by Luke Harding
These assets included hotel projects in seven U.S. cities, as well as in Mexico, the Dominican Republic, Dubai, Canada, and Panama, the lawyer noted. There were casinos and golf courses. These, too, were scattered all over the world, including Trump’s latest golf course development project in Scotland.
In fact, the same day he argued that the depression meant he was off the hook, Trump gave an interview to The Scotsman newspaper. After a two-year fight, he had succeeded in getting approval from the Scottish government for a new Trump golf resort near Balmedie in Aberdeenshire. The decision thrilled Trump. (It outraged environmentalists, who believed the course would wreck sand dunes and damage coastline ecology.) Trump was in a carefree mood.
“The world has changed financially and the banks are all in such trouble, but the good news is that we are doing very well as a company and we are in a very, very strong cash position,” Trump told the paper.
Trump said he didn’t have any exposure to the stock market, had bought the Scottish land for cash, and was now well placed to build “the world’s greatest golf course.” Two weeks later George Sorial, a Trump organization executive, assured The Scotsman that the tycoon had a billion dollars earmarked for the course. Sorial was vague as to where this fortune was, bankwise, but said: “The money is there, ready to be wired any time.”
If this weren’t damning enough, Molo’s affidavit cited Trump’s own literary works, which summarized Trump’s insouciant attitude toward paying back other people’s money—something he didn’t feel greatly obliged to do.
The attorney observed:
Trump provides extensive advice on how to do business through at least half a dozen books he has authored. In How to Get Rich Trump advised readers to use the courts to “be strategically dramatic.” In Think Big and Kick Ass in Business and in Life, he boasts of how he “love[s] to crush the other side and take the benefits.”
Trump strategy—honed during terrible struggles and shouting matches with lenders during the 1990s—“was to turn it back on the banks.” “I figured it was the bank’s problem, not mine,” Molo quoted Trump as saying, in connection with unpaid debt.
Molo concluded his petition by arguing that Trump must now settle his outstanding balance. “To date, he has failed to pay,” he wrote.
Trump’s outrageous behavior vis-à-vis Deutsche Bank might have been anticipated. He was, after all, someone who had been through a slew of corporate bankruptcies. His Taj Mahal casino, his other casinos in Atlantic City, his Plaza Hotel in New York City all filed for chapter 11 bankruptcy in the early 1990s.
After those failures, U.S. banks that had previously advanced the capital to Trump for building projects, believing them to be sound investments, stopped lending. Chase Manhattan, Citibank, and other burned Wall Street houses declined further credit, refused his calls.
The one institution willing to advance him loans in the new century was Deutsche Bank.
Now Trump had shafted Deutsche, too. Trump was a litigious client, slippery, untruthful, loud, wily, and knavish. He was prepared to use vexatious and underhanded tactics, toppling into absurdity. He had sued the bank for $3 billion. A judge had sensibly thrown out Trump’s suit. Evidently Deutsche would have nothing further to do with him. It would reclaim its investment and rip up its client’s file.
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There was a certain fittingness that Trump would do business with a bank whose American headquarters were at 60 Wall Street. A century earlier, Donald’s German grandfather, Friedrich Trump, had worked at the same address. Friedrich was born in 1869 in Kallstadt, a small village in southwest Germany. He emigrated to New York at age sixteen. He opened hotels in Seattle and the Yukon, cashing in on the gold rush, before returning to lower Manhattan.
On Wall Street Friedrich didn’t work as the proprietor of another food and drink establishment. He went back to the profession he had learned as a teenager: barber. While his wife, Elizabeth, looked after their young son, Fred—Trump’s father—Friedrich snipped the hair of brokers and speculators. He later became a hotel manager. He died in the flu pandemic of 1918.
Friedrich’s Wall Street barbershop no longer exists. In its place is the U.S. headquarters of Deutsche Bank, a fifty-story skyscraper built in the late 1980s in giant postmodern style. Next door is a public atrium with fake palm trees and a Starbucks. There’s a shoe repair store, “while u wait.” The East River—a shimmer of silver-gray water—is visible as one exits the grand lobby of the building.
