Trump made his vision for oversight clear. “I’ll be the oversight,” he said.
The CARES Act empowers a number of different offices to make sure the money is spent wisely and without favoritism. Shortly after he signed it into law, Trump ousted the inspector general who was slated to lead the oversight — one of five watchdogs the president has purged in less than two months.
Trump also issued a signing statement asserting that he can ignore oversight provisions of the bailout law and that Congress does not have to be consulted. “My Administration will treat this provision as hortatory but not mandatory,” he wrote.
We spoke to an official just hired to do one of the jobs Trump cited in his signing statement. She told us that Trump’s moves have made her particularly careful to avoid any “adverse” comments about the administration.
Linda Miller began work this week as the deputy executive director of the Pandemic Response Accountability Committee, or PRAC. Miller spent a decade at the nonpartisan, independent Government Accountability Office, where she dug into the case of a crooked Navy contractor nicknamed Fat Leonard. She said she’s learned that corruption often starts at the top.
Here is an edited transcript of our conversation with Miller. She spoke with “Trump, Inc.” co-host Ilya Marritz a few days before formally joining the PRAC. (Our episode also includes an interview with Bharat Ramamurti, a member of the bailout’s congressional watchdog.)
Trump, Inc.: You warned my producer when we booked this interview that there are a lot of things that you can’t talk about or won’t talk about. Just so I know, what are those things?
Linda Miller: Uh, anything that would be in any way adverse to the administration is something that I won’t be commenting on in any way.
Trump, Inc.: What do you mean by “adverse to the administration”?
Miller: I can’t speak negatively about the president or any of the decisions he’s made, particularly when it comes to the IG community. That’s the biggest, probably political football around my new role. The IG community is obviously under a lot of stress and scrutiny.
There’s a lot of politics, and people have been asking me what it’s going to be like to go work in the inspector general community. I can speak real broadly. I just won’t say anything that’s in any way derogatory about the president because, obviously in my role, I need to stay as neutral as possible in order to basically stay in my role, frankly.
Trump, Inc.: And that’s your judgment, coming into this job.
Miller: Right. That’s my judgment.
Trump, Inc.: I know that your career specialty is detecting risk of fraud. You did this at the Government Accountability Office. You also did it in the private sector. What are some of the frauds that you have uncovered?
Miller: My specialty is less in investigating fraud and more in helping organizations prevent fraud from occurring. So, often when a big fraud event occurs, I come in afterwards and help the agency or sometimes the private-sector company think about how they were vulnerable.
I’m not sure if you’re familiar with the very large Navy scandal, it’s affectionately known as the “Fat Leonard” scandal. A contractor who bribed a variety of senior government officials all the way up to admirals, in order to get information that would give him a competitive advantage.
That particular scandal was shocking for the scale and the scope. There were bribes involving prostitutes, and meals, and jewelry and all kinds of stuff.
And I often use that fraud example when I talk about how fraud manifests itself, and especially when leadership is in any way participatory in it. And I’ve always found that interesting, that people who otherwise wouldn’t accept a bribe or participate in a collusion scheme, when they see other people doing it, and the people that they see doing it are people they respect, they tend to think it may not be so bad.
Trump, Inc.: Right. You’re saying, if people at the top or near the top do it, everyone else thinks it’s OK.
Miller: Yup. Exactly. And it’s shocking how many fraud schemes are perpetrated by senior leadership of an organization. Often people below them won’t question decisions they make because they’re in charge. So they’ve got all this power and using that power, abusing that power, is a really common way that fraud shows up both in government, and in [the] private sector.
Trump, Inc.: So we are talking just a few days before you start work as the deputy executive director of the Pandemic Response Accountability Committee, the PRAC. By the time people hear this, you will be at the PRAC already. How are you thinking about how you’re going to do that job?
Miller: I'm really excited about the opportunities for this new role. I mean, the PRAC was created by the CARES Act, which is the coronavirus stimulus act. As most people know, there’s over $2.4 trillion of federal money that went out in that stimulus bill. And so there’s obviously an enormous opportunity for fraud to occur across a variety of ways, programs and benefit programs, different agencies.
Trump, Inc.: So what are the main categories of fraud that you’re going to look for? Help us think about where things can go wrong.
Miller: I would say No. 1 on my list of concerns is identity theft. The biggest difference between the Recovery Act back in 2009 and now is the vast number of breaches that have occurred in the last 12 years.
Obviously the [Paycheck] Protection Program has gotten a lot of scrutiny, and we will be looking at a deeper dive into [it].
And then I think another big area that I envision the PRAC playing a role is building out some advanced data analytics capabilities that can look across the different government agencies and really identify patterns, trends, with the aspirational goal of essentially being able to provide indicators and red flags to agencies. Because you know, most of the IG’s world is what we call “pay and chase.” The money’s gone out, and we’re trying to go back and get it back.
Trump, Inc.: Will you be looking at contracting as well?
Miller: Yes, definitely. Obviously when you put this much money out, and opportunities for contractors to gain an advantage over their competitors, they start to engage in a variety of fraudulent activities, including kickbacks and bribery and collusion, and all these sorts of corruption schemes. And friendships between leadership and contracting companies way too often plays a role in who gets a contract.
Trump, Inc.: At the beginning of this interview, I was actually kind of surprised you basically said, like, I cannot anger the president. So given that you have this concern about angering the president and knowing that investigations you do, or conclusions you draw, could anger the president, how do you do your job? I mean, see a lot of potential conundrums for you that you might face very, very quickly.
Miller: You know, actually, I don’t think we’re going to get on the wrong side of the president here at the PRAC. I think that what we’re really trying to do is go after unscrupulous actors who may have tried to get funding they weren’t entitled to.
We’re going to be looking at the bad guys outside of government. We’re going to be looking at the identity theft rings, and we’re going to be looking at the everyday bad actor who wants to cash in on a huge government program. And so we’re all on the same side here.
Trump, Inc.: I understand there are things that you don’t want to say, but the president has made it pretty clear that he sees government as a tool to reward allies and punish critics and enemies.
Here’s this huge pile of money that’s going out. It’s going out through executive branch agencies. One could imagine any number of scenarios where the president would be unhappy with a bright light being shined on bad things being done in those agencies or laws being broken in those agencies or rules being bent in those agencies. So if and when it comes to that moment, what are you going to do?
Miller: You know, the thing I’m being hired to do, and the thing I did for 10 years at GAO: to maintain generally accepted government auditing standards.
I'm a big believer in, my mom used to say, “Always keep your side of the street clean.”
Which really meant, focus on the things you can control. And for me, I’ve got a mission and I’ve got a job to do in this role. And I’m really excited and I feel a sense of responsibility. Really, truly, a sense of awesome responsibility to American citizens and American taxpayers to carry that role out. And nothing’s going to change about how I will assist and direct our organization in adhering to those standards.
And I think that’s what the country was founded on. And there’s a reason that the inspectors general were created in 1978. And I think the mission is as important now, if not more than it ever has been.
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|Jun 10, 2020|
New Questions for Trump’s Biggest Lenders
A decade ago, loan filings showed Trump Tower in New York City had a reported profit of about $13.3 million. But when the tower refinanced its debt soon after, the profits for the same year — 2010 — somehow appeared higher. A new lender listed the profits as $16.1 million, or 21% more than they had been recorded previously.
The next year’s earnings for the building also “improved” between the two filings. Profits for 2011 were listed as 12% higher under the new loan than the old, according to reports by loan servicers and data provider Trepp.
ProPublica uncovered the Trump Tower discrepancies by examining publicly available data for mortgages that are packaged into securities known as commercial mortgage-backed securities, comparing the same years in reports for different CMBS. If a bank had held onto the loan, instead of selling it to investors, such information would have been kept private. No evidence has emerged that the Trump Organization was involved in changing the profit figures.
Alan Garten, the Trump Organization’s chief legal officer, said: “Not only were the numbers provided to the servicer accurate, but Trump Tower is considered one of the most underleveraged commercial buildings around.”
The discrepancies in the tower profits match a pattern described in a whistleblower complaint filed with the Securities and Exchange Commission, which ProPublica revealed this month. The complaint accuses commercial lenders of fraudulently inflating the income numbers underlying loans in many CMBS.
The complaint named seven servicers and 14 lenders, including two of the country’s biggest issuers of CMBS — Ladder Capital and Wells Fargo. Both were involved in the more recent Trump Tower loan, one as the lender, the second as the financial institution that packaged the loan into a CMBS. The complaint does not say which entities altered specific numbers and does not address whether borrowers were involved in, or knew about, the alleged fraud.
Wells Fargo declined to comment. Ladder Capital did not respond to questions about Trump’s signature Fifth Avenue tower. Ladder did respond to questions for ProPublica’s earlier article; it acknowledged it had altered historical numbers for two other loans ProPublica asked about, to remove expenses that were not recurring in the future. The lender said its actions were appropriate. (Ladder is a publicly traded commercial real estate investment trust with more than $6 billion in assets. It employs Jack Weisselberg, the son of the Trump Organization’s longtime CFO, Allen Weisselberg, as an executive director whose job is to make loans. Jack Weisselberg declined to comment.)
When the Trump Organization refinanced its loan for Trump Tower in 2012, it increased the size of its loan from $27.5 million to $100 million, extracting $67.9 million in cash. The interest-only loan originally represented about 8% of the more than $1 billion in mortgages assembled into the CMBS. (Only the commercial part of the tower — with retail tenants such as Gucci and offices, including for the Trump Organization — served as collateral for the loan.)
For both 2010 and 2011, data shows the discrepancies in net operating income between the old and new loans for Trump Tower were largely due to the new loan reporting lower expenses. The prospectus for the more recent loan stated that “the historical expenses exclude security associated with Donald J. Trump’s personal services” — though it did not specify dollar amounts for the change. Greater revenues were cited for both years under the new loan, too, but the prospectus did not explain why.
The whistleblower complaint, filed by a CMBS-industry insider named John Flynn, concerns the nearly $600 billion CMBS market. It accuses lenders and servicers of manipulating historical cash flows, failing to report misrepresentations, changing names and addresses of properties, and “deceptively and inaccurately” describing loan representations. The complaint asserts that Flynn has found overstatements in $150 billion worth of CMBS since 2013.
The misrepresentations allowed properties to qualify for loans they wouldn’t have otherwise, Flynn asserts, while leaving investors in the dark.
The SEC has not taken any public action in response to Flynn’s complaint; the agency declined to comment.
Altering past profits without providing an explanation is “highly questionable,” John Coffee, a professor at Columbia Law School and an expert in securities regulation, told ProPublica for its earlier article on CMBS.
As hotels, retail and office properties face unprecedented difficulties due to the virus that has shuttered much of the country, Flynn says the manipulations have increased the likelihood and potential severity of a crash.
Last year, ProPublica revealed another set of income discrepancies at Trump Tower and other company-owned buildings, ones that seemed to hark to the testimony of former Trump lawyer Michael Cohen, who testified that Trump would inflate income figures when seeking a loan and deflate the figures when filing taxes. Other Trump Organization properties investigated by ProPublica reported higher profits in the CMBS filings than they did in tax filings. A Trump Organization spokesperson said at the time that “comparing the various reports is comparing apples to oranges” because reporting requirements differ.
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|May 27, 2020|
Temporary Presidential Immunity
The Supreme Court heard oral arguments on Tuesday, via teleconference, about the power to investigate the president.
President Donald Trump has objected to subpoenas for his tax returns and other financial records. New York City prosecutors have demanded the documents as part of a criminal investigation into the president’s hush money payments to porn actress Stormy Daniels, while the House of Representatives has been seeking to investigate the conflicts of interests of a president who still owns a sprawling business.
Trump’s lawyers have argued that a president shouldn’t be subject to investigation while in office. “We're asking for temporary presidential immunity,” attorney Jay Sekulow said.
Andrea Bernstein of Trump, Inc. and NYU law professor Melissa Murray listened to the oral arguments and chatted with co-host Ilya Marritz about what struck them. A few takeaways:
• Fights between the legislative and executive branch are not normally heard in front of the Supreme Court. Congress and the White House have typically negotiated solutions to such disputes. “And the fact that we're in court is because this president hasn’t acceded to those norms,” Murray said.
• A phrase that came up repeatedly: “presidential harassment.” It’s language that Trump frequently uses on Twitter and his lawyers raised in court. The assertion, Murray said, “has transformed what would be considered, I think in other times, ordinary and essential legislative oversight into what accounts to bullying, harassment and mere partisan politics.”
• A number of the justices — including the liberal Stephen Breyer — expressed sympathy for the White House’s arguments against the House’s demands for documents, but they were far more skeptical about the claim that the president is immune from even criminal investigation. “The court seemed not to be amenable to that kind of argument at all,” Murray said.
The justices are expected to deliver a decision in the cases — Trump v. Mazars, Trump v. Deutsche Bank and Trump v. Vance — this summer.
|May 13, 2020|
On May 12, after a six-week delay caused by the pandemic, the U.S. Supreme Court will hear arguments in the epic battle by congressional committees and New York prosecutors to pry loose eight years of President Donald Trump’s tax returns.
Much about the case is without precedent. Oral arguments will be publicly broadcast on live audio. The nine justices and opposing lawyers will debate the issues remotely, from their offices and homes. And the central question is extraordinary: Is the president of the United States immune from congressional — and even criminal — investigation?
The arguments concern whether Trump’s accounting firm, Mazars USA, must hand over his tax returns and other records to a House committee and the Manhattan district attorney, which have separately subpoenaed them. (There will also be arguments on congressional subpoenas to two of Trump’s banks.)
Trump’s accountants have been crucial enablers in his remarkable rise. And like their marquee client, they have a surprisingly colorful and tangled story of their own. It’s dramatically at odds with the image Trump has presented of his accountants as “one of the most highly respected” big firms, solemnly confirming his numbers after months of careful scrutiny. For starters, it’s only technically true to say Trump’s accounting work is handled by a large firm.
In fact, Trump entrusts his taxes and planning to a tiny, secretive team of CPAs who have operated at various times from humble quarters in Queens and two Long Island office parks. That team, which has had two leaders with back-to-back multidecade terms, has been working for the Trumps since Fred Trump began using the firm back in the 1950s. It was eventually subsumed into Mazars USA, the American arm of a large international firm, through a series of mergers over decades.
One theme has been consistent: partners and sometimes the firm itself have faced accusations of fraud, misconduct, and malpractice on multiple occasions, an investigation by ProPublica and WNYC has found.
This story was co-published with ProPublica; visit their website to read Peter Elkind's full text story on President Trump's relationship with his accounting firm. Stay up to date with email updates about our investigations into the president’s business practices.
|May 06, 2020|
He Went To Jared
On April 2, Jared Kushner uncharacteristically took to the podium to speak at the White House’s daily coronavirus briefing. He’d been given the task, he said, of assisting Vice President Mike Pence’s Coronavirus Task Force with supply chain issues. “The president,” Kushner said, “wanted us to make sure we think outside the box, make sure we’re finding all the best thinkers in the country, making sure we’re getting all the best ideas, and that we’re doing everything possible to make sure that we can keep Americans safe.”
That very day, he said, President Donald Trump told him that “he was hearing from friends of his in New York that the New York public hospital system was running low on critical supply.” So Kushner called Dr. Mitchell Katz, who runs the 12-hospital system, which serves, in a normal year, over a million patients. Kushner said he’d asked Katz which supply he was most nervous about: “He told me it was the N95 masks. I asked what his daily burn was. And I basically got that number.”
In a chaotic environment, the New Jersey boy turned Manhattan businessman turned senior White House adviser is using his clout to help the cities and states at the epicenter of a global pandemic get the aid they need.
Yet there’s another side to the equation. Kushner’s role is also a symptom of the dysfunction of the Trump administration, according to critics, some of whom worked in emergency management under Republican and Democratic administrations. The ad hoc nature of Kushner’s mission and its lack of transparency make it hard for people — and government agencies — to know exactly what he’s doing. So far, those officials say, there's little sign Kushner or anyone at the White House is helping New York or New Jersey with their urgent longer-term needs, particularly more testing and billions from Congress to ease the gaping holes that have emerged in local budgets.
”If you can reach Jared, if you can applaud Jared, if you can convince him that you're the most needy, he will deliver for you,” said Juliette Kayyem, faculty chair of the homeland security project at Harvard University’s Kennedy School of Government and a former assistant secretary of homeland security in the Obama administration. But his role bypasses long-held tenets of how the federal government should work in a national emergency, she said, without addressing systemic problems, much less reinventing the bureaucracy. “What's outside the box? What process is outside the box? It can't possibly be Kushner's [giving out his] cellphone number,” Kayyem said. “But that's what it appears to be.”
Read the text version of this story at ProPublica.
|Apr 22, 2020|
How Trump Is Eligible for a Coronavirus Rescue
In a late March press briefing on the coronavirus, President Trump turned the microphone over to Mike Lindell, the founder and CEO of a company called MyPillow. Lindell — a regular on Fox News and at Trump properties, and a high-dollar donor to Republican causes — talked about how his company was pivoting from pillows to protective masks — and effusively praised the president's leadership.
We've been thinking about who stands to benefit from the coronavirus bailout, and that unusual moment highlights the close links between Trump and allies who stands to benefit (often in more ways than just publicity) from the government response to the pandemic. On this episode of the show we're examining:
• How the Trump family business qualifies for the two trillion dollar bailout
Check out reporter Meg Cramer's story about how businesses within the Trump Organization stand to benefit from the coronavirus bailout and Peter Elkind's reporting on how Trump Org properties are responding to the crisis. And visit our tips page to learn how to securely share what you know.
Sign up for email updates from Trump, Inc. to get the latest on WNYC and ProPublica's investigations.
|Apr 08, 2020|
What To Look Out For
The “Trump, Inc.” podcast has long explored how people have tried to benefit through their proximity to the Oval Office. And we're going to continue digging into that as the Trump administration is tasked with rolling out more than $2 trillion in bailout money.
We spoke to two people this week to help us understand the stakes. “Some policymakers sitting in the Treasury Department or some other government agency have this awesome power to say, ‘You get the money, you go out of business,.’” said Neil Barofsky, who served as the government’s watchdog for the 2008 bank bailout. “One of the most important things we can do is make sure that power is exercised fairly, consistently, and, most importantly, consistent with the policy goals that underlie this extraordinary outpouring of taxpayer money.”
We also spoke with journalist Sarah Chayes, a former NPR correspondent who has reported on corruption and cronyism in countries experiencing economic shock. She said powerful players often “take advantage of adversity and uncertainty to enrich themselves.”
But Chayes also described something else. She coined it “disaster solidarity.” That’s when there’s so much suffering, so much adversity, “that people's tolerance for selfish, hogging, me-first behavior is really low.”
And that’s where you come in. We want your help to dig into the coming bailout. If you know something, please tell us.
Sign up for email updates from Trump, Inc. for the latest on WNYC and ProPublica's investigations.
|Mar 27, 2020|
Trump’s Company Paid Bribes to Reduce Property Taxes, Assessors Say
The Trump Organization paid bribes, through middlemen, to New York City tax assessors to lower its property tax bills for several Manhattan buildings in the 1980s and 1990s, according to five former tax assessors and city employees as well as a former Trump Organization employee.
Two of the five city employees said they personally took bribes to lower the assessment on a Trump property; the other three said they had indirect knowledge of the payments. The city employees were among 18 indicted in 2002 for taking bribes in exchange for lowering the valuations of properties, which in turn reduced the taxes owed for the buildings. All of the 18 eventually pleaded guilty in U.S. District Court in Manhattan except for one, who died before his case was resolved.
No building owners were charged, though the addresses of some of the properties involved became public. Trump’s buildings were not on that list. No evidence has emerged that Donald Trump personally knew of or participated in the alleged bribery.
Trump denied any wrongdoing at the time, and the Trump Organization reiterated that position in response to questions for this article. “To be clear, at no time did the Trump Organization or any of its employees or principals ever pay anyone for the purpose of unlawfully obtaining a lower tax valuation,” Alan Garten, the Trump Organization’s chief legal officer, wrote in a statement. “This was corroborated by multiple investigations which found no evidence of any wrongdoing by the company or any of its principals. ... If anything, the Trump Organization was a victim of the scandal.” (Here is the company’s full statement.)
Read the full print version of this story at ProPublica. Special thanks to former New York Times reporter Charles Bagli, who first reported on the bribery scheme in 2002. Sign up for email updates from Trump, Inc. for the latest on WNYC and ProPublica's investigations
|Mar 11, 2020|
The Family Business
This episode of Trump, Inc. was originally released on September 18, 2019. We’ll be back next week with a new episode of Trump, Inc.
We've done dozens of episodes over since Donald Trump took office, detailing how predatory lenders are paying the president, how Trump has profited from his own inauguration and how Trump's friends have sought to use their access in pursuit of profit.
We've noticed something along the way. It's not just that the president has mixed his business and governing. It's that the way Trump does business is spreading across the government.
Trump's company isn't like most big businesses. It is accountable to only one man, it has broken the rules, and those promoting it have long engaged in what Trump has dubbed, ahem, "truthful hyperbole."
Those traits are now popping up in the government. It may seem like the news from Washington is a cacophony of scandals. But they fit clear patterns — patterns that Trump has brought with him from his business.
|Mar 04, 2020|
Paying to Protect the President
Last year, Eric Trump defended his father’s frequent visits to properties owned by the family business, saying that Trump hotels charge far less than others would. “If they were to go to a hotel across the street, they’d be charging them $500 a night, whereas, you know we charge them, like 50 bucks,” Eric Trump told Yahoo Finance.
But recent reporting by The Washington Post’s David Fahrenthold revealed that’s not the case: records show that the Secret Service was charged rates as high as $650 a night to stay at Trump properties — then tried to keep that information secret.
“It’s not only that Trump has control over this - he’s paying money to himself - but also that we weren’t told,” Fahrenthold said. “You could make the case that if they publicly advertise this and listed these things in public spending databases and you and I knew about this from the beginning, they might be able to make the argument that like, ‘Oh well, the public knows and they're okay with it.’ But we didn't know. They didn't tell us. So there's a real moral distinction.”
Learn more about Fahrenthold and The Post's unanswered questions about government spending at Trump properties. Stay up to date with email updates about WNYC and ProPublica's investigations into the president's business practices.
|Feb 19, 2020|
An Intimate Dinner with President Trump
Lev Parnas and Igor Fruman have attained notoriety for their parts in the Ukraine mess. They’re both Soviet-born U.S. citizens who worked closely with the president’s personal lawyer, Rudy Giuliani, serving as emissaries in the campaign to oust then-U.S. Ambassador Marie Yovanovitch and press Ukraine’s government to investigate Joe Biden’s son.
But Parnas and Fruman also exemplify the shattering of norms when it comes to the influence of big money in politics during the administration of President Donald Trump.
“Parnas and Fruman are not the first people that we've seen fit this mold of someone with deep foreign connections, who's never given campaign contributions before, suddenly starts giving large amounts of political contributions and then shows up at exclusive events,” said Robert Maguire, the research director at Citizens for Responsibility and Ethics in Washington, or CREW. But he says they can be a model for what to look for: political newcomers suddenly making big donations, often using an LLC to obscure their identity.
Parnas and Fruman now face federal criminal charges for, among other things, allegedly funneling foreign money into U.S. elections and trying to hide its source. (They’ve pleaded not guilty.)
The law is clear on this: “At the most basic level, one is not allowed to solicit, accept, or receive any foreign money in connection with a US election at the state, federal, or local level,” said Ellen Weintraub, a member of the Federal Election Commission. In practice, though, it’s perhaps easier than ever for foreign money to enter the American political system undetected.
Learn more about how you can dig into campaign finance documents yourself with our new Reporting Recipe. Read about how watchdogs identified Parnas and Fruman’s suspicious campaign contributions at ProPublica. An earlier version of this story incorrectly identified FEC vice-chair Steven Walther as a Republican; he is an independent.
|Feb 05, 2020|
Read Everything, Talk to Everyone: Reporting on Trump, Inc.
Andrea Bernstein discusses the reporting process behind Trump, Inc. and her new book, American Oligarchs: The Kushners, The Trumps, and the Marriage of Money and Power, with Death, Sex & Money host Anna Sale.
This bonus episode was recorded at the Commonwealth Club in San Francisco.
|Feb 03, 2020|
The Trump Inauguration’s ‘Unconscionable Contract’
Reporters Ilya Marritz and Justin Elliott have been reporting on Trump's inauguration since 2018. They looked at how the inaugural committee raised a record $107 million (and the big questions behind where that money went) and examined the role Ivanka Trump played in negotiations over space at the Trump International Hotel, located just blocks from the White House.
Those negotiations, first reported by Trump, Inc. in 2019, are now the subject of a civil suit filed by the District of Columbia’s attorney general. “Members of the Trump family were aware of and involved in the negotiation of this unconscionable contract,” D.C. Attorney General Karl Racine wrote in the complaint charging the Trump inaugural committee and the Trump Organization with using around $1 million of charitable funds to improperly enrich the Trump family, filed Wednesday, January 22.
A spokesperson for the Trump Organization dismissed the D.C. suit in an emailed statement: “The AG’s claims are false, intentionally misleading and riddled with inaccuracies. The rates charged by the hotel were completely in line with what anyone else would have been charged for an unprecedented event of this enormous magnitude and were reflective of the fact that [sic] hotel had just recently opened, possessed superior facilities and was centrally located on Pennsylvania Avenue. The AG’s after the fact attempt to regulate what discounts it believes the hotel should have provided as well as the timing of this complaint reeks of politics and is a clear PR stunt.”
This episode of Trump, Inc. was originally released on February 20, 2019.
|Jan 23, 2020|
Turning Politics Into Money
For generations, the Trump family has used government and politicians as a path to profit. As president, Donald Trump has taken things even further.
“This guy is a state capitalist,” said Trump’s first biographer, reporter Wayne Barrett, in a 1992 WNYC interview, cited extensively in this episode. “[In] every single one of his major deals, he was designated to be a millionaire and subsequently a billionaire by the government officials that he co-opted and compromised.”
“The Trump family is not shy on transforming their wealth into power in a very crude and brutal way,” says economist Gabriel Zucman, co-author of the book “The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay.” “But that's the nature of extreme wealth. When you're extremely wealthy what do you do? You spend your wealth and your time trying to defend your established position.”
This episode is based on reporting from host Andrea Bernstein’s new book “American Oligarchs: the Kushners, the Trumps, and the Marriage of Money and Power.” Read about the history of a 40-year tax break Trump negotiated for his Grand Hyatt hotel at ProPublica.
|Jan 22, 2020|
In 1996, an 83-year-old Holocaust survivor and refugee to America sat down with an interviewer from the USC Shoah Foundation to recount what she had experienced.
“If we’re not going to tell now, in 20 years I don’t know who’s going to be to tell,” Rae Kushner said in her Yiddish-accented English. “And now we have still the strength and we have the power to do this and to warn the rest of the world to be careful who is coming up on top of your government.”
Rae’s grandson Jared is now one of the most powerful people in the U.S. government. President Trump’s son-in-law and a senior White House adviser, he is an influential voice on some of the nation’s most pressing issues, including immigration across the southern border. And to understand him, you need to understand his family story.
This episode is based on reporting from host Andrea Bernstein’s new book “American Oligarchs: the Kushners, the Trumps, and the Marriage of Money and Power.” Read more about the Kushner family at ProPublica and find an excerpt of Bernstein’s book at The New Yorker.
|Jan 08, 2020|
In the summer of 2019, Donald Trump Jr. traveled to Mongolia. On Instagram, he wrote "Guys I'm back after living the Yurt Life...We covered many miles on horseback and 4WD...Truly one of the most beautiful places I've ever seen."
He didn't mention the fact that he shot and killed an endangered argali sheep. Or that the Mongolian government issued him a hunting permit after the shoot.
We learned that in many respects, Trump Jr.'s visit blurred the lines between private citizen and diplomacy. Trump Jr. even had a meeting with the Mongolian President.
|Dec 11, 2019|
Three women recall Gordon Sondland made unwanted sexual contact in business settings. One says he exposed himself. All recall professional retaliation after they rejected him. Sondland denies the allegations.
Sondland is the US Ambassador to the European Union. He also served as a point-man for President Trump in Ukraine, as Trump put a hold on military aid. Then, Sondland became a key witness in the impeachment inquiry.
Long before Sondland moved his residence to a Brussels mansion, he was a high-profile hotelier and philanthropist in the Pacific Northwest. In Portland, he has long been a powerful investor, political donor, and patron of the arts.
|Nov 27, 2019|
"Corruption Is Our Achilles Heel"
Glenn Simpson has a lot to say about business corruption and Russian influence in the U.S. In this episode, we speak to him. Simpson first came to these issues as an investigative journalist at The Wall Street Journal. In 2010, he co-founded Fusion GPS, a research firm. During the 2016 campaign, he began to research Donald Trump for two clients: first for a Republican opposed to Trump and then for a lawyer for Democrats.
Fusion is most famous — or infamous — for hiring Christopher Steele, the former British spy who wrote the so-called Steele dossier. We asked Simpson about the dossier, about becoming a part of the story, and about the deposition of former national security aide Fiona Hill, who said that when it comes to Russia, "corruption is our Achilles heel."
Simpson is now the author, with Peter Fritsch, of the new book, "Crime in Progress: Inside the Steele Dossier and the Fusion GPS Investigation of Donald Trump."
|Nov 26, 2019|
The Diplomat, The Machers, And The Oligarch
The impeachment inquiry focuses on whether or not there was a quid pro quo: Military aid in exchange for an investigation. But what if you look at the same events from a different vantage point? The business interests at play.
This episode: How Rudy Giuliani's associates worked their connections to oust the U.S. Ambassador in Ukraine. How President Trump's personal interests came into alignment with the interests of an indicted foreign businessman. And how all of them have been working to discredit Joe Biden.
|Nov 13, 2019|
All The President’s Memes
Read more about who makes money when a bunch of conspiracy theorists throw a party at Trump's hotel. Stay up to date with email updates about WNYC and ProPublica's investigations into the president's business practices.
President Trump's Doral resort has been in the news a lot lately. His chief of staff announced from the White House that America would host the next G-7 summit there. Then, Trump backed off. We're looking at a conference that did happen at Doral. A conference that attracted conspiracy theorists, where a violent video featuring a fake Trump massacring members of the media was shown. (The conference organizers say they "condemn political violence.")
Trump, Inc. was there.
So was the President’s son, Donald Trump, Jr.
This week: The business of conspiracies.
|Oct 30, 2019|
The Numbers Don't Match
Donald Trump’s former campaign chairman, Paul Manafort, is serving prison time for understating his income to the IRS, and for overstating his income to banks. Trump's former executive vice president and special counsel, Michael Cohen, is also serving prison time, for, among other things, making false statements to a bank.
And Donald Trump? A lot of people want to see his taxes: At least two congressional committees. The Manhattan District Attorney. Trump doesn’t want ANYONE to see them. He’s gone to court three times to make sure they stay secret. The court fight is ongoing. Trump's tax documents remain walled off.
Heather Vogell of ProPublica found some anyway. She compared them to financial documents Trump filed with his lender — and discovered that certain key numbers don't match.
Heather spoke with over a dozen experts in accounting, law, and real estate. Not a single one of them could explain the discrepancies away.
|Oct 16, 2019|
In the past two weeks, we've heard a lot about efforts by President Donald Trump and his lawyer, Rudy Giuliani, to push officials in Ukraine to investigate Trump's opponents. As the news has unfolded, it has introduced us to a litany of unfamiliar characters in both Ukraine and the U.S., many of whom were working with Giuliani or, in some fashion, on behalf of the president.
Trump, Inc. co-host Ilya Marritz was in Kiev last week following the trail of Giuliani in an effort to understand more about these obscure figures who have suddenly become so important.
One thing that became clear during his travels: Giuliani's "anti-corruption" efforts involved working with men who have their own questionable histories.
We reached out to Giuliani as well as the White House. We have not heard back.
Here is a rundown of key players in Giuliani's efforts.
The Former Prosecutor Fired for Not Going After Corruption…
Viktor Shokin was Ukraine's general prosecutor in 2015, a position akin to attorney general. He was responsible for investigating corruption. But according to U.S. officials, NGOs and the International Monetary Fund, he was not actually doing this.
Giuliani has claimed that then-Vice President Joe Biden improperly pushed for Shokin's removal to avoid an investigation into Biden's son Hunter, who was on the board of a Ukrainian energy company. There is no evidence that is true.
According to the now-famous whistleblower's report, Shokin spoke with Giuliani over Skype late last year in a call arranged by two Giuliani associates. (More on them in a moment.)
In response to our questions, Shokin declined comment, explaining that he’s out of the country.
The Former Prosecutor Who Was Not a Lawyer…
Yuriy Lutsenko took over the job of prosecutor general from Shokin in 2016. He got the job after allies in Parliament changed the law to allow the position to be filled by someone without a law degree. Lutsenko has no legal training.
Lutsenko has said he's spoken with Giuliani "maybe 10 times." In the middle of one meeting in New York last January in which Giuliani and Lutsenko talked about investigating the Bidens, Giuliani reportedly called Trump to loop him in.
In the spring, Lutsenko told a reporter he "would be happy to have a conversation" about Hunter Biden with Attorney General William Barr. Then, last week, he told the Los Angeles Times that he hadn't found any evidence against the Bidens, and said he had told Giuliani that any investigation should be conducted "through prosecutors, not through presidents."
In response to our questions, Lutsenko denied any wrongdoing. He was fired earlier this year.
The Current Prosecutor Caught on Tape…
Nazar Kholodnytsky is now Ukraine's top anti-corruption prosecutor. Audio tapes captured Kholodnytsky in unrelated cases coaching a witness to give false testimony and tipping off suspects to police raids. Kholodnytsky acknowledged the tapes were authentic, but said they were taken out of context.
Earlier this year, the U.S.’s then-ambassador to Ukraine called for Kholodnytsky’s firing. She explained, "Nobody who has been recorded coaching suspects on how to avoid corruption charges can be trusted to prosecute those very same cases." (The ambassador, Marie Yovanovitch, was removed from her position shortly after.)
Kholodnytsky and Giuliani met in Paris in May 2019. Kholodnytsky told The Washington Post the discussion was private, "prosecutor to a former prosecutor." Kholodnytsky told the Post added that he had questions about the Bidens as well as the prosecution of former Trump campaign chair Paul Manafort.
When the Post asked Giuliani about the meeting, he said, "I'm not going to tell you about that."
Kholodnytsky told us he was too busy to answer our questions.
Giuliani’s Special Envoys…
Lev Parnas and Igor Fruman are two Ukrainian-American businessmen who have worked with Giuliani and introduced him to the Ukrainian prosecutors. Giuliani has described them as his clients. They went to Ukraine after Giuliani canceled a trip in the wake of a New York Times article that revealed his travel plans.
In a detailed story about their work with Giuliani, Parnas told Buzzfeed they did nothing wrong. "All we were doing was passing along information," Parnas said. He added, "We’re American citizens, we love our country, we love our president."
Parnas was sued for allegedly defrauding investors in a movie he was involved with, "Anatomy of an Assassin."
"He conned us from day one," one of the investors told the Miami Herald, adding, "He financially ruined us." Parnas lost the case but has denied wrongdoing. "The truth is going to come out about that judgment," he has said.
Fruman is well-connected in Ukraine, where he owns a number of businesses, including Mafia Rave, a beach club in Odessa. Fruman and Parnas have been political contributors in the U.S. Last year, they set up a Delaware LLC that weeks later contributed $325,000 to a Trump-allied political group.
Giuliani was subpoenaed by Congress this week regarding his communications with Parnas and Fruman.
Parnas and Fruman did not respond to our requests for comment.
|Oct 02, 2019|
Donald J. Trump For President, Inc.
In August, at a campaign rally in Manchester, New Hampshire, a tall man with a Viking beard and an elegant gray suit walked out on a stage, carrying a stack of red Make America Great Again hats, tossing them to an adoring crowd, shouting "Four more years!"
