House of Trump, House of Putin2
Page 15
But the CIA was still skeptical. Next, Felix provided photographs of the missiles with their serial numbers and a copy of a daily newspaper to show the photo was contemporaneous.36 Meanwhile, Wolf began extended talks with two men in the CIA’s clandestine division about al-Qaeda, Osama bin Laden, and the Stinger missiles.
When President Clinton authorized the August 1998 bombing strike against al-Qaeda in retaliation for the terrorist bombings of the US embassies in Kenya and Tanzania, BuzzFeed reported, no fewer than ten current and former intelligence and law enforcement officials said Sater “supplemented US intelligence by providing location coordinates for al-Qaeda camps that the US military ultimately bombed in Khost, Afghanistan.”37
There was much more. Sater reportedly helped the FBI find dealers in New York’s Forty-Seventh Street Diamond District who were laundering money for al-Qaeda, and took part in other daring spy missions. After he started trying to track down the Stinger missiles, he began developing sources in Afghan intelligence and Russian intelligence.
He is even said to have been involved in North Korea’s nuclear program. “I was given photographs of the North Korean military intel operative who was out there buying various components to build a nuclear weapons program,” said Sater. “He sent me intel photos, surveillance photos, as well as photos of him sitting in restaurants, of him sitting in front of the North Korean Army choir, with the instructions that this is the man that needs to be put a tail on.”38
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Meanwhile, in late 1998, the FBI responded to a tip from New York police and broke into a Manhattan storage locker, where they discovered a shotgun, two pistols, and a gym bag full of documents tied to Sater.39
Immediately, the FBI’s Russian organized crime task force began hunting for Sater, who happened to be vacationing in Italy. He already had developed close ties to an intelligence officer with the Northern Alliance, the anti–al-Qaeda Afghan militia led by Ahmad Shah Massoud, who, BuzzFeed reported, called him with precious information: He had five satellite phone numbers belonging to Osama bin Laden,40 and he wanted Sater to pass the numbers along to US intelligence.
Then the FBI found Sater and told him he was under investigation for the pump-and-dump scam. “I never intended on fighting and I surrendered,” he said. “I knew I was going to cooperate.”
And so, Felix Sater became an informant not just for the CIA and DIA, but for the FBI as well, providing, according to former attorney general Loretta Lynch, information crucial to the conviction of more than twenty people. Moreover, in return, Sater managed to negotiate an immunity deal that allowed him to stay out of jail, pay a small fine of $25,000, and emerge relatively unscathed with a sealed criminal record. Sater was not even forced to pay restitution. And finally, even though the scam reportedly involved the Mafia,41 all of that was kept secret because Felix’s files were sealed.
The terms of the deal were so favorable that the matter came up during Loretta Lynch’s confirmation hearings for attorney general in 2015. Lynch explained that Sater had provided “information crucial to national security and the conviction of over 20 individuals, including those responsible for committing massive financial fraud and members of the Cosa Nostra.”42
Then, on September 11, 2001, everything changed. Terrorists hijacked four airliners, crashing two of them into New York’s World Trade Center and one into the Pentagon. Nearly three thousand people were dead.
The FBI, which had focused so much attention on the Italian Mafia in the past, now shifted its attention to a new enemy. The Italian Mafia was yesterday’s news, and resources were now directed to fighting radical Islamist terrorism. As for the Russian Mafia, it was barely on the FBI’s radar screen.
Meanwhile, the tragedy of 9/11 had made Felix’s contacts far, far more valuable than ever before. From now on, Felix Sater would be the FBI’s best friend.43 But to the rest of the world, by 2002, he had moved on and become managing director of a New York–based real estate development company called the Bayrock Group. Finally, with Felix Sater, there was always the possibility that the best stories of all were still untold.
CHAPTER THIRTEEN
BAYROCK
Officially, Bayrock was the heartwarming immigrant success story of its Kazakhstan-born founder and chairman, Tevfik Arif, who graduated from the Moscow Institute of Trade and Economics1 and worked in the Soviet commerce and trade ministry before running an export-import business, building hotels in Turkey,2 and moving to New York, where he developed property in Brooklyn.
