How Russian Money Helped Save Trump’s Business Pt 1
Thu Dec 27, 2018 6:36pm

This information pretty much matches numerous books I've read that were penned by former partners and former employees as well as numerous banking industry individuals. Not to mention that, in the last decade or so, tRUMP's two oldest sons publicly confirmed that Russian money was propping him up and financing his operations.

How Russian Money Helped Save Trump’s Business

After his financial disasters two decades ago, no U.S. bank would touch him. Then foreign money began flowing in.

By Michael Hirsh | December 21, 2018, 1:31 PM

In the fall of 1992, after he cut a deal with U.S. banks to work off nearly a billion dollars in personal debt, Donald Trump put on a big gala for himself in Atlantic City to announce his comeback. Party guests were given sticks with a picture of Trump’s face glued to them so they could be photographed posing as the famous real-estate mogul. As the theme music from the movie Rocky filled the room, an emcee shouted, “Let’s hear it for the king!” and Trump, wearing red boxing gloves and a robe, burst through a paper screen. One of his casino executives announced that his boss had returned as a “winner,” according to Trump biographer Michael D’Antonio.

But it was mainly an act, D’Antonio told Foreign Policy. In truth Trump was all but finished as a major real-estate developer, in the eyes of many in the business, and that’s because the U.S. banking industry was pretty much finished with him. By the early 1990s he had burned through his portion of his father Fred’s fortune with a series of reckless business decisions. Two of his businesses had declared bankruptcy, the Trump Taj Mahal Casino in Atlantic City and the Plaza Hotel in New York, and the money pit that was the Trump Shuttle went out of business in 1992. Trump companies would ultimately declare Chapter 11 bankruptcy two more times. When would-be borrowers repeatedly file for protection from their creditors, they become poison to most major lenders and, according to financial experts interviewed for this story, such was Trump’s reputation in the U.S. financial industry at that juncture.

For the rest of the ’90s a chastened Trump launched little in the way of major new business ventures (with a few exceptions, such as the Trump World Tower across from the United Nations, which began construction in 1999 and was financed by two German lenders, Deutsche Bank and Bayerische Hypo- und Vereinsbank). “He took about 10 years off, and really sort of licked his wounds and tried to recover,” D’Antonio said. As late as 2003, Trump was in such desperate financial trouble that at a meeting with his siblings following his father’s death he pressed them to hurriedly sell his father’s estate off, against the late Fred Trump’s wishes, the New York Times reported in an investigation of Trump family finances in October. And his businesses kept failing: In 2004, Trump Hotels and Casino Resorts filed for bankruptcy with $1.8 billion dollars of debt.

But Trump eventually made a comeback, and according to several sources with knowledge of Trump’s business, foreign money played a large role in reviving his fortunes, in particular investment by wealthy people from Russia and the former Soviet republics. This conclusion is buttressed by a growing body of evidence amassed by news organizations, as well as what is reportedly being investigated by Special Counsel Robert Mueller and the Southern District of New York. It is a conclusion that even Trump’s eldest son, Donald Trump Jr., has appeared to confirm, saying in 2008—after the Trump Organization was prospering again—that “Russians make up a pretty disproportionate cross-section of a lot of our assets.”

Trump’s former longtime architect, Alan Lapidus, echoed this view in an interview with FP this month. Lapidus said that based on what he knew from the internal workings of the organization, in the aftermath of Trump’s earlier financial troubles “he could not get anybody in the United States to lend him anything. It was all coming out of Russia. His involvement with Russia was deeper than he’s acknowledged.”

The overseas money came initially in the form of new real-estate partnerships and the purchase of numerous Trump condos, said a former real-estate partner of Trump’s who witnessed the transformation of those years and later soured on Trump. “I think part of it was he was toxic to the banks. I think he also probably learned that personal guarantees [on loans] weren’t a brilliant idea either,” said the former business associate, who would speak to FP only on condition of anonymity. “So he was saying to himself, ‘What else could I do in the world? I’ll just convince people to buy my brand.’ And the only people who were willing to buy it were tasteless Russians, people who like the absurd, ostentatious gold-leaf lifestyle he has. You’re not going to sell that brand to blue bloods in Greenwich, Connecticut.”