The man is Trump's campaign manager, Brad Parscale, who vaulted from a mid-level web designer to digital strategist for the 2016 Trump campaign and now manages the 2020 incarnation, Donald J. Trump for President Inc., which he claims will be America's first billion-dollar campaign. And as he's been doing this, Parscale has figured out ways to enrich himself and his firms, at various times collecting a salary from the Trump campaign, payments from the Republican National Committee and money from a super PAC, America First Action.
Like Trump, Parscale is a man who's reinvented himself, from working for a family company that declared bankruptcy to being a middling businessman, to becoming a high-profile avatar for Donald Trump.
ProPublica's Peter Elkind joined Trump, Inc. to talk about his in-depth profile of Parscale in ProPublica and the political juggernaut Parscale is assembling to re-elect the President.
Here's what Elkind says about Parscale and the stories he tells about himself: "He changes dates. He rearranges facts. He omits conspicuous events. He basically rewrites his own life story to become a more romantic tale, to fit into the image that he's trying to convey. He is a promoter, he's a hustler, he's a marketer." In short, Brad Parscale is a lot like his boss. To find out more, listen to the episode.
|Sep 19, 2019|
The Family Business
The Trump, Inc. podcast from WNYC and ProPublica is back. And we'll be bringing you new episodes every two weeks.
When we started all the way back in early 2018, we laid out how we'd be digging into the mysteries around President Donald Trump's business. After all, by keeping ownership of that business, Trump has had dueling interests: the country and his pocketbook.
We've done dozens of episodes over the past 18 months, detailing how predatory lenders are paying the president, how Trump has profited from his own inauguration and how Trump's friends have sought to use their access in pursuit of profit.
We've noticed something along the way. It's not just that the president has mixed his business and governing. It's that the way Trump does business is spreading across the government.
Trump's company isn't like most big businesses. It is accountable to only one man, it has broken the rules, and those promoting it have long engaged in what Trump has dubbed, ahem, "truthful hyperbole."
Those traits are now popping up in the government. It may seem like the news from Washington is a cacophony of scandals. But they fit clear patterns — patterns that Trump has brought with him from his business.
|Sep 18, 2019|
The Questions Mueller Didn't Ask
Perhaps you’ve heard: Special counsel Robert Mueller testified on Wednesday. There’s plenty of analysis about who won and who didn’t. We’re skipping that part. Instead, on a special, speedy episode of Trump, Inc. we’re focusing on the few tidbits that were actually revealing and how it came to be that there weren’t more.
ProPublica’s Jesse Eisinger and Heather Vogell talk with WNYC’s Andrea Bernstein about the many things we didn’t learn and why. They discuss potential mistakes during the investigation, avenues Mueller didn’t explore and witnesses — like the president — he decided not to try to question in person.
Mueller’s testimony is over. His report is done. And his office is closed. But there are plenty of critical yet unanswered questions remaining. And we’re still digging. Listen to the episode to hear what we still want to know.
|Jul 25, 2019|
A New Kind of Influencer: Friend of the President’s Kid
Over the past two years, the Trump administration has been grappling with how to handle the transition to the next generation of mobile broadband technology. With spending expected to run into hundreds of billions of dollars, the administration views it as an ultra-high-stakes competition between U.S. and Chinese companies, with enormous implications both for technology and for national security. Top officials from a raft of departments have been meeting to hash out the best approach.
But there’s been one person at some of the discussions who has a different background: He’s Donald Trump Jr.’s hunting buddy. Over the past two decades, the two have trained their sights on duck, pheasant and white-tailed deer on multiple continents. (An email from another Trump Jr. pal characterized one of their joint duck-hunting trips to Mexico years ago as “muy aggresivo.”)
Tommy Hicks Jr., 41, isn’t a government official; he’s a wealthy private investor. And he has been a part of discussions related to China and technology with top officials from the Treasury Department, National Security Council, Commerce Department and others, according to emails and documents obtained by ProPublica. In one email, Hicks refers to a meeting at “Langley,” an apparent reference to the CIA’s headquarters.
Hicks’ financial interests, if any, in the matters he has discussed aren’t clear. The interests are much more apparent when it comes to at least one of his associates. Hicks used his connections to arrange for a hedge fund manager friend, Kyle Bass — who has $143 million in investments that will pay off if China’s economy tanks — to present his views on the Chinese economy to high-level government officials at an interagency meeting at the Treasury Department, according to the documents.
Hicks is hardly the first private-sector power broker to emerge in a presidential administration, but he may represent a new subspecies: The Friend of the President’s Kid.
In fact, Hicks’ influence and career overwhelmingly hinge on two people: Trump Jr., his friend of about two decades, and, first and foremost, Hicks’ father. In a roughly 20-year career, Hicks has spent 17 of them working for investment funds and sports teams owned by his wealthy financier dad, Thomas Hicks Sr., and the other three working for a client of his father.
The generally privileged life of the younger Hicks has been speckled with occasional instances of misbehavior, one of them serious. At age 18, he pleaded no contest to misdemeanor assault, reduced from an original charge of felony aggravated assault, after he and two others were arrested in the beating of a fellow high school student at a party. (The victim was also kicked in the face during the assault, according to people familiar with the case. He told police that one of the three assailants — he didn’t say which — asked him, “What is your name, faggot?”) The criminal conviction did not prevent Hicks from being admitted to the University of Texas, where his father was an alumnus, a member of the Board of Regents and soon thereafter the first chairman of the University of Texas Investment Management Company, which manages the school’s endowment and other assets.
As an adult, friends say, Hicks’ carousing ways and occasional belligerent outbursts led some in his circle to bestow a heavily ironic nickname: “Senator Hicks.” His tenure as a director of the soccer team his father owned in Liverpool, England, a decade ago ended right after an email he sent to a heckling fan — “Blow me fuckface. Go to Hell. I’m sick of you.” — surfaced publicly.
Friends say Hicks has matured, particularly since he married and had three daughters. He has risen quickly in recent years. Hicks leveraged his Dallas financial network to become a top Trump campaign fundraiser in 2016 and a vice chairman of the inaugural finance committee; in January, he was named co-chairman of the Republican National Committee. His friends say he is motivated by patriotism.
Hicks also played a behind-the-scenes role, according to two people familiar with the matter and an account by a Turkish journalist, in the freeing last year of Andrew Brunson, an American pastor who was detained for two years by the Turkish government on what the U.S. government viewed as phony charges of spying and helping terrorists.
Even before becoming the second highest-ranking GOP official, Hicks was a frequent White House guest. He liked to have lunch in the White House mess with his half sister, who worked for a time in the communications operation. (The family is not related to Hope Hicks, the former White House communications director.) Hicks would then stroll the halls, according to a former senior administration official, dropping in to offices for impromptu chats with various officials, including Jared Kushner.
Those sorts of connections have given Hicks a convening power, the ability to call together multiple officials. “He basically opened the door for having a conversation with people who I didn’t know but needed to know,” said Robert Spalding, a former senior director for strategic planning at the National Security Council during the Trump administration.
The efforts, detailed in hundreds of pages of government emails and other documents obtained under the Freedom of Information Act, show that Hicks had access to the highest levels of government to influence policymaking in ways that could lead to painful economic outcomes for the Chinese — and a potentially lucrative result for Hicks’ hedge fund friend, Bass.
“When somebody comes in like this, a hedge fund manager who has an interest in the viability of China’s economy, you’re giving them an opportunity to influence policy,” said Virginia Canter, a former ethics lawyer at the Treasury Department who now serves as chief ethics counsel for Citizens for Responsibility and Ethics in Washington, a watchdog group. (CREW has sued Donald Trump for accepting emoluments from foreign governments.) “The question is why?”
Hicks’ unusual role as a nongovernment employee who opened doors on behalf of both industry and others, Canter said, put him in a gray zone of ethics and lobbying regulations. “He’s acting in a lobbyist role when he may fall outside the lobbyist disclosure rules, and it’s not clear how he benefits financially,” she said. “So the question is: What’s he getting out of it? What are his friends getting out of it? And is the government processing it in a way that ensures the public benefits?”
Bass presented his views on China’s banking system in the office of Heath Tarbert, an assistant secretary at Treasury in charge of international markets and investment policy and a powerful intergovernmental committee that reviews foreign investments in the U.S. for national security concerns. Among the officials at the meeting with Tarbert were Bill Hinman, the director of the division of corporation finance at the Securities and Exchange Commission, and Ray Washburne, a wealthy Dallas restaurant owner and family friend of Hicks’ who was nominated by Trump to head the Overseas Private Investment Corporation.
Hicks and Bass, both Dallas residents and longtime denizens of the financial community there, have invested together since at least 2011, according to securities filings and court records. They’ve owned shares of a publicly traded communications-technology manufacturer. And they were among the biggest creditors to the bankrupt law enforcement contracting company run by Chris Kyle, the ex-Navy SEAL portrayed by Bradley Cooper in “American Sniper.” The managing director of a new investment fund started by Hicks had previously advised Bass on the successful stock-shorting of a Texas real estate lender, according to corporate filings and court papers from a lawsuit in state court in Dallas.
But it’s not clear if Hicks or his family have an investment in Bass’ China-related funds. Reached twice on his cellphone, Hicks declined to be interviewed by ProPublica. In the second call, in June, Hicks didn’t dispute that he and his family have invested in Bass’ funds. But when asked to detail their business relationship, he cut the conversation short. “I’ve got to run. Let me see if I can get back to you,” Hicks said before hanging up. He didn’t call back.
Weeks later, after ProPublica followed up with questions to the RNC, a spokesman responded by emailing a “statement attributed to Tommy Hicks.” It read: “As a businessman, I passionately supported causes I believed in and, if appropriate, would sometimes meet with government officials to promote them. There is nothing wrong with that. I have taken every precaution during my time as Co-Chair of the RNC to ensure there is no conflict of interest between my job here and any personal businesses.” (The spokesperson also emailed a statement on behalf of the RNC: “Tommy has done an outstanding job working on behalf of President Trump and his agenda.”)
Bass, who made his name and fortune by betting against subprime mortgages before the crash and is known for large bets that economies or certain macro trends will turn downward, declined to comment. “I’m not interested in talking with you about my friends or any meetings I have or haven’t had privately with anyone,” he wrote in an email. In a subsequent message, Bass wrote that any suggestion “that we had corrupt intentions in meeting with Treasury officials... is categorically false and defamatory and could negatively affect our business.”
An administration official briefed on the Bass meeting at the Treasury downplayed it as “strictly a listening session.” He said Bass did not ask the attendees to take any actions, nor did the attendees divulge anything about U.S.-China policy. Government ethics officers vetted the federal employees for any conflicts and found none, the official said. He acknowledged that the review didn’t include an examination of any financial relationship between Hicks and Bass.
Spalding said the conversation centered primarily on Bass’ analysis of publicly available records on the Chinese financial system. “I think the thing that I’ve discovered over the past years is that the information in the private sector is better than anything we have in government,” Spalding said of Bass’ presentation. “You have to reach out to where the expertise is. In our country, that’s where the talent is.”
An SEC spokeswoman declined to comment. Washburne, now out of government, didn’t respond to emails seeking comment.
Bass has become a vocal advocate for an aggressive U.S. policy toward China. On Twitter and on cable business channels he’s denounced everything from the country’s Communist Party government to its business practices. Securities filings show Bass raised $143 million from about 81 investors in two funds — investments that would benefit if China’s currency were devalued or the country faced credit or banking crises. In April, in a letter to his investors, Bass wrote that his company, Hayman Capital Management, was positioned for coming problems in Hong Kong and was set up to “maintain a massive asymmetry to a negative outcome in Hong Kong and/or China.”
Hicks’ work on the 5G initiative was extensive.
Over just a few months in late 2017 and 2018, records show, he was part of an informal group led by then NSC official Spalding, that advocated for a strategy in which the federal government would plan out a national policy for 5G. One memo described their goal as the “equivalent of the Eisenhower National Highway System — a single, inherently protected, information transportation superhighway.”
The group conducted multiple meetings and briefings. For example, Hicks, Spalding and others traveled to Samsung Electronics’ Dallas-area offices for one meeting in January 2018.
That same month Hicks attended a 5G meeting that he’d arranged with Commerce Secretary Wilbur Ross. Commerce plays a key role in the future of 5G since a division within the agency manages government spectrum and another maintains a list of companies the government believes are, or will become, national security threats. Companies that end up on that list can be effectively shut out from global deal-making. The meeting with Ross focused heavily on the threat of China, said Ira Greenstein, who served as a White House aide and was part of Spalding’s 5G crew.
Hicks was one of a dozen nongovernment employees, including executives from Wells Fargo, Nokia, Ericsson and Google, that Spalding sent reading materials to ahead of a 5G discussion in the Eisenhower Executive Office Building. Copied on the email were top Commerce Department officials, a Booz Allen Hamilton contractor and a senior adviser for cybersecurity and IT modernization at the White House Office of Science and Technology. On the agenda? “Mid Band vs High Band” spectrum, “security,” “supply chain,” “financing” and other critical issues.
Hicks wasn’t just a passive observer. On Jan. 2, 2018, the managing director of OPIC, which provides financial backing to American companies expanding into foreign markets, emailed Spalding and others to say that the CEO of a satellite company called OneWeb had a plan to provide worldwide 5G coverage by 2027. Hicks fired back a note from his iPhone. “2027 is too late,” he wrote. “Let’s discuss as a smaller group tomorrow.”
Spalding was forced out of the West Wing in early 2018 after a draft 20-page briefing memo he authored proposing a government-organized national 5G network was leaked, then panned as an attempt to nationalize the wireless broadband industry. Trump has not pursued such an initiative, ultimately deferring to wireless carriers to bid on publicly maintained spectrum and develop their own networks as has traditionally been the case.
Still, the administration has made significant efforts to counter Chinese influence in 5G and related technologies, which are said to be critical for industries such as driverless cars, artificial intelligence, machine learning and much more. In May the Commerce Department barred Chinese telecom equipment manufacturer Huawei from doing business in the U.S. for national security reasons. And the top Department of Defense official in charge of acquisitions also recently announced the creation of a government-approved private marketplace to pair American private equity firms with U.S. technology companies producing products with national security applications to keep Chinese money out of 5G.
It isn’t clear what influence, if any, Hicks had in those decisions. But his profile is only rising. In April, he led a Republican delegation to Taiwan alongside a U.S. government delegation. Hicks met with the country’s president, Tsai Ing-wen, who has lately been positioning her country’s corporations as safer providers of 5G equipment than those in China. Tsai thanked the U.S. for selling arms to Taiwan. She asked Hicks to convey her regards to the Trumps.
|Jul 22, 2019|
An Opportunity for the Rich
Under a six-lane span of freeway leading into downtown Baltimore sits what may be the most valuable parking spaces in America.
Lying near a development project controlled by Under Armour’s billionaire CEO Kevin Plank, one of Maryland’s richest men, and Goldman Sachs, the little sliver of land will allow Plank and the other investors to claim what could amount to millions in tax breaks for the project, known as Port Covington.
They have President Donald Trump’s 2017 tax overhaul law to thank. The new law has a provision meant to spur investment into underdeveloped areas, called “opportunity zones.” The idea is to grant lucrative tax breaks to encourage new investment in poor areas around the country, carefully selected by each state’s governor.
But Port Covington, an ambitious development geared to millennials to feature offices, a hotel, apartments, and shopping, is not in a census tract that is poor. It’s not a new investment. And the census tract only became eligible to be an opportunity zone thanks to a mapping error.
As the selection process was underway, a deputy chief of staff to Maryland's governor wrote in an email that “Port Covington does not qualify” as an opportunity zone.
Maryland's governor chose the area for the program anyway — after his aides met with the lobbyists for Plank, who owns about 40% of the zone.
“This is a classic example of a windfall benefit,” said Robert Stoker, a George Washington University professor who has studied economic development in Baltimore for decades. “A major investment was already planned and now is in a zone where they are going to qualify for all kinds of beneficial tax treatment.”
In selecting Port Covington, the governor had to exclude another Maryland community from the opportunity zone program. In Baltimore, for example, the governor dropped part of a neighborhood that city officials recommended for the program — Brooklyn — with a median family income one-fifth that of Port Covington. Brooklyn sits just across the Patapsco river from Port Covington, in an area that suffers from one of the highest drug and alcohol death rates in Baltimore, which in turn has one of the highest drug fatality rates nationwide.
In a statement, Marc Weller, a developer who is Plank’s partner in the project, defended the opportunity zone designation. “Port Covington being part of an Opportunity Zone will attract more investors, foster more economic growth in a neglected area of the City, and directly benefit all of the surrounding communities for decades to come,” Weller said. Supporters say the Port Covington development could help several nearby struggling south Baltimore neighborhoods.
An official in the administration of Maryland’s Republican governor, Larry Hogan, said, “The success of that project is really going to go a long way to providing benefits for the whole city of Baltimore.” The official added: “The governor is a huge supporter of the development.”
A spokesperson for the state’s Department of Housing and Community Development, which was involved in the selection process, said that “due to the time limits of the federal tax incentive, the state of Maryland did purposefully select census tracts where projects were beginning to increase the odds of attracting additional private sector investment to Maryland's opportunity zones in the near term.”
The Birth of a New Tax Break
In December 2017, Trump signed the Tax Cuts and Jobs Act, his signature legislative achievement. Much criticized as a giveaway to the rich, the law includes one headline provision that backers promised would help the poor: opportunity zones.
Supporters of the program argued it would unleash economic development in otherwise overlooked communities. “Our goal is to rebuild homes, schools, businesses and communities that need it the most,“ Trump declared at a recent event, adding, “To revitalize these areas, we’ve lowered the capital gains tax for long-term investment in opportunity zones all the way down to a very big, fat, beautiful number of zero.”
The provision has bipartisan support. “These cities are gold mines,” New Jersey Sen. Cory Booker, a 2020 presidential hopeful and main Democratic architect of the program, told real estate investors in October. “They’re domestic emerging markets that are more exciting than anything you’ll see overseas.”
Here’s how the program works. Say you’re a hedge fund manager, you purchased Google stock years ago, and are sitting on $1 billion in gains. If you sell, you’d send the IRS about $240 million, a lot less than ordinary income tax but still annoying. To avoid paying that much, you can sell the shares and put the $1 billion into an opportunity zone. That comes with three generous breaks. The first is that you defer that $240 million in capital gains tax, allowing you to invest more money up front. But if that’s not enough for you, you can hold the investment for several years and you’ll get a significant reduction in those taxes. What’s more, any additional gains from the new investment are tax-free after 10 years.
It’s impossible to predict how much the tax break will be worth to individual investors because it depends on several variables, not least whether the underlying project gains in value. But one investment pitch projected 10-year returns would jump to 91% from 29% on a hypothetical $1 million investment. That includes $284,000 in tax breaks — money the federal government would have collected from taxpayers with capital gains but for the program.
The tax code already favored real estate developers like Trump, and his overhaul made it even friendlier. Investors can put money into a range of projects in opportunity zones, but so far most of the publicly announced deals are in real estate. The tax break has led to a marketing boom, with Wall Street pitching investors to raise funds to invest in the zones. Critics argue that the program is flawed, pointing out that there’s no guarantee that the capital investment will help community residents, that the selection process was vulnerable to outside influence, and that it could be a giveaway for projects that were going to happen anyway. In a case in Chicago uncovered by the Real Deal, two tracts already slated for a major development project were selected by the governor as opportunity zones even though city officials hadn’t initially recommended them.
Under the new law, areas of the country deemed to be “low-income communities” would be eligible to be named opportunity zones. The Treasury Department determined which census tracts qualified. Then governors of each state could select one quarter of those tracts to get the tax benefit.
That governor prerogative turned out to be very useful to Kevin Plank.
In 2012, Plank-connected entities quietly began buying up waterfront property on a largely vacant and isolated peninsula south of downtown Baltimore. Often using shell companies to shield the identity of the true buyer, they ultimately spent more than $100 million acquiring much of the peninsula. Plank’s privately held Sagamore Development now controls roughly 40% of the area that would later be named an opportunity zone.
In early 2015, more than two and a half years before Trump’s tax law passed, Plank revealed himself as the money behind the purchases. He planned a new development and headquarters for Under Armour, the sports apparel company he started after coming up with the idea as a University of Maryland football player. Today, Under Armour employs 15,000 people. Plank has a net worth of around $2 billion.
Though the Port Covington area was cut off from downtown by I-95, Plank said he likes the location because of the visibility. “When people drive through Baltimore [on I-95] I literally want them to drive through and go, 'There's Baltimore on the right. There's Under Armour on the left,’” he told The Baltimore Sun.
A year later, Plank’s firm took his vision to the general public, running TV and print ads touting the new project. One of the ads, reminiscent of the Democratic presidential primary spots airing at that time, was filled with a diverse cast sharing their dreams for a new city within a city.
“We will build it. Together,” the ad begins, before running through a glittering digital rendering of contemporary urban design features. Office towers, shops, transit, parks, jobs — all of it to be anchored by a new world headquarters of the city’s most visible brand name, Under Armour. Sagamore would spearhead the project and sell land to others who would build businesses and housing.
Even before qualifying for the opportunity zone break, taxpayers were going to subsidize the development. Days after the ads touting togetherness, Plank proposed that the city float $660 million in bonds to help build what the company has said would be a $5.5 billion development. Opponents contended Plank’s proposal amounted to corporate welfare that would exacerbate the city’s stark economic and racial divides. But the company agreed to provide millions of dollars to the city and a group of nearby low-income neighborhoods to gain support for the project, and the City Council passed the measure that fall.
As Under Armour’s stock plummeted in 2017 amid slowing sales growth and progress on the Port Covington project lagged. That September, Goldman Sachs stepped in to commit $233 million from its Urban Investment Group. Hogan, himself a real estate developer, personally spoke with the then-CEO of Goldman, Lloyd Blankfein, about the deal.
Meeting With the Governor’s Office
In the weeks after the 2017 federal tax overhaul passed, Plank’s team spotted an opportunity.
Nick Manis, a veteran Annapolis lobbyist who has also represented the Baltimore Ravens, reached out to Hogan’s chief of staff about Port Covington, according to emails obtained by ProPublica through a public records request. The developers and their lobbyists had given at least $15,000 to Hogan’s campaigns in recent years. A meeting was set for early February.
But the developers had a problem.
The Friday before the meeting, a deputy chief of staff to the governor wrote in an email that “Port Covington does not qualify” for the coveted tax breaks.
The Port Covington tract, which includes a gentrified corner of South Baltimore north of the largely empty peninsula, was too wealthy to be an opportunity zone. There is a second provision of the law for wealthier tracts: A tract can qualify if it is adjacent to a low-income area. But Port Covington failed that test, too. Its median family income — nearly 160% of Maryland’s — exceeded the income cap even for that provision.
Port Covington was out — unless the tract could somehow be considered low-income in its own right.
On Feb. 5, the Port Covington development team arrived at the second floor of the statehouse in the opulent governor’s reception room to meet with top Hogan aides. The agenda for the meeting included opportunity zones, as well as transit and infrastructure issues. The developer’s team requested that the Port Covington tract be made an opportunity zone. The state officials “acknowledged their interest in receiving that designation,” a Hogan administration official said.
Bank Error in Your Favor
Three days after that meeting, Plank and the Port Covington developers got bad news. The Treasury Department released a list of census tracts across the country that were sufficiently poor to be included in the program. Port Covington was not included in that list.
Three weeks later, however, things turned around. The Treasury Department issued a revised list. The agency said it had left out some tracts in error. The revised list included 168 new areas across the country defined by the agency as “low-income communities.”
This time, Port Covington made the cut.
It couldn’t have qualified because its residents were poor. It couldn’t qualify because it was next to some place that was poor. But the tract could qualify under yet another provision of the law. Some tracts could make the cut if they had fewer than 2,000 people and if they were “within” what’s known as an empowerment zone. That was a Clinton-era redevelopment initiative also aimed at low-income areas.
Port Covington wasn’t actually within an empowerment zone, but it is next to one. So how did it qualify? The area met the definition of “within” because the digital map files the Treasury Department used showed that Port Covington overlapped with a neighboring tract that was designated an empowerment zone, Treasury officials told ProPublica.
That overlap: the sliver of parking lot beneath I-395. That piece of the lot is about one one-thousandth of a square mile.
There are no regulations or guidance on how to interpret the tax law’s use of “within,” said a spokesman for the Treasury Department’s Community Development Financial Institutions Fund, which compiled the maps. The agency made what it called a “technical decision” that any partial overlap with an Empowerment Zone would count as being “within” that zone — no matter how small the area, or if anyone lived there.
Or, if the overlap was even real.
Turns out, no part of Port Covington actually overlapped with the empowerment zone.
Treasury’s decision ignored a well-known problem in geographic analysis known as misalignment, mapping experts said.
Misalignment happens when the lines on digital maps made by two sources differ slightly about where things like roads and buildings lie, according to Henry Luan, a professor of geography at the University of Oregon.
For example, if a tract ends at a highway, one file might show the border on the near side of the highway while another — when zoomed all the way in — might show it a few feet away on the far side. When laid on top of each other, the two files end up with minuscule differences that don’t mean anything in the real world.
Except in this case, it had big real world consequences for Port Covington. The mapping error allowed the entire tract to qualify as an opportunity zone.
“That area of overlap is a complete artifact of” the map files Treasury used, said David Van Riper, director of spatial analysis at the Minnesota Population Center. “It’s not an actual overlap.”
Sometime in the mid-2000s, the Census Bureau used GPS devices to make its map files more accurately represent the country’s roads. One of the maps used by Treasury appeared to be based on the older, less accurate Census maps, Van Riper said.
Even accepting Treasury’s misaligned maps, the entire Port Covington tract receives tax benefits, even though less than 0.3% of it overlaps with the neighboring tract.
“Only a minimal overlap, but you make the whole Census tract benefit from the policy?” Luan said. “That doesn’t make sense to me.”
Port Covington is one of just a handful of tracts in the country that ProPublica identified that qualified through similar flaws in Treasury’s process.
Taking the Break
There is no evidence that Plank or the Port Covington developers influenced the Treasury Department’s revision.
But the lobbying of the governor before the Treasury change appears to have paid off.
As they were lobbying, Baltimore officials were working out which parts of the city would benefit most from being opportunity zones. They petitioned the governor to pick 41 low-income city neighborhoods to get the tax break, all of them well below the program’s maximum income requirements.
The city’s list remained largely intact when the governor made his selections in April. Hogan made just four changes, three of which qualified under the main criteria without the benefit of the mapping error. But the fourth didn’t: Port Covington.
Plank’s team cheered the revision. The very thing that made Port Covington a poor candidate to be an opportunity zone — that it wasn’t a low-income area — could make it exceptionally attractive to investors. In January, they convened an opportunity zone conference at their Port Covington incubator called City Garage featuring state officials and executives from Goldman, Deloitte and other firms.
“Port Covington kind of fits all the needs,” said Marc Weller, Plank’s partner, at the conference. “It has all the entitlements, and it has a financial partner in place as well. It’s probably the most premier piece of land in the United States that’s in an opportunity zone.”
The opportunity zone program has restrictions intended to prevent already-planned developments from benefitting. But the Port Covington developers told Bloomberg that the firm will be able to reap the benefits of the tax break because it has found new investors. Among the potential new investors who might take advantage of the tax break are Plank’s own family, one of the developers told the Baltimore Business Journal. A Port Covington spokesman denied that Plank’s family members are potential investors.
To get the maximum benefit, investments need to be made in 2019, though investments made through 2026 can take advantage of growth tax-free. Only a portion of the Port Covington project is expected to be underway by then.
A Goldman spokesman said it is “likely” that the firm will take advantage of the opportunity zone benefits in Port Covington, adding that it has “made no firm decisions about how each component will be financed.”
Margaret Anadu, the head of Goldman’s Urban Investment Group and the lead on the Port Covington investment, recently said of the opportunity zone program: “These are the same neighborhoods that have been suffering since redline started decades and decades ago, pretty much eliminating private investment. … And so we simply have to reverse that. And the only way to reverse that is to start to bring that private capital back into these neighborhoods.”
The Port Covington tract is just 4% black. For it to be included in the program, another community somewhere in Maryland had to be excluded. The ones that the city suggested that were excluded by the governor, for example, are 68% black and have a poverty rate three times higher than Port Covington’s.
There is some evidence suggesting being named an opportunity zone has already been a boon for property owners. An analysis by Zillow found that sale price gains in opportunity zones significantly outpaced gains in eligible tracts that weren’t selected. Real Capital Analytics found that sales of developable sites in the zones rose 24% in the year after the law passed.
Under Armour has said it’s still committed to building its new headquarters on the peninsula, but it’s not clear when that will happen.
Still, other aspects of the once-stalled project finally started moving forward in recent months. After presenting plans for the first section inside the opportunity zone this winter, the project finally got underway on a rainy day in early May of this year.
"The project is real,” Weller said at the kickoff event, which included Anadu, the Goldman Sachs executive, and city and state officials. “The project is starting. We're open for business."
|Jun 19, 2019|
Pay Day at the Trump Doral
In mid-March, the payday lending industry held its annual convention at the Trump National Doral hotel outside Miami. Payday lenders offer loans on the order of a few hundred dollars, typically to low-income borrowers, who have to pay them back in a matter of weeks. The industry has been long been reviled by critics for charging stratospheric interest rates — typically 400% on an annual basis — that leave customers trapped in cycles of debt.
The industry had felt under siege during the Obama administration, as the federal government moved to clamp down. A government study found that a majority of payday loans are made to people who pay more in interest and fees than they initially borrow. Google and Facebook refuse to take the industry’s ads.
On the edge of the Doral’s grounds, as the payday convention began, a group of ministers held a protest “pray-in,” denouncing the lenders for having a “feast” while their borrowers “suffer and starve.”
But inside the hotel, in a wood-paneled bar under golden chandeliers, the mood was celebratory. Payday lenders, many dressed in golf shirts and khakis, enjoyed an open bar and mingled over bites of steak and coconut shrimp.
They had plenty to be elated about. A month earlier, Kathleen Kraninger, who had just finished her second month as director of the federal Consumer Financial Protection Bureau, had delivered what the lenders consider an epochal victory: Kraninger announced a proposal to gut a crucial rule that had been passed under her Obama-era predecessor.
Payday lenders viewed that rule as a potential death sentence for many in their industry. It would require payday lenders and others to make sure borrowers could afford to pay back their loans while also covering basic living expenses. Banks and mortgage lenders view such a step as a basic prerequisite. But the notion struck terror in the payday lenders. Their business model relies on customers — 12 million Americans take out payday loans every year, according to Pew Charitable Trusts — getting stuck in a long-term cycle of debt, experts say. A CFPB study found that three out of four payday loans go to borrowers who take out 10 or more loans a year.
Now, the industry was taking credit for the CFPB’s retreat. As salespeople, executives and vendors picked up lanyards and programs at the registration desk by the Doral’s lobby, they saw a message on the first page of the program from Dennis Shaul, CEO of the industry’s trade group, the Community Financial Services Association of America, which was hosting the convention. “We should not forget that we have had some good fortune through recent regulatory and legal developments,” Shaul wrote. “These events did not occur by accident, but rather are due in large part to the unity and participation of CFSA members and a commitment to fight back against regulatory overreach by the CFPB.”
This year was the second in a row that the CFSA held its convention at the Doral. In the eight years before 2018 (the extent for which records could be found), the organization never held an event at a Trump property.
Asked whether the choice of venue had anything to do with the fact that its owner is president of the United States and the man who appointed Kraninger as his organization’s chief regulator, Shaul assured ProPublica and WNYC that the answer was no. “We returned because the venue is popular with our members and meets our needs,” he said in a written statement. The statement noted that the CFSA held its first annual convention at the Doral hotel more than 16 years ago. Trump didn’t own the property at the time.
The CFSA and its members have poured a total of about $1 million into the Trump Organization’s coffers through the two annual conferences, according to detailed estimates prepared by a corporate event planner in Miami and an executive at a competing hotel that books similar events. Those estimates are consistent with the CFSA’s most recent available tax filing, which reveals that it spent $644,656 on its annual conference the year before the first gathering at the Trump property. (The Doral and the CFSA declined to comment.)
“It’s a way of keeping themselves on the list, reminding the president and the people close to him that they are among those who are generous to him with the profits that they earn from a business that’s in severe
danger of regulation unless the Trump administration acts,” said Lisa Donner, executive director of consumer group Americans for Financial Reform.
The money the CFSA spent at the Doral is only part of the ante to lobby during the Trump administration. The payday lenders also did a bevy of things that interest groups have always done: They contributed to the president’s inauguration and earned face time with the president after donating to a Trump ally.
But it’s the payment to the president’s business that is a stark reminder that the Trump administration is like none before it. If the industry had written a $1 million check directly to the president's campaign, both the CFSA and campaign could have faced fines or even criminal charges — and Trump couldn’t have used the money to enrich himself. But paying $1 million directly to the president’s business? That’s perfectly legal.
The inauguration of Donald Trump was a watershed for the payday lending industry. It had been feeling beleaguered since the launch of the CFPB in 2011. For the first time, the industry had come under federal supervision. Payday lending companies were suddenly subject to exams conducted by the bureau’s supervision division, which could, and sometimes did, lead to enforcement cases.
Before the bureau was created, payday lenders had been overseen mostly by state authorities. That left a patchwork: 15 states in which payday loans were banned outright, a handful of states with strong enforcement — and large swaths of the country in which payday lending was mostly unregulated.
Then, almost as suddenly as an aggressive CFPB emerged, the Trump administration arrived with an agenda of undoing regulations. “There was a resurgence of hope in the industry, which seems to be justified, at this point,” said Jeremy Rosenblum, a partner at law firm Ballard Spahr, who represents payday lenders. Rosenblum spoke to ProPublica and WNYC in a conference room at the Doral — filled with notepads, pens and little bowls of candy marked with the Trump name and family crest — where he had just led a session on compliance with federal and state laws. “There was a profound sense of relief, or hope, for the first time.” (Ballard Spahr occasionally represents ProPublica in legal matters.)
In Mick Mulvaney, who Trump appointed as interim chief of the CFPB in 2017, the industry got exactly the kind of person it had hoped for. As a congressman, Mulvaney had famously derided the agency as a “sad, sick” joke.
If anything, that phrase undersold Mulvaney’s attempts to hamstring the agency as its chief. He froze new investigations, dropped enforcement actions en masse, requested a budget of $0 and seemed to mock the agency by attempting to officially re-order the words in the organization’s name.
But Mulvaney’s rhetoric sometimes exceeded his impact. His budget request was ignored, for example; the CFPB’s name change was only fleeting. And besides, Mulvaney was always a part-timer, fitting in a few days a week at the CFPB while also heading the Office of Management and Budget, and then moving to the White House as acting chief of staff.
It’s Mulvaney’s successor, Kraninger, whom the financial industry is now counting on — and the early signs suggest she’ll deliver. In addition to easing rules on payday lenders, she has continued Mulvaney’s policy of ending supervisory exams on outfits that specialize in lending to the members of the military, claiming that the CFPB can do so only if Congress passes a new law granting those powers (which isn’t likely to happen anytime soon). She has also proposed a new regulation that will allow debt collectors to text and email debtors an unlimited number of times as long as there’s an option to unsubscribe.
Enforcement activity at the bureau has plunged under Trump. The amount of monetary relief going to consumers has fallen from $43 million per week under Richard Cordray, the director appointed by Barack Obama, to $6.4 million per week under Mulvaney and is now $464,039, according to an updated analysis conducted by the Consumer Federation of America’s Christopher Peterson, a former special adviser to the bureau.
Kraninger’s disposition seems almost the inverse of Mulvaney’s. If he’s the self-styled “right wing nutjob” willing to blow up the institution and everything near it, Kraninger offers positive rhetoric — she says she wants to “empower” consumers — and comes across as an amiable technocrat. At 44, she’s a former political science major — with degrees from Marquette University and Georgetown Law School — and has spent her career in the federal bureaucracy, with a series of jobs in the Transportation and Homeland Security departments and finally in OMB, where she worked under Mulvaney. (In an interview with her college alumni association, she hailed her Jesuit education and cited Pope Francis as her “dream dinner guest.”) In her previous jobs, Kraninger had extensive budgeting experience, but none in consumer finance. The CFPB declined multiple requests to make Kraninger available for an interview and directed ProPublica and WNYC to her public comments and speeches.