With the flags of the United States, Turkey, and Kazakhstan conspicuously on display in his office, Arif projected the image of a cosmopolitan international businessman who had fulfilled the American dream.3 Boasting more than $2.5 billion in investments in luxury waterfront resort, hotel, residential, retail, and office space developments, Bayrock had hired renowned architects to design new projects in New York, Europe, the Mediterranean, and elsewhere. The icing on the cake in terms of Bayrock’s marketing identity could be articulated in one word: Trump. Trump was ready to license his name to Bayrock and other developers to build luxury condos in Panama City, Panama; Toronto, Canada; Baku, Azerbaijan; Kiev, Ukraine; Moscow; and many more places all over the world.
Judging from its twenty-eight-page presentation materials, one would think Bayrock was one of the most successful real estate development companies in the world. Among its projects, Bayrock planned to build the Trump SoHo in New York, the Trump International Hotel and Tower in Fort Lauderdale, the Trump Las Olas in Fort Lauderdale, and the Trump International Hotel and Residences in Phoenix. And that was just the United States. As a coda to its presentation, its star-studded list of strategic partners was topped with the name “The Trump Organization” and a photo of Bayrock founder Tevfik Arif standing shoulder to shoulder with Donald Trump.4
That was Bayrock—or, at least, the image Bayrock projected. But the reality was much more complex. Bayrock through its business practices brought into Donald Trump’s orbit a host of oligarchs and alleged mobsters involved in laundering money, the trafficking of underage women, feeding intelligence to the Russians, and more. In court records from a lawsuit by former employees, it is alleged Bayrock was “covertly mob-owned and operated,” “backed by oligarchs and money [the oligarchs] stole from the Russian people,” and “engaged in the businesses of financial institution fraud, tax fraud, partnership fraud, human trafficking, child prostitution, statutory rape, and, on occasion, real estate.”5
Bayrock is no longer active as a real estate development company and now exists only as a legal entity engaged in ongoing litigation, of which a spokesperson said the firm disputes all such allegations. Nevertheless, Bayrock had many of the attributes that one might find in a center of operations affiliated with the Russian Mafia. That was of special interest, given that its key partner was the future president of the United States.
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Trump was first introduced to Bayrock by the late Tamir Sapir,6 the penniless Soviet émigré turned billionaire who became, in Trump’s words, “great friends” with Trump himself,7 and who introduced Trump to Tevfik Arif, the founder of Bayrock, aka Tofik Arifov.8 On paper, at least, Arif’s story was another stirring rags-to-riches saga. In 2002, after becoming a successful real estate developer in Brooklyn, he moved Bayrock’s offices to Trump Tower, where he and his staff of mostly Russian émigrés set up shop on the twenty-fourth floor.9
When Arif and Sater helped put together several prospective Trump Tower licensing deals for sites including Moscow, Warsaw, Istanbul, and Kiev, Trump was ecstatic. Thanks to Bayrock, he could bring franchising to high-end condos. He could be the Colonel Sanders of luxury high-rises. “It was almost like mass production of a car,” Trump crowed.10
For some projects, he boasted, he would get up to a 25 percent stake, plus management fees and a possible percentage of the gross—without having to invest a dime.
Trump worked closely with Bayrock on real estate ventures in
Russia, Ukraine, and Poland. When it came to financing them, however, he was still so toxic after Atlantic City that he left matters of funding to his new partners. “Bayrock knew the investors,” he later testified.11 Arif “brought the people up from Moscow to meet with [Trump].”
Altogether, Bayrock’s leadership, as portrayed in its presentation materials, was a cozy family of billionaire oligarchs from the former Soviet Union. In fact, the extent to which various Bayrock partners actually came through with financing is unclear, but according to Bayrock’s promotional literature, Arif turned to fellow Kazakh billionaire Alexander Mashkevich and his Eurasian Natural Resources Corporation (or Eurasian Group, as it is called in Bayrock’s promotional literature), which he controls with Patokh Chodiev and Alijan Ibragimov, among others, to finance Bayrock. (Even though he was referred to on Bayrock’s website, Patokh Chodiev has denied any connection to Donald Trump, the Trump Organization, or Bayrock Group. Similarly, a person close to Mashkevich told Bloomberg that Mashkevich never invested in Bayrock.)12 Together, the three men—known as “the Trio”—are major stockholders in the Eurasian Natural Resources Corporation and control chromium, alumina, and gas operations in Kazakhstan,13 which adds up to about 12 percent of the industrial production in the entire country.14
In June 2005, many of them came together when Arif celebrated his fifty-second birthday at the grand opening of the “seven-star” Rixos hotel in Belek on the Turkish Riviera near Antalya. Guests came from all over the world—St. Petersburg, the Côte d’Azur, Ukraine, Latvia, Israel, and Moscow, traveling by yacht and private jet.15
This was no run-of-the mill gathering. There were huge mounds of caviar, food, drink, and song. Among the honored guests was then–prime minister of Turkey Recep Tayyip Erdoğan, who later became president.16 There were professional hockey stars, Moscow restaurateurs, and billionaires from all over the world.