In 2010 Trump settled his feud with Deutsche Bank. This was done, extraordinarily, by borrowing more money from…Deutsche Bank.
Shut out from its real estate division, Trump turned to another part of the same institution, Deutsche Bank’s private wealth division, which typically deals with high-net-worth individuals. It doesn’t normally do property. Still, the unit lent him the money. And later gave him another $25 to $50 million in credit.
This was Trump’s route back to solvency.
The decision to keep lending to Trump was unusual, bizarre even. Deutsche Bank employees in New York were surprised. Asked whether it was normal to give more money to a customer who was a bad credit risk and a litigant, one former senior Deutsche Bank staff member said: “Are you fucking kidding me?”
The banker—who didn’t want to be named—told me that only private wealth accepted personal guarantees. “Real estate refused to lend to him [Trump],” the banker said. Still, senior risk managers and the compliance department straddled divisions and would likely have approved the move.
Remarkably, Trump was able to borrow even bigger sums. He took out two mortgages against his Trump National Doral resort in Miami. And a $170 million loan to finish his hotel in Washington in the old post office tower. These loans flowed from the private-wealth wing. There was also the outstanding Chicago loan.
According to an analysis by Bloomberg, by the time he became the forty-fifth president Donald Trump owed Deutsche Bank around $300 million. All four debts were due in 2023 and 2024.
This was an unprecedented sum for an incoming president and one that raised awkward questions about conflict of interest. If Deutsche Bank were to get into regulatory difficulty, one of the bodies that would investigate was the Department of Justice. Which reported to Trump. It was hard to see how the department could work dispassionately. Or how Deutsche Bank might take legal action against a sitting president if he defaulted again.
During the same period Deutsche Bank was doing something abnormal—something that would provoke the interest of regulators, and in turn lead to punishment. The bank was laundering money. Russian money. Not small amounts but many billions of dollars. This dubious tide flowed from Moscow to London, and from London to New York, enveloping the spot where Friedrich Trump had once worked, setting his descendants on a path to greater affluence.
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In 2005 Deutsche Bank bought UFG, a boutique investment bank already well established in Moscow. UFG’s cofounder and chairman was Charlie Ryan, a charming American banker with libertarian views. Ryan’s partner was Boris Fyodorov, a former Yeltsin-era finance minister. The bank neatly straddled West and East. It was international and localized. It would be Deutsche Bank’s beachhead into Moscow.
The man behind Deutsche Bank’s aggressive expansion was Anshu Jain, its future co-CEO. He persuaded Ryan to stay on and head up Deutsche Bank’s new Moscow office. Jain came up with a controversial strategy: to tap into potentially huge Russian profits, he decided to forge relationships with state partners.
He desired, in effect, to become best friends with the Kremlin.
One way of doing this was to hire people with connections. Russia’s most powerful banker was Andrey Kostin. Kostin had served in Sydney and London as a Soviet diplomat. Intelligence sources think he was a KGB spy. In the 1990s, he became head of Vnesheconombank—VEB—a state development bank described by one former CIA analyst as the “Kremlin’s cookie jar.” Then Putin made Kostin head of Vneshtorgbank, or VTB, also state-run. Aft
er which Kostin expanded VTB to operate in nineteen countries. It worked in jurisdictions with minimal oversight. This flexibility meant the Kremlin could use VTB for sensitive international operations. In 2005 VTB absorbed two banks traditionally used in Soviet times for espionage and for shifting currency to Western communist parties. These were the Moscow Narodny Bank, based in London, and Eurobank, in Paris.
Jain and Deutsche Bank recruited Kostin’s twentysomething son, also named Andrei, with an i. In spring 2007 Kostin Jr. moved from a posting in London to Deutsche Bank in Moscow. Suddenly, Kostin got massive flows of business. It appeared Dad may have helped. Deutsche Bank did a series of lucrative trades with VTB.
According to one estimate, the German bank’s Moscow subsidiary began notching up profits of $500 million to $1 billion a year, with VTB generating somewhere between 50 and 80 percent of all revenue. This picture was pieced together from interviews with Deutsche Bank staff looking for jobs elsewhere. Other investment banks based in Moscow were chagrined. And a little suspicious.
