by Craig Unger
In 2008, Polonsky spoke at a real estate conference in Moscow at which Donald Trump, Jr., was the keynote speaker.27 Since then, Polonsky was convicted of fraud in 2017, after having been charged with stealing 3.2 billion rubles (about $51 million).28 He and other principals at Mirax, including two board members and its board president, Maxim Temnikov, fled Russia and were being sought for allegedly appropriating 2.4 billion rubles (about $39 million) from a Moscow real estate development.29
Sater wasn’t exactly a big hit with everyone at Mirax. “You can’t trust him in any way, not in a professional setting, not in a personal setting,” Mirax’s chairman of the board, Alexey Kunitsin, told the Atlantic.30 “You could see it very clearly. He was telling constant crazy stories, wild fantasies about all the people he knew. He was not a balanced dude. He’s very emotional and gets into conflicts very easily.”
Nevertheless, Sater had begun to forge ties in the treacherous world of Russian business. Polonsky and Mirax had had an extended working relationship with Moscow mayor Yuri Luzhkov and had partnered with the Mogilevich-linked company Sistema.31 In addition, Sater joined with Maxim Temnikov to buy a $4.8 million condo in affluent Fisher Island, Florida.32
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Exactly how much Trump knew about Sater and the inner workings of Bayrock was unclear—which is exactly the way he seemed to want it. But on December 19, 2007, Trump gave a deposition in a lawsuit he filed against author Timothy O’Brien. Two days earlier, New York Times reporter Charles Bagli had revealed that Felix Sater had a hidden past, and now that Trump was under oath it was possible to determine the extent of his knowledge. When asked about Sater’s criminal history, Trump testified, “[I’m] looking into it because I wasn’t happy with the story. So I’m looking into it.”33 In other words, under oath, Trump had admitted that he knew about Sater’s run-ins with the law.
Because the deposition was marked “Confidential” and kept under seal, Trump may not have expected it to become public. Regardless, Trump’s knowledge of Sater’s past was now a matter of court record. According to Jonathan Winer, the former money-laundering czar in the Clinton administration, if someone in Trump’s situation failed to investigate such allegations he would be “open to charges of ‘willful blindness’ in terms of the knowledge he had.”34
“The responsible course of action would have been to have Sater resign and disclose Sater’s past to interested parties,” says Richard Lerner, who, with Frederick Oberlander, filed a qui tam lawsuit against Bayrock in 2015—that is, a civil suit that rewards private entities working to recover funds for the government.35 In this case, they charged Bayrock with laundering $250 million in profits from Trump SoHo and other projects, and setting up elaborate mechanisms to evade more than $100 million in state and federal taxes. Sater’s attorney, Robert Wolf, characterized the allegations of “their extortionate litigations” as “baseless and highly defamatory.”36
But rather than extricate himself from the deal with Bayrock and a partnership with a convicted felon, Trump kept silent about Felix, continued working with Bayrock, and ultimately profited from the arrangement. Indeed, according to Bayrock’s internal emails, rather than disclose the truth, Trump even saw the predicament as an occasion to renegotiate his fees—upward, of course. “Donald . . . saw an opportunity to try and get development fees for himself,” Sater emailed investors a few days after the deposition.37
In the end, Sater remained managing director of Bayrock through 2008. Trump also continued to participate in the venture and enjoy its profits. “Inducing a bank to lend money based on a fraudulent loan application—i.e., concealing Sater’s criminal past—is bank fraud,” said Fred Oberlander.38 “If you know that the loans were procured by fraud yet stay involved, it’s a conspiracy to violate money laundering and racketeering statutes.”
“It’s certainly a question for [special counsel Robert] Mueller to look into,” said Jonathan Winer.39 “What anyone in Trump’s position should have done is investigate those allegations [about Sater’s criminal past] to ensure that there was not a money-laundering operation.”
But Trump wasn’t charged with any crime at the time. Nevertheless, once condos in the building were finally put up for sale, the project suffered more than its share of problems. The building’s no-man’s-land neighborhood—not really SoHo—with its grand entrance beside Varick Street and the chaotic approach to the Holland Tunnel, made it a difficult sell. In addition, in order to circumvent restrictive zoning laws, the project was explicitly marketed to prospective buyers overseas as a second or third home, with the highly challenging proviso that owners could live in their apartments only 120 days a year, and never for more than 29 consecutive days in any 36-day period. In 2010, 15 condo buyers filed suit, charging the Trumps and Bayrock with “an ongoing pattern of fraudulent misrepresentations and deceptive sales practices.” According to the Daily Beast,40 among the claims made to spur sales were Ivanka Trump’s proclamations to Reuters and to the London Times in June 2008 that 60 percent of the 391 units in the building had been sold. Documents later submitted to the New York attorney general showed that only 15 percent had found buyers.