In all, Bayrock’s promotional literature boasted that it had seven billionaires affiliated with the company, in one way or another. Among them was Tamir Sapir, who arrived on the Mystère, his 160-foot yacht, which has been described as the most beautiful private vessel in the world.17 Alexander Mashkevich cruised in on his yacht, the Lady Lara, which was nearly twice as big, at 299 feet.18 Not all the Bayrock billionaires could make it, but one extremely high-profile tycoon in New York who couldn’t attend made sure that his presence was felt anyway. So on Tevfik Arif’s birthday, the familiar image of Donald Trump suddenly appeared on a big-screen videoconference call for the entire party to see.
“Tevfik is my friend,” Trump said. “Let’s drink to Tevfik!”19
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By this time, Trump was indeed in the midst of a phoenix-like rebirth, both personally and professionally. His turbulent tabloid marriage to Marla Maples, his second wife, had come to an end, and he had married his third wife, Melania Knauss, a model from Slovenia, in January 2005, in a suitably extravagant wedding on his Mar-a-Lago estate that was attended by celebrities including Shaquille O’Neal and P. Diddy, then-senator Hillary Clinton, and former president Bill Clinton.
And when it came to real estate, Trump’s new paradigm was taking off like wildfire. He was all over Bayrock’s promotional literature, but he had nothing to do with financing and few development responsibilities. The larger point was that Trump had created a new model where he was paid to put his name on major development projects. “He’s a marketing genius,” Adam Rose, president of Rose Associates, which manages more than fourteen thousand apartments, told the New York Times.20 “He’s gotten to the point where he can license his name.”
And license he did, lending his name to projects like Trump University,21 a “real estate training program” that turned out to be not a university at all but a gigantic high-pressure bait-and-switch scam* that “preyed upon the elderly and uneducated to separate them from their money,” as one affidavit from a former salesman for Trump University put it.22
In addition to various projects in development with Bayrock, Trump signed a deal to license his name for an 813-unit condo project23 called Trump Towers in Sunny Isles Beach, Florida, a barrier island north of Miami Beach. In 2005, he built a thirty-five-story Trump Tower in White Plains, New York. He pursued licensing his name to a Trump Tower development in Tampa, but it never got off the ground.24 Trump made plans to build what became Trump Tower Chicago—a ninety-eight-story condo-hotel tower.25 In Hawaii, he licensed his name to the Trump International Hotel Waikiki. In Las Vegas, a sixty-four-story Trump International Hotel was on the drawing board. And his name was in play with Bayrock for a tower in Phoenix.26
As usual his clientele had had its share of run-ins with the law. In Florida, at least thirteen buyers of Trump Towers condos in Sunny Isles Beach had been the subjects of government investigations, either personally or through their companies, including members of a Russian-American organized crime gang, the Miami Herald reported. When interviewed about the Sunny Isles condos, Trump Organization lawyer Alan Garten stated that it was “completely unfair and completely misleading to suggest we had anything to do with those people” and called shady buyers an industry-wide problem for luxury real estate. But the larger point is that in these ways and more, Donald Trump was bigger than ever.27
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When it came to having fun, Trump’s partners spared no expense. Tevfik Arif flew Bayrock employees out to the Rixos hotel in Antalya, Turkey, for an all-inclusive vacation.28 On another occasion, both Arif and Alexander Mashkevich rented the Savarona—a 446-foot yacht that had once been owned by the Father of the Turks, Mustafa Kemal Atatürk.