Or as another Trump biographer, Gwenda Blair, put it: “Trump was on the Titanic heading down. Everyone’s drowning around him. … Suddenly he gets saved. It’s almost like a spaceship landed right next to where he was in the water.”

All this history helps put into context some recent developments in the investigations by Mueller and the Southern District of New York, which have focused on supposed Trump collusion or conspiracy with the Russians. It may have seemed odd at first that during the presidential campaign the people in Trump’s orbit—including Trump’s son, daughter, and son-in-law—were contacted by at least 14 Russians, according to information emerging from the federal investigations. Or that in November 2015, according to a sentencing memo published recently, former Trump lawyer Michael Cohen was approached by a Russian who offered “political synergy” between the Trump campaign and Russia (adding that a meeting between Trump and Russian President Vladimir Putin would have “phenomenal” impact “not only in political but in a business dimension as well”).

But in fact at least some of these encounters appear to have sprung from business contacts Trump had developed over nearly two decades.

According to Trump’s former real-estate partner and other sources who are familiar with the internal workings of the Trump Organization, his post-’90s revival may have really begun in the early 2000s with the Bayrock Group, which rented offices two floors down from Trump’s in Trump Tower. Bayrock was run by two investors who would help to change Trump’s trajectory: Tevfik Arif, a Kazakhstan-born former Soviet official who drew on seemingly bottomless sources of money from the former Soviet republic; and Felix Sater, a Russian-born businessman who had pleaded guilty in the 1990s to a huge stock-fraud scheme involving the Russian mafia.

With Bayrock’s help, Trump began his broad transformation from a builder to a brander. He reinvented himself and his business model—going from being a force in real estate to a nearly bankrupt but brazen self-promoter who had mainly his name to sell. In lieu of the big banks, Bayrock helped to bring Trump back into real estate by supplying him with the equity stake he needed to entice new lenders for big projects, according to a former Bayrock official. The biggest of those projects was the Trump SoHo, the troubled 46-story condominium and hotel that has been a target of lawsuits since it opened in 2010 and is reportedly being investigated by Mueller over whether it was financed partly by Russian money. That deal gave Trump 18 percent of the equity just for licensing his name. (In addition to Bayrock, the other partner was the Sapir family from the former Soviet republic of Georgia.)

The Trump Organization did not respond to a request for comment for this article. But in a deposition related to Trump SoHo litigation, Trump said he was drawn to Bayrock because he was impressed with Kazakh-born Arif’s connections, and that Arif had brought potential Russian investors to meet him. “Bayrock knew the people, knew the investors,” Trump said.

By the time he ran for president, Trump had been enmeshed in this mysterious overseas flow of capital—which various investigators believe could have included money launderers from Russia and former Soviet republics who bought up dozens of his condos—for a decade and a half. And Felix Sater was pitching Cohen on a Moscow deal as recently as mid-2016—as Trump was clinching the Republican nomination, according to a sentencing memo recently unveiled by the Mueller probe.

As a result, some recent reports indicate that federal and congressional investigators are now focused on the Trump Organization as much as the president himself in probing alleged Russian influence. This is especially true of Democratic House members getting set to take over key committees in January. According to two Democratic staffers involved in Trump probes who spoke to FP on condition of anonymity, Democratic Senate staffers plan to work with their House colleagues—who will have subpoena power—in investigating the president’s business dealings going back to the Bayrock-Trump partnership and Trump’s other overseas sources of investment. They say another primary focus will be the Trump Organization’s more recent all-cash purchases overseas, “largely of golf courses,” in order to probe whether some of that investment may have involved money laundering.

“Our broader concern is the extent to which the Trump Organization has received an influx of foreign sources of money over the years, and if that continues to compromise the president,” said one Capitol Hill staffer. He added that this wouldn’t be an issue if Trump had followed precedent and divested himself of his business holdings, as previous presidents have.

It remains unclear whether Trump’s policies have been influenced by these past—and in some cases ongoing—business associations, or by the president’s awareness that Russian and other foreign capital helped revive his business career. But one question Mueller must certainly be probing is whether the relationships made Trump beholden to certain Russians—and whether the outreach by Russian business people to Trump and his organization reflects Kremlin tradecraft for developing intelligence assets and compromising them.