“They were doing some very curious things. Nobody could make sense of their business,” said Chris Barter, the CEO of Goldman Sachs Moscow at the time. He added: “We found the nature and concentration of their business with VTB quite galling. Nobody else could touch VTB.”
Clearly Deutsche Bank owed its success to its newfound alliance with Russian state interests. As everyone in Moscow understood, VTB was more than a bank. It had ties to Russian intelligence. Putin’s FSB spy chief, Nikolai Patrushev—and Patrushev’s successor, Alexander Bortnikov—both sent their sons to work at VTB. The bank’s deputy chief executive, Vasily Titov, chaired the FSB’s public council. According to Trump’s business associate Felix Sater, writing in his email to Michael Cohen, VTB had agreed to bankroll Trump Tower Moscow.
So some well-connected people were helping Deutsche Bank, or at least aiding the office of their Moscow affiliate. And possibly Trump, too.
Maybe they were doing so out of kindness, as a favor. Or perhaps they wanted something in return.
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Moscow was an alluring destination for Western expatriates. Especially for young single males.
There were the devushki—attractive long-legged Russian girls, some from Moscow, some newly arrived from the provinces—who were keen to meet foreigners and practice their English. There were the nightclubs, the parties, fueled by toasts and endless vodka shots. And the friendships, always more intense and philosophical than those at home.
In the new millennium the Russian capital was awash with petrodollars and opportunity. There was a dark side, too—as one of those attracted by its offer of riches discovered. Tim Wiswell grew up in Old Saybrook, Connecticut, one hundred miles northeast of New York. He was more of a “repatriate” than an expat: his father had worked in oil and gas in Russia. At age seventeen Wiswell spent a year at the Anglo-American School in Moscow and then returned to the United States for study.
In his midtwenties, Wiswell went back to Moscow and got a job with Alfa, the private bank owned by the oligarch Mikhail Fridman. From there he moved to Deutsche Bank. By twenty-nine he was head of Russian equities. He found a Russian girlfriend—Natalia Makosiy, an art historian whom he met at a Moscow dinner party.
In the wake of the 2008 crash, profits from the bank’s Russian business line were reduced by half. Traders were now under pressure to increase revenue. According to Barter, it was evident that “something nefarious” was going on at Deutsche Bank during the Wiswell period.
Barter recalled how he was approached by “broker types, not very senior,” seeking to do large, unexplained volumes of trade with Goldman Sachs. These were on behalf of major Russian clients. The brokers declined to identify their counterparties. Their names were concealed beneath “shell company after shell company,” Barter said, making a due diligence process impossible. He turned this business down “in five seconds.”
Seemingly, the same entities approached Wiswell. There they got better results. Over five years, between 2011 and February 2015, Wiswell presided over a money-laundering scheme run from the equities desk of Deutsche Bank’s Moscow office. According to the New York State Department of Financial Services (DFS), more than $10 billion was shifted from Russia to the West.
The method was simple—and effective. In Moscow, a Russian client bought blue chip Russian stocks from Deutsche Bank Moscow in companies like Gazprom or Sberbank. The payment was in rubles. The size of a typical order was $2 million to $3 million. Shortly afterward a non-Russian “customer” sold exactly the same number of securities to Deutsche Bank in London, paying in dollars.
These “mirror trades” were fake and had no economic logic. The selling parties were based in offshore territories like Cyprus or the British Virgin Islands. The buyers and sellers were linked, with related owners and agents. At least twelve different entities used the scheme to surreptitiously convert rubles into dollars. The money was interred in offshore accounts.
Thus, billions were moved out of one Deutsche Bank, from its modern glass office at Building 2, 82 Sadovnicheskaya Street, to another Deutsche Bank, at 60 Wall Street. There were nearly six thousand transactions. Nobody in New York or London or Frankfurt or any of the international financial centers really noticed.
When concerns were raised—by an unnamed European bank, for example—Wiswell swatted them aside. According to the New York regulator, he told the European bank that “there was no reason for concern.” Wiswell approved, or “on-boarded,” the Russian parties. He “threatened” and browbeat his colleagues on several occasions “when it appeared they had not moved quickly enough to facilitate transactions.”
