House of Trump, House of Putin2

by Craig Unger

  Of course, all of this did not go entirely unnoticed. But in Russia, investigative journalists, rogue intelligence agents, and opposition politicians who revealed the truth inevitably faced brutal reprisals. In 2000, Paul Klebnikov published Godfather of the Kremlin: The Decline of Russia in the Age of Gangster Capitalism, in which he compared Russian oligarch Boris Berezovsky to a Sicilian mafioso. Four years later, having just become the editor of Forbes’s Russian edition, Klebnikov published a list of the one hundred richest Russians, and was shot and killed by unknown assailants.16

  Similarly, Russian journalist Anna Politkovskaya; Alexander Litvinenko, a former officer of the Russian Federal Security Service (FSB) and KGB who had blamed Putin for ordering Politkovskaya’s assassination; and Sergei Magnitsky, a Russian lawyer and auditor representing Bill Browder’s Hermitage Capital Management, are just a few* of the scores of people who died mysteriously after investigating the alleged crimes of Putin and his oligarchs.17

  As a key component of this battle, Vladimir Putin used a secret weapon that few Americans understood. While the Italian Mafia in the US exists largely to serve its own interests, in Russia things were different. Where Americans cracked down on organized crime, Putin co-opted it. He weaponized it. Russian gangsters became, in effect, Putin’s enforcers. This is not merely a metaphor. As Oleg Kalugin, former head of counterintelligence for the KGB, told me, in effect, “the Mafia is one of the branches of the Russian government today.”18

  All of which means that, since coming to power first as prime minister in 1999 and then as president in 2000, Putin’s greatest triumph is his extraordinary command over a Mafia state, a political system that is effectively a government of, by, and for organized crime. As author Karen Dawisha explains in Putin’s Kleptocracy, the Mafia had come together with former KGB officials and the political and economic elites, combining their money and power to forge the basis for Putin’s authoritarian kleptocracy,19 a kleptocracy that ushered in an era of global theft on an unimaginable level and has reportedly made Vladimir Putin the richest man in the world, with wealth, according to Hermitage Capital Management CEO Bill Browder, approaching $200 billion.20

  As a result of this unfathomable greed, untold billions that ordinarily would have been spent on education, transportation, health care, and other services in Russia and its trading partners have been stashed in offshore bank accounts, hedge funds, and luxury condos for Putin and his cronies who were allowed to make billions through drug trafficking, extortion, elaborate financial schemes, the sex trade, arms deals, and the like on just one fundamental condition: they work within Putin’s rules to further his strategic goals. They were then free to compromise persons of influence in the West via various forms of kompromat that documented money laundering, illicit sexual trysts, and other potential scandals—provided that they serve his political agenda, that they act as intelligence operatives, that they recruit assets, that they collect intelligence on persons of interest. In effect, they became geopolitical weapons against the West.

  Putin’s ascent is best described not by old-school Kremlinologists but, as former world chess champion Garry Kasparov explains in Winter Is Coming, “by the achievements of Don Vito Corleone: the web of betrayals, the secrecy, and the blurred lines between what is business, what is government, and what is criminal—it’s all there in [Mario] Puzo’s books . . . a strict hierarchy, extortion, intimidation, a tough-guy image, a long string of convenient deaths among leading critics, eliminating traitors, the code of secrecy and loyalty, and, above all, a mandate to keep the revenue flowing.”21

  In other words, it was a Mafia—which was something Donald Trump knew a lot about.

  CHAPTER THREE

  MARRIED TO THE MOB

  Donald Trump was no virgin when it came to organized crime. In fact, the Trump family had a taste for it dating back three generations.*

  It began at the tail end of the nineteenth century when a rogue entrepreneur who happened to become Donald Trump’s grandfather headed out for Canada’s Yukon Territory during the Klondike Gold Rush and sought to make his fortune not by panning for gold, but by providing essential services for gold miners.1 According to author Gwenda Blair, among the various enterprises owned by Frederick, né Friedrich, Trump, was a restaurant sometimes called the Dairy Restaurant and sometimes called the Poodle Dog, which advertised “Private Rooms for Ladies”—a polite euphemism for prostitution.2