Kraninger is new to public testimony, but she already seems to have developed the politician’s skill of refusing to answer difficult questions. At a hearing in March just weeks before the Doral conference, Democratic Rep. Katie Porter repeatedly asked Kraninger to calculate the annual percentage rate on a hypothetical $200 two-week payday loan that costs $10 per $100 borrowed plus a $20 fee. The exchange went viral on Twitter. In a bit of congressional theater, Porter even had an aide deliver a calculator to Kraninger’s side to help her. But Kraninger would not engage. She emphasized that she wanted to conduct a policy discussion rather than a “math exercise.” The answer, by the way: That’s a 521% APR.
A while later, the session recessed and Kraninger and a handful of her aides repaired to the women’s room. A ProPublica reporter was there, too. The group lingered, seeming to relish what they considered a triumph in the hearing room. “I stole that calculator, Kathy,” one of the aides said. “It’s ours! It’s ours now!” Kraninger and her team laughed.
Triple-digit interest rates are no laughing matter for those who take out payday loans. A sum as little as $100, combined with such rates, can lead a borrower into long-term financial dependency.
That’s what happened to Maria Dichter. Now 73, retired from the insurance industry and living in Palm Beach County, Florida, Dichter first took out a payday loan in 2011. Both she and her husband had gotten knee replacements, and he was about to get a pacemaker. She needed $100 to cover the co-pay on their medication. As is required, Dichter brought identification and her Social Security number and gave the lender a postdated check to pay what she owed. (All of this is standard for payday loans; borrowers either postdate a check or grant the lender access to their bank account.) What nobody asked her to do was show that she had the means to repay the loan. Dichter got the $100 the same day.
The relief was only temporary. Dichter soon needed to pay for more doctors’ appointments and prescriptions. She went back and got a new loan for $300 to cover the first one and provide some more cash. A few months later, she paid that off with a new $500 loan.
Dichter collects a Social Security check each month, but she has never been able to catch up. For almost eight years now, she has renewed her $500 loan every month. Each time she is charged $54 in fees and interest. That means Dichter has paid about $5,000 in interest and fees since 2011 on what is effectively one loan for $500.
Today, Dichter said, she is “trapped.” She and her husband subsist on eggs and Special K cereal. “Now I’m worried,” Dichter said, “because if that pacemaker goes and he can’t replace the battery, he’s dead.”
Payday loans are marketed as a quick fix for people who are facing a financial emergency like a broken-down car or an unexpected medical bill. But studies show that most borrowers use the loans to cover everyday expenses. “We have a lot of clients who come regularly,” said Marco (he asked us to use only his first name), a clerk at one of Advance America’s 1,900 stores, this one in a suburban strip mall not far from the Doral hotel. “We have customers that come two times every month. We’ve had them consecutively for three years.”
These types of lenders rely on repeat borrowers. “The average store only has 500 unique customers a year, but they have the overhead of a conventional retail store,” said Alex Horowitz, a senior research officer at Pew Charitable Trusts, who has spent years studying payday lending. “If people just used one or two loans, then lenders wouldn’t be profitable.”
It was years of stories like Dichter’s that led the CFPB to draft a rule that would require that lenders ascertain the borrower’s ability to repay their loans. “We determined that these loans were very problematic for a large number of consumers who got stuck in what was supposed to be a short-term loan,” said Cordray, the first director of the CFPB, in an interview with ProPublica and WNYC. Finishing the ability-to-pay rule was one of the reasons he stayed on even after the Trump administration began. (Cordray left in November 2017 for what became an unsuccessful run for governor of Ohio.)
The ability-to-pay rule was announced in October 2017. The industry erupted in outrage. Here’s how CFSA’s chief, Shaul, described it in his statement to us: “The CFPB’s original rule, as written by unelected Washington bureaucrats, was motivated by a deeply paternalistic view that small-dollar loan customers cannot be trusted with the freedom to make their own financial decisions. The original rule stood to remove access to legal, licensed small-dollar loans for millions of Americans.” The statement cited an analysis that “found that the rule would push a staggering 82 percent of small storefront lenders to close.” The CFPB estimated that payday and auto title lenders — the latter allow people to borrow for short periods at ultra-high annual rates using their cars as collateral — would lose around $7.5 billion as a result of the rule.
The industry fought back. The charge was led by Advance America, the biggest brick-and-mortar payday lender in the United States. Its CEO until December, Patrick O’Shaughnessy, was the chairman of the CFSA’s board of directors and head of its federal affairs committee. The company had already been wooing the administration, starting with a $250,000 donation to the Trump inaugural committee. (Advance America contributes to both Democratic and Republican candidates, according to spokesperson Jamie Fulmer. He points out that, at the time of the $250,000 donation, the CFPB was still headed by Cordray, the Obama appointee.)
Payday and auto title lenders collectively donated $1.3 million to the inauguration. Rod and Leslie Aycox from Select Management Resources, a Georgia-based title lending company, attended the Chairman’s Global Dinner, an exclusive inauguration week event organized by Tom Barrack, the inaugural chairman, according to documents obtained by “Trump, Inc.” President-elect Trump spoke at the dinner.
In October 2017, Rod Aycox and O’Shaughnessy met with Trump when he traveled to Greenville, South Carolina, to speak at a fundraiser for the state’s governor, Henry McMaster. They were among 30 people who were invited to discuss economic development after donating to the campaign, according to the The Post and Courier. (“This event was only about 20 minutes long,” said the spokesperson for O’Shaughnessy’s company, and the group was large. “Any interaction with the President would have been brief.” The Aycoxes did not respond to requests for comment.)
The ability-to-pay rule technically went into effect in January 2018, but the more meaningful date was August 2019. That’s when payday lenders could be penalized if they hadn’t implemented key parts of the rule
Payday lenders looked to Mulvaney for help. He had historically been sympathetic to the industry and open to lobbyists who contribute money. (Jaws dropped in Washington, not about Mulvaney’s practices in this regard, but about his candor. “We had a hierarchy in my office in Congress,” he told bankers in 2018. “If you were a lobbyist who never gave us money, I didn’t talk to you. If you’re a lobbyist who gave us money, I might talk to you.”)
But Mulvaney couldn’t overturn the ability-to-pay rule. Since it had been finalized, he didn’t have the legal authority to reverse it on his own. Mulvaney announced that the bureau would begin reconsidering the rule, a complicated and potentially lengthy process. The CFPB, under Cordray, had spent five years researching and preparing it.
Meanwhile, the payday lenders turned to Congress. Under the Congressional Review Act, lawmakers can nix federal rules during their first 60 days in effect. In the House, a bipartisan group of representatives filed a joint resolution to abolish the ability-to-pay rule. Lindsey Graham, R-S.C., led the charge in the Senate. But supporters couldn’t muster a decisive vote in time, in part because opposition to payday lenders crosses party lines.
By April 2018, the CFSA members were growing impatient. But the Trump administration was willing to listen. The CFSA’s Shaul was granted access to a top Mulvaney lieutenant, according to “Mick Mulvaney’s Master Class in Destroying a Bureaucracy From Within” in The New York Times Magazine, which offers a detailed description of the behind-the scenes maneuvering. Shaul told the lieutenant that the CFSA had been preparing to sue the CFPB to stop the ability-to-pay rule “but now believed that it would be better to work with the bureau to write a new one.” Cautious about appearing to coordinate with industry, according to the article, the CFPB was non-committal.
Days later, the CFSA sued the bureau. The organization’s lawyers argued in court filings that the bureau’s rules “defied common sense and basic economic analysis.” The suit claimed the bureau was unconstitutional and lacked the authority to impose rules.
A month later, Mulvaney took a rare step, at least, for most administrations: He sided with the plaintiffs suing his agency. Mulvaney filed a joint motion asking the judge to delay the ability-to-pay rule until the lawsuit is resolved.
By February of this year, Kraninger had taken charge of the CFPB and proposed to rescind the ability-to-pay rule. Her official announcement asserted that there was “insufficient evidence and legal support” for the rule and expressed concern that it “would reduce access to credit and competition.”
Kraninger’s announcement sparked euphoria in the industry. One industry blog proclaimed, “It’s party time, baby!” with a GIF of President Trump bobbing his head.
Kraninger’s decision made the lawsuit largely moot. But the suit, which has been stayed, has still served a purpose: This spring, a federal judge agreed to freeze another provision of the regulation, one that limits the number of times a lender can debit a borrower’s bank account, until the fate of the overall rule is determined.
As the wrangling over the federal regulation plays out, payday lenders have continued to lobby statehouses across the country. For example, a company called Amscot pushed for a new state law in Florida last year. Amscot courted African American pastors and leaders located in the districts of dozens of Democratic lawmakers and chartered private jets to fly them to Florida’s capital to testify, according to the Tampa Bay Times. The lawmakers subsequently passed legislation creating a new type of payday loan, one that can be paid in installments, that lets consumers borrow a maximum $1,000 loan versus the $500 maximum for regular payday loans. Amscot CEO Ian MacKechnie asserts that the new loans reduce fees (consumer advocates disagree). He added, in an email to ProPublica and WNYC: “We have always worked with leaders in the communities that we serve: both to understand the experiences of their constituents with regard to financial products; and to be a resource to make sure everyone understands the law and consumer protections. Educated consumers are in everyone’s interest.” For their part, the leaders denied that Amscot’s contributions affected their opinions. As one of them told the Tampa Bay Times, the company is a “great community partner.”
Kraninger spent her first three months in office embarking on a “listening tour.” She traveled the country and met with more than 400 consumer groups, government officials and financial institutions. Finally, in mid-April, she gave her first public speech at the Bipartisan Policy Center in Washington, D.C. The CFPB billed it as the moment she would lay out her vision for the agency.
Kraninger said she hoped to use the CFPB’s enforcement powers “less often.” She alluded to a report by the Federal Reserve that 40% of Americans would not be able to cover an emergency expense of $400. Her suggestion for addressing that: educational videos and a booklet. “To promote effective approaches to savings and particularly emergency savings,” Kraninger explained, “the Bureau recently launched our Start Small, Save Up initiative. It offers tips, tools and information to help consumers build a basic savings cushion and develop a savings habit. Later this year, we will be launching a savings ‘boot camp,’ a series of videos, and a very readable, informative booklet that serves as a roadmap to a savings plan.”
Having laid out what sounded like a plan to hand out self-help brochures at an agency invented to pursue predatory financial institutions, she then said, “Let me be clear, however, the ultimate goal for the bureau is not to produce booklets and great content on our website. The ultimate goal is to move the needle on the number of Americans in this country who can cover a financial shock, like a $400 emergency.”
Back at the Doral the month before her speech, $400 might not have seemed like much of an emergency to the payday lenders. Some attendees seemed most upset by a torrential downpour on the second day that caused the cancellation of the conference’s golf tournament.
Inside the Donald J. Trump Ballroom, the conference buzzed with activity. The Bush-era political adviser Karl Rove was the celebrity speaker after the breakfast buffet. And the practical sessions continued apace. One was called “The Power of the Pen.” It was aimed at helping attendees submit comments on the ability-to-pay rule to the government. It was clearly a matter of importance to the CFSA. In his statement to ProPublica and WNYC, Shaul noted that “more than one million customers submitted comments opposing the CFPB’s original small-dollar loan rule — hundreds of thousands of whom sent handwritten letters telling personal stories of how small-dollar loans helped them and their families.”
A couple of months after the Doral conference, Allied Progress, a consumer advocacy group, analyzed the new round of comments that were submitted to the CFPB in response to Kraninger’s plans. Because, the group said, the industry had been accused of submitting “duplicative comments” in the past, it searched for such repetitions in the latest round. In one sample of 26,000 comments, the group discovered that 27% of the statements submitted by purportedly independent individuals contained duplicative passages, all of which supported the industry’s position, and also included identical personal anecdotes. (Payday opponents have encouraged people to submit preprinted comments to the CFPB, but there’s no indication that they include matching personal details.) For example, Allied Progress reported that 221 of the comments stated that “I have a long commute to work and it’s better for me financially to borrow from Cash Connection so that I can still make it to work than to not take care of my car and lose my job because of absences.” There were 201 asserting that “I now take care of my parents and my children” and I “want to be able to enjoy life and not feel burdened by the additional expenses that are piling up.” Allied Progress said it doesn’t know “if these are fake people, fake stories, or form letters intentionally designed to read as personal anecdotes.” (Cash Connection couldn’t be reached for comment.)
Taking account of public comments is the final task before Kraninger officially determines whether to put the ability-to-pay rule to death. Whatever she decides, it’s a likely bet that decision will be challenged in court, the CFSA will weigh in and the payday lenders will still be talking about it at next year’s annual conference. A spokesperson for the CFSA declined to say whether the event will be held at a Trump hotel.
Clarification: This article has been updated to clarify the methodology Allied Progress used in searching for duplicative comments to the CFPB and to explain how duplicative pro-payday-lender comments differed from efforts by anti-payday-loan advocates to encourage people to submit prewritten comments.
|Jun 05, 2019|
Former FBI Deputy Chief Andrew McCabe and Trump, Inc. Compare Notes
Before he became infamous for working on the investigation of Hillary Clinton’s emails and the Trump Russia investigation, former acting FBI chief Andrew McCabe investigated the Russian mob in Brighton Beach, Brooklyn. McCabe has been asking some of the questions we at Trump, Inc. have asked ourselves about Trump’s business. So today, we compare notes.
In this conversation with Andrea Bernstein and Heather Vogell, of Trump, Inc., McCabe talks about why it makes sense that some of the people he investigated in the 1990s have resurfaced in special counsel Robert Mueller’s investigation, what questions he still has after the Mueller report and why he and former FBI director Jim Comey have said Trump’s management style reminds them of the mob.
Trump has long denied any wrongdoing, and he has said he was simply acting as an ordinary businessman in his Russia dealings.
(This interview has been edited and condensed for clarity.)
WNYC’s Andrea Bernstein: I want to start by asking you about your FBI training. You write about being at Quantico and you say, “I embraced every bit of this culture, even the most arbitrary aspects of the discipline.” You say that you loved “wearing the same style of polo shirt every day for weeks on end, loved the fact that everybody around me wore the same polo shirt too.” Why was it important to you, to dress the part?
Andrew McCabe: You know, I think each of those little details, though not significant individually, were a way of communicating to us that we had joined an organization that was much bigger and more significant than our individual preferences or our lives before that point.
Bernstein: I have to say, you definitely look like a G-man.
McCabe: I'm going to say thank you.
Bernstein: Early on in your career, you were assigned to investigate the Russian mob at a specific point in history in New York, and Brighton Beach was a big place where a lot of this activity was based. I'm wondering if you could paint a picture for listeners of what Brighton Beach was like then, and what the Russian mob was like then and how it all came to you?
McCabe: So the FBI field office in New York City had experience with developing new programs in what we called nontraditional organized crime. The folks who ran the organized crime program recognized the situation that we had with a very large Russian-speaking population in New York — one with a deep historical connection to organized crime activity in Russia — and so they made the decision to start a Russian organized crime squad.
So when I got there in ’96, it was really still in its infant stages. Pretty much everybody on the squad were very young, new agents. “First office agents,” as we call them in the Bureau. And so we found Brighton Beach to be just a fascinating, chaotic, confusing place filled with opportunity to identify and investigate criminal activity.
Brighton in those days was a thriving, bustling, Russian-speaking community. You’d drive down Brighton Beach Avenue and all of the signs for all the stores were written in both English and Russian. It was not uncommon to walk down Brighton Beach Avenue and just not hear anyone speaking anything other than Russian. Places like Tatiana’s, Rasputin, the Odessa. All these very fancy restaurants that also operated as night clubs. And there was a thriving kind of social scene around those nightclubs, which often led to criminal activity and became the kind of focus of the organized crime community in New York at that time.
ProPublica’s Heather Vogell: You wrote about how the Russian mob started turning more toward financial crimes and business to pursue its goals. Could you talk a little bit about that transformation?
McCabe: Sure. This was one of the fascinating things about working on that squad. You could be working an extortion or kidnapping case one day, and then a really esoteric financial fraud the next. The thing that set the Russians apart from their Italian counterparts in the organized crime community was their creativity. They very quickly became the originators of the new scams.
Bernstein: We have spent the last year thinking about whether there is a line from some of the small-time crooks in Brighton Beach to Russian interference in the 2016 election. The list of people who seem to matter now were in some way connected to this scene. There's Felix Sater, who is connected to the Trump Tower Moscow deal; there was Michael Cohen. They later show up trying to build a Trump Tower Moscow. And then there's Yevgeny Dvoskin, who was convicted in the gasoline scam that you were just talking about in Brighton Beach and is now a banker in Russia.
McCabe: That's right.
Bernstein: So they were all connected to Brighton Beach years ago, and then they show up in negotiations and 2015 and 2016. What do you make of that?
McCabe: Well, it is at first blush curious, and then when you think about it a little bit longer, it makes perfect sense. Brighton Beach — we thought of it as kind of the Normandy landing in America for Russian organized crime folks.
So there were many people who had experience with organized crime in Russia who came to the United States and settled in Brighton Beach just because they thought it was the new frontier. And this is a place you can make a lot of money.
And then there were some who we believe were actually sent by organized crime criminal organizations in Russia for the purpose of organizing and developing business and things like that. So if you are someone, or you are an organization, that is not opposed to dealing with people with that sort of background, with those sorts of connections, with that sort of history, then you're gonna find yourself negotiating with and being represented by people who had experience in those early ’90s heydays of Russian organized crime and Brighton Beach.
That doesn't really surprise me that much that you see connections like that back to the Trump Organization.
Bernstein: OK, so let's talk about that a little more, because to us we're like, wow! That is crazy that these characters keep re-emerging in the story, and a generation later. So when you say it doesn't seem strange to you when you think about it, can you unpack that a little more? I mean, why is it that they're coming to work with the Trump Organization and the man who is now the president of the United States?
McCabe: Well, as I said, it makes sense to me as an investigator. I don't mean to say that it's a good thing. But these are the same folks in many cases — guys like Felix Sater and others people — who we investigated back in the early and mid-’90s. If you are an organization that doesn't have a problem with dealing with someone who has a known organized crime past and has actually been convicted of federal crimes for that same sort of activity, then you know you're going to find yourself making deals with and being represented by Felix Sater.
Bernstein: So how does that make you feel? Here's the president of the United States, who is in a business deal or talking about a business deal with somebody that you investigated when you started, and when the United States started, investigating the Russian mob.
McCabe: It is to my recollection and experience absolutely unprecedented and deeply concerning. From a strictly counterintelligence perspective, these are the exact sort of connections and historical overlaps that you look for when you're trying to determine whether or not a person or an organization could be subject to foreign influence.
If you think about it just in the context of a standard background check for access to classified information, one of the things that can slow down an unbelievably complicated background check for any individual is if they have a relative in a foreign country. That requires all kinds of other degrees of investigation because you have to understand who is that person and what position are they in and that sort of thing.
Now think of that in terms of someone who is taking extraordinary steps to develop a potentially billion-dollar real estate investment not in any foreign country, but in Russia. I mean, that is incredibly concerning to any counterintelligence professional who is trying to make an assessment as to when, how and where will that foreign government attempt to influence this person.
Vogell: So we have all these characters re-emerging from Brighton Beach. Can you talk about the significance of that in light of what we now understand in terms of the interplay between organized crime and the state security services and the top levels of the Russian government?
McCabe: Yeah. So there's a lot there. But I would start, I think, by saying it is very hard to desegregate organized crime from the government in Russia. I mean, we learned from the Mueller report that Vladimir Putin met quarterly with the oligarchs. The oligarchs are the modern-day masters of organized crime in Russia. They are the folks who, by one way or another, rose to the top of that pile and now control massive assets as a result. Huge fortunes.
Vogell: So how, in your understanding, did this tie back to the Russian government?
McCabe: The place where those two things come together — the organized crime figures and the government — is through the intelligence services. So there's always been this kind of synchronicity between the arm of the government that understands organized crime, knows who the players are, understands the businesses and the things that different individuals are engaged in, and has the kind of boots on the ground, if you will, to make those sorts of connections. Those are the intelligence services in Russia.
Bernstein: There is a mountain of evidence suggesting a Trump-Russia thing. But so far no one — not not us, not you, not Robert Mueller — has been able to say what that thing is.
And as you have puzzled over this relationship, does it seem possible that there in fact isn't a thing?
McCabe: I think that mountain of evidence that you referred to makes it strongly likely that there is a thing. Does that mean we'll ever figure out what it is? No. But it certainly means we should keep looking.
If you look at even just the Trumps’ history with Deutsche Bank: It's almost impossible to look at those series of relationships and transactions and defaults and failures followed by more and more loans. There has to be a thing at the core of that relationship between the Trump Organization and Deutsche Bank. Do we know what it is just yet? No. Will we ever? I'm not sure, but we certainly should keep looking.
Bernstein: So after the Mueller report was released, we locked ourselves in the big conference room and read it for hours.
McCabe: I did the same thing.
Bernstein: And then when we read it, we were like, well, we still have so many questions about Trump and his business dealings in Russia and how that might have linked to foreign influence in the election. If I'm hearing you correctly, I'm hearing you say that you still have a lot of questions, too.
McCabe: Well, I think anybody who follows these issues can't help but have a lot of questions. And I don't think that Director Mueller and his team went about their work assuming that they would answer every question about Donald Trump and about the Trump business enterprises and about his historical business entanglements with Russians or anyone else. They tried to be as narrowly tailored in their remit as they could possibly be. But sure, I still have many questions about the president and his associates’ connections with Russia. I think you can't help but but walk away from the report with a lot of things that you'd like to see more information about.
Bernstein: So you just switched to the second person you said “you can't help.” But we're not you. We didn't actually start this investigation; we didn't work on this investigation; we weren't investigating the Russian mob two decades ago. So I'm wondering what we are to conclude from that.
McCabe: What we are to conclude from the fact that I still have questions?
McCabe: Well, I think you see it the same way that I do.
I mean, I think that the issues that you address in the podcast are the best indication of that. I think even such basic things as, why is this president fighting tooth and nail to continue to withhold and conceal his own personal financial records in a way that no other president — Republican or Democrat — has ever endeavored to conceal? Those are the sorts of questions that, if you are an investigator, and you know this as well as I do, give rise to the curiosity that leads you to investigate.
Like why is it that there are so many representatives, so many people, even if it's just a handful, people who have official connections to sanctioned entities or banks in Russia who are interacting with the president, with his associates, with his family members? Have we ever seen that before by any president or really any high-level government official? I haven't, in the years that I've been doing this. So those are questions that I think were outside the scope of what Director Mueller was doing to some extent, but certainly questions I'd love to see answered.
Bernstein: Trump says in his Russia dealings he was acting like an ordinary businessman. So let's talk about the Trump administration for a moment. You know we are big students of the history of President Trump. And before he was President Trump, he was a businessman here in our city. And one of the tactics that he honed very well was to try to kill off investigations about him or that might potentially involve him before they started.
And just observing from the outside seeing these sustained attacks by the president on you, on Peter Strzok, both of you, forced out, forced off the Russia beat, makes me feel like there's this incredible brain drain going on. Are you alarmed by that?
McCabe: Well, I think that there's no question that this president, that's his approach to perceived adversity. He attacks people personally. He will stop at nothing to undermine reputations and employment and everything else. That's certainly what I've experienced. And Peter and others I think have been on the sharp end of that as well.
Am I concerned that there's no one left in the FBI to investigate these sorts of things? No. The investigative experience in that organization is deep and significant and done, hopefully, by people whose names you and the president don't know, so they can continue doing that work carefully and quietly in the way that it needs to be done.
Bernstein: In your book you write a lot about your private thoughts in the years that you were working in the Trump administration, and as you were having these strange and sometimes alarming conversations with the president. One of the strangest interactions at that time that you wrote about was a meeting with President Trump and the White House counsel Don McGahn when you were being pressured to say it was a good idea for the president to come and address the FBI. You were writing that your permission would somehow give him cover to do something he was planning to do. In the end, he didn't make the trip but you wrote, “The president and his men were trying to work me the way a criminal brigade would operate.” What did you mean by that?
McCabe: You know, it's a method of operation that I'd seen many times before in my own investigative history working in Russian organized crime. The leader of the crew, the leader of an organized criminal enterprise doesn't come out and tell someone what to do. They throw it out as an option that they want that other person to select. And so that way after the fact they can say: “Oh, I was just doing what they asked me to do. I wasn't forcing them to pay me $100 a week to protect their furniture store. I simply gave him the option to do that, and he selected it for himself.”
So it's a kind of a subtle, passive-aggressive kind of bullying that comes with an unspoken threat. That's very effective. I mean, organized criminal enterprises have been doing that for as long as organized crime enterprises have existed. And so that's what it felt like in the Oval Office that day as I was being kind of progressively backed into the corner to state the words that they wanted to hear me state.
Bernstein: Just to follow up with that, Jim Comey in his book references La Cosa Nostra. He also says the way that the president operated reminded him of the way the mob operated. But what are you guys saying here?
McCabe: It's impossible to interact with the president and the administration without drawing that comparison. If you're somebody who comes from an investigative background, somebody like Jim Comey or myself or anybody else who's had experience with organized crime, the parallels are undeniable. The parallels in the way business is conducted, the way conversations proceed, the way you are asked for personal loyalty rather than loyalty to the oath that you've taken, the way that everything is analyzed on this kind of black-and-white paradox: you're either with us or you're against us, you’re either on our team and a part of this effort or you are somebody that we need to destroy. It's just such an obvious comparison. I’m not try not trying to undermine Jim Comey or myself, but it is an undeniable parallel between the way this president conducts himself and those around him support him and conduct themselves and the things that we have seen from organized crime groups.
Bernstein: So is there an inference to be made from that or is that just an observation.
McCabe: That's just an observation. It certainly leads to another round of questions as to why somebody would conduct themselves that way. But until you see that entity actually conducting crimes, you're not really in a position to call it an organized crime enterprise, right? And I think that effort is ongoing.
Vogell: So we wanted to talk a little bit more about Robert Mueller, who you worked very closely with when he was FBI director.
Vogell: You had some wonderful and revealing personal details about his work habits and his general demeanor in the book. Especially, the one I liked, was about how on charts that showed different networks of criminal connections, he hated it when there were too many bold colors on those. Tell us a little bit more about that and what that taught you about his personality and how that was important at the time.
McCabe: You know, through your interactions with the director you would pick up those little gems like, oh my gosh, you can't use a diagonal line on your chart. They have to be straight lines and perpendicular lines. You can't use bold colors, as you've mentioned. He hated some case names, the code names that were used for major cases. And so you're constantly kind of navigating your work with an eye on like, oh you can't do this because the director wouldn’t like it, or you should do that because he’ll like it better.
So it was hard to do at the time and it could be a cause of great stress, but it was also a very effective way of completely transforming the way that we approached our work at least in the terrorism area.
Vogell: It was a level of discipline, is what you're saying?
McCabe: That's right. A level of discipline and accountability.
Vogell: There was at one point more recently when you were sort of pining for the old Bob Mueller “say nothing” FBI, right in the middle of all of these political firestorms that were going on.
Vogell: Did you feel that you had gotten a long way from where you were just a few years earlier with him? And not entirely necessarily because of the directors themselves, but the whole climate and environment had changed, and did you feel the whole organization struggling to adjust to that?
McCabe: You know, I did. It was a little bit of a nostalgic look back. There were many days I was in the Hoover Building wishing I was back in Brighton Beach. Those were simpler and in many ways more satisfying times. But we changed significantly as an organization, particularly in terms of the way that we approached our responsibilities to informing the public and informing Congress of what we were doing after Director Mueller left. And that's because those things had changed around us. In the age of 24-hour news cycles and social media and constant reporting and everything that we were doing, there was certainly a need for the Bureau to evolve in its approach to public relations and things of that nature.
And Jim Comey was the perfect guy to do it, because he had such significant abilities as a communicator and brought a great understanding of the impact of social media and media in general to the Bureau. But it did get us to a place where, you know, once you invite that guest over you're kind of stuck entertaining that guest for as long as they stay, which in this case was forever.
Bernstein: Forever is a long night.
McCabe: It is. It is.
Bernstein: So you have been through an awful lot in the last four years. How are you feeling now about the future of our country and national security?
McCabe: You know, like many people, I am still surprised day in and day out by the things, the developments that I see in the news each day. This latest constitutional crisis that we seem to be stumbling our way towards causes me great concern. Understanding that maybe we're at a point in history now where the executive branch not only doesn't cooperate with the legislative branch, but completely denies and ignores their constitutional responsibilities to conduct oversight. That's not someplace I ever thought we'd end up. Seeing things like that is tough. And I think it reinforces for us the incredible challenges that we face with this current administration.
However, I try to step back and take the long view. I try to remind myself that we as a nation have been through really infinitely tougher challenges before. We have made mistakes in the past, and we've gotten past those mistakes by owning up to them and acknowledging them transparently and honestly and having leadership with the courage and the moral backbone to do that and to guide us to a better place. And I think that that will happen for us this time as well. I've no reason to believe it won't. And so I am still confident and optimistic about the future. I don't know how long this kind of period of chaos will last, but it won't last forever. And I think at the end of the day we will navigate this in the same way we have every other challenge that's faced this country.
Bernstein: Thank you very much, Andrew McCabe.
McCabe: Sure. Thank you for having me. It's been really fun.
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|May 29, 2019|
Trump and Deutsche Bank: It’s Complicated
Whispers of money laundering have swirled around Donald Trump’s businesses for years. One of his casinos, for example, was fined $10 million for not trying hard enough to prevent such machinations. Investors with shady financial histories sometimes popped up in his foreign ventures. And on Sunday, The New York Times reported that anti-money-laundering specialists at Deutsche Bank internally flagged multiple transactions by Trump companies as suspicious. (A spokesperson for the Trump Organization called the article “absolute nonsense.”)
The remarkably troubled recent history of Deutsche Bank, its past money-laundering woes — and the bank’s striking relationship with Trump — are the subjects of this week’s episode. The German bank loaned a cumulative total of around $2.5 billion to Trump projects over the past two decades, and the bank continued writing him nine-figure checks even after he defaulted on a $640 million obligation and sued the bank, blaming it for his failure to pay back the debt.
Trump, Inc. isn’t the only one examining the president’s relationship with the bank. Congressional investigators have gone to court seeking the kind of detailed — and usually secret — banking records that could reveal potential misdeeds related to the president’s businesses, according to recent filings by two congressional committees. The filings were made in response to a highly unusual move by lawyers for Trump, his family and his company seeking to quash congressional subpoenas issued to Deutsche Bank and Capital One, a second institution he banked with. Trump’s lawyers have contended that the congressional subpoenas “were issued to harass” Trump and damage him politically.
Earlier today, a federal judge in New York declined to issue a preliminary injunction to block the subpoenas. During the hearing in which he delivered that ruling, U.S. District Judge Edgardo Ramos said Congress is within its rights to require the banks to turn over Trump’s financial information, even if the disclosure is harmful to him.
For their part, the filings for the House Financial Services and Intelligence committees say they are “investigating serious and urgent questions concerning the safety of banking practices, money laundering in the financial sector, foreign influence in the U.S. political process, and the threat of foreign financial leverage, including over the President.” The inquiry includes investigating whether Trump’s accounts were involved in two large schemes involving Deutsche Bank and Russian clients.
The committees want to determine “the volume of illicit funds that may have flowed through the bank, and whether any touched the accounts held there by Mr. Trump, his family, or business.” Links to Russia will get a particularly close look. “The Committee is examining whether Mr. Trump’s foreign business deals and financial ties were part of the Russian government’s efforts to entangle business and political leaders in corrupt activity or otherwise obtain leverage over them,” the filing stated.
The episode explores some of the Trump-related moves by the bank:
➧ Deutsche Bank’s private wealth unit loaned Trump $48 million — after he had defaulted on his $640 million loan and the bank’s commercial unit didn’t want to lend him any further funds — so that Trump could pay back another unit of Deutsche Bank. “No one has ever seen anything like it,” said David Enrich, finance editor of The New York Times, who is writing a book about the bank and spoke to Trump, Inc.
➧ Deutsche Bank loaned Trump’s company $125 million as part of the overall $150 million purchase of the ailing Doral golf resort in Miami in 2012. The loans’ primary collateral was land and buildings that he paid only $105 million for, county land records show. The apparent favorable terms raise questions about whether the bank’s loan was unusually risky.
➧ To widespread alarm, and at least one protest that Trump would not be able to pay his lease obligations, Deutsche Bank’s private wealth group loaned the Trump Organization an additional $175 million to renovate the Old Post Office Building in Washington and turn it into a luxury hotel.
Like Trump, Deutsche Bank has been scrutinized for its dealings in Russia. The bank paid more than $600 million to regulators in 2017 and agreed to a consent order that cited “serious compliance deficiencies” that “spanned Deutsche Bank’s global empire.” The case focused on “mirror trades,” which Deutsche Bank facilitated between 2011 and 2015. The trades were sham transactions whose sole purpose appeared to be to illicitly convert rubles into pounds and dollars — some $10 billion worth.
A spokesperson said Deutsche Bank has increased its anti-financial-crime staff in recent years and is “committed to cooperating with authorized investigations.” The bank said it has policies in place to address the potential for conflicts of interest, including “special measures with respect to clients that hold public office or perform public functions in the U.S.”
The bank was “laundering money for wealthy Russians and people connected to Putin and the Kremlin in a variety of ways for almost the exact time period that they were doing business with Donald Trump,” Enrich said. “And all of that money through Deutsche Bank was being channeled through the same exact legal entity in the U.S. that was handling the Donald Trump relationship in the U.S. And so there are a lot of coincidences here.”
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|May 22, 2019|
What We’ve Learned From Trump’s Tax Transcripts
President Donald Trump has refused to release his tax returns. He has sued his former accountants and Deutsche Bank to keep them from releasing his returns after they were subpoenaed to do so. And his treasury secretary has refused to provide the returns to Congress.
But bit by bit, The New York Times’ Susanne Craig and Russ Buettner have been gathering returns and tax data from Trump’s earlier years. In the latest installment, they show how Trump claimed over a billion dollars in business losses from 1985 to 1994. In some years, he lost more than any other taxpayer.
In this Trump, Inc. podcast extra, we speak to Craig about how she got the story, what she found and what to look for if and when the president’s tax returns are released. “You don’t lose this much money unless you’re a really bad businessman,” Craig told us.
When the Times asked for comment from Trump officials, a spokesperson initially said, "You can make a large income and not have to pay large amount of taxes.” Later, Trump's lawyer Charles Harder, wrote that the tax information was “demonstrably false.” He cited no specific errors.
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|May 10, 2019|
The Government's Bar Tab at Mar-a-Lago
Find “Trump, Inc.” wherever you get your podcasts. This week’s episode examines the intersection of money, presidential access and security, and the push and pull between government spending and private profits at Mar-a-Lago.
In April 2017, Chinese President Xi Jinping visited Mar-a-Lago, President Donald Trump’s Palm Beach, Florida, estate and club, for a two-day summit. While Xi and his delegation stayed at a nearby hotel, Trump and his advisers stayed at the peach-colored, waterfront resort.
That evening, Trump and a dozen of his closest advisers hosted Xi and the Chinese delegation in an ornate dining room where they ate Dover sole and New York strip steak. Those sorts of lavish, formal gatherings are expected for a major bilateral summit.
But then there are less formal events. At some point later that evening, a group repaired to Mar-a-Lago’s Library Bar, a wood-paneled study with a portrait of Trump in tennis whites (titled “The Visionary”) hanging nearby. The group asked the bartender to leave the room so it “could speak confidentially,” according to an email written by Mar-a-Lago’s catering director, Brooke Watson.
The Secret Service guarded the door, according to the email. The bartender wasn’t allowed to return. And members of the group began pouring themselves drinks. No one paid.