The suit was eventually settled, and the plaintiffs received 90 percent of their deposits back.41 But in 2014, four years after its opening, more than two-thirds of the building’s condos remained unsold. The website Curbed headlined a story “Trump SoHo Heads to Foreclosure Due to Unsellable Condos.”
As other lawsuits unfolded, more charges about Bayrock came forth, among them allegations that the condos themselves were being used as vehicles for money laundering. According to the Financial Times,42 lawyers for Almaty, the biggest city in Kazakhstan, charged that Viktor Khrapunov, a former Kazakh energy minister and the city’s ex-mayor, and his family “conspired to systematically loot hundreds of millions of dollars of public assets . . . and to launder their ill-gotten gains through a complex web of bank accounts and shell companies . . . particularly in the United States.”43
Khrapunov and Mukhtar Ablyazov, another Kazakh oligarch, have been accused of embezzling about $10 billion from a Kazakh bank and laundering it through shell companies, which purchased real estate all over the world.44 With regard to Trump SoHo, the lawyers charged that Khrapunov’s network used dozens of shell companies, among them three limited liability companies—whose ownership could be easily concealed—called Soho 3310, Soho 3311, and Soho 3203, which corresponded to apartments of the same name in Trump SoHo. The vendor of the apartments was Bayrock/Sapir LLC, which was named after the developers of the building, Bayrock and Tamir Sapir’s Sapir Organization. The Financial Times also reported that, according to regulatory filings, Bayrock/Sapir had a third co-owner—Donald J. Trump.*
Initially, Sater had helped the Khrapunov family buy apartments in Trump SoHo, but he later turned on the family and began cooperating with lawyers and private investigators who were pursuing multiple cases against them on three continents.45 According to the New York Daily News, Sater pocketed at least $21.5 million from related deals with Khrapunov and Mukhtar Ablyazov.46 Sater’s lawyer, Robert Wolf, denied that Sater ever worked with Ablyazov or that he knew whether or not Ablyazov was involved in any wrongdoing.
The Oberlander and Lerner lawsuit alleged Bayrock’s projected profits were “to be laundered, untaxed through a sham Delaware entity” to the FL Group,47 Iceland’s largest private investment fund,48 the first major firm to collapse in 2008 when Iceland’s financial bubble burst, and a favored financial instrument for loans to Russia-connected oligarchs who were, court papers claim, in favor with Vladimir Putin.49 (The Kremlin has denied that Putin has any connection to the FL Group or Bayrock.)50 According to Bloomberg, Eva Joly, who assisted Iceland’s special prosecutor in the investigation of the financial collapse, said, “There was a huge amount of money that came into these banks that wasn’t entirely explained by central bank lending. Only Mafia-like groups fill a gap like that.”51
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But Iceland was only one of Bayrock’s many connections to Russian money, Russian intelligence services, and the Russian mob. In the Soviet era, Arif had spent seventeen years working for the USSR Chamber of Commerce and Industry, an agency run by KGB officers that had long been systematically engaged in commercial espionage in the West.52 As for Alexander Mashkevich and Patokh Chodiev, who were named in Bayrock’s promotional material, both had worked for Boris Birshtein’s KGB-linked Seabeco53 and were allegedly tied up with the Russian Mafia through their alliance with the Chernoys in the Aluminum Wars. In the early 2000s Mashkevich, Chodiev, and Alijan Ibragimov were accused of money laundering in Belgium, where prosecutors believed their funds to be of “criminal origin.” In the end, however, the cases were settled, with the Trio paying a fine to the Belgian government and not admitting their guilt.54
Another significant Bayrock partner, the Sapir Organization, had, through its principal, Tamir Sapir, a long business relationship with Semyon Kislin, the commodities trader who was tied to the Chernoy brothers and, according to the FBI, to Vyacheslav Ivankov’s gang in Brighton Beach.55 A generous donor to former New York mayor and future Trump attorney Rudy Giuliani, Kislin* happened to have considerable political capital after Giuliani appointed him to be a member of the New York City Economic Development Corporation. (At a 1999 press conference, Kislin denied any ties to the Russian mob, insisting, “I have done nothing evil.”56 Kislin did not respond to an email request for comment.)
