This is the third in our series of articles laying out all you ever wanted to know about Trump and Russia, but were afraid to ask. Read parts one, two, and four.
Donald Trump's infatuation with Russia goes back more than 30 years, to the glasnost period of the Soviet Union when communism proved no impediment to get-rich-quick artists with loose scruples and gaudy tastes. In 1988 Trump was famously hoodwinked by Ronald Knapp, a Gorbachev impersonator, who stopped by Trump Tower and shook The Donald’s hand in what the latter clearly imagined was a rare moment in history, not to mention a wide enough slit in the Iron Curtain for capitalists on the make to wriggle through.
In 1986, Yuri Dubinin, Soviet ambassador to the United Nations, invited Trump to Moscow to discuss building a hotel that could stand as a symbol of the mogul’s international reach. Trump sought to erect his signature “Trump Tower” as an unmistakable totem to himself in the once-impenetrable capital of the world’s only other superpower.
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And yet, not then, and no since, have we seen a gilded monstrosity rising in above the onion domes of Saint Basil’s Cathedral. Russia, it seems, has proven too elusive for Trump to establish his highly touted name-brand, even though he and his scions have boasted of the steady stream of rubles pouring their way.
“Russia is one of the hottest places in the world for investment,” Trump said in a 2007 court deposition (about which more anon). “We will be in Moscow at some point.”
A year later, his son Donald, Jr. — a recognizable surrogate on his father’s campaign trail — told a real estate conference the Russian market had “natural strength, especially in the high-end sector,” and, “Russians make up a pretty disproportionate cross-section of a lot of our assets. We see a lot of money pouring in from Russia.” Which sounded a little odd after he said in the same speech, “As much as we want to take our business over there, Russia is just a different world. It is a question of who knows who, whose brother is paying off who. . . . It really is a scary place.”
But, really, scary or not, the Trumps just couldn’t resist, especially once investor confidence in Russia started rising again, with Russia’s reserves climbing to a whopping $250 billion by 2006. This was not the work of financial geniuses. The global prices for oil and gas – Russia’s main exports — were at all-time highs, enabling Putin to pay debts, mint new crony billionaires, and consolidate his power as a lot of money was “pouring“ in a lot of different directions.
In the spirit of “who knows who,” the Trump Organization has tried working through a series of dubious yet well-placed intermediaries, at least one of whom has been linked, in U.S. court, to the Genovese crime family and other mobs.
To date, though, his proudest accomplishment in the East has been hosting the 2013 Miss Universe beauty pageant in Moscow.
Not only did that event afford him the opportunity to be surrounded by gorgeous Slavic women (two out of three of his wives came from former Soviet satellite states), it also enabled him to mingle with Moscow’s extravagantly wealthy upper class. Or, so he claimed.
Upon returning home, Trump bragged to Real Estate Weekly about the beauty contest, “Almost all of the oligarchs were in the room.” In attendance were rich performers like pop singer Philipp Kikorov who participated in the event, but his guest of honor, Vladimir Putin, did not show despite Trump rather fawning invitation. “Do you think Putin will be going to The Miss Universe Pageant in November in Moscow,” Trump tweeted that year. If so, “will he become my new best friend?”
Well, no. But Putin may have made amends for his absence by dispatching via a lacquered box a kind note to a well-connected intermediary, an oligarch who was already one of Trump’s known business associates and cohost of the pageant.
THE AZERI
Aras Agalarov is an Azeri-born entrepreneur whose father was listed by Forbes as one of the 100 wealthiest Russians, with a net worth estimated at $1.33 billion by Forbes. His own son, Emin, a popular singer and dancer, is married to the daughter of Ilham Aliyev, the president of Azerbaijan.
It was through Agalarov that Trump advanced what likely was his main goal, using Miss Universe as a way to gain entry to Moscow’s politically keyed-in sector of developers and industrialists.
Agalarov was seemingly just the man for the job. His son Emin told The Washington Post that his father was very much interested in helping Trump. “I convinced my father it would be cool to have next to each other the Trump Tower and Agalarov Tower, and he was kind of into it at some point,” he said. He was also rising to the top. Not long after the pageant was over, Putin bestowed the Order of the Honor of the Russian Federation++ on the Azeri. In 2014, Agalarov was awarded the contract to build two stadiums for Russia’s hosting of the 2018 World Cup soccer championship, although the project reportedly has been beset with problems.