Six days later, on April 13, Mar-a-Lago created a bill for those drinks, tallying $838 worth of alcohol plus a 20% service charge. It covered 54 drinks (making for an average price of $18.62 each) of premium liquor: Chopin vodka, Patron and Don Julio Blanco tequilas and Woodford Reserve bourbon. Watson’s email did not specify how many people consumed the alcohol or who the participants were. (It stated that she “was told” the participants included then-strategist Steve Bannon and then-deputy chief of staff Joe Hagin. Bannon, who has said he stopped drinking years ago, said he didn’t drink at Mar-a-Lago and didn’t recall the episode. Hagin did not respond to requests for comment.)
The bill was sent to the State Department, which objected to covering it. It was then forwarded to the White House, which paid the tab.
The unusual cocktail hour underscores a unique push and pull in the current administration: Donald Trump’s White House pays a bill and Donald Trump’s club reaps the revenue. (It’s unclear if the White House asked any of those drinking to reimburse the government; the White House declined to comment.)
The premium liquor costs are only the beginning of government spending at Mar-a-Lago that emerges in hundreds of pages of receipts and email correspondence between Trump Organization employees and staffers for the State Department, which oversees presidential diplomatic travel and works with the Secret Service and White House. The emails show that the president’s company refused to agree to what was essentially a bulk-purchase agreement with the federal government, and that it charged the maximum allowable federal rate for hotel rooms. The Trump Organization could be obstinate when it came to rates for, say, function rooms at Mar-a-Lago, a problem that was eased when the president signed a law lifting the maximum “micro-purchase” the government can make.
The emails have been released as part of an ongoing lawsuit between the nonprofit Property of the People, a Washington-based transparency group, and the federal government. Property of the People provided the emails and receipts to ProPublica and we, in turn, have added them to our tracker of government spending at Trump-owned properties for our interactive graphic Paying the President. (The State Department is expected to release an additional 1,800 pages of records as part of the lawsuit, which was filed under the Freedom of Information Act.)
In response to questions from ProPublica, the State Department asked for and received the documents described in this article. State Department officials promised a detailed response, but then declined comment.
The documents reveal the intersection between Trump’s conflicting interests. The emails show that “Mar-a-Lago wanted to have the government money without the government rules,” said Charles Tiefer, a law professor at the University of Baltimore who served on the congressionally chartered Commission on Wartime Contracting in Iraq and Afghanistan.
A few months after Trump’s inauguration, the State Department proposed a contract that would pay $200,000 for all room costs for federal employees who stay at Mar-a-Lago over the first term of his presidency. But Mar-a-Lago rejected the government's proposal. Instead, Trump’s resort bills the government the maximum permitted by federal rules: 300% of the government’s per diem rate, which works out to $546 per night.
Mar-a-Lago rejected the proposed flat-fee arrangement, according to the emails, because of concerns the club’s lawyers had about the Federal Acquisition Regulation, or FAR, which governs federal purchases and is overseen by contracting officers. FAR seeks to promote competition and maintain “the public’s trust.”
The emails suggest the Trump Organization was worried that the lack of competitive bidding could run afoul of federal rules, among other concerns. A State Department staffer wrote in May 2017 that Mar-a-Lago’s attorneys brought up federal “small business set-aside” requirements, which set strict rules for sole-source government bids for small businesses. The State Department staffer wrote that Mar-a-Lago’s “concerns are based on their general lack of knowledge on the applicability of the FAR regulations.”
Mar-a-Lago and the Trump Organization did not respond to ProPublica’s requests for comment.
Since Mar-a-Lago wouldn’t agree to a bulk contract, the State Department had to go to Plan B. When it came to the meeting with China’s president, for example, the agency had to go into some contortions to make Mar-a-Lago’s $546 nightly room rate square with its rules on competitive bidding, given that there are other less expensive hotels nearby. At least 16 staffers stayed at the Hampton Inn in West Palm Beach; at least eight stayed at the nearby Hilton Garden Inn; and four others stayed at the Tideline Ocean Resort & Spa, where the press pool also stayed, according to a hotel manifest obtained through the FOIA lawsuit. The government-negotiated rates at those establishments ranged from $195 to $305 per night.
(At least 24 White House and federal staffers stayed at Mar-a-Lago during the Xi visit. They included then-Secretary of State Rex Tillerson; then-chief of staff Reince Priebus; then-Secretary of Defense Jim Mattis; Treasury Secretary Steven Mnuchin; then-National Economic Council adviser Gary Cohn; and other advisers, past and present, such as Bannon, Hope Hicks, Stephen Miller and Sean Spicer.)
The State Department also broke with protocol regarding taxpayer-funded travel and applied for a Citibank travel card just for Mar-a-Lago visits.
Meanwhile, other problems emerged:
• Mar-a-Lago can’t process charges over $10,000, which led to problems when the club split bills and charged the government card for multiple transactions, emails show.
• Mar-a-Lago refused government requests to waive the costs of its "function room” for press and other official meetings in April 2017, leading to a near-violation of a $3,500 government spending cap. Last year, Trump signed a law that lifted that cap, known as the “micro-purchase threshold,” from $3,500 to $10,000. The law does not appear to have been aimed at facilitating spending at Mar-a-Lago, but it allows the club to avoid additional government contracting rules when charging sums below $10,000.
• In one instance, after the government was charged more than $3,500 for conference space at Mar-a-Lago, it asked the Trump Organization for a 10% discount so that it wouldn’t violate the micro-purchase threshold. Mar-a-Lago relented, but only after months of haggling.
In the emails, the director of presidential travel support, Michael Dobbs, frequently described the creation of a charge card unique to Mar-a-Lago as a “headache.”
As Steve Schooner, a professor of government contracting law at George Washington University, put it, “The fact that we have a State Department contracting officer saying this is a headache is a reminder that, but for the relationship with President Trump, this would not be a contract the government would be having. That's a problem."
Many of the expenses incurred by White House staff are arranged and paid for by the White House’s Office of Administration. These expenses are not required to be made public. The same goes for Secret Service spending to protect the president on such visits. (The Government Accountability Office released a report last month evaluating spending at Mar-a-Lago in February and March 2017 and found that a total of $60,000 was spent at the hotel during four trips; the figure ran to $13.6 million when costs for plane travel, secret service, security and other logistics were included.)
The State Department payments, and its work on behalf of the White House and other traveling staff, are considered public records.
Between 2015 and June of 2018, at least $16.1 million has poured into Trump Organization-managed and branded hotels, golf courses and restaurants from his campaign, Republican organizations and government agencies. Because Trump’s business empire is overseen by a trust of which he is the sole beneficiary, he profits from these hotel stays, banquet hall rentals and meals.
Federal spending rules don't specifically address agency-level spending on alcohol that is directly invoiced to the government, as occurred with the $1,000 bar tab at Mar-a-Lago. The State Department and the White House have had exemptions included in their appropriations legislation to allow for alcohol purchases.
Individual government employees are not permitted to use charge cards for "improper" purposes, such as alcohol, and federal per diem rules allow for charges for breakfast, lunch, dinner and related tips and taxes but specifically exclude alcoholic drinks.
Six government contracting experts said Mar-a-Lago may be violating rules requiring competitive bids. They argue that Mar-a-Lago’s practice of invoicing meeting spaces, hotel stays and meals separately is a way to get around federal spending rules.
“Mar-a-Lago didn’t want to compete, they wanted to sneak around the requirements, and charge much higher prices than the competition,” said Tiefer, who served as deputy general counsel with the House of Representatives for 11 years. “It’s not the first time in history that vendors have tried to get around the rules by charging individual components. This is familiar to every contracting officer. And it’s wrong. It’s not just a technicality. It’s not a game. The only safeguard the public has against the Trumps swallowing up all the government business is at least minimal competition.”
Several experts contend the State Department is exploiting loopholes in government spending rules to facilitate official gatherings at Mar-a-Lago. “It’s one of the biggest fears coming true, that they are bending over backwards to help the Trump Organization,” said Scott Amey, general counsel of the Project On Government Oversight. “I'm frustrated the State Department would exploit the system to bill Uncle Sam and the taxpayers. To have the government bicker to get a 10% discount shows the Trump Organization isn't putting the American public first. It's a worst-case scenario when it comes to conflicts of interest, with the president and his children putting themselves and profits ahead of the public."
“Trump, Inc.” is exploring whether the federal Consumer Financial Protection Bureau is still enforcing consumer financial laws and holding companies accountable. We want to hear from people who work at the agency or left recently (particularly those familiar with enforcement actions, supervisory exams and areas such as payday lending and debt collection). We’re also hoping to hear from consumers and companies who have interacted with the bureau in recent years. To find out more, click here.
|May 01, 2019|
'Harm to Ongoing Matter'
On Thursday, the “Trump, Inc.” team gathered with laptops, pizza and Post-its to disconnect — and to read special counsel Robert Mueller’s report.
What we found was page after page of jaw-dropping details about the inner workings of the administration of President Donald Trump, meetings with foreign officials and plots to affect our elections. But we also found rich details on how Trump ran his business dealings in Russia, itself the subject of our recent episode on his Moscow business partners.
It backed up a lot of our earlier reporting: The deal with Andrey Rozov, a relatively unknown developer whose claim to international prominence was the purchase of a building in Manhattan’s garment district, did go further than agreements with other developers. The type of development they were hoping for would need signoff from Russia’s powers that be — namely, President Vladimir Putin — potentially putting Trump in the position of owing favors to a hostile foreign power. And the deal went on longer than the Trump campaign wanted the public to know, with the then-candidate rebuffing Michael Cohen’s concerns about the accuracy of his portrayal of his relationships with Russia.
Here are a few of our takeaways:
The deal was bigger…
The Mueller report puts the terms of Trump’s most infamous Trump Tower deal side by side with a failed prior deal with the family of Russian pop star Emin Agalarov. In doing so, it proposes an answer to why Trump chose to move forward with Rozov: he offered Trump a much better deal.
In fact, Cohen said the tower overall "was potentially a $1 billion deal.” Under the terms of the agreement, the Trump Organization would get an upfront fee, a share of sales and rental revenue, and an additional 20% of the operating profit. The deal offered by the well-known Agalarov developers, in contrast, would have brought in a flat 3.5%. We’d tried to reach Rozov to talk about the deal for our earlier reporting. He never responded.
For Trump, this agreement promised to be the deal of a lifetime.
There were more Russian contacts…
The report says Cohen and Felix Sater, a fixer who brought the Trump Organization together with the potential developer for the Moscow deal, both believed securing Putin’s endorsement was key. There was also plenty of outreach from Russians, many of them offering to make that very connection.
But even as the two were figuring out how to pitch the tower plan to Putin, at least three intermediaries who claimed to have connections to the Russian president were reaching out to Trump and his associates. They promised help with Trump’s business interests and his campaign, the report says.
One was Dmitry Klokov, whom Cohen looked up online and mistakenly identified as a former Olympic weightlifter. Klokov, in fact, worked for a government-owned electric company and was a former aide to Russia’s energy minister. He told Cohen he could facilitate a meeting with a “person of interest” — that is, Putin — and also offered help creating “synergy on a government level.” But Klokov’s overtures for talks on matters beyond mere business interests were rebuffed by Cohen.
The report also clarified that it was Sater who approached the Russian developer with the idea of a Trump Tower Moscow — and later brought his pitch to the Trump Organization. This sequence of events raises new questions about whether the tower deal, which Trump had wanted for decades, was part of the Russian government’s multiple intelligence approaches to Trump and his advisers at the time.
One other figure in our previous Trump Moscow episode surfaced again in the Mueller report: Yevgeny Dvoskin, a Russian national with a U.S. criminal record and alleged ties to organized crime. Dvoskin is now a part-owner of Genbank, a small Russian bank sanctioned by the U.S. Treasury. He grew up in Brighton Beach at the same time as Sater, who, in 2016, called on Dvoskin to invite Trump and Cohen to Russia for an exploratory visit. To arrange the invitation, Dvoskin asked for copies of Cohen’s and Trump’s passports, which Cohen was happy to provide. The Mueller report says that Trump’s personal assistant even brought Trump’s passport to Cohen’s office, but that it is not clear whether it was ever passed on to Sater.
Sater declined to comment for the podcast. Genbank and Dvoskin did not respond to earlier requests for comment.
And there was more cover-up…
Mueller describes continued efforts to mislead investigators and the public about the Trump Moscow deal and associates’ contacts with Russian officials. Many of the details are gleaned from Cohen’s cooperation.
Cohen confronted Trump after he denied having business ties to Russia in July 2016 and pointed out that Trump Tower Moscow was still in play. “Trump told Cohen that Trump Tower Moscow was not a deal yet and said, ‘Why mention it if it is not a deal?’” according to the Mueller report.
To maintain Cohen’s loyalty during the investigation, multiple Trump staff members and friends told him the “boss” “loves you,” according to the Mueller report. “You are loved,” another associate told him in an email. Cohen also said the president’s lawyer told him he’d be protected as long as he didn’t go “rogue.”
The report concludes that active negotiations in Moscow continued into the summer of 2016. Cohen told Mueller’s team that the project wasn’t officially dead until January 2017, when it was listed with other deals that needed to be “closed out” ahead of the inauguration.
After admitting to lying to Congress about when the Moscow deal fizzled, Cohen told Mueller about the “script,” or talking points he’d developed with Trump to downplay his ties to Russia. He also said he believed lawyers associated with his joint defense agreement — including attorneys for the president — edited out a key line about communications with Russia from his congressional testimony. The offending line: “The building project led me to make limited contacts with Russian government officials.”
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|Apr 19, 2019|
Trump, Inc. Goes Beyond Collusion
In this Trump, Inc. podcast extra, we talk about what we know, what we don’t know and what we still want to know after Attorney General William Barr gave his summary of special counsel Robert Mueller’s report. Trump, Inc co-hosts Andrea Bernstein and Ilya Marritz joined Maya Wiley, professor at the New School and MSNBC Legal Analyst on WNYC’s Brian Lehrer show to review the on-going investigations.
Collusion was never the only thing. For the last year and a half, we have been looking at the conflicts of interest that pervade President Donald Trump’s administration. That trail has led us from Brighton Beach, Brooklyn, to Panama, India and, yes, Russia, where we reported on how Trump’s associates appealed to the Kremlin for help at the same time the Kremlin was preparing an attack on the 2016 elections.
And Andrea Bernstein also talks with Eric Umansky, Trump, Inc. Editor and Deputy Managing Editor at ProPublica, about how to interpret what we know (and don't know) about the special counsel's report.
|Mar 25, 2019|
Trump’s Moscow Tower Problem
This week, we’re exploring President Donald Trump’s efforts to do business in Moscow. Our team — Heather Vogell, Andrea Bernstein, Meg Cramer and Katie Zavadski — dug into just who Trump was working with and just what Trump needed from Russia to get a deal done. (Listen to the podcast episode here.)
First, the big picture. We already knew that Trump had business interests involving Russia during the 2016 presidential campaign — which he denied — that could have been influencing his policy positions. As the world has discovered, Trump was negotiating to develop a tower in Moscow while running for president. Former Trump lawyer Michael Cohen has admitted to lying to Congress about being in contact with the Kremlin about the project during the campaign.
All of that explains why congressional investigators are scrutinizing Trump’s Moscow efforts. And we’ve found more:
• Trump’s partner on the project didn't appear to be in a position to get the project approved and built. On Oct. 28, 2015 — the same day as a Republican primary debate — Trump signed a letter of intent with the partner, a developer named Andrey Rozov, to build a 400-unit condominium and hotel tower in Moscow.
In a letter Rozov wrote to Cohen pitching his role, he cited his work on a suburban development outside of Moscow, a 12-story office building in Manhattan’s Garment District (which he bought rather than constructed) and two projects in Williston, North Dakota, a town of around 30,000.We looked into each of them.
Rozov’s Moscow project has faced lawsuits from homeowners, some of which have settled and some of which are ongoing, and the company developing it filed for bankruptcy. It remains unfinished.
Property records show that Rozov owned his New York building for just over a year. He bought it for about $35 million in cash, took out an almost $13 million loan several months later, made no significant improvements and then sold it for a 23 percent profit. Trump’s former business associate, Felix Sater, who once pleaded guilty to financial fraud and reportedly later became an asset for U.S. intelligence agencies, is listed on the sale as an “authorized signatory.”
We did find a developer with a workforce housing project in Williston, as well as approved plans for a mall/hotel/water-park. (The town attracted interest from developers as the center of North Dakota’s oil boom earlier in the decade.) Rozov’s name doesn’t appear on materials relating to the company, but a person familiar with the project confirmed that this is what Rozov was bragging about in his letter. Oil prices cratered and the mega-mall was never built.
Rozov did not respond to an email seeking comment.
Here is a rendering of the plan:
• An owner of a sanctioned Russian bank that vouched for the Trump Organization in Moscow had a criminal history that included involvement in a Russian mafia gas-bootlegging scheme in the U.S.
Making a business trip to Russia requires an official invitation. According to correspondence published by BuzzFeed, Sater arranged for an invitation from Genbank, a small Russian bank that expanded significantly in Crimea after Russia invaded in 2014.
One of Genbank’s co-owners is Yevgeny Dvoskin, a Russian-born financier who grew up in Brighton Beach at the same time as Sater. Dvoskin pleaded guilty to tax evasion in federal court in Ohio for the bootlegging scheme and spent time in prison. He was later deported to Russia, according to press accounts. In Russia, he remained tied to criminal networks, according to the Organized Crime and Corruption Reporting Project. (We were unable to reach Dvoskin for comment.)
• We also get a hint about why Trump may have needed the Kremlin to get his deal done. Some of the sites under consideration for a potential Trump Tower Moscow were in historic areas with strict height restrictions. Just a few years before the 2015 letter of intent that Trump signed, Moscow Mayor Sergey Sobyanin pledged to do all he could to prevent the city from being overrun by skyscrapers.
If Trump’s deal was to move forward in some place like the Red October Chocolate Factory, one of the spots that was considered, getting around zoning restrictions would need help from the very top.
Sater and Cohen were also kicking around a plan to offer Putin the building’s $50 million penthouse, according to BuzzFeed. That need for special help, combined with the potential offer of a valuable asset, raises questions about whether the plan ran afoul of the Foreign Corrupt Practices Act, according to Alexandra Wrage, the president and founder of Trace International, an organization that helps companies comply with anti-bribery laws. “What you describe is certainly worrying,” she said.
The Trump Organization, the White House, and Michael Cohen did not respond to requests for comment.
For his part, Sater is scheduled to testify before the House Intelligence Committee on March 27. The committee members will undoubtedly have plenty of questions.
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|Mar 21, 2019|
Six Tips for Preparing for the Mueller Report, Which May or May Not Be Coming
Being investigative journalists means we’re constantly asking questions. But these days, it also means people are asking us questions. One we hear a lot nowadays: “When is the Mueller report coming — and what will it say?”
Our answer: We don’t know. But we’ve realized that perhaps we can be more helpful than that. We don’t have insider information on special counsel Robert Mueller’s office. (Sorry!) But we have spent lots of time investigating the president and his businesses. And we thought we’d share some of the perspectives we’ve gained.
Here are six things to keep in mind.
We don’t know what Mueller will report, when he will report it or even whether we’ll be able to read it. That’s because Congress changed the law after special prosecutor Kenneth Starr’s salacious tell-all on President Bill Clinton. When Mueller is done, he has to give a report to Attorney General William Barr. But Barr can choose to keep the report confidential. Barr only has to give a summary to Congress. If Barr doesn’t make Mueller’s actual report public, Democrats will almost surely subpoena it. Then get ready for a fight.
Stop focusing on “collusion.”
“Collusion” has come to be a kind of shorthand for ... basically doing something bad with Russia. But the term is both too vague and too narrow. For one thing, “collusion” is not itself a clearly defined crime. It is a crime to commit a conspiracy against the United States — for which there is a high bar: proving an intent to undermine the government.
Remember: We already know a lot.
We already know Trump had a hidden conflict of interest involving Russia during the campaign. Despite publicly denying it, Trump was negotiating to develop a tower in Moscow while he was running for president. That means Trump had interests involving Russia — which voters didn’t know about — that could have been influencing his policy positions. That’s all problematic on its own.
We also know that Russian government interests hacked the emails of the Democratic National Committee, handed them to Wikileaks, and that at least one Trump ally, Roger Stone, was in touch with Wikileaks.
Don’t expect answers to everything, or even most things.
That’s not Mueller’s job. He is a prosecutor. His job is first and foremost to look for crimes. And while he can, and has, looked beyond Russian interference in the election, he’s unlikely to dig into everything. And, of course, there are lots of areas worthy of scrutiny beyond Russia: Trump’s businesses, his inauguration, his hush money payments and more.
Mueller is not alone.
There are lots of active investigations looking into all these issues. A partial rundown of just the ones we know about: Federal prosecutors in Manhattan are investigating the inauguration and other matters, the New York attorney general is investigating the Trump Foundation, and the District of Columbia’s attorney general and the state of Virginia are suing Trump over emoluments. There are also a whole host of coming congressional investigations.
The final judgments on Trump’s actions will be political, not legal. (Caveats apply.)
Whatever Mueller ultimately files, he is very unlikely to charge the president with a crime. Since Watergate, the Department of Justice has had a policy that a sitting president should not be indicted. And Mueller is a stickler for the rules.
So: Stay tuned. Stay patient. And while you wait for the report, check out our conversation with On The Media – they’ve created a handy “Breaking News Consumers’ Handbook Mueller Edition.”
|Mar 05, 2019|
What We’ve Learned From Michael Cohen
For a year now, Trump, Inc. has been digging into the president’s business. We’ve reached out repeatedly to the Trump Organization with questions. Mostly, we haven’t gotten answers.
Yesterday was different.
Michael Cohen worked for a decade as the president’s in-house attorney and fixer. In his testimony before the House Oversight Committee, he offered a detailed, insider account of alleged fraud, secrecy and cover-ups.
In many cases, what he described connected to the very stories we’ve been digging into:
-- How Cohen came to work for Trump.
-- How Trump often changed the value of his assets, sometimes to seem richer, sometimes to lower his taxes, like at his golf courses.
Trump, Inc. hosts Andrea Bernstein and Ilya Marritz sat down to review what we’ve learned and what it means for ongoing investigations into the president and his business. Dan Alexander from Forbes joined them.
|Feb 28, 2019|
How a Nigerian Presidential Candidate Hired a Trump Lobbyist and Ended Up in Trump’s Lobby
This week, Trump, Inc. goes inside the Trump International Hotel in Washington, D.C. Located in the Old Post Office, the hotel is at the center of three lawsuits alleging President Donald Trump is violating the Constitution’s Emoluments Clause barring the president from taking gifts from foreign governments.
We stayed the night.
Among the many prominent guests we saw: Nigerian presidential candidate Atiku Abubakar and his entourage. Nigeria’s elections were last weekend, and Abubakar was the main challenger to the incumbent president out of a crowded field of candidates. After a tightly contested race, he came in second.
Abubakar’s visit is surprising for several reasons. He had been reportedly barred from the U.S. for nearly 10 years for his alleged involvement in corruption while he was Nigeria’s vice president. Perhaps you remember the $90,000 in cash that was found in Louisiana Congressman William Jefferson’s freezer back in 2005? That was allegedly a bribe for Abubakar.
A 2010 Senate report on foreign corruption dedicated an entire chapter to Abubakar and his wife. The report detailed their efforts to transfer $40 million in “suspect funds” into the U.S. through offshore accounts while Abubakar served as vice president.
Abubakar has never been arrested or charged, either in the U.S. or Nigeria, and says he has never taken bribes. He has also called the reports of his immigration ban “misinformation.”
Last year, Abubakar hired a lobbyist, Scott Mason, who was a former Trump campaign adviser. Disclosures filed by Mason show he lobbied Congress, the State Department and the National Security Council on “visa issues.”
Mason and his lobbying firm did not respond to requests for comment.
Abubakar’s party also hired another firm close to Trump: Ballard Partners, run by Brian Ballard, former finance co-chairman for Trump’s campaign in Florida and a top Trump fundraiser. Years ago, he was Donald Trump’s lobbyist when he wanted to establish a casino in the Sunshine State. Now, he’s what Politico called “The Most Powerful Lobbyist in Trump’s Washington.” Filings by the firm say only that it was working on “advocacy services relative to US-Nigeria bilateral relations.”
James Rubin, a partner at the firm, said they were hired to work on “promoting free and fair elections” in Nigeria.
The visa status of individuals is confidential, but Reuters has reported that the U.S. government temporarily suspended Abubakar’s visa ban after a push by the lobbyists.
A spokesperson from the State Department declined to comment on Abubakar’s case. But the spokesperson said, “In cases where the secretary of state has credible information that officials of foreign governments have been involved in significant corruption … those individuals and their immediate family members are ineligible for entry into the United States.”
Abubakar isn’t the only foreign political figure to patronize the Trump International Hotel in Washington since the 2016 election; there’s a long list of others. Dignitaries from Saudi Arabia, Kuwait, Bahrain, Malaysia and Azerbaijan have all lodged at the Old Post Office. And this past year, the Trump Organization reported an increase in foreign profits to their hotels.
|Feb 27, 2019|
Who Was Behind the Plan to Give Saudi Arabia Nuclear Power, and What Was Their Agenda?
For a year, “Trump, Inc.” has been digging into the 2017 inauguration. That reporting led us to look closely at the man Donald Trump picked to run the event, Tom Barrack, a wealthy businessman who’s been friends with Trump for decades.
As we were finishing our Barrack episode — just out this week — the House Oversight Committee released a report detailing how the Trump administration pursued a plan to export nuclear technology to Saudi Arabia.
The plan had been championed by then-national security adviser Michael Flynn, who could have profited from it. The efforts continued despite warnings from ethics officials and staff at the National Security Council.
And who was in talks to lead the initiative? Tom Barrack.
The House investigation confirmed some reporting by one of our ProPublica colleagues, Isaac Arnsdorf, that goes back to late 2017. So we decided to bring Isaac in for this podcast extra to help us understand who was behind the plan and what they wanted.
Barrack has declined our requests for an interview, and Flynn’s lawyer and the White House have not responded.
|Feb 22, 2019|
Trump Inauguration Chief Tom Barrack’s ‘Rules for Success’
Last year, our Trump, Inc. podcast with WNYC explored the mystery of how Donald Trump’s inaugural managed to raise and spend $107 million. A lot has happened since then.
We now know the inaugural committee is the subject of a wide-ranging criminal investigation. And we at Trump, Inc. broke the news that some of the inaugural money went to Trump’s own business – and that Ivanka Trump played a role in the negotiations. That could violate tax law. (A spokesman for Ivanka said she simply wanted a “fair market rate.”)
In our latest episode, we take a deep dive into the many roles of Tom Barrack: Trump’s old friend; wealthy investor with decades-long ties to the Middle East; and the man who chaired the now-under-investigation inaugural committee.
Before the inauguration, Barrack described the role as “the worst job in the world.” So why’d he take it?
One possible clue comes from an eight-page strategic plan dated one month after the inauguration on the letterhead of the company he founded. Another reason could be a plan he supported to export U.S. nuclear technology to Saudi Arabia.
Barrack has spent his career cultivating the powerful. He lives by twenty “Rules for Success,” including: “Punctuality is the courtesy of kings” and “The jungle is a safer place with professionals than a paved road with amateurs.”
Barrack did not agree to an interview. His spokesman, and the inaugural committee, did not respond to our questions. A committee spokeswoman previously said its finances “were fully audited internally and independently and are fully accounted.” WNYC
Elsewhere in the podcast, we report that the inaugural committee was so eager to book space at Trump’s hotel in Washington that it encouraged hotel management to cancel another event -- a prayer breakfast -- so space would be clear for the inaugural celebration, according to a lawsuit against the committee filed by the reverend who organized the breakfast.
The hotel did briefly cancel the breakfast, invoking “force majeure,” or an act of god. In this case, they predicted civil unrest over the inauguration week.
|Feb 20, 2019|
What We Now Know About Manafort, Cohen and ‘Individual-1’
Court filings by prosecutors last week shined a light on the business lives of two men who worked get Donald Trump elected president: former Trump personal attorney Michael Cohen and former Trump campaign chairman Paul Manafort.
Trump, Inc co-hosts Ilya Marritz and Andrea Bernstein talk with Franklin Foer of The Atlantic about what the documents show -- and the further questions they raise.
Among those questions:
- Why did Russian officials approach the Trump campaign about potential “political synergy”?
- How much did Trump know about Cohen’s coordination of hush money payments to two women who alleged they had affairs with the now-president?
|Dec 12, 2018|
Trump Jr. Invested in a Hydroponic Lettuce Company
Donald Trump Jr., the president’s eldest son, took a stake last year in a startup whose co-chairman is a major Trump campaign fundraiser who has sought financial support from the federal government for his other business interests, according to records obtained by ProPublica.
The fundraiser, Texas money manager Gentry Beach, and Trump Jr. attended college together, are godfather to one of each other’s sons and have collaborated on investments — and on the Trump presidential campaign. Since Trump’s election, Beach has attempted to obtain federal assistance for projects in Asia, the Caribbean and South America, and he has met or corresponded with top officials in the National Security Council, Interior Department and Overseas Private Investment Corporation.
Beach and others at the startup, Eden Green Technology, have touted their connections to the first family to impress partners, suppliers and others, according to five current and former business associates. Richard Venn, an early backer of Eden Green, recalls the company’s founder mentioning “interest from the Trump family.” Another associate said Beach bragged about his ties to the Trumps in a business meeting.
The investment is one of just a handful of known business ventures pursued by Trump Jr. since his father moved into the White House almost two years ago. In addition to being a top campaign surrogate and public booster, Trump Jr. serves as an executive vice president of his father’s company and one of just two trustees of the trust holding the president’s assets.
Ethics experts have consistently criticized these arrangements, arguing that they invite those seeking to influence the government to do so by attempting to enrich the president or his family members with favorable business opportunities.
Trump Jr. invested in the startup, a company that grows organic lettuce in a hydroponic greenhouse, last year, records show. Those records don’t state how much money — if any — Trump paid for his 7,500 shares. But the shares would have been worth about $650,000 at the end of last year, based on a formula used by another shareholder in a recent court filing. Neither Trump Jr. nor the company have disclosed his investment publicly. Trump Jr. obtained the stake through a limited liability company called MSMDF Agriculture LLC, which was set up by a Trump Organization employee last fall.
The key ethical question, said Virginia Canter, chief ethics lawyer at the nonprofit Citizens for Responsibility and Ethics in Washington, is whether Beach’s involvement with Eden Green, and Trump Jr.’s investment in it, are based on the business merits — or on the possibility of cashing in on connections to power. “Why is Trump Jr. being given this opportunity?” she asked. “It definitely has the appearance of trying to gain access by any means to curry favor with the administration.”
The willingness of Eden Green to invoke the Trump name in its business dealings raises further ethical concerns, experts said, particularly if potential customers understand that they are giving contracts to a startup whose success could enrich the president’s son.
Neither Trump Jr. nor his spokesman responded to messages seeking comment on his relationship with Beach and investment in Eden Green. A White House spokeswoman didn’t respond to emailed questions. Alan Garten, the Trump Organization’s top lawyer, said in a statement that Trump Jr.’s investment is a personal one. The entity through which it was made “is not owned or controlled by, or affiliated in any way with, The Trump Organization,” Garten said.
Last fall, Eden Green concluded a deal with Walmart. Today, the giant retailer sells the company’s lettuce, kale and other greens at about 100 stores in the Dallas-Fort Worth region. (Eden Green’s sole facility is a 44,023-square-foot greenhouse outside Fort Worth, where it grows the greens in 18-foot vertical tubes.)
Walmart interacts with government regulators on an array of matters -- everything from labor practices and land use to securities filings -- but there is no indication that Walmart is aware of Trump Jr.’s connection to Eden Green. (Separately, Walmart contributed $150,000 to Trump’s inaugural committee. Beach was a finance vice chair of that committee, but a Beach spokesman says he has never met with Walmart executives.)
Molly Blakeman, a Walmart spokeswoman, declined to comment on Eden Green or its investors. “We don’t talk about our relationships with our suppliers,” said Blakeman, who added that Walmart has “supported inaugural activities” in the past.
Andrew Kolvet, a spokesman for Beach and the other Eden Green executives, said it’s “categorically false” that the Trump name was invoked by Eden Green officials. Kolvet cited a corporate policy that forbids discussing investors “with any current or potential client.” He also said Trump Jr. isn’t involved with company operations and bought into Eden Green during “U.S. friends and family fundraising efforts.”
A recent lawsuit asserts that Eden Green is in financial trouble. In October, the company’s largest shareholder, an entity controlled by a wealthy oil and gas family from Midland, Texas, filed suit in state court in Dallas, alleging “gross project mismanagement.” The suit accused Beach and six executives, all of them board members, of paying themselves extravagant salaries (allegedly $250,000 to $300,000 per year) and putting the company “on the precipice of failure.” A financial consultant hired to examine the company’s books asserted that Eden Green executives spent more than $19.4 million in the first nine months of 2018 — a daunting sum for a company that reported having raised a total of $22 million as of June — while generating $9,000 in revenues.
In late November, less than a month after the suit was filed, it was settled on confidential terms. Kolvet disputed the compensation figures asserted in the litigation, saying that the company’s pay is “in accordance with industry standards.” He maintained that Eden Green’s prospects are good. As with many startups, he said, “things don’t go in a straight line.” Kolvet asserted that the company has plenty of operating cash.
Trump Jr., now 40, and Beach, now 43, met at the University of Pennsylvania two decades ago. Both are the sons of wealthy businessmen, one in real estate, one in oil and gas. Beach’s father has since been laid low: Last month he was sentenced to four months in federal detention, plus two years of supervised release, for bankruptcy fraud.
Beach was a groomsman at Trump Jr.’s wedding (Trump Jr. and his wife recently separated). Beach and Trump Jr. like to hunt and once considered buying a hunting preserve in Mexico together. According to a 2010 deposition testimony by Trump Jr., they talked business during lunches at Rothmann’s steakhouse in New York.
Both have struggled in business at times. In 2009, Trump Jr. and others (including one person who pleaded guilty to an unrelated criminal fraud charge in 2010) formed a company that would sell concrete panels for home constructions out of a warehouse in North Charleston, South Carolina. The business quickly became mired in lawsuits seeking payment for unpaid bills. Trump Jr. made the situation more precarious by personally guaranteeing a $3.7 million loan for the project. Days before the note was due, the Trump Organization purchased the debt, eventually taking over the warehouse and selling it all back to Trump Jr.’s original business partner, according to press accounts.
For his part, Beach’s career path has also included some travails. He spent a year or so at Enron and then moved into finance. Beach worked for a hedge fund and remains locked in litigation with it more than a decade later. (He claims he wasn’t paid his full compensation; the fund claims he was “responsible for the destruction of millions of dollars of investor capital.”) Beach now runs a “family office focused on private equity investments” out of a Dallas office that Eden Green uses as its corporate address.
Trump Jr. has at least twice before invested with Beach in deals that didn’t pan out. Trump Jr. put $200,000 in a dry Texas oil well managed by Beach’s father, according to testimony by Trump Jr. He also lost an unknown sum in a failed African mining company affiliated with Beach’s uncle.
But Trump Jr. stuck with his friend. The Associated Press reported this year that the two formed a company last October to pursue technology investments.
Then there was Eden Green. By the time Trump invested last fall, the company had already run into problems. It first launched in 2013 in South Africa with an ambitious mission: to feed the world through a highly efficient indoor farming system deploying patented technology intended to yield 10 to 12 harvests a year, compared with two or three for conventional agriculture.
There’s a market for vegetables grown in controlled greenhouse environments as big retailers increasingly push for cleaner, more reliable and locally grown alternatives. But the challenges are significant. Energy costs run high, and there are myriad difficulties associated with scaling up to an industrial-size system.