In addition to being wired into the Kremlin, Sapir’s son-in-law, Rotem Rosen, was a supporter of Chabad along with Sater, Sapir, and others at Bayrock, and, as a result, was part of an extraordinarily powerful channel between Trump and Putin.
After all, the ascent of Chabad in Russia had been part of Putin’s plan to replace older Jewish institutions in Russia with corresponding organizations that were loyal to him.57 When they began, Russia already had a chief rabbi, Adolf Shayevich, who was recognized as such by the Russian Jewish Congress. But when Abramovich and Leviev installed Chabad rabbi Lazar at the head of their rival organization, the Federation of Jewish Communities of Russia, the Kremlin recognized Lazar as Russia’s head rabbi and removed Shayevich from its religious affairs council.58
Consequently, the Federation of Jewish Communities of Russia, the voice of Chabad in Russia, became so close to Putin that he even made a point of attending the dedication of their center in Moscow’s Marina Roscha neighborhood in 2001.59 With Chabad’s Rabbi Berel Lazar leading the way, the Federation of Jewish Communities of Russia was now providing Putin with a Jewish “umbrella” that allowed him to battle Vladimir Gusinsky, whose media properties had become critical of him and who even dared to back candidates opposed to Putin. “I said openly,” Lazar said, “that what Gusinsky was doing was not desirable and would hurt the Jewish community.”60
But another reason for the close ties between Chabad and Putin was that both Lazar and Leviev had promised Putin that they would make their connections available to the Kremlin and “open doors to the corridors of power in Washington.”61
At the time, Trump’s comeback in real estate and his ascent in TV were in full swing, but his political prospects were still dicey at best. However, his role in Bayrock and its real estate deals with Russian oligarchs were real and provided a connection to Moscow.
That’s what made the Chabad channel so mysterious. First and foremost, the biggest contributor to Chabad in the world was Leviev, the billionaire “King of Diamonds” who had a direct line to Rabbi Berel Lazar, aka “Putin’s rabbi,” to Donald Trump, and to Putin himself dating back to the Russian leader’s early days in St. Petersburg. Leviev would make major real estate transactions with Jared Kushner, including selling the retail space in the former New York Times Building to Kushner for $295 million.62 As an undergraduate at Harvard, Jared had been active at the campus Chabad House at Harvard.63 Jared later married Ivanka Trump and became a senior adviser to her father in the White House. Jared and Ivanka were also close to Chabad donor Roman Abramovich and his wife, Dasha Zhukova.
Another major contributor was Jared’s father, Charles Kushner,64 an American real estate developer who was eventually jailed for illegal campaign contributions, tax evasion, and witness tampering. But that is just the beginning of Chabad’s ties to Trump. Indeed, one of the biggest contributors to Chabad of Port Washington, Long Island, was Bayrock founder Tevfik Arif, a Kazakh-born Turk with a Muslim name who was not Jewish, but nonetheless won entry into its Chai Circle as a top donor.65
The Port Washington founder and head rabbi, Shalom Paltiel, happened to be an acolyte of Rabbi Berel Lazar, Paltiel’s “dear friend and mentor,”66 as he referred to Lazar. But he was also close to Felix Sater and later named Sater “man of the year” for Chabad of Port Washington. At the ceremony honoring Sater, Paltiel recalled how Sater recounted his daring adventures as an intelligence operative. “I only recently told Felix I really didn’t believe most of it,” Paltiel said.67 “I thought perhaps he watched too many James Bond movies, read one too many Tom Clancy novels. Anyone who knows Felix knows that he can tell a good story. I simply did not put too much credence to them.”
In addition to Sater, Daniel Ridloff, a fellow Bayrock employee, was a member of the Port Washington Chabad house.68
Chabad supporters Rotem Rosen and his bride, Zina Sapir, of course, were tied to Bayrock through Zina’s father, Tamir Sapir, and they were such close personal friends of Trump that he let them have their 2007 wedding at Trump’s Mar-a-Lago, with Lionel Richie and the Pussycat Dolls performing.69
A few months later, Leviev met with Trump in Moscow to discuss potential deals for Trump in Russia.70 Then, in June 2008, after Zina and Rotem’s son was born, Lev Leviev arranged for the bris, the Jewish ritual of circumcision, to take place at the grave of Rabbi Menachem Mendel Schneerson, the renowned Hasidic rabbi who was the spiritual leader of the Chabad-Lubavitch movement.71
Touting the event as “the best bris invite ever,” New York magazine opined that the “invite list for this particular penis-chopping” was as chic as it gets, including hotelier André Balazs, restaurateur Giuseppe Cipriani, New York nightlife empress Amy Sacco, various real estate moguls, and, of course, Donald Trump and his future son-in-law Jared Kushner.