“Russian efforts either to recruit somebody as an asset or effectively coerce them into becoming an asset historically typically rely on compromise of either a financial nature or a sexual nature,” said David Kris, a former assistant attorney general in charge of the Justice Department’s National Security Division. “Or some other nature by which they can gain leverage. Either induce somebody voluntarily to cooperate or blackmail them.” Kris added that “there is long history of that kind of activity, including in the context of presidential elections,” going back to Soviet efforts to offer money to Hubert Humphrey in the 1968 election.

Ever since his presidential campaign, Trump’s critics in Washington have questioned his unwillingness to criticize Putin directly and his push to ease sanctions against Russia. Most recently, the U.S. president appeared to blame both sides for Putin’s violent intervention in Ukraine, when Russian ships fired upon, wounded, and seized Ukrainian sailors, saying: “Either way, we don’t like what’s happening, and hopefully, it will get straightened out.” Trump at first called off a meeting with Putin at the G-20 summit at the end of last month, then held one anyway. And he recently appeared to let both Putin and Saudi Crown Prince Mohammed bin Salman off the hook for political murder, which both leaders are accused of. “The world is a very dangerous place!” Trump said.

Trump, of course, is not known for a sense of loyalty to anyone who has helped him in the past—as Cohen, who was just sentenced to 36 months in prison, has recently discovered. And Trump’s standard response to accusations that, as a businessman, he occasionally dealt with unsavory partners is that what mattered was their money was good. If a buyer overpaid, all the better. As he told a campaign rally in 2015: “Saudi Arabia, get along with all of them. They buy apartments from me. They spend $40 million, $50 million. Am I supposed to dislike them?”

Some New York real-estate experts, like Joel Ross, a long-established investment banker in Manhattan, say this devil-may-care attitude is typical in the industry, and critics are overreacting in tying Trump’s business ties to his presidential policies. Though Ross says he’s “no fan” of Trump, he added that the key point is that the big 2016 Moscow negotiation went nowhere, and there is no evidence that Trump is currently basing his policies toward Russia on his business dealings. In truth, Trump’s several forays into Russia in search of possible deals is standard in big-time real estate, Ross said. And the majority of negotiations don’t pan out.

“As to any other deals, what they may earn on a management contract is not enough to get him to change foreign policy,” Ross wrote FP in an email. “This is not as serious an issue as you seem to imagine. You guys in the media have no understanding of how real estate works and how unserious these things are. Trump is not much different than most of the NY real estate developers. Obnoxious, liar, screws people, impossible to trust, etc, but in NY real estate–not unusual.”

Ross added: “None of any of that is proof of anything other than Trump was considered a bad guy who nobody trusted to do business with in the US banking world. That is far from any proof he did anything wrong as to collusion which there was none.”

What there was, at the very least, was a lot of money. The Trump-Bayrock partnership took off especially after Trump launched his reality-TV show, “The Apprentice,” in early 2004. The show featured contestants who competed for the prize of a contract to promote one of Trump’s properties. His fame escalated worldwide, and Bayrock turned that into a marketing bonanza. Real-estate experts in New York with knowledge of Trump’s career contend that Bayrock was a critical bridge back to success for him, tiding him over until the mid-2000s. That’s when lending standards had so deteriorated—during the mortgage-backed securities mania—that some U.S. lenders had become willing to deal with Trump again. Bayrock sold the debt-ridden mogul on the idea of launching an international chain of Trump-branded, mixed-use hotels and condominiums and was willing to supply him with an equity stake—the 10 percent or so any developer needs to secure a loan, the former Trump partner told FP. “Bayrock was the loyal soldier bringing him deals,” he said.

This was the period in which the Trump Organization began to grow into a global trademarking factory—he called many of his assets “Trump Marks” on his 2015 Federal Election Commission disclosure form—largely prospering on royalties, fees and rents from buildings, golf courses, and other properties and products in which Trump had little equity other than putting his name on them. As the election disclosure form revealed, among the approximately 500 corporations, trusts, limited liability companies, and other associations the Trumps hold positions in are numerous “Trump Marks” entities, from Baku, Azerbaijan, to Dubai to Toronto to Qatar. The former real-estate magnate became largely a collector of branding fees.


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