  A generation later, Fred Trump, the son of Frederick, and Donald’s father, started out building single-family houses in Queens3 and then became wealthy thanks to windfall profits from building government-backed housing in Brooklyn and Queens.4

  Fred’s influence was particularly conspicuous in the Brooklyn neighborhoods of Brighton Beach and Coney Island. Brighton Beach had a marvelous sandy coast looking out on the Atlantic and the adjacent Coney Island amusement park, all just ten miles from Manhattan—everything one could ask for in a delightful seaside resort. Unfortunately, it had become scarred by the egregious urban renewal policies of New York “master builder” Robert Moses, which transformed parts of the healthy middle-class neighborhood into a festering slum.5

  Much of this decline came from Fred Trump’s projects in the area, which were tainted by scandal, misappropriation of funds, and cronyism in one form or another. New developments often led to federal hearings and investigations into Trump’s business practices, allegations that Trump defrauded veterans in rental agreements, and allegations of racism. According to Coney Island historian Charles Denson, Fred Trump was so shrewd at exploiting the weak spots in federal regulations that “federal laws had to be changed to prevent the kind of nefarious schemes that Trump excelled in.”6

  Fred usually got his way, but when he didn’t, there was hell to pay. After being denied a zoning change in his effort to build Miami Beach–style high-rises at Coney Island’s famed Steeplechase Park, Donald’s father was so frustrated that he threw a party at the site and invited guests to vandalize the stained glass façade of the Pavilion, knocking out the teeth of the enormous Steeplechase funny face, a local landmark. “This sad event was a vindictive and shameful act by a grown man behaving like a juvenile delinquent. It wasn’t business—it was personal,” wrote Denson, asserting that it revealed “a twisted personality that was unusual for even the most hard-bitten developers.”7

  Fred’s projects often involved people tied to the mob, and he dealt with them with the help of Brad Zackson, a convicted felon who had spent nearly five years in jail after taking a plea to dodge an attempted murder charge,8 and who served as Fred’s consigliere9 and the exclusive broker10 for all his properties. (Zackson later worked with Donald Trump campaign manager Paul Manafort as Manafort’s “real estate fixer,” as the Real Deal put it, “a Fred Trump protégé with a checkered past and an appetite for fanciful deals.”)11

  According to the New York State Organized Crime Task Force’s investigations in the fifties, a complicated web of relationships tied Fred’s partner Willie Tomasello to both the Gambino and Genovese12 crime families, as well as to Lucky Luciano, a father of modern organized crime in America.13 In addition, when it came to getting crucial favors from city hall insiders, such as zoning approvals, Fred relied on Kenny Sutherland, an ally of the Lucchese family, which had become enormously powerful in city and state politics.14

  Meanwhile, even in high school at New York Military Academy, Donald was so obsessed with money that he bragged about his father’s wealth—he pegged it at $30 million—and boasted that it doubled every year.15 “He was already focused on the future, thinking long-term more than present,” said his roommate David Smith. “He used to talk about his dad’s business, how he would use him as a role model but go one step further.”

  In his spare time, Donald worked enough with his father to learn the real estate game, running errands, hosing down construction sites, and collecting those coins from the laundry rooms at the seven high-rises his father called Trump Village.16

  In th
e end, however, Donald saw his father’s vision as severely limited by the humble outer boroughs of New York and desperately wanted to take things further. “I want to be in mid-Manhattan, where all the top stuff is going on,” he said early on in his career. “I’ll never be involved with the old man’s property except when he needs me.”17

  Determined to leave behind the more modest world of Brooklyn and Queens, in the midseventies, Donald, then still in his twenties, reached across the East River for the brass ring—Manhattan.

  By that time, however, New York City had hit rock bottom. Manufacturing had fled the city. Crime was soaring. By the spring of 1975, the city had an operating deficit of at least $750 million18 and a debt level of more than $11 billion, and its credit had been exhausted. In October 1975, President Gerald Ford declared he would veto any bill that called for a federal bailout to save New York from bankruptcy. An unforgettable and iconic headline in the New York Daily News put it succinctly: “Ford to City: Drop Dead.”