For all that, Agarlov never seemed to make headway on his idea to break Trumpian ground in black earth.
Nor is it clear to what extent Agalarov still has financial or business ties to the mogul. In September 2015, Agalarov said that he remained in touch with the Manhattan mogul, and Trump had even been filmed in a video Agalarov’s son Emin made with the winners of the Miss Universe pageant.
THE KAZAKHSTANI
The development company, the Bayrock Group, was founded by Tevik Arif (in Russian known as Tofik Arifov), a Soviet émigré originally from Kazakhstan who had previously served as a Soviet-era commerce official. Trump claimed in a court deposition that the proposal for him to license his name to properties in New York, Florida and Arizona may have come from Felix Sater, a Soviet-born recent hire to Bayrock, whose offices are in midtown Manhattan.
According to the New York Times, Arif and Sater’s connections were exactly what Donald, Jr. would later claim were so hard to come by.
They had done “numerous deals all over the world,”Trump stated in a court deposition. “Bayrock knew the people, knew the investors, and in some cases I believe they were friends of Mr. Arif. And this was going to be Trump International Hotel and Tower Moscow, Kiev, Istanbul, etc., Poland, Warsaw.”
The deposition was tied to an eventual condo buyers’ lawsuit against the Trump Organization for what did emerge from the Bayrock partnership, the Trump SoHo. Buyers of condominiums in the 46-storey luxury building on Spring Street alleged that Trump and others misled them as to the worth of the properties and that the construction had been assisted by what the Times called “undisclosed involvement of convicted felons and financing from questionable sources in Russia and Kazakhstan.”
In the end, the case was settled out of court and 90 percent of $3.16 million in condo buyer deposits was refunded. Meanwhile, a concurrent criminal investigation into whether or not the building of Trump SoHo had involved any fraud was closed as a result of the civil litigation deal, which stipulated that the condo buyers refrain from continuing to aid New York prosecutors with their case.
But Sater’s criminal background was by then a matter of public record.
In 1991, when he was a young and thriving stock broker, he was convicted on assault charges after he slashed a man in the face with a broken piece of glass from a margarita.
He and two business partners, Salvatore Lauria and Gennady Klotsman, were implicated in 1998 in money laundering and stock manipulation in a criminal complaint that was filed in secret. Owing to the recondite nature of the case, the defendants’ stance is only attributable to Klotsman, who says that he and Sater pleaded guilty. However, prosecutors would not comment on the record about it. “A subsequent indictment in March 2000 stemming from the same investigation,” the Times’s Charles Bagli reported in 2007, named Sater as an unindicted co-conspirator “and a key figure in a $40 million scheme involving 19 stockbrokers and organized crime figures from four Mafia families.” Edward Garafola, a member of the Gambino crime family, had evidently tried to extort money from Sater and Lauria, according to court records; rather than turn to the authorities, they sought protection from Ernest Montevecchi, a member of the Genovese family, to get Garafola off their backs.
Evidence of Sater’s money laundering scheme was uncovered in a Manhattan Mini-Storage locker, along with pistols and a shotgun. By that point, however, he and Klotsman had fled to Russia. Lauria, too, also left New York. They all eventually came back and pleaded guilty in exchange for their offer to help the U.S. attorney go after other mobbed-up fraudsters.
Lauria later joined Sater at Bayrock, and what was not known until recently, when U.S. federal court records were unsealed, was that both had become FBI informants. Sater, according to the Times, helped “disrupt an organized crime ring on Wall Street and deal with an unexplained national security matter involving his foreign connections.”
Sater went on to serve as a consultant to the Trump Organization, the parent company that oversees the candidate’s multifarious empire, with a business card identifying his relationship and even an office in the Trump Tower on Fifth Avenue. Lauria, meanwhile, who brokered the Trump SoHo deal, also got Bayrock to do business with FL Group, an Icelandic company that Putin-friendly businessmen are said to favor.