That’s what happened in Eden Green’s first iteration, according to a half dozen early backers and associates. The produce may have been sustainable — but the business model wasn’t. The CEO of its European unit wrote in an October 2017 email obtained by ProPublica that the company had “been bleeding money and resources for almost 2 years now.” In the fall of 2017, Eden Green’s founders cemented a deal to hand over majority control to a group of U.S. investors led by Beach, current and former business associates said.
This was the company Trump Jr. bought into. He used an innocuous-sounding limited liability company, called MSMDF Agriculture LLC, to make the investment. ProPublica discovered MSMDF after the Trump Organization listed it in New York City filings among dozens of other entities it controlled. (Because the Trump Organization has contracts with the city to run the Wollman skating rink in Central Park and a golf course in the Bronx, the city requires the company to file disclosures.) The Trump Organization told ProPublica that MSMDF is not in fact owned by the Trump Organization but was included in the disclosure form because it’s controlled by Trump Jr., who was described in the form as MSMDF’s president, secretary and treasurer.
MSMDF was formed by a Trump Organization employee in September 2017 in Delaware, according to incorporation papers. Eden Green Holdings UK, Ltd., an affiliate of the Texas-based company, then listed MSMDF among its roughly two dozen shareholders in a 2018 report filed with British regulators.
The Trump Jr-Beach connection has been most visible in the political arena. Last year, for example, Trump Jr. publicly thanked Beach and their mutual friend Tommy Hicks Jr., another wealthy investor from Dallas, for their fundraising during the 2016 campaign. “We couldn’t have done it without you guys,” Trump Jr. said of his buddies to a crowd of Republican donors in March 2017. “It was just absolutely incredible.”
In the foreword to a recent book, Trump Jr. reiterated the message, writing that a “rag tag army” — Trump Jr., Beach, Hicks and Charlie Kirk, the firebrand chief of the pro-Trump organization, Turning Point USA — barnstormed the country in 2016, raising “over 150 million dollars in ninety days.”
Since Trump’s election, Beach has met with top administration figures on multiple occasions. For example, according to the AP, he lobbied National Security Council officials to relax sanctions against Venezuela to create opportunities for U.S. companies. He attended a private lunch with Republican donors and Interior secretary Ryan Zinke.
Beach has denied leveraging his ties to the first family. Last month, Beach told a TV interviewer in Croatia, where he said he was exploring a “truly spectacular” $100 million real estate development, “I don’t need anything from the government, thankfully, except normal police protection in my hometown.”
But newly obtained emails show that Beach wanted government backing for his private business interests at the same time he was running Eden Green. In October 2017, Beach pitched Ray Washburne, who heads the Overseas Private Investment Corporation, a government agency that offers loans and guarantees to American companies looking to expand into emerging markets, according to emails obtained under the Freedom of Information Act. (Before joining OPIC, Washburne was a Dallas investor and a top fundraiser for Trump. He and Beach move in the same circles and have friends in common.)
“The Dominican Republic could really use some US investment and support,” Beach wrote in one email to Washburne, describing his various projects there, which included “a power plant upgrade to an existing tin mine” as well as liquid natural gas infrastructure. He invited OPIC officials to travel with him to the Dominican Republic “If permitted, we would be happy to handle all transportation from DC to DR and back,” he wrote in a follow-up note. (Such a trip never occurred, according to an OPIC spokesperson.)
A month later, the emails show, Beach also lobbied on another project, arranging a call with his business partner and one of Washburne’s top deputies regarding an “India Oppty,” which appeared to involve an energy fund. Separately, Beach also introduced Washburne to the head of oil giant Exxon Mobil’s Africa operations, with whom Beach said he had gone shooting at Blenheim Palace in England, where the Churchill family resided for three centuries. And Beach connected another Washburne aide with a South African mining executive who Beach described as “one of my partners.”
OPIC spokeswoman Amanda Burke said Beach has not submitted any formal applications for agency funding. “OPIC routinely meets with a variety of businesses and stakeholders,” she said, adding that formal applications trigger background and credit checks and “go through several levels of agency vetting and approval.”
Asked whether having a Trump connection would disqualify a person from receiving OPIC support, Burke emailed that “in general, an individual’s personal or legal business interests would not disqualify them from applying. However, certain relationships may cause board members or other decision makers of OPIC to be conflicted out of the decision-making process on potential projects.”
|Dec 04, 2018|
The Emolument Suit Against Trump That Is Moving Ahead
There’s lots of talk about congressional investigations of the Trump administration that may be coming. Meanwhile, there is already a push to pull back the veil on the president’s conflicts. And it’s making progress.
This month, a federal judge ruled that Maryland and Washington, D.C., can move ahead with a lawsuit claiming the president has violated the Constitution’s Emoluments Clause, which bars presidents from accepting payments from foreign and state governments without congressional approval. That means the president may soon have to turn over all sorts of documents related to his businesses.
We spoke about the case with one of the lawyers behind it, District of Columbia Attorney General Karl Racine.
Racine explains that the Emoluments Clause is the “country's first anticorruption law.” The framers created it to “ensure that a president the United States as well as other federal officers would be loyal to the interest of the United States, not to their purses or to their pocketbooks.”
The Department of Justice has fought the case, disputing that the president is violating the Emoluments Clause. “This case, which should have been dismissed, presents important questions that warrant immediate appellate review,” a department spokesman said after the judge’s order.
Racine also talked with us about what exact documents they’re hoping to get, and the time a Republican Congress investigated whether another president was receiving emoluments. (He wasn’t.)
|Nov 14, 2018|
So What Trump Investigations Could Be Coming?
For two years, journalists have operated in an environment where Congress has declined to inquire into key issues surrounding President Trump’s family business: Is he profiting from his presidency? Are his friends, family, and appointees? Is Trump violating the Constitution when members of foreign governments make payments to his company by staying at his properties?
Now, with Democrats taking control of the House of Representatives after this week’s midterm elections, that will change. Already, several high-ranking members are vowing to look into aspects of the relationship between Trump’s business and his administration.
• Rep. Richard Neal (D-MA), currently the ranking member of Ways and Means Committee, says he’ll request Trump’s tax returns from the Treasury Department.
• Rep. Elijah Cummings (D-MD) the ranking member of the House Oversight Committee, says in a statement he’ll “shine a light on...President Trump’s decisions to act in his own financial self-interest rather than the best interests of the American people.”
• Rep. Jerrold Nadler (D-NY), current ranking member of the Judiciary Committee is vowing to investigate policies “that enable pervasive corruption to influence decision-making at the highest levels of government.”
• Rep. Adam Schiff (D-CA), ranking member of the House Intelligence Committee says in a statement the committee will look at “areas inquiry the majority ignored or prevented us from investigating.” Democratic committee staff issued a report last spring detailing some of those areas. Among them: the Trump Organization’s business practices.
What will this all mean? What do we hope to learn? And how might this change our understanding of the presidency and his business? WNYC’s Andrea Bernstein convened an all-star panel to discuss it all: Adam Davidson of the The New Yorker, McClatchy’s White House Correspondent Anita Kumar, The Washington Post’s David Fahrenthold, and Eric Umansky of ProPublica.
They also helped us to create a must-read list of stories, articles, documents and court filings that take on new interest after the midterms for anyone following the administration.
From Adam: The House Intelligence Committee’s Minority Views report, which lays out how a Democrat-led committee might continue to investigate possible collusion with Russia during the 2016 presidential campaign, and the deposition of Trump Organization CFO Allen Weisselberg in State of New York v. The Donald J. Trump Foundation.
From Andrea: U.S. District Judge’s Peter J. Messitte’s Nov. 2, 2018, Memorandum Opinion in The District of Columbia and the State of Maryland v. Donald J. Trump, otherwise known as the “emoluments lawsuit.”
From Anita: Sarah Chayes’ amicus brief in CREW v. Donald J. Trump.
From David: Trump’s 2007 deposition in the case Donald J. Trump v. Timothy O’Brien.
From Eric: Axios’ story about a GOP spreadsheet of expected Democratic-led investigations. It’s a long list that spans everything from well-known issues like Trump’s tax returns to things many of us have long forgotten, such as whether classified information has been inappropriately shared at Mar-a-Lago.
|Nov 08, 2018|
Rudy Giuliani has had many identities in his time on the public stage. A crusading federal prosecutor who struck terror in mobsters and Wall Street titans alike. A sometimes cantankerous New York City mayor who became a national hero for his stirring leadership after the 9/11 attacks. And, currently, President Donald Trump’s unpaid attorney in the Russia collusion investigation being led by Robert Mueller. In this week’s episode of Trump, Inc., we’re digging into a part of Giuliani's work that has occurred largely outside of the spotlight: He has often traveled to Russia or other former Soviet states as guests of powerful players there. And since Trump was elected, he appears to have stepped up the frequency of those trips.
Just last week, for example, Giuliani appeared in the former Soviet republic of Armenia, which has close trade ties with Russia. He was invited, according to local press accounts, by Ara Abramyan, an Armenian businessman who lives in Russia. Abramyan once helped reconstruct the Kremlin and also received a medal for “merit to the fatherland” from President Vladimir Putin of Russia. Giuliani said he was in Armenia as a private citizen, but on a local TV news show, Abramyan implied that he expected Giuliani to carry a message for him to Trump. (The conversation was in Armenian, so it’s not clear whether Giuliani understood what Abramyan was saying.)
While in Armenia, Giuliani also attended a technology conference (one of his businesses advises on cybersecurity). The conference program listed him as appearing on a panel that also included a Russian currently on the U.S. sanctions list imposed after Russia's invasion of Crimea.
There are many things we don't know about Giuliani's trips. We don't know whether he's being paid, and if so by whom. Giuliani declined to answer our questions.
One thing we do know is that a company called TriGlobal Strategic Ventures claims credit for organizing the trips. Abramyan is on TriGlobal’s board, as is a former Russian government minister. TriGlobal and Abramyan also did not respond to our questions.
Giuliani's work abroad does not appear to break any laws or rules. But it also appears to be unprecedented. Said Barbara McQuade, a former U.S. attorney and a law professor at the University of Michigan: “I don't recall seeing anything like this before.”
|Oct 31, 2018|
Trump and Taxes: The Art of the Dodge
From the moment during the presidential campaign that Donald Trump broke decades of precedent and declined to release his personal tax returns, the issue of Trump and the taxes he has paid (or not paid) has been the subject of widespread fascination, scrutiny and not a little controversy. That scrutiny ratcheted up significantly in recent weeks with two substantial media investigations of the tax-paying practices of Trump’s family and those of Trump in-law and White House official Jared Kushner.
This week’s episode of Trump, Inc. brings clarity to a complex subject. It identifies three patterns in the president’s approach to taxes. First, it describes a history of ignoring norms (which, for presidential candidates, include releasing tax returns). Second, it delves into a recent New York Times investigation — which concluded that the president’s family committed “outright fraud” — to show a history of breaking tax rules. Finally, it examines Trump’s ability to change tax rules to benefit himself and his wealthy peers.
The episode includes an interview with The New York Times’ Susanne Craig, the co-author of the expose that reported that Fred Trump passed $413 million in today’s dollars to his son Donald, who describes how she reported her article and the mysteries she and her colleagues unraveled. It also examines a second New York Times article that explored how Kushner exploited a seemingly prosaic tax technique — depreciation — to wipe out his taxable income. (Representatives of the Trumps and Kushners have denied any tax improprieties.) Finally, the episode looks at many of the ways in which Trump’s signature tax cut will redound to the benefit of the real estate industry.
The bigger picture? As tax expert Jenny Johnson Ware puts it in the podcast, for taxpayers who want to be aggressive, “It’s a great time.”
Correction: This story originally misattributed and misquoted a statement. Jenny Johnson Ware did not say, “It’s a good time to be wealthy in the United States if you are aggressive about your tax money.” ProPublica's Jesse Eisinger asked, “Is it a good time to be wealthy in the United States if you are aggressive about your tax planning?” Ware responded that for taxpayers who want to be aggressive, “It’s a great time.”
|Oct 24, 2018|
Trump’s Tangled Relationship With Saudi Arabia
The disappearance of Washington Post contributor Jamal Khashoggi at a Saudi Consulate has brought renewed attention to what’s been true for years: The United States — and its president — has an important, and extremely complicated, relationship with Saudi Arabia.
Trump has been doing business with Saudis for years, even bragging during his presidential campaign about the large amount of money Saudi buyers paid for his apartments.
"Saudi Arabia, I get along with all of them. They buy apartments from me. They spend $40 million, $50 million," he said at a rally in Mobile, Alabama, in August 2015. "Am I supposed to dislike them? I like them very much."
In this Trump, Inc. podcast extra, WNYC’s Charlie Herman talks with The Washington Post’s David Fahrenthold and Joe Nocera from Bloomberg Opinion about all the ways Saudi Arabia is intertwined with U.S. business interests, including those of the president himself.
|Oct 19, 2018|
Pump and Trump
Since Donald Trump’s fortunes came surging back with the success of “The Apprentice” 14 years ago, his deals have often been scrutinized for the large number of his partners who have ventured to the very edges of the law, and sometimes beyond. Those associates have included accused money launderers, alleged funders of Iran’s Revolutionary Guard and a felon who slashed someone in the face with a broken margarita glass.
Trump and his company have typically countered by saying they were merely licensing his name on these real estate projects in exchange for a fee. They weren’t the developers or in any way responsible.
But an eight-month investigation by ProPublica and WNYC reveals that the post-millennium Trump business model is different from what has been previously reported. The Trumps were typically way more than mere licensors or bystanders in their often-troubled deals. They were deeply involved in these projects. They helped mislead investors and buyers — and they profited handsomely from it.
Patterns of deceptive practices occurred in a dozen deals across the globe, as the business expanded into international projects, and the Trumps often participated. One common pattern, visible in more than half of those transactions, was a tendency to misstate key sales numbers.
In interviews and press conferences, Ivanka Trump gave false sales figures for projects in Mexico’s Baja California ; Panama City, Panama ; Toronto and New York’s SoHo neighborhood . These statements weren’t just the legendary Trump hype; they misled potential buyers about the viability of the developments.
Another pattern: Donald Trump repeatedly misled buyers about the amount (or existence) of his ownership in projects in Tampa, Florida; Panama; Baja and elsewhere. For a tower planned in Tampa, for example, Trump told a local paper in 2005 that his ownership would be less than 50 percent: “But it’s a substantial stake. I recently said I’d like to increase my stake but when they’re selling that well they don’t let you do that.” In reality, Trump had no ownership stake in the project.
The Trumps often made money even when projects failed. And when they tanked, the Trumps simply ignored their prior claims of close involvement, denied any responsibility and walked away.
The cycle is exemplified in Panama City, where the Trumps were involved in a project to build a massive tower and complex known as the Trump Ocean Club . The project’s unfortunate turns included bankruptcy, then, years later, the forcible ejection of the Trump Organization from managing the hotel.
There, as elsewhere, the Trump Organization disclaimed responsibility. It emphasized that it had merely licensed the Trump name to developers who handled everything from construction to marketing. “The Trump Organization was not the owner, developer or seller of the Trump Ocean Club Panama project,” it said in a statement last year. “Because of its limited role, the company was not responsible for the financing of the project and had no involvement in the sale of units.”
That was false. For starters, Trump arranged financing — his promised commission: $2.2 million or more — by bringing in investment bank Bear Stearns , which issued the bonds that paid for the Panama project’s construction.
Trump touted himself as a “partner” of the developer. His daughter Ivanka briefly boasted that she had personally sold 40 units. (A broker on the project said he couldn’t remember her selling even one.) Meanwhile, Ivanka told a journalist at the time that “over 90 percent” of the Panama units had sold — and at prices five times as high as comparable buildings. Both statements were untrue.
Not only were the Panama sales figures inflated, but many “purchases” turned out to be an illusion. That was no coincidence. The building’s financing depended on obtaining advance commitments from buyers, often before concrete had started pouring. But in between the sale of the bonds in 2007 and 2013, the year the building went bankrupt, buyers of 458 units in the 1,000-unit building abandoned their purchase contracts. Those buyers forfeited more than $50 million in deposits, and they never took possession of finished units. Given that the “buyers” were often shadowy shell companies or other paper entities, it was nearly impossible to discern who the actual purchasers were, let alone why they backed out.
Trump licensed his name for an initial fee of $1 million. But that was just the beginning of the revenue streams, a lengthy and varied assortment that granted him a piece of everything from sales of apartment units to a cut of minibar sales, and was notable for the myriad ways in which both success and failure triggered payments to him.
Consider the final accounting: In the wake of the project’s bankruptcy, a 50 percent default rate and his company’s expulsion from managing the hotel, Donald Trump walked away with between $30 million and $55 million.
The Trump Organization did not respond to a long list of questions about its transactions. The White House didn’t have a comment.
Trump’s licensing strategy originated with his early-2000s comeback, as “The Apprentice” propelled him to international TV stardom and restored luster to a reputation tarnished by multiple bankruptcies. As Trump put it in one promotional video during that period, “When the first season of ‘The Apprentice’ finally finished shooting, I was able to get back to my core business, real estate, and I’ve made some really incredible deals.” That strategy is still playing out today. The Trump Organization, which pledged not to launch new projects during the Trump presidency, is aggressively pursuing existing ones, including in the Dominican Republic, Indonesia and India.
Some long-assumed beliefs about Trump are being re-investigated, with surprising results. This month, The New York Times published a 13,000-word examination of how Donald’s father, the late Fred Trump, and his estate, funneled millions of dollars to his children, in possible violation of tax rules and criminal laws. With copious documentation showing that Fred directed $413 million in today’s dollars to Donald — not the single loan for $1 million, with interest, that Donald has always claimed — it exploded Trump’s long-propagated claim that he is a self-made man.
This article examines another Trump claim: that his post-millennium comeback and global expansion rested on the brilliant purity of a licensing strategy that paid him millions simply for the use of his name. That, it turns out, is no truer than the notion that Donald Trump is self-made.
“Development Wasn’t Our Big Forte”
A Lebanese importer-exporter with expertise in the apparel industry seemed an unlikely choice as a partner for one of Donald Trump’s first international forays. Yet that’s precisely who Trump would team with to embark on a wildly ambitious construction project in a distant Central American location.
Roger Khafif divided his time between Panama, where he had become a citizen, and South Florida. He was a slick dresser who made big promises and exuded an intensity that could be viewed either as determination or stubbornness, according to people who did business with him. He had worked in the Panama Canal free-trade zone as an importer-exporter of clothing and had recently begun dabbling in real estate, documents show, via ownership interests in two Panamanian beach resorts. “Development wasn’t our big forte,” Khafif acknowledged in an interview with ProPublica.
If Khafif seemed an implausible partner, Panama seemed an odd location for a project that would become a template of sorts for Trump’s international licensing deals. The country was better known as a cog in the Latin American drug trade than as a tourist destination. It was a place to turn illegal profits into useable cash. Money laundering helped fuel the proliferation of high-rises that gave Panama City its sleek, ultramodern skyline .
The deal came together fast, according to Khafif. To get to Trump, he said, an associate put him in touch with a business partner of Marvin Traub, the Trump friend and former Bloomingdale’s CEO who had also brokered Trump Vodka. Traub’s consultancy got Khafif on Trump’s schedule. (Traub’s firm later sought almost $1.3 million for matchmaking, court documents show.)
“We had a quick meeting,” Khafif recalled of his first encounter with Trump in New York in 2005. “Then I left. I went down to Miami, got a call the next day from Donald Trump saying they were interested in the project.” Khafif was so surprised he didn’t at first believe he was talking to Trump.
Trump signed on to Khafif’s plan and decided to bestow the leading role in the project, at least as far as the Trump Organization went, on his daughter Ivanka, Khafif told Reuters. Just entering her mid-20s, she was leading a major deal for the first time. Ivanka traveled to Panama shortly after, and the agreement coalesced quickly.
Khafif’s dream was audacious and grandiose. The planned complex, Ivanka claimed in a promotional video, would amass the largest square footage of any construction in all of the Americas. Fully Trumpian in its luxury and excess, the plan would call for a 69-story sail-shaped building with 1,000 condos and hotel-condo units, offices, a casino, spa, private beach, pool deck and yacht club. (When viewed from Panama Bay, the resulting edifice would look less like a sail and more like a giant lemon wedge perched on a square base.)
One Monday in April 2006 in the marble atrium at Trump Tower in Manhattan, Khafif stood in a well-cut dark suit and pale pink tie beside Trump, Ivanka and Donald Jr. to announce plans for the Trump Ocean Club’s birth. “I really think the time for Panama has come,” Trump proclaimed.
Trump left multiple observers with the impression that he had an equity stake in the deal. “He said the Trump does have a financial interest in the project but he would not disclose the amount,” reported a newsletter circulated to clients and associates, alerting them to news and investment opportunities, by the Panamanian law firm Mossack Fonseca, which would later become publicly known for sheltering wealth in offshore accounts.
Marketing materials for the Panama project also implied that Trump was functioning as a developer. “I am honored to develop this extraordinary high rise with my partner Roger Khafif of the K Group,” Trump was quoted as saying in one promotional statement. Buyers believed the Trumps and their company were functioning as the project’s developers, in partnership with Khafif, according to a lawsuit later filed by dozens of buyers.
But Trump did not have a penny of equity in the development, according to records of the bond sale and bankruptcy. Nor was he the actual developer, as the Trump Organization’s own statement confirmed.
In Panama and elsewhere, Trump’s projects depended on outsiders’ willingness to invest. Trump claimed at the time that banks were “fighting to put up money” for the building. But there’s no evidence that was the case. His five casino and hotel bankruptcies meant financial institutions tended to shy away, and Khafif’s lack of building experience made him a risky financing prospect. (Khafif ultimately brought on the principals of a Colombian construction and design firm to deliver the necessary know-how.)
Still, Trump had a card to play without which the tower would likely never have been built: his two-decade relationship with Bear Stearns. The investment bank agreed to underwrite a $220 million bond issue. Bear Stearns and Trump had worked together on a variety of endeavors. For example, two years earlier he and a Bear Stearns executive, Trump’s investment banking adviser, had launched Trump University , a non-accredited business education program that purported to teach his real estate strategies. (It later collapsed among accusations of fraud. Trump paid $25 million to settle a suit but denied wrongdoing.) And as far back as 1988, Trump paid a $750,000 civil judgment to the U.S. Department of Justice for having Bear Stearns make purchases of casino stocks in the bank’s name rather than in his. (Trump was looking to buy casinos at the time, and the Justice Department asserted that the concealed purchases violated antitrust laws.)
As the bond underwriter in the Panama project, Bear Stearns played a dual role: It raised money for construction and also vouched for the soundness of the bonds it would sell. The bank was supposed to be checking that information disclosed to investors was accurate and provided a complete picture of the investment’s strengths and weaknesses.
In reality, however, “the bank had significant lapses in exercising due diligence over their bond offerings” during that period, according to Gary Aguirre, an attorney and former SEC senior counsel who advocated for more accountability of Bear Stearns and other Wall Street banks involved in the financial crisis and said he researched Bear Stearns as part of that process. The bank, including a member of its Latin America group (which was involved in the Panama deal), faced multiple investigations by regulators into whether its employees in Miami and New York had improperly valued financial instruments, though they did not lead to charges, SEC records and media reports show.
The bond sale barely squeaked through in November 2007. Tremors of what would become a global financial earthquake were already destabilizing markets. At the last minute, Bear Stearns postponed the offering only to reverse course a few days later. “I remember walking up Fifth Avenue and I put my arm around Roger [Khafif],” said Jack Studnicky, a lead real estate agent for the project, “and I said, ‘You are the luckiest SOB I ever met.’” This project, branded with the name of a longtime Bear Stearns client, was the only bond issue among eight at Bear Stearns at that moment that moved forward.
Many investors turned up their noses at the bonds, even though Bear Stearns representatives had traveled to New York City, Miami and London to talk up the deal. Part of what drove some blue-chip corporate investors away was obvious: The bonds for the Panama project were rated “speculative” — “junk” in Wall Street parlance — reflecting what rating agencies viewed as an elevated chance of default. More risk-tolerant, and more anonymous, hedge funds and money managers proliferated among the bond buyers, making up 80 percent of initial investors.
Within months of the offering, it became clear that the Trump Ocean Club would outlive its financial backer. Bear Stearns crumpled suddenly in March 2008 as creditors pounced on the heavily indebted institution. Less than six months after it delivered the money to construct the tower, Bear Stearns disappeared into the belly of J.P. Morgan.
“We Needed Those Extra Sales”
Trump’s connections landed financing for the Panama project, but they could take the deal only so far. The $220 million in bond proceeds wouldn’t have started flowing if Khafif’s team hadn’t satisfied a key prerequisite: Racking up “presales,” the term for purchase contracts signed while the building was under construction (and in many cases, before construction had even begun).
Buyers promised to make a down payment of 30 percent, spread over four installments, and to eventually pay in full. These binding pledges served as collateral for the bond, a crucial source of value that bondholders could seize if the developers failed to pay back what they owed.
Khafif and a cadre of brokers set out to move units, with what appeared to be dramatic success at first. The year Trump joined the project, 2006, the developers reported signing a whopping 585 presales contracts with prospective buyers (nearly 60 percent of the units in the building). The Moody’s credit-rating service cited the project’s rapid sales as a “positive credit characteristic.”
But the project scrambled to nail enough contracts to fulfill the bank’s requirements, according to Studnicky, who worked for the project’s master brokers, International Sales Group (ISG). Over a meal in a Spanish restaurant in New York City, Khafif told Studnicky he needed “another 100 sales to make it valid” — scribbling numbers on the paper tablecloth, according to Studnicky. “It wasn’t fully collateralized, and we needed those extra sales,” he said.
ISG leaned on its agents. “We knew there was a presale requirement in order to trigger the bond issue,” said Jeff Barton, another broker who worked at ISG at the time. “So there was definitely pressure.”
In dealing with potential buyers, the ISG brokers communicated urgency of a much different sort: They acted as if the building were running out of units. The prices were in constant flux, keeping potential buyers off-balance. “You could never really get a straight answer in terms of what was actually available, what had actually sold and what the real price was,” said Kent Davis, who began looking to sell Ocean Club inventory soon after opening his own real estate company in Panama City in 2007. (One buyer echoed Davis’ comments. “When I invested it was ‘Oh wow, it’s almost sold out!’” said Al Monstavicius, a retired doctor who bought into the Panama tower. “I was told the units were selling real well. Well, they weren’t selling real well.”) ISG did not return messages seeking comment.
Davis said he sold a few units, splitting the commission with ISG. “I think some of their projections were exaggerated. I think the way they described how the project would ultimately be built did not come to fruition,” he said. “I think they were overpromising and, to be honest, at times I was complacent.”
Just as Trump took millions upfront, financial incentives in the project were stacked to reward brokers for quick presales — rather than slow and steady contracts perhaps more likely to close once construction finished.
Commissions were front-loaded to an unusual degree, Davis said. Agents making the earliest sales would receive 90 percent of their expected commissions by the time construction started, according to Barton. Only the final 10 percent was held back until closing, when the buyer had paid in full and the unit was ready to be occupied. (Davis said that brokers typically get commissions in increments in line with the percentage their clients have put in.)
Even as brokers were taking cash out quickly, buyers were given time to put their money in. They anted up just 10 percent upon signing a purchase contract, according to the bond prospectus. They paid the remaining 20 percent in increments over the year after that.
Khafif complained of soaring construction costs and raised prices even as brokers hustled for contracts, Studnicky said. “I kept saying I understand the problem, but if you keep pushing the prices up, people are never going to be able to close on these things,” he said.
The higher prices climbed, the more the Trumps stood to pocket. Their licensing agreement gave them a base fee of 4 percent of gross sales when units closed. (This was on top of the $1 million Trump was given in advance for the use of his name.) They also received an “incentive fee”: the higher the price rose above benchmarks, the greater a proportion the Trumps earned, records show. A hotel-condominium unit that sold for $385,000, for example, would produce a payment of $20,650 — just over 5 percent — to Trump’s company.
That was just the beginning. Along with the cut of sales, Trump’s 2006 licensing agreement provided the family other cash streams from the Panama project. The Trumps could take a 20 percent commission on construction costs if money was saved through Trump dealmaking, for instance. Once the hotel opened , they would pocket 17.5 percent of what hotel guests paid for their rooms, including what they spent on minibar items, internet service and even bathrobes; 4 percent for parking unit sales; and 12 percent of commercial space rentals. The Trump Organization would also receive 4 percent of the hotel’s gross revenue for managing it, plus an incentive fee equal to a fifth of the hotel’s net operating income.
If everything went smoothly, according to the bond prospectus, Trump’s take would be $74 million by 2010. That sum was equivalent to about a third of the entire financing for the project.
Of course, things would go less than perfectly. But Trump was protected if that happened, too. His contract created a safety net for him if prices rose so high that buyers failed to close. One provision required that two years after the first closing, developers would pay the Trumps fees for unsold units — basing the amount on the average sales prices of the units that had closed. In theory, avoiding such payments provided an incentive to sell more units; in reality, it meant that Trump would get paid whether or not units actually sold.
The contract required that monthly sales and marketing reports be provided to the Trumps. It was a stipulation the Trump Organization appeared to value: In an email related to another project, Trump’s son Eric chastised business partners in the Dominican Republic for delays in making such reports. “I am getting weekly emails from my team who requests this info on all projects for basic monitoring purposes,” Eric wrote.
His sister, meanwhile, asserted her engagement with the company’s endeavors. “I’m involved in every aspect of our new construction projects,” Ivanka said in a 2008 interview. “[A] lot of what I do is get involved in the acquisition process, from sourcing the potential opportunities and then the initial due-diligence process, but then, of course, I follow the deals through to predevelopment planning, design, interior design, architectural design, sales and marketing, and, ultimately, through operations.”
“Our biggest problem is not having enough inventory”
Construction on the Trump Ocean Club had begun in May 2007, with customer deposits, investor money and a bridge loan tiding the developers over until the sale of bonds in November 2007. To hear the Trumps tell it, the project was a raging and immediate success, even in the face of a historic global financial and real estate crisis that erupted in 2008 and continued into 2009 and beyond.
At times, the hyperbole crossed over into misrepresentation. In a November 2008 interview, Ivanka Trump bragged that she had “sold 40 units in Panama last month.” She added that “it’s a 1,000-unit building, we’ve sold over 90 percent of it.” The units, she said, had been going at a “500 percent premium to anything the luxury market has ever experienced prior to our entry.”
All of that was exaggerated or outright false. When pressed by her interviewer about what she meant by “I sold 40 units,” Ivanka backed off, saying, “We did, our project,” a transcript of the interview shows. Studnicky, who was deeply involved with Ocean Club sales at the time and generally praised the Trumps, said Ivanka didn’t sell any units that he knew of.
Three months after Ivanka’s comments were published, Moody’s reported that 79 percent of the building’s units were under purchase contracts. The Trump name did carry a premium, according to data filed with Panamanian securities officials. But even at its high point, it amounted to about 130 percent of what similar luxury properties fetched, not the 500 percent Ivanka claimed.
Meanwhile, the Trumps used some of their glamour to encourage sales. Donald Trump himself hosted a gala for the Panama project at Mar-a-Lago where celebrity Regis Philbin dropped in.
But difficulties were mounting and cash was tight. By 2009, some buyers were offered hefty discounts if they agreed to pay the full purchase price up front. (Monstavicius says he accepted such an offer, shaving $100,000 off his nearly half-million-dollar penthouse suite.)
Ratings for the Ocean Club’s bonds were lowered in February 2009, but you wouldn’t have known that by listening to the Trumps. A few weeks after the downgrade, Ivanka gushed about Panama in an interview with a publication called the Latin Business Chronicle. “Given the global downturn, the fact that sales remain so robust is a testament to the product, the brand and Panama,” she said. “Our biggest problem is not having enough inventory. We only have a small percent of the building left.”
The following year brought more trouble. There was another bond downgrade. One of the services that reduced its rating, Fitch, expressed concerns about the market and buyers’ “willingness and ability to close on units upon delivery.”
The developers faced a $27 million construction shortfall and delays by subcontractors performing services such as millwork. Khafif and his team trimmed back some of their plans, which only irked buyers who had already committed their money. For example, buyers said square footage for some units was reduced. The location for a planned beach club was moved to a more distant spot with less cachet. And plans to have Trump manage the casino were abandoned.
The issuing of the bonds hadn’t relieved pressure on the Ocean Club to move units. The developers needed to keep sales commitments and cash high or they risked defaulting on the bonds. By 2010, 25 contracts appeared in jeopardy as buyers missed payments toward their deposits.
Facing pressure from multiple sides, the developers sought bondholders’ permission to make key changes to their agreement. They proposed relaxing the requirements for collateral and reducing the amount of cash they had to keep in a deposit account. In a company statement quoted in the press at the time, Newland International Properties (the entity formed by Khafif and the outside developers he partnered with) was blunt about its need: “The company believes that the proposed amendments are necessary to allow the company to continue construction.”
“Nobody Ever Asked Where These Sales Were Coming From”
From the beginning, the plan at the Trump Ocean Club was to draw a luxury-seeking international clientele with disposable income. With some 1,000 units to sell, brokers tapped networks of upper-crust buyers across the globe. In doing so, they netted purchasers with problematic pasts, including some with ties to organized crime and money laundering operations.
ISG representatives and independent brokers fanned out to Russia, Spain, Switzerland, Dubai, China and South Africa, as well as other Latin American countries. As of mid-2007, roughly 60 percent of buyers came from outside the United States, bond documents show. (Much has been made of Trump’s buyers of Russian nationality or extraction, but the Panama sales were not tracked by nationality. Still, some were found in Moscow and, Khafif said, in Trump developments in )
Several aspects of the Panama sales raised red flags, according to experts. For example, some buyers bought blocks of units. Purchases were typically made anonymously through shell corporations registered in Panama. That allowed some buyers to change the ownership of the unit in secret, simply by changing the ownership of the company. They often used so-called bearer shares, allowing a stake in a company to be transferred simply by passing a piece of paper.
“Nobody ever asked where these sales were coming from, where the money was coming from,” said Studnicky, adding that this wasn’t unusual for such a building at the time.
The purchase of multiple units and the use of bearer shares or shell companies are not illegal in themselves. But they can be hallmarks of money laundering, according to experts. “We have no idea of the people behind those companies,” said Eryn Schornick, a policy adviser for Global Witness, an international anti-corruption organization. The Panama deal, she said, bore signs of “classic money laundering.”
Meanwhile, multiple buyers claimed they were promised quick profits through flips arranged by the developers, promises they say were not fulfilled. Some of those allegations began emerging in litigation even before the Trump Ocean Club opened.
In late 2010, a group of buyers accused Trump, the Trump Organization, Khafif and Newland, Khafif’s development operation, of misleading them, according to a previously unreported lawsuit filed in U.S. District Court in Florida. There were 37 plaintiffs, led by an independent broker, Greg Landau. The group — including South Florida residents, a family in Brooklyn, a Massachusetts psychiatrist, a New York fashion mogul and several Russians — had bought 42 Ocean Club condominiums between 2006 and 2009.
The group alleged that Khafif had offered them a sweet enticement: If they put 30 percent down, either the developer or the Trump Organization would finance the rest. Khafif, plaintiffs claimed, said Newland or the Trump Organization would manage the investment — finding new buyers so they could flip it for a big profit before construction was finished and they had to close on the property.
The deal soured after some of the Ocean Club plans were trimmed (including, as noted, reducing the size of units). Buyers discovered there was no developer financing, and no buyers lined up to flip to. They went to court.
Trump had “stood by silently as Khafif made the misrepresentations” in a meeting at Mar-a-Lago in 2007 aimed at attracting investors and encouraging current investors to increase their deposits, the lawsuit claimed. It also cited the marketing materials in which Trump called Khafif his “partner.” “The Trump Organization knew these representations were being made by Khafif to Landau and of the fact that Landau was expected to repeat them to other potential investors,” it alleged. “Defendants Khafif, Donald Trump, and the Trump Organization were culpable participants in the fraudulent scheme.”