  For Donald Trump, the fact that the entire city was on the verge of bankruptcy was good news indeed, because prices could not go much lower. For his option to buy the dilapidated, rat-infested Commodore Hotel on East Forty-Second Street, Trump paid exactly $1.19 Decrepit though it was, the Commodore had two things going for it: First, it was adjacent to Grand Central Terminal, a spectacular location—if the city came back to life. And second, because the property was so big, the upside was potentially colossal in a city valued by the square foot. It was the opportunity of a lifetime.

  Helping Trump navigate the perilous waters necessary to get the political support and legal tax abatements to consummate the deal was none other than Roy Cohn, Trump’s mentor and role model, the ruthless, heavy-lidded attorney who served as a brutal and pitiless fixer for establishment fixtures (Richard Nixon, Ronald Reagan, and Rupert Murdoch, among others) and mobsters alike (Anthony “Fat Tony” Salerno, Carmine Galante, and John Gotti).

  An iconic figure who truly embodied the dark side of his era, Cohn has been dead for more than three decades but still casts a long shadow over American politics. Cohn won notoriety as the hatchet man for Senator Joe McCarthy, the red-baiting demagogue of the fifties, leading McCarthy’s aggressive, prosecutorial witch hunt against alleged communists. One of his most infamous Red Scare triumphs took place during the trial of Julius and Ethel Rosenberg, who were convicted of espionage in 1951. Cohn’s great feat was to succeed in bullying David Greenglass to testify against his sister, Ethel Rosenberg. Later, Greenglass admitted he had lied on the stand, at Cohn’s insistence, when he testified that his sister typed notes that were sent to the Soviets. As a result of his testimony, Ethel was executed in the electric chair.20

  One of several cases that led to Cohn’s eventual disbarment had him entering the room of a dying multimillionaire client, Lewis Rosenstiel, misrepresenting a document that would have made Cohn executor of his will and emerging with a shakily signed signature that the courts refused to accept.21

  By the 1970s, Cohn became one of many celebrities hanging out at Studio 54, the epochal New York disco, with Andy Warhol, Bianca Jagger, Liza Minnelli, and the club’s owners, Steve Rubell and Ian Schrager. There, Cohn became known as “the most evil, twisted, vicious bastard ever to snort coke at Studio 54,” as described by a character in Tony Kushner’s Angels in America.22

  Kushner’s play, of course, was fiction, but Cohn was described similarly by those who knew him in real life. “You knew when you were in Cohn’s presence you were in the presence of pure evil,” lawyer Victor A. Kovner told Vanity Fair.23

  “He was a tangle of contradictions, a Jewish anti-Semite and a homosexual homophobe, vehemently closeted but insatiably promiscuous,” wrote Michael Kruse in Politico.24

  Donald Trump had met Cohn at another Manhattan nightspot, Le Club, a pre–disco era successor to café society haunts like El Morocco and the Stork Club, where the fixers and society swells had drinks and traded favors. Trump was instantly captivated by Cohn’s combative, belligerent style and later allowed it to shape his approach to politics. Meanwhile, Cohn helped the Trumps battle a 1973 lawsuit by the Civil Rights Division of the Justice Department alleging that Trump rental properties refused to rent to minority applicants.25 Cohn advised Donald to tell the government “to go to hell and fight the thing in court.”26

  Which is precisely what Trump did, with Cohn as his lead attorney, suing the United States government for $100 million (roughly $575 million in 2018 dollars) on behalf of Trump Management, asserting that the charges were “irresponsible and baseless.”27 In effect, Donald had adopted Roy Cohn’s credo as his own: Always attack. Never apologize. Attack, attack, attack.

  As Marie Brenner noted in Vanity Fair, by the time he became Trump’s lawyer, Cohn had carved out a unique place for himself with his unparalleled mastery of New York’s “Favor Bank,” that invisible network of tacit understandings through which cops, lawyers, judges, machers, influence peddlers, and crooks make the world go round.28

  Cohn was so adept that Trump sometimes phoned him fifteen or twenty times a day, calling upon his magical ability to win an inside fix on generous but dubious tax abatements, zoning variances, contract disputes, and the like. He had become “a walking advertisement for every form of graft, the best-known fixer in New York,” Wayne Barrett wrote.29 Years later, in moments of crisis long after Cohn’s death, President Donald Trump was known to shout out to the world, “Where’s my Roy Cohn?”* 30

  As the Commodore project took shape, Cohn, as consigliere for the two biggest crime families in New York, the Genoveses and the Gambinos,31 was invaluable in helping Trump traverse otherwise choppy waters with concrete contractors, demolition companies, and the like that were often controlled by the mob.