For a week-long party in September 2010, when Mashkevich rented the yacht, nine young “escort girls” were allegedly supplied for businessmen attending the party on the Savarona. “[O]ne of the businessmen was especially fond of 13–14 year old [girls] and the organization head supplied those girls,” according to documents that were part of an investigation.29
A search by police, the report said, turned up “a huge amount of contraceptives and a file with escort girls’ pictures and hotel receipts.”30
Ten suspects, among them two Turkish billionaires, were arrested immediately and investigated for solicitation and trafficking in women. Mashkevich and Arif denied the accusations against them,31 and in April 2011 Arif was acquitted of all charges.32 The court judgment also recorded that all women aboard the yacht were over eighteen.
According to Mashkevich’s lawyer, Ronel Fisher, Turkish authorities made no claims against Mashkevich, nor was he interrogated by police.33 A spokesman told the British daily the Telegraph that he was on board the yacht when it was raided but he was not in any way connected to criminal or immoral acts on it.34
Nevertheless, the indictment paints a salacious picture of a sordid and extraordinarily decadent35 world of spectacular yachts, Mediterranean villas, and private planes, in which billionaire oligarchs ship in batches of teenage girls and “trade human beings” to have sex with their wealthy friends, while their underlings wrangle over whether to pay top dollar for a virginal sixteen-year-old and the bother of having to “send that unpretty back.”36
The level of decadence was unparalleled. Every oligarch had to have a yacht, each one bigger than the next. And who among them could be the most transgressive? Tamir Sapir won notoriety for furnishing his yacht with bar stools covered in python skin, a stuffed lion, and the carcasses of twenty-nine different endangered species.* 37 As the New York Post put it, “It was just like Noah’s Ark, except everything was dead—and illegal.”38
Bayrock never seemed short of funding, but much of it came from murky origins. In the nineties, Arif had worked in Kazakhstan for the UK-based Trans-World Group, a company run by David and Simon Reuben and the Chernoy brothers—all big players in the highly lucrative but spectacularly dangerous metals industry, which was beset by “Aluminum Wars” that left dozens of executives, traders, bankers, and mob bosses dead.39
Similarly, Alexa
nder Mashkevich and his partners in the Trio who may have been investors did business with Mikhail Chernoy and had huge holdings in chromium, alumina, and gas operations in Kazakhstan. When it came to having ties to the Kremlin, Tamir Sapir had high-level connections through Rotem Rosen, his son-in-law and the CEO of the Sapir Organization. Rosen was also a lieutenant of Israeli diamond magnate Lev Leviev, who was a major donor to the Putin-supported Chabad sect and had been close to Putin since the early nineties.
Given that his control over the oligarchs was crucial to maintaining power, Putin needed to be able to keep tabs on their whereabouts and where their money went. If hundreds of millions of dollars from the Russian Mafia or other forms of flight capital were funding a Trump-branded project, Putin wanted to know. If oligarchs were buying scores of Trump condos in SoHo or Panama or Toronto, Putin wanted to know.
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And Bayrock would have had the answers. Indeed, in many ways, Bayrock resembled an updated version of the initiative launched by KGB general Vladimir Kryuchkov at the end of the Cold War, when the KGB had founded scores of front companies that appeared to be self-sufficient independent corporations but were staffed by operatives tied to the KGB and the GRU. Far more than merely providing phony identities as cover for intelligence operatives, these companies were meant to be multibillion-dollar corporations that would trade the natural resources of the former Soviet Union on the global market, make billions of dollars, and simultaneously launder money, gather intelligence, and grow through relations with Western partners and Western banks.40
One of the models for those companies was Boris Birshtein’s Seabeco SA.41 Over the years, Birshtein, who hosted the famous Tel Aviv meeting with Mogilevich, had worked with Colonel Leonid Veselovsky,42 an intelligence operative who specialized in starting front companies for the KGB all over the world—in Antwerp, Toronto, Winnipeg, Panama, Zurich, and Delaware.43 Along the way, through the Soviet foreign ministry, Birshtein also met and began working with Patokh Chodiev and Alexander Mashkevich, who comprised two-thirds of Eurasian Natural Resources Corporation’s Trio.44 He also had ties to Solntsevo head Sergei Mikhailov, with whom he started a business in Antwerp called MAB International.45