In an interview with ProPublica, one of those buyers described what he had expected to happen. “There was an agreement that when the hotel is built, when the building is ready, we’ll sell our apartments, our shares, and quit the project,” said Victor Masaltsev, an internet entrepreneur who lives in Moscow and invested in the Ocean Club through a Panamanian shell company that became a plaintiff in the Landau suit against Trump. Masaltsev said he was invited to visit Mar-a-Lago for an event with Trump celebrating the project, but he couldn’t make the trip.
“I’ve been doing business for a long time and, you know, there’s never a 100 percent guarantee,” he said through a translator. “But I was expecting to make no less than 50 percent profit on my money.” Instead, he said, he lost his deposit.
In their legal papers, the Trump Organization and Newland asserted that the complaint was “completely devoid of facts sufficient to show that Donald Trump and The Trump Organization were conducting the affairs of a ‘fraudulent scheme.’”
Khafif called the lawsuit a case of “buyers’ remorse, of course.” There were “a million” such lawsuits when the financial crisis came, he added. “They tried to invent anything in order to get their money back. It wasn’t our fault.”
A U.S. judge ordered the case be moved to Panamanian courts, but the parties reached a confidential settlement before that happened. Other plaintiffs, reached by ProPublica, have a surprising take on the dispute today. Three of them echoed Khafif and said the project was simply a bad investment. “It’s nothing to do with Trump,” said David Feldman, speaking outside his Brooklyn duplex. He said he did not receive any money in the settlement and added that he thought Trump was hurt by the deal, too, before declining to talk further. Landau did not respond to requests for comment, nor did Roderick Coleman, the attorney named on the lawsuit pleadings.
Landau’s group wasn’t the only one to claim it was sold on an unfulfilled promise of easy flipping. One buyer from Dubai made similar claims, according to emails in the Panama Papers, a collection of documents leaked from Mossack Fonseca and shared by the International Consortium of Investigative Journalists. “The concept was pay the deposit and they would get it resold before completion,” a representative for the buyer wrote to a lawyer in Panama. “[T]he apartment was going to be resold for them by the agents that came from Panama to Dubai for Marketing the project.” Khafif called it another case of buyer’s remorse.
“Our project was the cleanest one of them all”
Unfulfilled promises weren’t the only questionable behavior alleged at the Trump Ocean Club. For example, one high-selling broker, Alexandre Ventura Nogueira , was linked to money laundering by Global Witness and a joint Reuters-NBC investigation. Nogueira confirmed in that article that some of his partners and investors on the Trump Panama project had connections to the Russian mafia. (He asserted that he had discovered those connections only after the fact.) Among the buyers Nogueira landed was a Colombian businessman who was subsequently convicted in the United States of conspiring to launder drug money.
Khafif told ProPublica that he hired Nogueira because he was one of the highest-profile brokers in Panama City at the time. “That guy was very famous,” Khafif said. “We ended up suing him because he swindled the clients.” Nogueira, who was also accused of selling the same units to more than one buyer at the same time, fled Panama and described himself in the Reuters article as a “fugitive.” (He denied in that story, but could not be reached for comment for this article.)
The Trump Organization denied the family knew Nogueira. But photos were published of Ivanka and her father smiling with an arm around Nogueira at events at Trump Tower and Mar-a-Lago.
Project developers also seem to have made dubious presales themselves — and profitable ones at that — according to emails between bondholders and Newland obtained by ProPublica.
Newland shareholders purchased some of the building’s units at below-market prices with down payments of just 5 percent. “I have never seen 8-10 percent of a 996 unit project reserved by the developers at prices as much as 70 percent less than list price (with just a 5% deposit),” asserted one email from Gary Lundgren, who now owns a sizable part of the building, to others in the project. The purchases were “not disclosed in the Bear Stearns’s bond offering circular, not disclosed in the quarterly financial disclosure, not disclosed in the annual audited financial statements,” he complained.
Newland acquired some of the units by taking over ones that were in danger of default, Lundgren stated in the email, with the developers kicking in the 5 percent needed for the units to continue being counted as collateral under the bond terms. The developers resold some of the properties at higher prices, Lundgren’s email asserted, and they pocketed the difference. These resales effectively cut out bondholders from their share of the proceeds. His emails to Newland did not mention the Trumps. (In 2016, Lundgren was barred by the Financial Industry Regulatory Authority from acting as a broker after he failed to respond to an information request. His filings asserted that the complaint against him, filed by someone who was not his customer, was without merit, and that Panamanian law prevented him from disclosing the records.)
The insider purchases potentially violated the terms of the project’s financing. The bond prospectus required down payments of at least 30 percent, which would “protect the economics of our project.” Since sweetheart deals generated less cash — which meant less collateral for the bonds — a provision of the bond agreement restricted sales made to affiliates of the developers. And if buyers stopped making payments, they were supposed to go through a default process rather than have Newland take over their purchase.
“The developers made bad judgment calls, and they justified it by their support for the project,” said Alfredo “Dino” de Angelis, of Gapstone, which advised Newland in the bankruptcy. Ultimately, he said, the developers added money to stabilize the project, enough to equal or exceed what they appear to have made by re-selling units.
Khafif said that bondholders looked into the questions and “found everything was 100 percent by the book.” He said developers didn’t need to buy units and followed the rules in the bond indenture. Khafif insisted that he conducted business the right way. “Our project was the cleanest one of them all,” he said. “We had to watch out for Trump, we had to watch out for bondholders. We had to work within the indenture, or else we’d be screwed.”
“Replete with misrepresentations”
Ivanka Trump ’s exaggerations about the Ocean Club reflected a tactic she and her father employed repeatedly in other cases, ProPublica and WNYC found. Their statements, typically made in the midst of sales drives, tended to overstate the number of units under contract or the Trump Organization’s equity stake in projects scattered around the globe.
The Trumps’ propensity to overstate sales led them, as ProPublica, WNYC and the New Yorker reported last year, to be investigated on potential felony fraud charges in one case. Ivanka had announced in June 2008 that 60 percent of the units at the SoHo tower had been bought when in fact 15 percent had, according to an affidavit filed by a Trump partner. The Manhattan district attorney’s office considered charging the Trumps but backed off after a visit from a donor — Trump’s attorney Marc Kasowitz . (The DA, Cyrus Vance , denied he was influenced by the donation but later changed his policy and now refuses donations from lawyers with cases before him.)
Similar deceptions occurred elsewhere. In a marketing video for a project in Baja, Mexico, Ivanka referred to Trump International Hotel in Toronto as one of several “sold out” properties. The Toronto tower never did sell out. It was still three-quarters empty late last year, a few months after Trump’s name was removed from the building.
Trump himself also made misrepresentations. In 2006, he said the Trump Organization would be a significant equity investor in the $200 million Baja project and repeatedly portrayed himself as the project’s developer. Yet in 2008, the company admitted it was neither a developer nor an investor.
In Tampa, as noted, Trump told the press he had a significant ownership stake when he had none. Moreover, his licensing agreement contained a confidentiality provision barring “under any circumstances” that anyone reveal the agreement existed, and hence that Trump was only licensing his name. The deal never got financing and ultimately fell apart.
Panama also wasn’t the only project where questions emerged about insider deals. In Tampa, Donald Trump Jr. and three executives associated with the Trump Organization arranged to buy a unit under unusually attractive terms, according to emails between the executives and the developer. As early sales on the project surged, the Trump group — which formed a company called Busy Boys Investments to handle the purchase — bargained both for a discount price and a smaller deposit than other buyers paid.
“Can you confirm the deal?” asked Russell Flicker, a former Trump Organization executive vice president, in a late-2004 email to one of the Tampa developers. “(We had discussed 5% down payment, discounted price and flip rights prior to closing — are all of these on the table?) You’re the man.” The developer replied, “The deal is as you state!”
The Trump group also discussed backdating documents to reduce their tax liability, according to the emails. They excitedly anticipated a quick flip that would yield a $200,000 profit — $50,000 apiece, a handsome return on the $8,604 deposit each paid. (The emails were revealed in a court case filed by unhappy buyers; their suit ultimately settled, with the buyers receiving limited refunds of their deposits.) In January 2005, Flicker forwarded an email conveying the prospect of such a windfall to his partners in the side deal: Donald Jr. and Trump Organization executive vice presidents Bernie Diamond and Jason Greenblatt, with the message: “!!!!!!!!!!!!!!!!!”
In a July 2005 email, Diamond, an attorney, explained to the others that the developer told him he would prepare a unit purchase contract “for Busy Boys to sign dated in 2004,” as well as an assignment of their contract to the proposed buyer, also “dated one year earlier.” Diamond noted, “This is good, as it will give us the best shot at capital gains treatment.” (The Tampa tower was never constructed, so the Busy Boys entity did not ultimately cash in. On behalf of Greenblatt, who is now a special representative for international negotiations in the Trump administration, a White House official said “Mr. Greenblatt complied with all applicable laws in connection with condominium purchase agreements.”)
In Baja, Ivanka tried to leverage her own unit purchase to pull in other buyers. “I personally am very excited about it, I actually chose to purchase a unit in the first tower,” she said in a promotional video as she flashed a smile. She did not mention that the deposit she paid was less than half of the 30 percent other investors put in for their units, according to Univision. Univision also reported that the developers overstated the percentage of units sold and had assigned 34 units to their own executives and other related parties.
Written materials became a matter of contention, as well; multiple buyers contended they were misleading. Trump had some say over such materials: Projects including Baja, Tampa, the Dominican Republic, Israel and Panama all required developers and other partners to obtain prior approval from Trump’s company before posting press releases. In some cases, the company had veto power over promotional materials in general, as well.
There were other deceptions. In marketing materials featuring a grinning image of the New York developer, potential buyers in a Trump-branded project in Toronto were shown investment projections that proved wildly optimistic, according to interviews and records from the extensive litigation that ensued. A Canadian appeals court, ruling after the Toronto deal went sour, unanimously found that estimates of profitability provided to purchasers “bore no relation to financial reality.” The panel quoted a trial judge’s findings that the projections were “deceptive” and “replete with misrepresentations of commission, of omission, and of half-truth.” (The case is still pending.)
In Chicago , Trump promised discounts — some with down payments of as little as 5 percent — to friends and colleagues, only to rescind those arrangements when sales in the building picked up. Trump justified the broken promises, saying “we’re entitled” to the higher prices.
Buyers who sued Trump have had mixed success. Most suits settled before trial, but Trump prevailed in cases in Las Vegas and Florida in which buyers accused his company of deception.
The “Stormy Jack Daniels”
The Trump Ocean Club in Panama was officially inaugurated on July 6, 2011. It was nearly a year behind schedule after cost overruns and construction delays. The Trumps had been more visible again during the final stages. Ivanka picked out design finishes, including helping deck out the “sky lobby” on the 15th floor with wood paneling, pillars and marble that echoed the ground floor entrance hall. The lobby’s “tropical color palette” was “reminiscent of indigenous flowers,” Ivanka said in one promotional video.
July falls during Panama’s rainy season and a downpour swamped the city’s already-overwhelmed infrastructure on the day of the opening, turning the cramped roads near the tower into waterways. Trump had angered many Panamanians by declaring that the U.S. had “stupidly” turned over the Panama Canal “in exchange for nothing.” But the country’s then-president, Ricardo Martinelli , turned up for the ceremony nonetheless. He joined Trump, his two adult sons, Khafif, and other dignitaries to cut a ribbon to mark the opening. Ivanka, days away from giving birth to her first child, did not attend. (In June 2018, Martinelli was extradited on corruption charges, unrelated to the Trump project, from the U.S., where he had fled in search of sanctuary. He has denied wrongdoing.)
Trump was upbeat. “I think this hotel is truly magnificent,” he said, according to press reports. “You look at Panama’s skyline and you see how this one truly stands out.”
The time had come for the hundreds of sales contracts that brokers had amassed over the previous five years — eventually covering about 85 percent of the building — to convert to actual sales. In the months that followed, however, it became increasingly clear that buyers were walking away in droves.
Ultimately, only about half the sales contracts closed, leaving the building largely empty and developers struggling to make bond-related payments. One-bedroom units that once sold for $350,000 could be scooped up for $180,000. In November 2011, developers defaulted on a critical bond payment.
The volume of people who abandoned their deposits far exceeded the ratings agencies’ worst-case predictions. Those predictions rested on the forbidding combination of tight post-crisis financing standards and the high prices that many buyers had agreed to pay. That strongly suggests that many of the remaining people who paid deposits and then vanished may not have intended to do anything more than put down enough cash to trigger the $220 million bond issuance.
Newland declared bankruptcy in April 2013 in federal court in New York City, where it kept much of its cash. The Trumps agreed to reduce their fees, making concessions that bankruptcy records said would amount to $20 million over a period of years.
Even after those concessions, Khafif’s company continued to run in the red in 2014 and 2015, with net losses nearing $28 million in 2014 alone, financial reports show. It missed another payment in 2015.So Trump didn’t make the $74 million he had hoped for. He appears to have walked away with between $30 million and $55 million, based on fragmentary information in his government disclosure forms, financial statements filed in Panama and estimates by observers.
Khafif seems philosophical about it. At 63, he’s semiretired and travels to the U.S. and Europe often. These days, he said, his main business is laundering linens. The company, Perfect Cleaners, which Khafif called the largest industrial laundry plant in Central America, has served the Trump Ocean Club. (He did not respond to a question about his own financial outcome on the Trump project.)
Khafif said his relationship with the family remains good. “I was in New York a couple months ago. I went to visit Eric Trump,” he said. “We’re fine.” The Ocean Club proved a disappointment in many respects, he said, “but life goes on. … It’s the best building in town.”
As much as $120 million of the original bond was never paid back, according to one investor. Asked about that, Khafif pointed out that many investors sold their bonds — albeit at a discount — after receiving interest payments for years, allowing some to recoup much of their investment at a time when lots of people were hemorrhaging money. “It depends on how you look at it,” Khafif said. “You’re grateful at getting your money back, or you’re greedy and you want to make money when everybody lost their shirt.”
Ocean Club buyers filed a host of lawsuits in Panama, complaining of the delays and changes in the building plans. The beach club was never built. A non-Trump company took over the casino. Some rooms were smaller than planned.
By 2015, a new revolt was brewing, this time by Ocean Club unit owners fed up with the way the Trumps were managing the property — or more particularly, with how they were spending the building association’s money. Led by Lundgren, the owners alleged that Trump employees overspent budgets, taking excessive bonuses for themselves, and mishandled building finances, leading them to propose a steep increase in fees to owners. Trump responded by suing the condo owners, demanding up to $75 million for wrongful termination. (The litigation was settled confidentially in 2016.)
In 2017, Ithaca Capital Partners, led by Orestes Fintiklis, bought 202 of the hotel’s 369 hotel-condo units. In October of last year, his group sought to remove the Trump Organization as hotel managers — alleging in a legal action that it had mismanaged the hotel, leading to drastic drop-offs in occupancy and profits. The Trump Organization countersued, accusing Fintiklis of a “fraudulent scheme” that breached its 20-year management contract.
The dispute reached a head early this year, when Fintiklis’ representatives, with a court order behind them, sought to take physical control of the building. Trump Organization employees and a group of security personnel tried to block the effort, leading to confrontations and shoving matches.
Fintiklis’ group ultimately gained entry but discovered walls had been hastily erected in inconvenient places — in the middle of a hallway, in front of an elevator bank — to impede access to the building’s inner offices. Reports circulated of Trump employees shredding documents.
In March of this year, the Trumps suffered the ignominy of seeing their name crowbarred off the stone wall in front of the tower . It was rebranded the Bahia Grand Panama. In late spring, the hotel, once touted as boasting stratospheric levels of luxury, was quiet, with rooms renting for the decidedly terrestrial rate of $169 a night. At the hotel bar, you could order drinks with a sardonic twist that reflected Fintiklis’ sense of humor, including the “Fire and Fury” and the “Stormy Jack Daniels.”
In June, Fintiklis announced the hotel would have a new manager. “We are thrilled that our hotel will operate as a JW Marriott ,” he said in a statement, “and we believe this partnership, together with a talented team and spectacular hotel amenities, will be a success.”
Additional reporting by Micah Hauser, Ian MacDougall, Gabriel Sandoval, Katherine Sullivan and Madeleine Varner.
|Oct 17, 2018|
Trump’s Patron-in-Chief: Sheldon Adelson
Late on a Thursday evening in February 2017, Japanese Prime Minister Shinzo Abe’s plane landed at Andrews Air Force Base in Maryland for his first visit with President Donald Trump. A few hours earlier, the casino magnate Sheldon Adelson’s Boeing 737, which is so large it can seat 149 people, touched down at Reagan National Airport after a flight from Las Vegas.
Adelson dined that night at the White House with Trump, Jared Kushner and Secretary of State Rex Tillerson. Adelson and his wife, Miriam, were among Trump’s biggest benefactors, writing checks for $20 million in the campaign and pitching in an additional $5 million for the inaugural festivities.
Adelson was in town to see the Japanese prime minister about a much greater sum of money. Japan, after years of acrimonious public debate, has legalized casinos. For more than a decade, Adelson and his company, Las Vegas Sands, have sought to build a multibillion-dollar casino resort there. He has called expanding to the country, one of the world’s last major untapped markets, the “holy grail.” Nearly every major casino company in the world is competing to secure one of a limited number of licenses to enter a market worth up to $25 billion per year. “This opportunity won’t come along again, potentially ever,” said Kahlil Philander, an academic who studies the industry.
The morning after his White House dinner, Adelson attended a breakfast in Washington with Abe and a small group of American CEOs, including two others from the casino industry. Adelson and the other executives raised the casino issue with Abe, according to an attendee.
Adelson had a potent ally in his quest: the new president of the United States. Following the business breakfast, Abe had a meeting with Trump before boarding Air Force One for a weekend at Mar-a-Lago. The two heads of state dined with Patriots owner Bob Kraft and golfed at Trump National Jupiter Golf Club with the South African golfer Ernie Els. During a meeting at Mar-a-Lago that weekend, Trump raised Adelson’s casino bid to Abe, according to two people briefed on the meeting. The Japanese side was surprised.
“It was totally brought up out of the blue,” according to one of the people briefed on the exchange. “They were a little incredulous that he would be so brazen.” After Trump told Abe he should strongly consider Las Vegas Sands for a license, “Abe didn’t really respond, and said thank you for the information,” this person said.
Trump also mentioned at least one other casino operator. Accounts differ on whether it was MGM or Wynn Resorts, then run by Trump donor and then-Republican National Committee finance chairman Steve Wynn. The Japanese newspaper Nikkei reported the president also mentioned MGM and Abe instructed an aide who was present to jot down the names of both companies. Questioned about the meeting, Abe said in remarks before the Japanese legislature in July that Trump had not passed on requests from casino companies but did not deny that the topic had come up.
The president raising a top donor’s personal business interests directly with a foreign head of state would violate longstanding norms. “That should be nowhere near the agenda of senior officials,” said Brian Harding, a Japan expert at the Center for Strategic and International Studies. “U.S.-Japan relations is about the security of the Asia-Pacific, China and economic issues.”
Adelson has told his shareholders to expect good news. On a recent earnings call, Adelson cited unnamed insiders as saying Sands’ efforts to win a place in the Japanese market will pay off. “The estimates by people who know, say they know, whom we believe they know, say that we're in the No. 1 pole position,” he said.
After decades as a major Republican donor, Adelson is known as an ideological figure, motivated by his desire to influence U.S. policy to help Israel. “I’m a one-issue person. That issue is Israel,” he said last year. On that issue — Israel — Trump has delivered. The administration has slashed funding for aid to Palestinian refugees and scrapped the Iran nuclear deal. Attending the recent opening of the U.S. embassy in Jerusalem, Adelson seemed to almost weep with joy, according to an attendee.
But his reputation as an Israel advocate has obscured a through-line in his career: He has used his political access to push his financial self-interest. Not only has Trump touted Sands’ interests in Japan, but his administration also installed an executive from the casino industry in a top position in the U.S. embassy in Tokyo. Adelson’s influence reverberates through this administration. Cabinet-level officials jump when he calls. One who displeased him was replaced. He has helped a friend’s company get a research deal with the Environmental Protection Agency. And Adelson has already received a windfall from Trump’s new tax law, which particularly favored companies like Las Vegas Sands. The company estimated the benefit of the law at $1.2 billion.
Adelson’s influence is not absolute: His company’s casinos in Macau are vulnerable in Trump’s trade war with China, which controls the former Portuguese colony near Hong Kong. If the Chinese government chose to retaliate by targeting Macau, where Sands has several large properties, it could hurt Adelson’s bottom line. So far, there’s no evidence that has happened.
The White House declined to comment on Adelson. The Japanese Embassy in Washington declined to comment. Sands spokesman Ron Reese declined to answer detailed questions but said in a statement: “The gaming industry has long sought the opportunity to enter the Japan market. Gaming companies have spent significant resources there on that effort and Las Vegas Sands is no exception.”
Reese added: “If our company has any advantage it would be because of our significant Asian operating experience and our unique convention-based business model. Any suggestion we are favored for some other reason is not based on the reality of the process in Japan or the integrity of the officials involved in it.”
With a fortune estimated at $35 billion, Adelson is the 21st-richest person in the world, according to Forbes. In August, when he celebrated his 85th birthday in Las Vegas, the party stretched over four days. Adelson covered guests’ expenses. A 92-year-old Tony Bennett and the Israeli winner of Eurovision performed for the festivities. He is slowing down physically; stricken by neuropathy, he uses a motorized scooter to get around and often stands up with the help of a bodyguard. He fell and broke three ribs while on a ferry from Macau to Hong Kong last November.
Yet Adelson has spent the Trump era hustling to expand his gambling empire. With Trump occupying the White House, Adelson has found the greatest political ally he’s ever had.
“I would put Adelson at the very top of the list of both access and influence in the Trump administration,” said Craig Holman of the watchdog group Public Citizen. “I’ve never seen anything like it before, and I’ve been studying money in politics for 40 years.”
Adelson grew up poor in Boston, the son of a cabdriver with a sixth-grade education. According to his wife, Adelson was beaten up as a kid for being Jewish. A serial entrepreneur who has started or acquired more than 50 different businesses, he had already made and lost his first fortune by the late 1960s, when he was in his mid-30s.
It took him until the mid-1990s to become extraordinarily rich. In 1995, he sold the pioneering computer trade show Comdex to the Japanese conglomerate SoftBank for $800 million. He entered the gambling business in earnest when his Venetian casino resort opened in 1999 in Las Vegas. With its gondola rides on faux canals, it was inspired by his honeymoon to Venice with Miriam, who is 12 years younger than Adelson.
It’s been said that Trump is a poor person’s idea of a rich person. Adelson could be thought of as Trump’s idea of a rich person. A family friend recalls Sheldon and Miriam’s two sons, who are now in college, getting picked up from school in stretch Hummer limousines and his home being so large it was stocked with Segway transporters to get around. A Las Vegas TV station found a few years ago that, amid a drought, Adelson’s palatial home a short drive from the Vegas Strip had used nearly 8 million gallons of water in a year, enough for 55 average homes. Adelson will rattle off his precise wealth based on the fluctuation of Las Vegas Sands’ share price, said his friend the New York investor Michael Steinhardt. “He’s very sensitive to his net worth,” Steinhardt said.
Trump entered the casino business several years before Adelson. In the early 1990s, both eyed Eilat in southern Israel as a potential casino site. Neither built there. Adelson “didn’t have a whole lot of respect for Trump when Trump was operating casinos. He was dismissive of Trump,” recalled one former Las Vegas Sands official. In an interview in the late ’90s, Adelson lumped Trump with Wynn: “Both of these gentlemen have very big egos,” Adelson said. “Well, the world doesn't really care about their egos.”
Today, in his rare public appearances, Adelson has a grandfatherly affect. He likes to refer to himself as “Self” (“I said to myself, ‘Self …’”). He makes Borscht Belt jokes about his short stature: “A friend of mine says, ‘You’re the tallest guy in the world.’ I said, ‘How do you figure that?’ He says, ‘When you stand on your wallet.’”
By the early 2000s, Adelson’s Las Vegas Sands had surpassed Trump’s casino operations. While Trump was getting bogged down in Atlantic City, Adelson’s properties thrived. When Macau opened up a local gambling monopoly, Adelson bested a crowded field that included Trump to win a license. Today, Macau accounts for more than half of Las Vegas Sands’ roughly $13 billion in annual revenue.
Trump’s casinos went bankrupt, and now he is out of the industry entirely. By the mid-2000s, Trump was playing the role of business tycoon on his reality show, “The Apprentice.” Meanwhile, Adelson aggressively expanded his empire in Macau and later in Singapore. His company’s Moshe Safdie-designed Marina Bay Sands property there, with its rooftop infinity pool, featured prominently in the recent hit movie “Crazy Rich Asians.”
While their business trajectories diverged, Adelson and Trump have long shared a willingness to sue critics, enemies and business associates. Multiple people said they were too afraid of lawsuits to speak on the record for this story. In 1989, after the Nevada Gaming Control Board conducted a background investigation of Adelson, it found he had already been personally involved in around 100 civil lawsuits, according to the book “License to Steal,” a history of the agency. That included matters as small as a $600 contractual dispute with a Boston hospital.
The lawsuits have continued even as Adelson became so rich the amounts of money at stake hardly mattered. In one case, Adelson was unhappy with the quality of construction on one of his beachfront Malibu, California, properties and pursued a legal dispute with the contractor for more than seven years, going through a lengthy series of appeals and cases in different courts. Adelson sued a Wall Street Journal reporter for libel over a single phrase — a description of him as “foul-mouthed” — and fought the case for four years before it was settled, with the story unchanged. In a particularly bitter case in Massachusetts Superior Court in the 1990s, his sons from his first marriage accused him of cheating them out of money. Adelson prevailed.
Adelson rarely speaks to the media any more, with occasional exceptions for friendly business journalists or on stage at conferences, usually interviewed by people to whom he has given a great deal of money. “He keeps a very tight inner circle,” said a casino industry executive who has known Adelson for decades. Adelson declined to comment for this story.
Adelson once told a reporter of entering the casino business late in life, “I loved being an outsider.” For nearly a decade he played that role in presidential politics, bankrolling the opposition to the Obama administration. As with some of his early entrepreneurial forays, he dumped money for little return, his political picks going bust. In 2008, he backed Rudy Giuliani. As America’s Mayor faded, he came on board late with the John McCain campaign. In 2012, he almost single-handedly funded Newt Gingrich’s candidacy. Gingrich spent a few weeks atop the polls before his candidacy collapsed. Adelson became a late adopter of Mitt Romney.
In 2016, the Adelsons didn’t officially endorse a candidate for months. Trump used Adelson as a foil, an example of the well-heeled donors who wielded outsized influence in Washington. “Sheldon or whoever — you could say Koch. I could name them all. They’re all friends of mine, every one of them. I know all of them. They have pretty much total control over the candidate,” Trump said on Fox News in October 2015. “Nobody controls me but the American public.” In a pointed tweet that month, Trump said: “Sheldon Adelson is looking to give big dollars to [Marco] Rubio because he feels he can mold him into his perfect little puppet. I agree!”
Despite Trump’s barbs, Adelson had grown curious about the candidate and called his friend Steinhardt, who founded the Birthright program that sends young Jews on free trips to Israel. Adelson is now the program’s largest funder.
“I called Kushner and I said Sheldon would like to meet your father-in-law,” Steinhardt recalled. “Kushner was excited.” Trump got on a plane to Las Vegas. “Sheldon has strong views when it comes to the Jewish people; Trump recognized that, and a marriage was formed.”
Trump and his son-in-law Kushner courted Adelson privately, meeting several times in New York and Las Vegas. “Having Orthodox Jews like Jared and Ivanka next to him and so many common people in interest gave a level of comfort to Sheldon,” said Ronn Torossian, a New York public relations executive who knows both men. “Someone who lets their kid marry an Orthodox Jew and then become Orthodox is probably going to stand pretty damn close to Israel.”
Miriam Adelson, a physician born and raised in what became Israel, is said to be an equal partner in Sheldon Adelson’s political decisions. He has said the interests of the Jewish state are at the center of his worldview, and his views align with Prime Minister Benjamin Netanyahu’s right-of-center approach to Iran and Israel’s occupation of Palestinian territories.
Adelson suggested in 2014 that Israel doesn’t need to be a democracy. “I think God didn’t say anything about democracy,” Adelson said. “He didn’t talk about Israel remaining as a democratic state.” On a trip to the country several years ago, on the eve of his young son’s bar mitzvah, Adelson said, “Hopefully he’ll come back; his hobby is shooting. He’ll come back and be a sniper for the IDF,” referring to the Israel Defense Forces.
On domestic issues, Adelson is more Chamber of Commerce Republican than movement conservative or Trumpian populist. He is pro-choice and has called for work permits and a path to citizenship for undocumented immigrants, a position sharply at odds with Trump’s. While the Koch brothers, his fellow Republican megadonors, have evinced concern over trade policy and distaste for Trump, Adelson has proved flexible, putting aside any qualms about Trump’s business acumen or ideological misgivings. In May 2016, he declared in a Washington Post op-ed that he was endorsing Trump. He wrote that Trump represented “a CEO success story that exemplifies the American spirit of determination, commitment to cause and business stewardship.”
The Adelsons came through with $20 million in donations to the pro-Trump super PAC, part of at least $83 million in donations to Republicans. By the time of the October 2016 release of the Access Hollywood tape featuring Trump bragging about sexual assault, Adelson was among his staunchest supporters. “Sheldon Adelson had Donald Trump's back,” said Steve Bannon in a speech last year, speaking of the time after the scandal broke. “He was there.”
In December 2016, Adelson donated $5 million to the Trump inaugural festivities. The Adelsons had better seats at Trump’s inauguration than many Cabinet secretaries. The whole family, including their two college-age sons, came to Washington for the celebration. One of his sons posted a picture on Instagram of the event with the hashtag #HuckFillary.
The investment paid off in access and in financial returns. Adelson has met with Trump or visited the White House at least six times since Trump’s election victory. The two speak regularly. Adelson has also had access to others in the White House. He met privately with Vice President Mike Pence before Pence gave a speech at Adelson’s Venetian resort in Las Vegas last year. “He just calls the president all the time. Donald Trump takes Sheldon Adelson’s calls,” said Alan Dershowitz, who has done legal work for Adelson and advised Trump.
Adelson’s tens of millions in donations to Trump have already been paid back many times over by the new tax law. While all corporations benefited from the lower tax rate in the new law, many incurred an extra bill in the transition because profits overseas were hit with a one-time tax. But not Sands. Adelson’s company hired lobbyists to press Trump’s Treasury Department and Congress on provisions that would help companies like Sands that paid high taxes abroad, according to public filings and tax experts. The lobbying effort appears to have worked. After Trump signed the tax overhaul into law in December, Las Vegas Sands recorded a benefit from the new law the company estimated at $1.2 billion.
The Adelson family owns 55 percent of Las Vegas Sands, which is publicly traded, according to filings. The Treasury Department didn’t respond to requests for comment.
Now as Trump and the Republican Party face a reckoning in the midterm elections in November, they have once again turned to Adelson. He has given at least $55 million so far.
In 2014, Adelson told an interviewer he was not interested in building a dynasty. “I want my legacy to be that I helped out humankind,” he said, underscoring his family’s considerable donations to medical research. But he gives no indication of sticking to a quiet life of philanthropy. In the last four years, he has used the Sands’ fleet of private jets, assiduously meeting with world leaders and seeking to build new casinos in Japan, Korea and Brazil.
He is closest in Japan. Japan has been considering lifting its ban on casinos for years, in spite of majority opposition in polls from a public that is wary of the social problems that might result. A huge de facto gambling industry of the pinball-like game pachinko has long existed in the country, historically associated with organized crime and seedy parlors filled with cigarette-smoking men. Opposition to allowing casinos is so heated that a brawl broke out in the Japanese legislature this summer. But lawmakers have moved forward on legalizing casinos and crafted regulations that hew to Adelson’s wishes.
“Japan is considered the next big market. Sheldon looks at it that way,” said a former Sands official. Adelson envisions building a $10 billion “integrated resort,” which in industry parlance refers to a large complex featuring a casino with hotels, entertainment venues, restaurants and shopping malls.
The new Japanese law allows for just three licenses to build casinos in cities around the country, effectively granting valuable local monopolies. At least 13 companies, including giants like MGM and Genting, are vying for a license. Even though Sands is already a strong contender because of its size and its successful resort in Singapore, some observers in Japan believe Adelson’s relationship with Trump has helped move Las Vegas Sands closer to the multibillion-dollar prize.
Just a week after the U.S. election, Prime Minister Abe arrived at Trump Tower, becoming the first foreign leader to meet with the president-elect. Ivanka Trump and Jared Kushner were also there. Abe presented Trump with a gilded $3,800 golf driver. Few know the details of what the Trumps and Abe discussed at the meeting. In a break with protocol, Trump’s transition team sidelined the State Department, whose Japan experts were never briefed on what was said. “There was a great deal of frustration,” said one State Department official. “There was zero communication from anyone on Trump’s team.”
In another sign of Adelson’s direct access to the incoming president and ties with Japan, he secured a coveted Trump Tower meeting a few weeks later for an old friend, the Japanese billionaire businessman Masayoshi Son. Son’s company, SoftBank, had bought Adelson’s computer trade show business in the 1990s. A few years ago, Adelson named Son as a potential partner in his casino resort plans in Japan. Son’s SoftBank, for its part, owns Sprint, which has long wanted to merge with T-Mobile but needs a green light from the Trump administration. A beaming Son emerged from the meeting in the lobby of Trump Tower with the president-elect and promised $50 billion in investments in the U.S.
When Trump won the election in November 2016, the casino bill had been stalled in the Japanese Diet. One month after the Trump-Abe meeting, in an unexpected move in mid-December, Abe’s ruling coalition pushed through landmark legislation authorizing casinos, with specific regulations to be ironed out later. There was minimal debate on the controversial bill, and it passed at the very end of an extraordinary session of the legislature. “That was a surprise to a lot of stakeholders,” said one former Sands executive who still works in the industry. Some observers suspect the timing was not a coincidence. “After Trump won the election in 2016, the Abe government’s efforts to pass the casino bill shifted into high gear,” said Yoichi Torihata, a professor at Shizuoka University and opponent of the casino law.
On a Las Vegas Sands earnings call a few days after Trump’s inauguration, Adelson touted that Abe had visited the company’s casino resort complex in Singapore. “He was very impressed with it,” Adelson said. Days later, Adelson attended the February breakfast with Abe in Washington, after which the prime minister went on to Mar-a-Lago, where the president raised Las Vegas Sands. A week after that, Adelson flew to Japan and met with the secretary general of Abe’s Liberal Democratic Party in Tokyo.
The casino business is one of the most regulated industries in the world, and Adelson has always sought political allies. To enter the business in 1989, he hired the former governor of Nevada to represent him before the state’s gaming commission. In 2001, according to court testimony reported in the New Yorker, Adelson intervened with then-House Majority Whip Rep. Tom DeLay, to whom he was a major donor, at the behest of a Chinese official over a proposed House resolution that was critical of the country’s human rights record. At the time, Las Vegas Sands was seeking entry into the Macau market. The resolution died, which Adelson attributed to factors other than his intervention, according to the magazine.
In 2015, he purchased the Las Vegas Review-Journal, the state’s largest newspaper, which then published a lengthy investigative series on one of Adelson’s longtime rivals, the Las Vegas Convention and Visitors Authority, which runs a convention center that competes with Adelson’s. (The paper said Adelson had no influence over its coverage.)
In Japan, Las Vegas Sands’ efforts have accelerated in the last year. Adelson returned to the country in September 2017, visiting top officials in Osaka, a possible casino site. In a show of star power in October, Sands flew in David Beckham and the Eagles’ Joe Walsh for a press conference at the Palace Hotel Tokyo. Beckham waxed enthusiastic about his love of sea urchin and declared, "Las Vegas Sands is creating fabulous resorts all around the world, and their scale and vision are impressive.”