  At the time, most developers who used ready-mix concrete were vulnerable to work stoppages by the Teamsters, construction unions, and mobsters who controlled the unions. But when it came to breaking ground on Trump Tower in 1979, Trump bought his Manhattan ready-mix from a mobbed-up company called S & A Concrete that was secretly owned by Mafia chieftains Anthony “Fat Tony” Salerno, of the Genovese crime family, and Gambino boss Paul Castellano, both of whom were regular visitors to Roy Cohn’s East Side town house.32 According to Wayne Barrett, Cohn may even have arranged a meeting in the living room of his town house between Trump and Salerno.33

  For carpentry, Trump used a company that also was controlled by the Genoveses.34 In those days, working with mob contractors wasn’t particularly unusual for New York developers because the Five Families controlled both the major construction firms and the unions representing their workers.35 But thanks to Roy Cohn, who represented both Salerno and Castellano, Trump never had to worry about work stoppages orchestrated by the Mafia to extort more cash.36 That was just one part of the beauty of being connected.

  In the end, Roy Cohn helped Trump save $120 million through tax abatements from the city,37 which enabled Trump and his partners, the Pritzker family’s Hyatt Corporation, to renovate the Commodore for $100 million, put a façade of mirrored glass on its skeleton, and transform it into the 1,407-room Grand Hyatt. In 1996, twenty years after he optioned it for $1, Trump sold his share for $140 million.38

  Cohn died in 1986, and whether or not he was the genius who orchestrated the use of anonymous shell companies to launder money through real estate is unclear. At the time Trump Tower was being planned, though, Cohn was in fact Trump’s lawyer and represented Robert Hopkins,39 the Lucchese crime family associate who Cohn had recruited40 to pay almost $2 million to buy two units in the still-unfinished building as a way of establishing a high market value. Finally, Cohn clearly did have experience with creative accounting: He represented Studio 54 owners Ian Schrager and Steve Rubell when they were accused of skimming nearly $2.5 million in unreported income. In the end, they pleaded guilty, only admitting to skimming $366,000, and went to jail.*

  As for how he felt about Cohn’s mob connections, in The Art of the Deal, Trump wrote,
“I don’t kid myself about Roy. He was no Boy Scout. He once told me that he’d spent more than two-thirds of his adult life under indictment on one charge or another. That amazed me. I said to him, ‘Roy, just tell me one thing. Did you really do all that stuff?’ He looked at me and smiled. ‘What the hell do you think?’ he said.”41

  In the end, Trump said he never really knew what the answer was. Besides, all that actually mattered was that Trump’s first deal in Manhattan had been a success, no matter what it took.

  CHAPTER FOUR

  BRIGHTON BEACH

  At the same time Trump was learning about wiseguys from Roy Cohn, the Russian Mafia began invading Brighton Beach. It had started as an unintended consequence of legislation dealing with the Cold War. In 1974, Senator Henry M. “Scoop” Jackson of Washington and Representative Charles A. Vanik of Ohio, two Democrats who were concerned about Soviet anti-Semitism, had passed a bill that allowed the Soviet Union to enjoy normal trade relations with the US, but only if it let Jewish refugees immigrate to America.

  In the aftermath of the Jackson-Vanik Amendment, more than six hundred thousand Soviet Jews emigrated from the USSR, but the KGB made certain that emigration was not limited to innocent victims of anti-Semitism. Instead, the Soviets opened the gates of their gulags, just like Fidel Castro did later, during the Mariel boatlift of 1980, and released thousands of hard-core criminals, among them convicted murderers, psychopaths, thieves, and the like, many of whom settled in Brighton Beach.1

  A Yiddish-inflected world that was sentimentalized and satirized in Neil Simon plays and Woody Allen movies, Brighton Beach had long been a place where people strolled the boardwalk, scarfed down hot dogs at Nathan’s Famous, rode the famed Cyclone roller coaster, and enjoyed other rides at Luna Park, Steeplechase Park, and Dreamland, in nearby Coney Island.