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In the midst of these efforts, something took place that seemed entirely unrelated to Trump’s interactions with Russia but ended up creating one of the most significant links of all between him and the Kremlin. In 2006, a group of apartment owners at Trump World Tower, his seventy-two-story skyscraper overlooking the United Nations, had taken control of the condo board and were accusing Trump of financial impropriety. For help, Trump turned to a sympathetic condo owner named Michael D. Cohen, who was such a devotee of the Trump brand that he had bought a number of Trump apartments himself, and had his parents, his in-laws, and a business partner buy apartments in Trump World Tower.72
Cohen was the same Michael Cohen who knew Felix Sater when he was growing up in Brighton Beach. Initially, when Sater was first asked about his ties to Cohen, he downplayed their relationship. “[Cohen] wasn’t one of my close friends,” Sater told Talking Points Memo in 2017,73 “just a guy dating a girl in the neighborhood and we had a bunch of mutual friends.”
Later, however, on MSNBC, Sater referred to Cohen as “an old and dear friend,”74 which was likely closer to the truth.
His suburban roots notwithstanding, Cohen had his own ties to the wiseguys of Brighton Beach. Most notably, through his uncle Dr. Morton Levine, there was his family’s shared ownership of Brooklyn’s El Caribe Country Club catering hall, the well-known hangout for both Russian and Italian gangsters.75 According to the New York Times, Dr. Levine was a family practitioner, and one of the families for whom he provided medical services was the Lucchese crime family. In the process of providing those services, according to a sworn affidavit in 1993 from an FBI special agent, Dr. Levine “aided their illegal acti
vities.” The affidavit added that a Lucchese underboss, Anthony “Gaspipe” Casso, “regarded Levine as someone who would do anything for him.”76
In addition to having served as headquarters for Evsei Agron and his gangsters, El Caribe was where John Gotti held his Christmas party in 1988, when he was at the height of his power as head of the Gambino family.77 Among other notable mob festivities at the restaurant, Genovese crime family soldier Ernest “Butch” Montevecchi, who partnered with Felix Sater’s father, Michael Sheferovsky, hosted a reception at El Caribe for a mob subordinate who happened to be the nephew of Charles “Lucky” Luciano.78
But El Caribe was just the beginning of Cohen’s mob ties. After college, Cohen got a law degree from the Thomas M. Cooley Law School (now known as Western Michigan University Cooley Law School), at the time, a notorious diploma mill, which, according to Reuters, has been repeatedly sued for misrepresenting employment and salary data about its graduates.79 In addition, Cohen got involved in an offshore casino business in Florida based on a 196-foot yacht, the Atlantic, a “failed gambling operation,” as BuzzFeed described it, that allegedly did not pay its debts and did business with people tied “to accused and convicted criminals” in both the Italian and Russian mobs. The casino was managed by Tatiana Varzar, the owner of the eponymous Russian nightclub in Brighton Beach, and her husband, Michael Varzar, who had been sent to prison for his role in the gasoline tax scam in the nineties.80
Representative Peter King, a Republican congressman from New York’s Second District, observed that Cohen had cultivated a tough-guy pose that is “a main part of who he is. He talks about it. He likes to play up the act that he’s a guy who was not raised in Manhattan . . . ‘I’m from Long Island, we don’t take crap from anyone.’”81
According to an investigation of Cohen by ProPublica, after law school Cohen worked with a series of small firms that defended clients accused of participation in various medical malpractice scams, phony auto accident cons, and the like that were similar to Russian Mafia swindles in the eighties and nineties. One of his first jobs after law school was working for a personal injury lawyer named Melvyn J. Estrin, who pleaded guilty to bribing insurance adjusters to inflate damage estimates.82 He subsequently drew up incorporation papers for a number of dubious medical practices and medical billing companies, one of which had filed nearly three hundred lawsuits. In one of the clinics Cohen incorporated, the principal doctor pled guilty to writing phony prescriptions that allowed clients to get 100,000 pills they ordinarily would not have been able to obtain.83