Adelson appears emboldened. When he was in Osaka last fall, he publicly criticized a proposal under consideration to cap the total amount of floor space devoted to casinos in the resorts that have been legalized. In July, the Japanese Diet passed a bill with more details on what casinos will look like and laying out the bidding process. The absolute limit on casino floor area had been dropped from the legislation.
Meanwhile, the Trump administration has made an unusual personnel move that could help advance pro-gambling interests. The new U.S. ambassador, an early Trump campaign supporter and Tennessee businessman named William Hagerty, hired as his senior adviser an American executive working on casino issues for the Japanese company SEGA Sammy. Joseph Schmelzeis left his role as senior adviser on global government and industry affairs for the company in February to join the U.S. Embassy. (He has not worked for Sands.)
A State Department spokesperson said that embassy officials had communicated with Sands as part of “routine” meetings and advice provided to members of the American Chamber of Commerce in Japan. The spokesperson said that “Schmelzeis is not participating in any matter related to integrated resorts or Las Vegas Sands.”
Japanese opposition politicians have seized on the Adelson-Trump-Abe nexus. One, Tetsuya Shiokawa, said this year that he believes Trump has been the unseen force behind why Abe’s party has “tailor-made the [casino] bill to suit foreign investors like Adelson.” In the next stage of the process, casino companies will complete their bids with Japanese localities.
Adelson’s influence has spread across the Trump administration. In August 2017, the Zionist Organization of America, to which the Adelsons are major donors, launched a campaign against National Security Adviser H.R. McMaster. ZOA chief Mort Klein charged McMaster “clearly has animus toward Israel.”
Adelson said he was convinced to support the attack on McMaster after Adelson spoke with Safra Catz, the Israeli-born CEO of Oracle, who “enlightened me quite a bit” about McMaster, according to an email Klein later released to the media. Adelson pressed Trump to appoint the hawkish John Bolton to a high position, The New York Times reported. In March, Trump fired McMaster and replaced him with Bolton. The president and other cabinet officials also clashed with McMaster on policy and style issues.
For Scott Pruitt, the former EPA administrator known as an ally of industry, courting Adelson meant developing a keen interest in an unlikely topic: technology that generates clean water from air. An obscure Israeli startup called Watergen makes machines that resemble air conditioners and, with enough electricity, can pull potable water from the air.
Adelson doesn’t have a stake in the company, but he is old friends with the Israeli-Georgian billionaire who owns the firm, Mikhael Mirilashvili, according to the head of Watergen’s U.S. operation, Yehuda Kaploun. Adelson first encountered the technology on a trip to Israel, Kaploun said. Dershowitz is also on the company’s board.
Just weeks after being confirmed, Pruitt met with Watergen executives at Adelson’s request. Pruitt promptly mobilized dozens of EPA officials to ink a research deal under which the agency would study Watergen’s technology. EPA officials immediately began voicing concerns about the request, according to hundreds of previously unreported emails obtained through the Freedom of Information Act. They argued that the then-EPA chief was violating regular procedures.
Pruitt, according to one email, asked that staffers explore “on an expedited time frame” whether a deal could be done “without the typical contracting requirements.” Other emails described the matter as “very time sensitive” and having “high Administrator interest.”
A veteran scientist at the agency warned that the “technology has been around for decades,” adding that the agency should not be “focusing on a single vendor, in this case Watergen.” Officials said that Watergen’s technology was not unique, noting there were as many as 70 different suppliers on the market with products using the same concept. Notes from a meeting said the agency “does not currently have the expertise or staff to evaluate these technologies.” Agency lawyers “seemed scared” about the arrangement, according to an internal text exchange. The EPA didn’t respond to requests for comment.
Watergen got its research deal. It’s not known how much money the agency has spent on the project. The technology was shipped to a lab in Cincinnati, and Watergen said the government will produce a report on its study. Pruitt planned to unveil the deal on a trip to Israel, which was also planned with the assistance of Adelson, The Washington Post reported. But amid multiple scandals, the trip never happened.
Other parts of the Trump administration have also been friendly to Watergen. Over the summer, Mirilashvili attended the U.S. Embassy in Israel’s Fourth of July party, where he was photographed grinning and sipping water next to one of the company’s machines on display. Kaploun said U.S. Ambassador David Friedman’s staff assisted the company to help highlight its technology.
A State Department spokesperson said Watergen was one of many private sponsors of the embassy party and was “subject to rigorous vetting.” The embassy is now considering leasing or buying a Watergen unit as part of a “routine procurement action,” the spokesperson said.
A Mirilashvili spokesman said in a statement that Adelson and Mirilashvili “have no business ties with each other.” The spokesman added that Adelson had been briefed on the company’s technology by Watergen engineers and “Adelson has also expressed an interest in the ability of this Israeli technology to save the lives of hundreds of thousands of Americans who are affected by water pollution.”
Even as the casino business looks promising in Japan, China has been a potential trouble spot for Adelson. Few businesses are as vulnerable to geopolitical winds as Adelson’s. The majority of Sands’ value derives from its properties in Macau. It is the world’s gambling capital, and China’s central government controls it.
“Sheldon Adelson highly values direct engagement in Beijing,” a 2009 State Department cable released by WikiLeaks says, “especially given the impact of Beijing's visa policies on the company's growing mass market operations in Macau.”
At times, Sands’ aggressive efforts in China crossed legal lines. On Jan. 19, 2017, the day before Trump took office, the Justice Department announced Sands was paying a nearly $7 million fine to settle a longstanding investigation into whether it violated a U.S. anti-bribery statute in China. The case revealed that Sands paid roughly $60 million to a consultant who “advertised his political connections with [People’s Republic of China] government officials” and that some of the payments “had no discernible legitimate business purpose.” Part of the work involved an effort by Sands to acquire a professional basketball team in the country to promote its casinos. The DOJ said Sands fully cooperated in the investigation and fixed its compliance problems.
A year and a half into the Trump administration, Adelson has a bigger problem than the Justice Department investigation: Trump’s trade war against Beijing has put Sands’ business in Macau at risk. Sands’ right to operate expires in a few years. Beijing could throttle the flow of money and people from the mainland to Macau. Sands and the other foreign operators in Macau “now sit on a geopolitical fault line. Their Macau concessions can therefore be on the line,” said a report from the Hong Kong business consultancy Steve Vickers & Associates.
A former Sands board member, George Koo, wrote a column in the Asia Times newspaper in April warning that Beijing could undercut the Macau market by legalizing casinos in the southern island province of Hainan. “A major blow in the trade war would be for China to allow Hainan to become a gambling destination and divert visitors who would otherwise be visiting Macau,” Koo wrote. “As one of Trump’s principal supporters, it’s undoubtedly a good time for Mr. Adelson to have a private conversation with the president.”
It’s not clear if Adelson has had that conversation. According to The Associated Press, Adelson was present for a discussion of China policy at the dinner he attended with Trump at the White House in February 2017. In September, Trump escalated his trade war with China. He raised tariffs on $200 billion Chinese imports. China retaliated with tariffs on $60 billion of U.S. products.
Adelson has said privately that if he can be helpful in any way he would volunteer himself to do whatever is asked for either side of the equation — the U.S. or China, according to a person who has spoken to him.
Torossian, the public relations executive, calls Adelson “this generation’s Rothschild” for his support of Israel. In early May, the Adelsons gave $30 million to the super PAC that is seeking to keep Republican control of the House for the remainder of Trump’s term. A few days later, Trump announced he was killing the Iran nuclear deal, a target of Adelson’s and the Netanyahu government’s for years. The following day, Adelson met with the president at the White House.
Five days later, Adelson was in Israel for another landmark, the opening of the U.S. Embassy in Jerusalem. Trump’s decision to move the U.S. Embassy from Tel Aviv to Jerusalem marked a major shift in U.S. foreign policy, long eschewed by presidents of both parties. Besides dealing a major blow to Palestinian claims on part of the city, which are recognized by most of the world, it was the culmination of a more than 20-year project of the Adelsons. Sheldon and Miriam personally lobbied for the move on Capitol Hill as far back as 1995.
In an audience dotted with yarmulkes and MAGA-red hats, the Adelsons were in the front now, next to Netanyahu and his wife, the Kushners and Treasury Secretary Steve Mnuchin. A beaming Miriam, wearing a dress featuring an illustration of the Jerusalem skyline, filmed the event with her phone. She wrote a first-person account of the ceremony that was co-published on the front page of the two newspapers the Adelsons own, Israel Hayom and the Las Vegas Review-Journal: “The embassy opening is a crowning moment for U.S. foreign policy and for our president, Donald Trump. Just over a year into his first term, he has re-enshrined the United States as the standard-bearer of moral clarity and courage in a world that too often feels adrift.”
Adelson paid for the official delegation of Guatemala, the only other country to move its embassy, to travel to Israel. “Sheldon told me that any country that wants to move its embassy to Jerusalem, he’ll fly them in — the president and everyone — for the opening,” said Orthodox Jewish Chamber of Commerce CEO Duvi Honig, who was in attendance.
Klein, the Zionist Organization of America president, was also there. The Adelsons, he said, “were glowing with a serene happiness like I’ve never seen them. Sheldon “said to me, ‘President Trump promised he would do this and he did it.’ And he almost became emotional. ‘And look, Mort, he did it.’
|Oct 10, 2018|
The Cost of the Office? Trump's Billion-Dollar Loss
Nearly 20 years ago, Donald Trump told Fortune magazine that he could run for president and make money doing it.
"It’s very possible that I could be the first presidential candidate to run and make money on it," he said in an interview in 2000.
But now that he's president, the story is looking a bit different. A new report from Forbes concluded that the presidency has not enriched Trump overall: Measuring Trump's net worth before he announced his run for the presidency in 2015 to the last two years, Trump’s fortune has dropped from $4.5 billion to $3.1 billion.
In a statement to the magazine, Eric Trump, who is co-managing the Trump Organization, said, “My father made a tremendous sacrifice when he left a company that he spent his entire life building to go into politics. Everything he does is for the good" of the American people.
In this Trump, Inc. extra, Charlie Herman talks with one of the Forbes reporter who looked into Trump's finances, Dan Alexander, and how Trump could have saved millions (and prevented a lot of headaches as well).
|Oct 05, 2018|
The Business of Silence
President Donald Trump has had many roles in his life: Real estate scion, reality show star, Oval Office holder. But through it all, one thing has remained consistent. He tries to control what information becomes public about himself and his business.
In the latest episode of Trump, Inc., our podcast with ProPublica, we’re looking at the ways Trump has tried to buy and enforce silence — and how it matters more than ever now that he’s president. We talk to The New Yorker’s Ronan Farrow about just one of the tactics used by those helping the president: the “catch and kill.”
|Oct 03, 2018|
Elliott Broidy's All-Access Pass
Trump, Inc. is back. Our podcast with ProPublica focused earlier this year on the many mysteries around President Donald Trump’s businesses. This season, we’re widening the lens to look at the people around Trump and how they are benefitting from his presidency.
Our first episode looks at Elliott Broidy. You might remember him as the Republican financier who agreed to pay a Playboy model $1.6 million in return for her silence. (Broidy has said it was just to help her financially.)
Before that scandal, Broidy was at the center of another one. A decade ago, he pleaded guilty to bribing New York State pension officials — “an old-fashioned payoff,“ as then-state Attorney General Andrew Cuomo put it. (Before the plea was finalized, a judge allowed Broidy to change his plea from a felony to a misdemeanor.)
After that, Broidy built himself back up as a fundraiser for Republican candidates and, eventually, for Trump. He became the deputy finance co-chair of the Republican National Committee, met with the president, and drummed up hundreds of millions in foreign business while touting his connections.
“Elliott Broidy is fantastic,” Trump said last year at his first presidential fundraiser. “Everybody loves Elliott.”
How did Broidy go from a criminal conviction to praise from the president? And what did he do with that connection? Listen to our episode.
We have an unusually detailed picture of Broidy’s work from his emails, which were hacked and given to reporters. Broidy has blamed Qatar, saying the country targeted him because he is a vocal supporter of Israel and critic of Qatar. (Here is a letter we received from Broidy’s lawyer about that.)
Broidy declined our requests for an interview. His spokesman told us in an email statement: “Elliott Broidy has never agreed to work for, been retained by nor been compensated by any foreign government for any interaction with the United States Government, ever.”
Correction, Sept 26, 2018: This story originally stated that Elliott Broidy was convicted of bribing New York State officials. In fact, he pleaded guilty to bribing them, but before the plea was finalized, a judge allowed him to change his plea from a felony to a misdemeanor.
Correction, Sept 26, 2018: This story originally said that Elliott Broidy paid $1.6 million to a Playboy model. He agreed to do so but stopped paying her after the arrangement became public.
|Sep 26, 2018|
Two Convictions That Shook Trump-World
In April, we published an investigation into Michael Cohen’s past. That episode traced how so many of Cohen’s associates over the years have been convicted of crimes, disbarred or faced other legal troubles.
But — at the time of the episode — the president’s former lawyer had himself never been convicted, or even accused of a crime.
Well, it’s time for an update.
Cohen pleaded guilty Tuesday to eight felony counts, including tax fraud, lying to a bank and campaign finance violations. The same hour he was pleading guilty in a New York courthouse, a federal jury some 200 miles away found another former Trump aide guilty: Paul Manafort, the erstwhile campaign chairman. Also eight counts. Also bank and tax fraud. Though the jury couldn’t reach a final verdict on 10 other counts.
Trump, Inc. podcast co-hosts Andrea Bernstein and Ilya Marritz sat down with WNYC’s Brian Lehrer for a live radio segment to break down the action. And we’re posting it here for you. Enjoy.
And keep an eye on your podcast feeds, because season two of Trump, Inc. is coming your way in September! Sign up to the notified.
|Aug 22, 2018|
Paul Manafort was Donald Trump’s campaign chairman for three critical months in 2016, leading up to the Republican Convention.
But for a decade before that, he did political work in Ukraine, and it's the money Manafort made from that work that is now under the microscope in a Virginia courtroom. Manafort stands accused of tax fraud and bank fraud in the first case in the Mueller investigation to go to trial. Allegedly, Manafort set up secret offshore bank accounts, took in tens of millions of dollars, and avoided the Internal Revenue Service. And later, when the work in Ukraine dried up, and he was short of cash, Manafort allegedly lied to banks to get loans.
Trump, Inc.'s Ilya Marritz and Andrea Bernstein dissect the trial's opening with Franklin Foer, a staff writer at The Atlantic who profiled Manafort in his article The Plot Against America.
|Aug 02, 2018|
Government Employees Spend Your Money at Trump Hotels
Shortly before President Trump took office, his lawyer promised Trump would forgo any profits his hotels made from foreign governments. There was no similar pledge for money earned from federal government employees, state officials, or anybody else who might be seeking to curry favor. And a lot of that money is coming from you, U.S. taxpayers.
In this episode of Trump, Inc. we’re going deep on Trump’s hotel rooms and the people who are paying to stay in them. We will talk to three people tracking the flow of taxpayer money from government employees and elected officials to the Trump Organization, many through hotel stays, many booked by individual government workers.
ProPublica has just released an interactive detailing at least $16.1 million spent at Trump Organization-managed and branded hotels, golf courses and restaurants from his campaign, Republican organizations, and government agencies since Trump announced his candidacy.
The vast majority of the money — at least $13.5 million — was spent by Trump’s presidential campaign.
We also found at least $400,000 has been spent by federal and state agencies — a figure that includes only a few agencies as many have resisted disclosing that information.
Among the examples we know of: In March 2017, for example, the Secret Service paid $27,724.32 at the Trump golf course and resort in Doonbeg, Ireland. The stay was to “support E. Trump Visit.”
The Trump Organization and the White House did not respond to our requests for comment.
Reporting by Derek Kravitz and Derek Willis, ProPublica and Paul Cronan, Mark Schifferli and Charlie Smart, Fathom Information Design.
|Jun 28, 2018|
Trump, Inc, Live: From ‘The Art of the Deal’ to the Dossier
A few days ago, we held a live taping of the Trump, Inc. podcast at The Greene Space in New York City. Tony Schwartz, the co-author with Donald Trump of The Art of The Deal, talked with Ilya Marritz from WNYC and Jesse Eisinger from ProPublica about what Schwartz does and does not recognize in President Trump now.
Then, ProPublica’s Eric Umansky and WNYC’s Andrea Bernstein spoke with Mark Schoofs, the Investigations Editor at Buzzfeed. Schoofs explained why he was the first journalist to post the Russian “dossier,” and what we’ve learned since.
There was also a Trump, Inc. trivia contest. How do you think you’d do? Here two examples. For the answers, listen to the podcast!
1) The Trump Organization has partnered with developers M3M for projects in India. What does M3M stand for?
a) Magnificence in the Trinity Of Men, Materials & Money
b) Money, Money, Money
c) My Three Mates Make Money
d) Mumbai Manufacturing and Materials
2) The largest contractor for the Trump inauguration was connected to the First Family how?
a) Eric Trump’s former wedding planner
b) Melania Trump’s friend
c) Donald Trump’s former caddy
d) Ivanka Trump’s former public relations advisor
|May 18, 2018|
The "King of Debt"? He Pays Cash.
Last week, the Washington Post had an intriguing story: In the nine years before now-President Donald Trump announced his candidacy, his company paid $400 million in cash to buy a number of properties.
Real estate companies doing deals usually borrow money for the same reason that many homeowners take out mortgages: Leveraging your money—especially when the cost of borrowing is low, as it has been for a decade—makes your money go farther.
The fact that Trump, the self-styled “king of debt," didn’t do that in these deals has raised a number questions, including how the Trump Organization had so much cash, and why it would use it to purchase properties in all cash.
Eric Trump told the Washington Post that the money came from profits that his father put back in the business. “He had incredible cash flow and built incredible wealth,” the younger Trump said. “We invested in ourselves.”
In this Trump Inc. podcast extra, we speak to the New Yorker’s Adam Davidson and the Washington Post’s David Fahrenthold, who wrote last week’s story with Jonathan O'Connell and Jack Gillum. Davidson and Fahrenthold talk about trying to make the numbers and the explanations add up. (Spoiler: They can’t.)
“There's this fundamental question we have,” says Davidson. “Where did the money come from and why was it spent the way it was spent? There’s some piece of information that we are missing because none of the explanations make sense.”
|May 11, 2018|
The Hidden Hand of a Casino Company In Trump’s Contact with Vietnam
On Dec. 14, 2016, one month after his election, President-elect Donald Trump had a call with the prime minister of Vietnam. At a time when foreign governments were scrambling to contact Trump, the conversation was a victory for the Vietnamese. State television broadcast footage of the call, with the prime minister surrounded by other smiling officials.
But inside the State Department, officials were puzzled and concerned. Historically, post-election calls to heads of state are carefully choreographed affairs. Careful deliberation goes into who the president-elect speaks to first and career diplomats deliver background briefings on issues to be raised and avoided.
The Trump transition operation ignored those conventions. The contact with Vietnam was not set up by the State Department. Instead, Trump’s personal lawyer, Marc Kasowitz, helped arrange the call.
Kasowitz had another client with a keen interest in Vietnam: Philip Falcone, an American investor with a major casino outside Ho Chi Minh City. After the Trump call, Kasowitz traveled to Vietnam with Falcone. They met with government officials as part of an effort to persuade Vietnam to lift a ban on gambling for its citizens. Such a shift would deliver vastly more gamblers to Falcone’s casino.
“Phil asked if Marc could arrange a phone call between the president and prime minister of Vietnam,” said a person familiar with the call. “Marc did that.”
In an interview, Falcone denied he requested the call. He added there was nothing improper about arranging such a call. “It’s just lending a hand when people ask you,” he said. A spokesman for Kasowitz acknowledged the lawyer provided a “telephone contact” to the Vietnamese government to call Trump.
Kasowitz has represented Trump for over 15 years, including in the Trump University fraud case, against allegations of sexual harassment, and, most recently, in the Russia investigation.
Falcone, who was barred from the securities industry several years ago after admitting to wrongdoing in managing his hedge fund, has been trying for several years to salvage his several hundred-million-dollar-bet on Vietnam’s gaming industry. So far, that investment has not paid off, in large measure because of the rules limiting casinos to foreign bettors.
It’s not clear whether Trump mentioned the casino on his December 2016 call with the prime minister or in any other communications with the Vietnamese. A White House spokeswoman referred all questions to Kasowitz. The Vietnamese embassy in the U.S. didn’t respond to requests for comment.
U.S. embassy officials in Vietnam heard about the call in advance from Falcone’s casino company, not the Trump transition. And they never received information from the Trump transition about what was said on the call; their only understanding of what was discussed came from Vietnamese officials, according to a person with knowledge of the episode.
“You want the State Department to set up calls and take notes,” said Susan Rice, a senior adviser on Barack Obama’s transition in 2008-09 who went on to become National Security Advisor. “You want contacts made in a fashion that can be accountable to the president-elect. You want background briefings for the president-elect.”
In November 2008, the Obama transition explicitly warned high-profile campaign supporters not to “under any circumstances” speak to “any foreign officials, or embassies on behalf of the transition or President-elect Obama.
The Vietnam call was just one instance of how the Trump administration has blurred the lines between private business interests and those of the country. Trump, who did not divest from his own real estate empire, has declared America “open for business.” Many have tried to take him up on the promise. Business people, lobbyists, friends, and foreign dignitaries have all vied for access to Trump since his election, believing it can mean lucrative contracts, eased regulations, or otherwise convey to potential partners a proximity to power and influence.
Falcone, who didn’t donate to Trump’s campaign, told ProPublica his casino hasn’t gained anything from the phone call. “Literally nothing has changed since the new administration.”
Falcone’s business interest in Vietnam goes back a decade. His Harbinger Capital fund has poured money -- Bloomberg put it at more than $450 million -- into a casino-resort called The Grand Ho Tram Strip. Located on a remote coastline 75 miles outside Ho Chi Minh City, the complex includes a gleaming Vegas-style tower, a golf course designed by the legendary Greg Norman, and a casino with 90 tables and a private area for high rollers dubbed the Pearl Room.
But the illegality of gambling for Vietnamese citizens has posed a nearly insurmountable obstacle. On a recent visit, the sprawling casino was almost entirely empty. Staff outnumbered customers. One industry observer quipped, “You could drive a truck through the casino and not hit anyone.”
To save the project, Falcone has spent years lobbying the Vietnamese government to allow its citizens to gamble in his casino.
The casino has proved not to be the comeback vehicle Falcone might have hoped for. A Harvard hockey player turned high-flying hedge fund manager who made it onto Forbes’ billionaire list and amassed a large stake in the New York Times Company, Falcone’s fortunes turned in the years after the financial crisis. In a 2013 settlement with the Securities and Exchange Commission, he was barred from the securities industry for five years and admitted to taking an improper loan of over $100 million from his fund. Falcone lost his place on the Forbes’ list.
Two months before the 2016 election, Falcone’s team made a play to add political heft to the Ho Tram project, appointing a pair of new board members to the casino company: Tony Podesta, the veteran lobbyist and brother of Hillary Clinton’s campaign manager; and Loretta Pickus, former vice president of legal affairs at Trump Entertainment Resorts, Donald Trump’s now-defunct casino company.
A week after Trump won the election, the casino company sent out a new press release touting Pickus’ appointment. It mentioned her onetime role representing Ivanka Trump and made a thinly veiled reference to Ho Tram’s efforts to get its local gambling license in Vietnam.
“With Ms. Pickus having substantial experience with Trump properties, she hopes The Grand Ho Tram can continue to serve as a champion of U.S.-Vietnam ties for the incoming Trump Administration,” the release said, calling her appointment “an excellent opportunity to share best practices from the United States as Vietnam considers opportunities to reform the regulatory regime for its hospitality and gaming sector.”
One of Pickus’ duties at Trump’s company was overseeing anti-money laundering enforcement. The Trump Taj Mahal in Atlantic City repeatedly ran afoul of anti-money laundering laws, and paid multiple fines for its lack of proper oversight. Pickus told ProPublica she has a decades long relationship with Trump but hasn’t had contact with him or the administration since his election. She also defended the Trump casino anti-money laundering programs as “sophisticated” and appropriate.
After Trump’s surprise election victory, Kasowitz’s longtime client was suddenly president-elect. A spokesman for the lawyer acknowledged Kasowitz’s role in setting up the December call between Trump and Vietnamese Prime Minister Nguyen Xuan Phuc. “At the request of the office of the Vietnamese Ambassador to the U.S., Mr. Kasowitz provided a telephone contact that the Vietnamese could use to try to arrange a congratulatory call to President-elect Trump,” the spokesman said.
(This wasn’t the only unusual Trump call during the chaotic transition. Controversy erupted when it emerged that former Senator Bob Dole, working as a lobbyist for Taiwan, played a role arranging a precedent-breaking call between Trump and Taiwan’s president.)
Just a few weeks after the phone call between Trump and Phuc, Falcone traveled to Hanoi to meet the Vietnamese prime minister and press him on the casino project. State media reported that Falcone “asked the Vietnamese government to continue creating favorable conditions for U.S. companies, including Harbinger, to do long-term and stable business in Vietnam.”
Falcone has retained an array of lobbyists, consultants, and media advisers to persuade the Vietnamese government to change its rules on gambling. The effort included getting Falcone on the cover of Vietnamese Esquire, arranging regular meetings between Falcone and top Vietnamese officials, and seeking assistance from the U.S. embassy.
It’s not clear when Kasowitz first got involved in the Ho Tram project. His law firm has represented Falcone and his associated businesses going back to at least 2013. David Friedman, who was a name partner at Kasowitz’s firm until Trump named him U.S. ambassador to Israel, also represented Falcone’s fund.
In 2017, Kasowitz traveled to Vietnam with Falcone. But Kasowitz went “not as my attorney, just kind of getting to know the landscape, understanding what was happening over there,” Falcone told ProPublica. Falcone said Kasowitz attended some meetings with Falcone and Vietnamese officials. A Kasowitz spokesman said Kasowitz went to Vietnam “to advise Mr. Falcone on legal issues” and declined to comment further.
Also on that trip was Jerry Abbruzzese, a Falcone consultant who has a history of working the levers of government for business interests. He is best known for being the main witness in the corruption trials of the former New York State Senate leader, Joe Bruno. The case centered on Bruno receiving a large consulting contract and payment for a racehorse from Abbruzzese, whose companies had business before the state. Bruno was ultimately acquitted. Abbruzzese was not charged in the case. He declined to comment on his role in Ho Tram.
Two Washington-based firms stocked with former diplomats from both Democratic and Republican administrations, BowerGroupAsia and The Asia Group, have worked on Falcone’s casino project. According to Falcone, Asia Group asked him for a connection with Kasowitz because of the attorney’s close ties with the Trump administration. A spokesman for Asia Group said: “The Asia Group does not comment on business confidential information, including the names of our clients and contract terms.”
Asia Group worked with Falcone to host a conference of investors in New York for Prime Minister Phuc’s visit to the U.S. last May. Luminaries including Ret. General David Petraeus, now with the firm KKR, attended.
The next day, Phuc traveled to Washington for his first in-person meeting with President Trump at the White House. The two leaders discussed trade and North Korea. As Trump and Phuc left a large meeting in the Cabinet Room, Marc Kasowitz was there, apparently waiting, according to a person familiar with the visit. Kasowitz greeted Trump and shook hands with Phuc.
The White House and the Vietnamese embassy declined to comment on Trump’s meeting with Phuc. There’s no evidence Trump raised Ho Tram.
Kasowitz’s spokesman denied he was waiting to greet the prime minister: “Mr. Kasowitz was in the White House on other business on May 31, 2017. He had no idea the Prime Minister of Vietnam was there that day, he was not waiting outside a meeting room for the Prime Minister, it was a total coincidence that he ran into the Prime Minister with the President and he had no substantive conversation with the Prime Minister.”
The spokesman added, “Neither Mr. Kasowitz nor anyone else at the firm has used any access [to Trump] to help a client of the firm.”
Falcone’s efforts have so far proved unsuccessful: the Ho Tram casino hasn’t yet won a local gambling license. One industry expert attributed that to disagreements within Vietnam’s Communist Party-controlled state.
“I find it shocking that people would think that the administration would bring up Ho Tram or even think about getting involved,” Falcone said.
Do you have information about the Trump administration and casino companies? Contact Justin at firstname.lastname@example.org or via Signal at 774-826-6240.
|Apr 25, 2018|
The Company Michael Cohen Kept
If you’ve seen video or images of Michael Cohen, President Trump’s personal attorney, they’ve probably been set in locations that exude power and importance: Cohen berating a CNN anchor in a TV studio, for example, or striding across the sleek marbled interior of Trump Tower, or more recently, smoking cigars in front of Cohen’s temporary residence, the Loews Regency Hotel on Manhattan’s Park Avenue.
But to understand how Michael Cohen arrived in those precincts, you need to venture across New York City’s East River. There, in a Queens warehouse district in the shadows of an elevated No. 7 subway line, is a taxi garage that used to house his law practice. The office area in the front is painted a garish taxi-cab-yellow, with posters of hockey players on the wall and a framed photo of the late Hasidic rabbi, Menachem Schneerson. Cohen practiced law there and invested in the once-lucrative medallions that grant New York cabs the right to operate.
Or you could drive 45 minutes deep into Brooklyn, near where Gravesend turns into Brighton Beach. There, in a desolate stretch near a shuttered podiatrist’s office, you’d find a medical office. According to previously unexamined records, Cohen incorporated a business there in 2002 that was involved in large quantities of medical claims. Separately, he represented more than 100 plaintiffs who claimed they were injured in auto collisions.
At the same time, in Brooklyn and Long Island, New York prosecutors were investigating what Fortune magazine called possibly “the largest organized insurance-fraud ring in U.S. history.” That fraud resulted in hundreds of criminal prosecutions for staging car accidents to collect insurance payments. Cohen was not implicated in the fraud.
A distinctive pattern emerged early in Cohen’s career, according to an examination by WNYC and ProPublica for the Trump, Inc. podcast: Many of the people who crossed paths with Cohen when he worked in Queens and Brooklyn were disciplined, disbarred, accused or convicted of crimes.
Cohen, 51, has always emerged unscathed — until now. Last week, his Rockefeller Center office was raided by federal agents, as were his home, hotel room, safety deposit box, and two cell phones. Cohen is under criminal investigation by federal prosecutors in the Southern District of New York. According to court papers, investigators are examining whether he committed fraud and showed a “lack of truthfulness.”
He and his attorneys did not respond to a lengthy set of questions emailed to them. Cohen’s lawyers have stated that he has done nothing improper.
Cohen has attained national attention as the man who paid Stormy Daniels $130,000 to keep her alleged affair with Trump secret. He also negotiated a $1.6 million settlement with a woman impregnated by Trump fundraiser Elliott Broidy. (Cohen’s attorney told a judge on Monday that his only three legal clients over the past 15 months were Trump, Broidy and talk-show host Sean Hannity.)
Cohen has for decades had close personal and professional relationships with many citizens of the former Soviet Union. He ended up as point men on Trump’s deals there and also turned up in the notorious Russia “dossier.” He has routinely been described as an indispensable man to Donald Trump.
One indicator of that, according to the New York Times: President Trump is more agitated by what those New York prosecutors may find in Cohen’s files than he is by the wide-ranging investigation led by special counsel Robert Mueller. Cohen, it seems, may hold some crucial secrets. What’s more surprising, perhaps, is the path he took to get to that point.
Michael Cohen grew up in the Five Towns area of Long Island, N.Y., a heavily Jewish enclave. His father was a surgeon, according to media reports, and Cohen enjoyed a top-tier education, graduating from the private Lawrence Woodmere Academy, then moving on to American University.
From there, it seems, Cohen’s educational trajectory turned in a different direction. He attended the Thomas M. Cooley School of Law in Michigan, which InsideHigherEd.com once wrote, “is known for admitting students other law schools would not touch.”
In 1992, after law school, he returned to his home region and landed a job working for a personal injury attorney named Melvyn Estrin, who had an office on lower Broadway in Manhattan.
Estrin was the first in a series of colleagues who would run afoul of authorities. Within three years of Cohen’s arrival, Estrin was charged with bribing insurance adjusters to inflate damage estimates and expedite claims. He later pleaded guilty. Cohen was never implicated in any of the misdeeds. Estrin did not respond to a request for comment. He is still practicing law.
Cohen continued to use Estrin’s address on legal filings as late as 1999, but he added several new addresses during this period, including 22-05 43rd Avenue, in Long Island City, Queens — the taxi garage. It was the headquarters of the New York branch of the empire of Simon Garber, a Soviet emigre who also has had cab companies in Chicago and Moscow. Charismatic and silver-haired, Garber released kitschy TV-style advertisements, in Russian, for his company.
Over the years, Garber has been convicted of assault in New York, arrested for battery in Miami, and pleaded guilty in New Jersey to charges of criminal mischief involving him breaking into three neighbors’ homes, shattering glass doors, smearing blood all over, and taking a shower. In Chicago, his taxi fleet included wrecked vehicles with illegally laundered titles.
Garber did not respond to a request for comment. (Two other attorneys had offices inside Garber’s offices in the early 2000s. One was forced to resign from the bar after he was accused of not turning money over to a client. The other was disbarred, in part for trying to steal money from the first lawyer.)
In 1994 Cohen married Laura Shusterman, who was born in the Soviet Union. Her father, also a taxi entrepreneur, pleaded guilty to a felony, conspiracy to defraud the IRS, the year before.
By the late 1990s, records show, Cohen had begun acquiring taxi medallions, licenses required by the City of New York to operate a yellow cab. The number of medallions has been strictly controlled for decades. Before the advent of services like Uber, they were particularly valuable, with their price peaking at over $1 million in 2014.
Cohen co-owned some of the medallions with his wife, and indeed, his family and business relationships sometimes overlapped. Filings show his father-in-law once made a loan to Garber. And in 2001, Cohen borrowed money for one of his taxi companies, Golden Child Cab Corp., from one of the men convicted with Cohen’s father in law, Fima Shusterman, in the fraud against the IRS.
Starting around 2000, Cohen was involved in scores of car insurance lawsuits, often on behalf of plaintiffs who claimed to have been injured in auto collisions and were seeking judgments to cover purported medical expenses.
At this time, a wave of staged auto accidents, involving immigrants from the former Soviet Union who claimed to have been hurt, had led prosecutors to open a massive investigation. They dubbed it Operation Boris, an acronym for Big Organized Russian Insurance Scam. The prosecutorial push resulted in hundreds of convictions.
Cohen also drew up incorporation papers for at least three medical practices, and three medical billing companies. One company Cohen registered in 2002, Avex Medical Care PRC, sued insurance companies nearly 300 times. The plaintiffs lawyer in almost all of these cases was David Katz, who was disbarred later for professional misconduct.
The doctor who owned Avex was charged in 2003 with criminal insurance fraud connected with another medical business; the charge was dismissed. He’s now practicing medicine in New Jersey.
Dr. Zhanna Kanevsky, the principal of Life Quality Medical, a clinic business that Cohen incorporated in 2002, surrendered her medical license after pleading guilty to writing phony prescriptions for 100,000 oxycodone and other pills.
Once again, Cohen was never charged.
In the early 2000s, Trump and Cohen became connected, fittingly, through real estate. Cohen started to transfer the wealth he’d gained from taxi medallions and insurance lawsuits to apartments in Trump buildings. Along with his parents, his in-laws, and Simon Garber, Cohen acquired eight units in Trump Palace, Trump Park Avenue, and Trump World Plaza. The man who operated out of a Queens taxi garage now owned apartments alongside the likes of Sophia Loren and Harrison Ford.
Cohen also began to show political ambitions. In 2003, he ran for city council on Manhattan’s Upper East Side as a Republican. Even people close to his campaign weren’t sure why he ran.
His own campaign biography provided few answers — or rather, disparate ones. He claimed at the time to own 200 taxi medallions, to be a member of the Friars Club, an avid stamp collector, and a member of the Metropolitan Transit Authority’s Inspector General advisory board.
Cohen lost the city council race, but his donor list provides a snapshot of his network. He received contributions from his father, his father in law, and Bruce Winston, a son of the jeweler Harry Winston. A New York Republican with knowledge of Cohen’s 2003 campaign said Cohen told him then that he was Harry Winston’s in-house counsel at the time. The company says Cohen was never an employee.