The Washington Post disclosed in May that Sater has also been accused of threatening his erstwhile Bayrock associates. A project manager, Ernest Mennes, alleged in a lawsuit filed in 2007 that a year earlier Sater had warned him that he “would electrically shock Mr. Mennes’ testicles, cut off Mr. Mennes’ legs, and leave Mr. Mennes dead in the trunk of his car,” as the lawsuit documents stated. Sater's attorney called these and other claims that Sater has used violence to silence people an "outright fabrication."
Trump later claimed to have “forgotten” Sater, although Politico reported that the latter visited Trump Tower on undisclosed business as recently as July 2016. (Emails and documents obtained by Forbes also show Donald Trump, Jr. corresponding with Sater, identified as the "managing director" of Bayrock.) The conman-turned-FBI-mole also made a contribution of $5,400 — the maximum legal amount — to Trump’s presidential campaign. Records even indicate that the campaign refunded him $120 owing to his initial overpayment of the legal limit.
As it happens, Sater’s father, Mikhail (or Michael Sheferofsky), was indicted in 2000 on two counts by Loretta Lynch, then still a U.S. Attorney for the Eastern District of New York: extortion and conspiracy to commit extortion, ranging from 1990 to 1999. Mikhail’s accomplice was none other than Ernest Montevecchi, the same Genovese gangster to whom Felix had turned for help with the Gambinos. Sater used intimidation and the threat physical violence to take over “restaurants, food stores, and a medical clinic” in Brighton Beach, according to the Lynch indictment. He pleaded guilty and got three years probation. This case, too, was sealed until 2006.
As for Trump’s dream of seeing his gilt moniker reach into the Moscow skyline, it never came to pass. He signed a one-year agreement with Bayrock to find a Trump Tower location in the Russian capital. Bayrock came back with a site that was home to a former pencil factory; and Felix Sater was instrumental in developing it. The deal fell apart.
Trump many other trial balloons into the Russian air only to see them pop. There were his abortive condos in Moscow project in 1996; the luxury “24K Super Premium Vodka” that went out of business in 2008; the statue of Christopher Columbus — which was taller than the Statue of Liberty, made by Georgian sculptor Zerab Tsereteli and donated by the Russian government — that was supposed to land in Trump’s Riverside South development in Manhattan. It was rejected by New York and other cities until it found a home in Puerto Rico.
DMITRY’S FOLLY
Not all of Trump’s business dealings with dubious Russians have ended with such a whimper, however.
Dmitry Rybolovlev, a Monaco-based fertilizer king has a net worth estimated at $7.7 billion. In 2008, he bought a 17-bedroom Florida mansion, pretentiously named “Maison l’Amite,”or the Friendly House, from Trump for $95 million. That price tag was more than double the $41 million that Trump paid for it just a few years earlier, and especially impressive given that the deal was done at a time when Florida’s real estate market was cratering.
Immediately after the purchase, as Politico’s Michael Crowley reported, Rybolovlev became embroiled in a messy divorce. According to documents revealed as part of the Panama Papers disclosures, his wife accused him of hiding assets in offshore trusts to prevent her from getting her share He's made other extravagant purchases such as the $22 million apartment for his daughter in New York. (The Rybolovlevs' six-year legal battle quietly came to an end in October 2015 after Dmitry agreed to make an undisclosed settlement to Elena, who was originally awarded $4.5 billion by a Swiss court.)
Now he says he wants to tear down the Friendly House, reportedly due to a mold problem, at a cost of $234,000.
Possibly owing to his divorce woes, Rybolovlev later told a court during a deposition that he didn’t even own the house. Trump replied in the press that “somebody paid me $100 million” for it.
For Trump, dealing with Putin’s Russia as a private citizen has been about nothing more than cashing in. As a presidential candidate he has flirted with the idea of recognizing the unlawful annexation of Crimea and unconditionally lifting U.S. sanctions — even as the war in east Ukraine grinds on and a campaign of annihilation in Syria gathers momentum. Russia is a notorious kleptocracy. A Spanish prosecutor who has spent years trying to unravel the Kremlin’s links to organized crime and use of criminal networks has called Russia “a virtual mafia state.” Yet to hear Donald Trump talk, dealing with Russia is on par with working a board room, no real challenge for a seasoned negotiator who’s spent 30 years trying and failing to build a monument to himself in Moscow.