In Moscow, Wiswell’s twenty-person equities desk was made up of Russians and Americans. One of its duties was to keep clients happy. That might mean extravagant skiing trips, visits to elite nightclubs, or weekends away. Sometimes clients repaid the favor. One of Wiswell’s business and skiing partners was Dmitry Perevalov, the owner of a Moscow fund called Lanturno.
For his fortieth birthday, Perevalov flew a group of people on a private jet to Mauritius. The jet belonged to Russian Orthodoxy’s most important bishop: Patriarch Kirill of Moscow. Perevalov chartered it for the occasion. One of his guests was Tim Wiswell. The weekend was designated “for wives” and Wiswell brought Natalia.
One fellow guest who met Wiswell at the party described him as charismatic and charming. He was a tall, handsome, all-American guy. At the same time, the person said, Wiswell came across as a “major lightweight” in terms of banking and finance.
“He had nothing special going for him. I remember him speaking pretty poor Russian. We wondered whether he was doing kosher business,” the guest said, adding that Wiswell’s wife was “quite aloof and spent the weekend with her friends.”
Guests stayed at the luxurious Four Seasons Hotel in Anahita, on the east coast of the Indian Ocean island.
Perevalov flew in a famous name to crown his birthday celebrations—the Russian rapper Timati. Timati gave a concert. Under a starry sky, and against a view of sea and mangroves, guests danced and twirled to Timati’s foot-stomping hit, “Welcome to St. Tropez.”
Woah, party now
Too much money in the bank account
Hands in the air make you scream and shout
Drinks, private villas, waterskiing out in the lagoon…everything was taken care of. “I was wondering: who the fuck is paying for all this? It was crazy,” the guest told me. Some invitees scarcely knew Perevalov, a former bartender. Those who were his actual friends—including Wiswell—called him Dima.
Lightweight or not, Wiswell was getting rich. In 2010 he had married Natalia at a ceremony in Newport, Rhode Island. While the mirror trades were occurring, Natalia became the beneficial owner of two offshore companies—one in the British Virgin Islands, one in Cyprus. In 2015 a counterparty paid $250,000 into her account. This was for “financial consulting.” Similar payments, totaling $3.8 million, were made through two companies in Beliz
e.
These payments were “undisclosed compensation,” the Department of Financial Services found—“a bribe.” Which bank cleared these bribes? Deutsche Bank in New York.
According to Ed Caesar, author of a New Yorker exposé on the Deutsche Bank scandal, there were further payments made to the Wiswells. These arrived as cash, in a bag. The idea of the money was “to hook you, so you are not going to do unexpected things,” one Moscow broker told Caesar. “Guys always pay something,” the broker said.
The end came in August 2015 when Deutsche Bank suspended Wiswell and then fired him. After that, he disappeared. There were Facebook postings from Southeast Asia and Bali, where the Wiswells went with their two small children. He appeared to be on the run from U.S. authorities and is now allegedly back in Moscow. One friend described him to The New Yorker as “finance’s Edward Snowden.” His lawyer, Ekaterina Dukhina, refused my request for comment. In a wrongful-dismissal suit Wiswell said he’d been scapegoated. Around twenty colleagues, including two senior managers in London, knew all about the trades, he said.
The affair was a grievous blow to Deutsche Bank’s reputation. And an expensive one. The DFS—which has the power to suspend any bank with a branch in New York—fined Deutsche Bank $475 million. London’s Financial Conduct Authority imposed a £163 million penalty. The bank carried out an internal review, Project Square.
The review did not identify the Russians behind the scheme. We don’t know who they were or where the billions went. Or where the money came from in the first place. Effectively, Deutsche Bank facilitated the illegal flight of capital by a number of well-connected superusers and Kremlin insiders.
These fines took place ten days after Trump’s inauguration. The larger picture was disturbing. A Kremlin bank, VTB, run by proxies of the FSB, had seemingly captured Deutsche Bank’s Moscow outpost. Deutsche Bank’s London and New York divisions were economic beneficiaries of this arrangement. While this was going on, Deutsche Bank in New York lent hundreds of millions of dollars to the future president.