Court papers show Cohen was one of the lawyers who helped Bruce Winston, and his daughter, Stephanie Winston Wolkoff, in a legal action challenging Deutsche Bank’s conduct as trustee of Harry Winston’s estate. Their petition failed. (For her part, Wolkoff, a friend of Melania Trump’s, later became the highest-paid contractor for Donald Trump’s inauguration, taking in an eye-popping $26 million, and sparking a backlash.)
It’s unclear when Cohen and Trump first met, but the two were publicly linked in February 2007. The New York Post published an article then about an attorney who was purchasing large numbers of apartments in Trump buildings. “Trump properties are solid investments,” Cohen told the Post. Trump returned the compliment, declaring Cohen to be a wise investor. “Michael Cohen has a great insight into the real-estate market,” he told the Post. “He has invested in my buildings because he likes to make money — and he does.”
Three months later, Cohen became an executive vice president at the Trump Organization, with the same job title as Donald Jr., Ivanka, and Eric Trump.
Cohen was never a traditional in-house lawyer for Trump. He has been described as both a “fixer” and a “dealmaker” — and it seems he embraced both roles. “He did jobs for Donald that no one else would do,” said one person who worked with Cohen, “especially not a lawyer. He did a lot of these jobs.”
Still, even after Cohen had joined the Trump Organization, he harbored personal political dreams. In 2010, Cohen mounted a second unsuccessful campaign, this time for the New York State Senate. Among his donors in that race were shipping magnate Oleg Mitnik and tobacco tycoon and New York real estate man Howard Lorber, one of Donald Trump’s closest friends.
Cohen continued to expand his role within the Trump universe. It had become simultaneously global, national and highly local. The Trump Organization’s business model had shifted, from building high-end Manhattan properties to scoping for international licensing deals, particularly in the former Soviet Union. Cohen, along with Trump’s adult children, headed up this effort.
At a Trump Tower press conference in early 2011, Cohen took the public stage as an international dealmaker. “Seven months ago, at the request of a dear friend of mine from Georgia, Giorgi Rtskhiladze, I traveled to the Republic of Georgia to explore several real estate opportunities on behalf of Mr. Trump,” Cohen said in his unmistakable Long Island accent. He then introduced Trump and the then-president of Georgia, Mikhail Saakashvili.
The ostensible purpose of the press conference was to talk up a planned tower in the city of Batumi, on the Black Sea coast. But most of the questions centered on Donald Trump’s possible run for President.
Months earlier, Michael Cohen had helped set up a website called shouldtrumprun.com with the Long Island law firm Schwartz, Gerstman, and Malito. (David Schwartz is a long time Cohen friend and attorney who made several television appearances on Cohen’s behalf when the Stormy Daniels news broke.) Cohen also traveled to Iowa to explore the political terrain.
Shouldtrumprun.com was billed as independent of Trump; otherwise Trump would have had to file papers with the Federal Election Commission on his own behalf. At the press conference, Trump was peppered with political questions. “Could you comment on the kind of feedback or what you took from the feedback from Mr. Cohen’s Iowa trip,” one reporter asked. “You could ask Mr. Cohen. You can speak to him,” Trump replied.
But she pressed. “Are you encouraged by anything that you saw or read out of that? Trump couldn’t resist. “Well,” he said, “I mean the response has been amazing, actually.”
Another response: A complaint was filed with the Federal Election Commission, alleging Trump had accepted “excessive or impermissible contributions from the Trump Organization, LLC” because shouldtrumprun.com was set up by an employee: Michael Cohen. Trump and Cohen were cleared of wrongdoing. One of the two commissioners who signed off on the ruling was Donald McGahn. McGahn later became Trump’s White House Counsel.
There’s another piece of public work that Cohen was involved in that further shows the close links among Trump, Cohen, and the attorney David Schwartz. During the same time period of the Georgia deal and shouldtrumprun.com, Schwartz and Cohen were both working on a project called Trump on the Ocean, which aimed to construct a massive catering hall in the popular Jones Beach State Park on Long Island.
Trump was so keen on this project that, unusually even for him, he called four governors and a state comptroller to lobby for it, according to former state officials. In at least one of the calls, he cited his generous donations as a reason to get the clearances he needed to move forward.
Trump put Cohen in charge of the negotiations. But some state officials balked at what they saw as an attempt to commercialize a state park, and Trump’s insistence that the state override its fire code so he could build a kitchen in the basement.
The lobbying was contentious, said Judith Enck, the top environmental advisor for Govs. Eliot Spitzer and David Paterson (and later the chief of the Environmental Protection Agency for the New York region), who was involved in the negotiations. “That was not a typical discussion with a business that was trying to do business with the state of New York. It was aggressive,” Enck said. “There were efforts to go around me to get a better outcome in the discussion… I recall it as you know one of the most unpleasant experiences I had in the governor's office.”
Misery, perhaps for a government official — but triumph for Trump, Cohen, and Schwartz. They got permission to begin construction. “GREAT JOB!” Trump wrote in a note to Schwartz. “I will hire your firm again!”
Alas, it was all for naught in the end. Months later, the tail of the storm Sandy inundated Jones Beach and Trump walked away from the project.
Three years later, when Trump made a run for the White House, Cohen continued to serve both as promoter and dealmaker. He frequently appeared on TV as a Trump surrogate, though he had no official campaign position. In one interview in the summer of 2016, Cohen refused to acknowledge that polls strongly favored Hillary Clinton. He badgered CNN anchor Brianna Keilar when she referred to Trump’s then-dismal poll numbers. “Says who?” Cohen shot back. “What polls?” The anchor, seemingly mystified, answered “all of them?” The clip went viral.
Cohen’s truculent tendencies were also on display a year before that interview when he threatened Daily Beast reporter Tim Mak. Mak had resurfaced an old accusation made by Donald Trump’s first wife, Ivana, during their divorce proceedings, that Trump had raped her. (She later withdrew the allegation.) “I'm warning you,” Mak says Cohen told him, “tread very fucking lightly because what I’m going to do to you is going to be fucking disgusting.”
Behind the scenes, Cohen was still attempting to make deals for Trump in the former Soviet Union. Cohen drafted a letter of intent with a Moscow investment company to build Trump World Tower Moscow.
Cohen’s partner in the deal was Felix Sater, a Trump associate who had been convicted of assault and securities fraud and had widely reported connections to the Russian mob. “Let’s make this happen and build a Trump Moscow,” Sater wrote in an email to Cohen. “And possibly fix relations between the countries by showing everyone commerce and business are much better and more practical than politics.”
In another email, Sater wrote, “Buddy our boy can become President of the USA and we can engineer it.” In a statement issued last summer, Cohen called this “puffery” and said Sater was prone to colorful language and salesmanship.
Cohen’s activities drew the attention of Christopher Steele, a former British spy who was assembling raw intelligence on the Trump campaign for a private client (ultimately paid for by the Clinton campaign). The resulting collection of documents has become known as “the dossier.”
Steele’s memo included the assertion that Cohen met with Russian contacts in Prague after damaging news emerged about Trump’s former campaign manager and an aide. “The overall objective had been ‘sweep it all under the carpet and make sure no connection could be fully established or proven,’” Steele wrote in a memo dated Oct. 19, 2016.
In statements and court documents, Cohen has vociferously denied ever visiting Prague, even dispensing photos of his passport, with no Czech stamps visible, as putative proof. Cohen has filed two defamation lawsuits over the release of the dossier. But now McClatchy has reported that Special Counsel Robert Mueller has evidence that Cohen was in Prague in late summer 2016. (And the photographic “proof” Cohen offered may turn out to be moot, according to the McClatchy article, since he reportedly entered the Czech Republic from Germany, which would not have required him to pass through immigration or customs.)
One thing that Cohen does not dispute: In October 2016, he was involved in fixing another problem, this time by paying $130,000 to porn star Stormy Daniels. Cohen asserts he did this on his own, with money he obtained from a home equity line of credit.
When FBI agents searched Cohen’s offices on April 9, 2018, they were seeking evidence relating to the Stormy Daniels payment. They were also, according to the Washington Post, sifting through business records relating to Cohen’s taxi medallions. There may still be answers to be found in Queens.
|Apr 18, 2018|
Trump’s Company Is Suing Towns Across the Country to Get Breaks on Taxes
President Trump is famous for bragging about his net worth. Publicly, he claims he’s worth more than $10 billion. He even sued an author over the issue and lobbied the editors of Forbes about his ranking on their billionaires list.
Yet quietly in another setting, the Trump Organization says the president’s holdings are worth far less than he has proclaimed. Across the country, the company is suing local governments, claiming it owes much less in property taxes than government assessors say because its properties are worth much less than they’ve been valued at. In just one example, the company has asserted that its gleaming waterfront skyscraper in Chicago is worth less than than its assessed value, in part because its retail space is failing and worth less than nothing.
Since becoming president, Trump’s companies have filed at least nine new lawsuits against municipalities in Florida, New York and Illinois, arguing for lower tax bills, ProPublica has found. Some of those lawsuits have been previously reported. At stake is millions of dollars that communities use to fund roads, schools and police departments.
Real estate owners dispute property taxes frequently, and some even sue. The president has a long track record of doing so himself. But experts are troubled that he’s doing so while in office.
No president in modern times has owned a business involved in legal battles with local governments.
“The idea that the president would have these interests and then those companies would sue localities is really a dangerous precedent,” said Larry Noble of the nonpartisan Campaign Legal Center. The dynamic between local and federal governments is impossible to ignore in these cases, he said, and municipalities “rely on resources from the federal government and the federal government can make your life easier or much more difficult.” He added that the concern arises because the president did not fully separate from his businesses.
A spokesman for the Trump Organization said, “Like any other business or property owner, when property taxes become inflated, it is not uncommon to challenge the process to ensure fair treatment. This is a routine practice and any suggestion otherwise is simply ridiculous.”
Here’s a selection of the Trump Organization’s fights:
Trump bought the course in 1996 for $7.5 million and put in $40 million of renovations. The course includes a 75,000-square-foot clubhouse, a 101-foot man-made waterfall, and a host of luxury condominiums overlooking the fairway.
Trump said in presidential financial disclosures that this property is worth at least $50 million. Ossining currently assesses the property at only $15 million. Yet in legal filings, the Trump Organization claims that assessment is far too high. In 2015, the company said the property is worth only $1.5 million in a lawsuit filed against the town in Westchester County court.
Municipalities almost always settle instead of taking these cases to trials, which can be expensive. But after public outcry, the town decided not to settle and instead is fighting this case and another one related to a neighboring private golf course which is not owned by Trump.
Asked how it feels to be sued by President Trump’s company, Dana Levenberg, a town supervisor in Ossining said, “It is certainly uncomfortable at best.”
Ossining has a population of 38,000 and an annual budget of $5.5 million. In order to fight, it’s had to bring in expert assessors and outside lawyers and that adds up.
“When you have deep private pockets, it’s a lot easier to have staying power in these cases,” said Levenberg.
Trump National Golf Club LLC, the subsidiary that owns the club, has filed lawsuits over property taxes each year since 2015. If the town loses, they’ll have to refund Trump National the difference between what it claimed was owed and the Trump Organization’s number — roughly $439,960 from 2015 alone. That will come out of school budgets and municipal funds. Briarcliff Schools, the district the course falls in, has put aside $2.8 million of their annual $51.4 million budget for future tax refunds. The town and a number of other municipal offices have set aside funds as well.
But in lawsuits filed against the Cook County Assessor’s Office, Trump’s lawyers call the building a “failed business” and claim the riverfront commercial retail space is worthless.
The Trump Organization, through its subsidiary, 401 Wabash Ventures LLC, has appealed valuations for Trump Tower Chicago and lowered its tax bills by over $14 million dollars over the years through settlement negotiations. Not satisfied with those reductions, the Trump Organization sued, first in 2006, and then repeatedly in subsequent years. Currently, there are five open cases filed on behalf of the Trump Organization against the county, all regarding Trump Tower. The Chicago Sun-Times estimates there are about $3 million in tax refunds at stake in these cases.
Reports by ProPublica Illinois and the Chicago Tribune show that the tax appeals system can exacerbate existing inequalities in the tax system in Illinois, in part because appeals are filed most frequently by those who can afford lawyers. Experts said they see this in many places across the country.
“The trend has often been that these appeals processes have been abused by those that are already advantaged,” said Andrew Kahrl, an expert in the history of taxation and an associate professor at the University of Virginia.
On his financial disclosure, Trump lists the value of the Jupiter course as $50 million. Yet in the lawsuit filed in Palm Beach County Civil Court, the company says the county’s current $19.5 million assessment “exceed[s] the market value” of the course. The county and its lawyer declined to comment on the ongoing litigation.
The county billed the company $398,315. In December, Jupiter Golf Club paid $296,595.01, calling it a “good faith estimate” of what’s owed.
|Apr 11, 2018|
Trump, the Ex-Lobbyist and 'Chemically Castrated' Frogs
This week, we’re doing a couple of things differently on Trump, Inc. Instead of focusing on President Trump’s businesses, we’re looking more broadly at business interests in the Trump administration. We’re also giving you, our listeners, homework.
Last month, ProPublica published the first comprehensive and searchable database of Trump’s 2,685 political appointees, along with their federal lobbying and financial records. It’s the result of a year spent filing Freedom of Information Act requests, collecting staffing lists and publishing financial disclosure reports.
We’ve found plenty in the documents. We know there are lots of lobbyists now working at agencies they once lobbied (including one involving an herbicide that could affect the sexual development of frogs). We know there are dozens of officials who’ve received ethics waivers from the White House. We know there are “special-government employees” who are working in the private sector and the government at the same time.
But there’s so much more to do. Remember, we have multiple documents for nearly 2,700 appointees. And we need your help. For example, you can help us unmask who is actually behind LLCs listed in officials’ financial disclosures. (A reader did that last year and turned us on to an interesting below-market condo sale the president made to his son, Eric Trump.)
You can also contact us via Signal, WhatsApp or voicemail at 347-244-2134. Here’s more about how you can contact us securely.
You can always email us at email@example.com.
|Apr 04, 2018|
The Many Red Flags of Trump’s Partners in India
President Donald Trump does not like the Foreign Corrupt Practices Act. “It’s a horrible law,” Trump has said. The FCPA makes it a crime for U.S. companies to bribe foreign officials, or to partner with others who are clearly doing so.
Trump has argued that the law puts U.S. firms at a disadvantage. “It’s things like this that cause us to not be able to lead the world,” Trump said on CNBC in 2012. “For this country to prosecute because something took place in India is outrageous.”
Corruption in India is quite common, particularly in the real estate industry. India’s also where the Trump Organization has four projects currently under construction and another just completed, more than it has in any other foreign country. As we detailed last week on Trump, Inc., Donald Trump Jr. has been closely involved in much of the work.
This week, we’re looking at the Trump Organization’s partners in India — and red flags their work has raised. We worked with Investigative Fund reporter Anjali Kamat, whose story on the Trumps’ business in India appears in the latest issue of The New Republic.
Kamat traveled to the location of each of the projects that are still under construction. Here’s what she found:
The project: Trump Tower Kolkata
What Trump Jr. has billed it as: Kolkata’s “first residential building with floor to ceiling glass.”
What’s there now: The foundation and a billboard
A partner: RDB Group
The red flags: Back in 2011, the RDB Group’s directors were charged with insider trading and were barred from the Indian stock market for four years. Also, the day after Trump Jr.’s visit, tax officials raided RDB’s offices over alleged “financial irregularities.” The group did not comment on the raid at the time.
Their response to us: None
The project: A residential tower in Gurgaon, a suburb of New Delhi
What Trump Jr. has billed it as: “The most prestigious address in the city”
What’s there now: A small patch of empty land
A partner: M3M, which stands for “Magnificence in the Trinity of Men, Materials & Money”
The red flags: Tax investigators seized about $70 million of undeclared money from M3M offices in 2011. The company later paid back taxes on the money, according to the Washington Post. Last year, a forest official filed a complaint alleging the company bribed forest guards to illegally cut trees. We couldn’t find any response from M3M about the alleged bribes.
Their response to us: None.
The project: An office tower in Gurgaon
What Trump Jr. has billed it as: “One of the most exciting and sought after commercial towers in India and beyond”
What’s there now: An empty lot with goats grazing
A partner: IREO
The red flags: Last month, two investment companies filed a criminal complaint against IREO for defrauding investors of nearly $150 million. It cites the former CEO, who said he witnessed “various acts of cheating, fraud, and misappropriation of money.”
Their response to us: None. In a letter to investors earlier this month, IREO’s managing director called the charges “false, baseless and devoid of any merit.”
The project: Trump Tower Mumbai
What the Trumps have billed it as: “The most spectacular addition to the Mumbai skyline.”
What’s there now: The tower is almost complete
A partner: The Lodha Group
The red flags: Officials at multiple Indian agencies told Kamat they had been looking into allegations of money laundering, tax fraud, and violations of foreign exchange regulations involving Lodha Group subsidiaries. No charges have been brought.
Their response to us: None. The Lodha Group has previously responded to one reported investigation, saying they were not aware of it.
Neither the White House nor the Trump Organization spoke to us for this story.
Remember, we want to hear from you. Our latest request: Do you know of lawsuits the president or his businesses have filed since he took office?
You can always email us at firstname.lastname@example.org.
|Mar 28, 2018|
Former Indian Official: Donald Trump Jr. Pushed 'Blatantly Illegal' Project
Last month, Donald Trump Jr. visited India to tout new Trump properties. Full page ads in India’s top papers announced, “Trump has arrived. Have you?”
It wasn’t Trump Jr.’s first trip to India. "I've been coming to India for over a decade,” he said during the visit. “There’s an entrepreneurial spirit here...it needs no further explanation.”
This week on Trump Inc., we’re looking at the Trumps’ years-long work in India, where corruption in the real estate industry is endemic.
We worked with Investigative Fund reporter Anjali Kamat, whose reporting on the Trumps’ business in India appears in the new issue of The New Republic.
As with many of the company’s deals abroad, the Trump Organization's India projects are licensing deals. Trump Jr. has been closely involved in much of the work.
The Trumps’ first India project, in Mumbai, was halted in early 2012 after investigators found significant “irregularities.” The investigators had been tipped off by a state lawmaker who suspected a possible $100 million fraud scheme and warned of “gross violations” in the project’s plans. Authorities revoked the building’s permits.
A few months later, in April 2012, Trump Jr. traveled to Mumbai and, along with his Indian business partners, met with a top official to try to get the project restarted.
Chief Minister Prithviraj Chavan, the equivalent of a U.S. governor, had been told Trump Jr. wanted to discuss investing in the state. But instead, Chavan recalled, Trump Jr. and his partners asked Chavan to overturn the decision to revoke the permits.
“I would get into trouble to sanction something that was blatantly illegal,” he told Kamat. The plans were “not within the existing rules.” (Chavan has described the encounter to the New York Times and Washington Post, though he has not previously called the project "blatantly illegal.")
The Trumps were back in India in 2014, after a new government came into power, Narendra Modi’s political party, the BJP. The Trump Tower Mumbai — a gold-hued skyscraper that the Trump Organization describes as “unlike anything you have ever seen” — is now slated to finished next year. It is one of five Trump-affiliated projects currently under development in India.
The Trump Organization said the projects are doing well. One Trump partner said they booked $15 million in sales on just one day during the visit by Trump Jr. It was the last day buyers would qualify for an offer by the Trump Organization’s partners to dine with the president’s son. Most of the names of buyers in the Trump projects have not been disclosed.
The Trump Organization, the White House and the developers for the projects did not respond to our requests for comment.
Remember, we want to hear from you: Do you have information about Trump-branded projects in India? Or do you have photos of them? Let us know.
|Mar 21, 2018|
Where’d Trump’s Record Inauguration Spending Go? 'It’s Inexplicable'
Last month, the committee that ran President Donald Trump’s inaugural festivities released basic details about its revenues and spending. Trump raised $107 million, almost twice the previous record, and spent $104 million. The committee’s tax filing showed that $26 million of the spending went to an event planning firm started in December by a friend of the First Lady.
It’s not clear how the firm spent that money, or how most of the money raised for the inauguration was used. The tax filing doesn’t show spending by subcontractors, nor is it required to do so.
In this week’s episode of Trump Inc., we dig into the inauguration. We’ve found that even experienced inaugural planners are baffled by the Trump committee’s massive fundraising and spending operation. We also noticed that two members of the inaugural committee have been convicted of financial crimes, and a third — the committee’s treasurer — was reportedly an unindicted co-conspirator in an accounting fraud.
Greg Jenkins led President George W. Bush’s second inaugural committee in 2005, which raised and spent $42 million (that would be $53 million in today’s dollars). Asked about how Trump’s team managed to spend so much more, Jenkins said, “It's inexplicable to me. I literally don't know.”
“They had a third of the staff and a quarter of the events and they raise at least twice as much as we did,” Jenkins said. “So there's the obvious question: where did it go? I don't know.”
Steve Kerrigan, who led both of President Obama’s inaugural committees, agreed. “There was no need for that amount of money,” said Kerrigan.” We literally did two inaugurations for less than the cost of that.”
According to Trump’s filing, slightly more than half of the money went to four event-planning companies, including the firm owned by the First Lady’s friend, Stephanie Winston Wolkoff. Her company, WIS Media Partners, paid the co-creator of “The Apprentice,” Mark Burnett, to help with the festivities, as the New York Times reported.
Melania Trump has since cut off her work with Wolkoff after the disclosure of the spending. Wolkoff and WIS Media Partners did not respond to a request for comment.
We asked the White House and the inaugural committee about fundraising and spending related to the inauguration. Officials did not agree to be interviewed on the record.
We also looked at members of the inaugural committee, which had about 30 people in leadership and fundraising roles.
The committee’s treasurer, Doug Ammerman, was named by prosecutors as an unindicted co-conspirator in a tax shelter fraud in the early 2000s, according to the Wall Street Journal. Ammerman was a partner at the accounting firm KPMG, which later admitted criminal liability. A Senate investigation from the time includes emails from Ammerman suggesting he was aware of the scheme.
Ammerman is also currently accused in a shareholder lawsuit of dumping stock in a grilled chicken chain, El Pollo Loco, where he was on the board, ahead of a bad quarterly report. Ammerman did not respond to requests for comment.
The finance vice-chair for the inaugural committee, Elliott Broidy, pleaded guilty in 2009 to paying bribes to get investments from the New York State pension fund. His felony conviction was later downgraded to a misdemeanor. Broidy, a top Trump fundraiser, has also come under scrutiny in Special Counsel Robert Mueller’s investigation. Broidy did not respond to requests for comment.
Another inaugural organizer was Rick Gates, the former deputy to former Trump campaign manager Paul Manafort. Gates pleaded guilty this year to lying to the FBI and to conspiracy in a vast money laundering scheme, charges that came from Mueller’s office.
At the time that Gates worked on the inauguration, he had not been indicted, but his dealings with former Ukrainian strongman Viktor Yanukovych had already come under scrutiny. Gates’ business partner, Manafort, was forced off of the Trump campaign in the summer of 2016 after it was reported he got nearly $13 million of undisclosed payments from Yanukovych. Gates did not respond to requests for comment.
We found one more thing that set this inauguration apart: Some of the donations are almost impossible to trace. As the Center for Responsive Politics reports, two “dark money” groups, which do not disclose their donors, gave $1 million each. Trump’s inaugural committee appears to have been the first to accept significant donations from dark money groups.
Kerrigan, Obama’s inauguration chief, said he would have rejected a check from a group designed to preserve donor anonymity. “I would have said, ‘Prove who you are and if you can’t pass vet, I’ll have to give the check back,’” Kerrigan said.
There are also, of course, many donors we do know about. Like other presidents, Trump raised millions from corporate contributions and wealthy individuals. The securities and investment industry contributed the most, nearly $15 million. Other top industries included real estate, casinos, oil and gas, and mining — each of which later benefited from various presidential initiatives and policies. The existence of a contribution, of course, doesn’t mean that’s the reason for a policy change.
|Mar 14, 2018|
Son-in-Law Inc: The (Other) Secretive Real Estate Scion in the White House
We’ve seen headline after head-spinning headline about Jared Kushner, son-in-law of President Donald Trump. We’ve heard that his company has been on a global search for cash, that it got giant loans from two big financial institutions after Kushner met with officials from those companies at the White House, and that countries believed they could manipulate Kushner through his “complex” business arrangements.
Like his father-in-law, Kushner has not fully divested from his family’s business, Kushner Companies. His disclosure forms show he owns at least $761 million in assets. Meanwhile, the company owes hundreds of millions of dollars in debt that comes due in less than a year.
All of this while Kushner Companies has worked very hard to keep some of its partners a secret.
It gets back to a familiar question: How can we know whether Kushner is operating in the interests of the country or his company?
A spokeswoman for the Kushner Companies said in an email that it “is financially very strong” and that “Jared Kushner is not in any way involved in the management of the business.”
Peter Mirijanian, spokesman for Jared Kushner’s attorney, said in a statement Kushner’s meetings are “to hear ideas about improving the American economy” and that he “has followed the ethics advice he has received for all of his work which include the separation from his business and recusals when appropriate.”
Joining us on this episode are David Kocieniewski and Caleb Melby of Bloomberg, who’ve broken a series of stories about the Kushner Companies' financial stress. They take WNYC and ProPublica on a tour of some of the real estate company's marquee properties.
Then we take a different kind of tour with ProPublica’s Alec MacGillis. For the past year, he's been tracking the travails of tenants living in apartment complexes in Baltimore owned by Kushner Companies -- and the extent to which the real estate company has gone to keep its partners secret.
|Mar 07, 2018|
Trump Org Ordered Golf Markers With the Presidential Seal. That May Be Illegal.
Donald Trump loves putting his name on everything from ties to steaks to water — and, of course, his buildings. But now the Trump Organization appears to be borrowing a brand even more powerful than the gilded Trump moniker: the presidential seal.
In recent weeks, the Trump Organization has ordered the manufacture of new tee markers for golf courses that are emblazoned with the seal of the President of the United States. Under federal law, the seal’s use is permitted only for official government business. Misuse can be a crime.
Past administrations have policed usage vigilantly. In 2005 the Bush administration ordered the satirical news website The Onion to remove a replica of the seal. Grant M. Dixton, associate White House council, wrote in a letter to The Onion that the seal "is not to be used in connection with commercial ventures or products in any way that suggests presidential support or endorsement.”
After listening to the new ProPublica/WNYC podcast Trump, Inc., a listener brought the signs to our attention.
Eagle Sign and Design, a metalworking and sign company with offices in New Albany, Indiana, and Louisville, Kentucky, said it had received an order to manufacture dozens of round, 12-inch replicas of the Presidential Seal to be placed next to the tee boxes at Trump golf course holes. Two tee markers are placed on the ground at the start of a hole on golf courses to indicate where golfers should stand to take their first swing.
“We made the design, and the client confirmed the design,” said Joseph E. Bates, who owns Eagle Sign, declining to say who the client was.
An order form for the tee markers reviewed by ProPublica and WNYC says the customer was “Trump International.” The Facebook page for Eagle Sign and Design shows a photo of the markers in an album with the caption “Trump International Golf Course.”
It is unclear how many Trump International golf courses could feature the markers. The Trump Organization owns four courses with the “International” name in the U.S. and abroad, with a fifth course in Bali, Indonesia, in the works.
Eagle Sign makes a wide array of tee markers out of bronze and aluminum, and has made other signs for Trump’s courses, according to its website. At some of Trump’s golf courses, tee markers have sported the Trump family crest, which he took from the family that originally owned Mar-a-Lago without permission and then altered by adding his own name.
Ethics experts have long been on the lookout for signs that the Trump Organization would exploit the office of the presidency for commercial gain. Several said that using the Presidential Seal on the company’s golf courses would fall into this category.
A law governs the manufacture or use of the seal, its likeness, “or any facsimile thereof” for anything other than official U.S. government business. It can be a criminal offense punishable by up to six months in prison.
The “law is an expression of the idea that the government and government authority should not be used for private purpose,” said Kathleen Clark, a law professor at Washington University specializing in government and legal ethics said. “It would be a misuse of government authority.”
The Department of Justice declined to comment on whether it was aware the seal had been used by entities outside the government. The White House and the Trump Organization did not respond to request for comment.
The presidential seal was first sketched out by President Millard Fillmore in 1850 and the current design — which shows a bald eagle with an olive branch in its right talon, a bundle of 13 arrows in the left, and a scroll bearing the words “E pluribus unum” in its beak — was chosen by President Truman and made official in a 1945 executive order.
The seal that adorns the president’s speaking lecterns is hand-made by the Institute of Heraldry, a department of the Army located at Fort Belvoir in Virginia that designs and provides guidance related to military and governmental symbols.
Versions of the seal have occasionally been put to personal use by past presidents. George W. Bush and Barack Obama had custom sets of golf balls made with the seal. Ronald and Nancy Reagan had a set of presidential china bearing the seal, and there have even been M&M’s and jelly-beans that featured the seal.
In this case, the difference is that a private company is using the seal, said Richard Painter, vice chairman of Citizens for Responsibility and Ethics in Washington, a government accountability group. Painter also served as an associate White House counsel during the George W. Bush administration.
“If we had heard of a private company using it for commercial purposes, we would have sent them a nasty letter,” he said.
Update: After this story was published, the Facebook page with the image of the Presidential Seal golf tee marker was removed.
|Mar 05, 2018|
The Mysterious Loan Trump Made to Himself and More
Listeners have been sending us lots of questions about President Trump and his businesses. So we sat down with one of the best in the business to answer them. The Washington Post’s David Fahrenthold has been digging into Trump for nearly two years. And he’s involved readers from the get-go.
Among the questions Fahrenthold takes on: How much money has the government spent on Trump properties? How much does it cost taxpayers and does Trump profit when he visits Mar-a-Lago? And who is Trump literally indebted to?
Fahrenthold also has his own question for listeners. He’s been looking into Trump’s debts and one loan in particularly piqued his interest: Trump has disclosed at least a $50 million loan from something called “Chicago Unit Acquisition LLC.” And according to Fahrenthold, it turns out Trump also owns that entity. Now, there can be a perfectly good explanation for why Trump would lend money to himself, but he should then also disclose the loan as an asset and Trump didn’t.
Fahrenthold wants to know more about “Chicago Unit Acquisition LLC.” (To get started, check out this Mother Jones story.) You can email Fahrenthold or reach us through our tip line. We’ll pass along the message, promise.
We also have our own request: Did you have any involvement in Washington, D.C.’s most expensive party ever? Yes, we’re talking about President Trump’s Inauguration. Perhaps you worked at it? Or attended the Candlelight Dinner? We want to hear from you.
|Feb 28, 2018|
Trump, Russia and 'Alternative Financing'
After Special Counsel Robert Mueller indicted 13 Russians for an intensive, elaborate effort to interfere with the 2016 elections, President Trump reacted as he has before — with bluster and bellicosity, at everyone but Russia.
This week on Trump Inc., we’re exploring the president’s, persistent weirdness around Russia: Why has Trump been so quiet about Russia and its interference?
Glenn Simpson has a theory—that one cannot understand the Russian collusion scandal without understanding Trump’s business.
Simpson is the head of Fusion GPS, the investigative firm behind the now-famous Trump dossier. Before that, he was a Wall Street Journal reporter who specialized in the nexus of money, politics and international skullduggery. Simpson was hired, first by conservatives and then by Democrats, to dig into Trump’s business record.
Simpson has been pilloried on the right as a tool of the Clinton campaign — or worse. He’s been sued multiple times. But amid all the charges, few have followed the details of what Simpson concluded: After a string of Trump failures, disappointments, and bankruptcies, Western financiers shut him off. Trump still needed money to fund his projects. Where did he get it? Simpson came to believe it came from Russia and Russian-connected sources. It came via golf courses, condos, and other conduits.
The eventual result, Simpson suggests, is that Trump ended up beholden to those providing his businesses with “alternative financing.”
One note: The Trump Organization and White House declined to answer our questions for the podcast.
And remember, we want to hear from you: We’re always eager for tips. We also want to hear your questions. What would you like to know about Trump’s businesses? What confuses you? Contact us.
“Trump, Inc.” is a production of WNYC Studios and ProPublica. Support our work by becoming a supporting member of WNYC or visiting donate.propublica.org. Subscribe here or wherever you get your podcasts.
|Feb 21, 2018|
Money Laundering and the Trump Taj Mahal
Just months before Donald Trump announced his bid for president in 2015, federal regulators announced they were slapping one of his longtime Atlantic City casinos with a record-setting $10 million fine for lack of controls around money laundering.
The problems went back years. The penalty was actually the second record-setting fine for the Trump Taj Mahal involving money-laundering oversight.
What exactly did the Taj fail to do? Casino officials admitted to “willful and repeated” violations of the Bank Secrecy Act: As federal authorities put it in a settlement, the Trump Taj Mahal “failed to report suspicious transactions; failed to properly file required currency transaction reports; and failed to keep appropriate records as required.”
In this episode of Trump, Inc., our podcast with ProPublica, we dig into the now-bankrupt and shuttered Trump Taj Mahal, once one of the biggest and glitziest casinos in the world. It’s a story of chaotic operations, massive debt, and a tendency to treat rules as more like suggestions. Ring a bell?
And remember, we want to hear from you: We’re always eager for tips. We also want to hear your questions. What would you like to know about Trump’s businesses? What confuses you? We may be able to answer, and even if not, we can at least try to explain why something isn’t known.
|Feb 14, 2018|
Open For Business
Last year, Trump's attorney Sheri Dillon made a promise to the country: The Trump Organization would donate all the profits its hotels collected from foreign governments to the U.S. Treasury. But what she didn't mention was what the president would do with the profits from his commercial tenants. According to Dan Alexander and Matt Drange in Forbes Magazine, that's where the real money is.
The two investigative reporters dug through financial documents, real estate websites and even measured off square footage in some properties with their feet to come up with a $175 million in commercial rent. That's the estimated amount that the president's company is collecting from "law firms that lobby the federal government, banks controlled by foreign states, and big media companies that cover Trump."
|Feb 13, 2018|
Trump's 'No Conflict Situation'
A couple of months ago, a few of us from ProPublica and WNYC sat together in a conference room and started scribbling on a whiteboard. We were brainstorming all the possible paths to explore around President Trump and his family businesses.
It looked like Carrie Mathison’s wall from Homeland. There’s so much that’s still unknown: We don’t know if the president is taking money from his businesses, or what deals are happening, or who his business partners are, who’s providing the financing. It goes on and on.
Sitting there, staring at the whiteboard filled with basic, unanswered questions, something occurred to us: That is the story.
More than a year into Trump’s presidency, we still have no way to know whether he is making decisions that place his company’s interests — and profits — ahead of the country’s.
There’s never been a situation like this before, where the person elected to lead our country owns a sprawling, active business empire. Trump has refused ethics experts’ advice to divest himself from his businesses.
So we’re trying something new: ProPublica and WNYC are teaming up to launch Trump Inc. It’s a weekly podcast that will start with questions, not answers.
We’re thinking of it as an “open investigation.” We’ll be laying out what we know and what we don’t. And we’re inviting everyone — our journalism colleagues elsewhere, experts, tipsters and anyone else interested — to join us in the quest for answers.
In our first episode, we take a breath, roll back a year, and lay out how we got to this point, where it’s almost impossible to see the line between Trump the president and Trump the CEO.
In his first year, the president spent a third of his time at a Trump-owned property. He promoted his winery in Virginia during a press conference about the white nationalist rally in Charlottesville, Virginia. He plugged his New Jersey golf resort at an official speech in South Korea. And his daughter and son had nearly simultaneous business in India: one official, one private. The lines are blurred.
We’re trying to make sense of this situation, and we want to hear from you. We’re always eager for tips, so contact us. We also want to hear your questions. What would you like to know about Trump’s businesses? What confuses you? We may be able to answer, and even if not, we can at least try to explain why something isn’t known.
|Feb 07, 2018|