The Trump Organization’s problem with possible money laundering

From Azerbaijan to Indonesia, Kazakhstan to the Republic of Congo, allegedly corrupt foreign officials have parked their money in Trump buildings time and again.

Over the past two decades, invest­ing in lux­u­ry real estate has become one of the go-to means of laun­der­ing dirty mon­ey. It’s hap­pen­ing almost every­where real estate is appre­ci­at­ing quick­ly: Manhattan, Paris, Malibu, London, Miami, and Hawaii are all tar­gets, as well as every­where from Boston to Buffalo to Boise. The abil­i­ty to pur­chase high-dol­lar real estate via anony­mous shell com­pa­nies has helped an untold num­ber of crooks and klep­to­crats wash their ill-got­ten gains and pro­tect their wealth from pry­ing eyes.

These klep­to­crats and cor­rupt for­eign offi­cials, of course, couldn’t have done it them­selves. They required the help of “enablers“: lawyers, accoun­tants, com­pa­ny-for­ma­tion agents, and devel­op­ers who glad­ly helped with trans­ac­tions, tak­ing their own cuts along the way. While klep­to­crat­ic for­eign offi­cials gut­ted their own home coun­tries’ finances, and engaged in grand cor­rup­tion, indi­vid­u­als in Western democ­ra­cies helped or turned a blind eye to signs of mon­ey laun­der­ing time and again.

Trump’s first kleptocrat

One was a bru­tal Haitian dic­ta­tor. One was a bur­geon­ing real estate devel­op­er. And both want­ed what the oth­er had.

This abil­i­ty to park these stolen gains in Western real estate has been, unfor­tu­nate­ly, per­fect­ly legal over the past few decades. For exam­ple, American lawyers can set up untrace­able com­pa­nies on clients’ behalf, watch their clients use those com­pa­nies to pur­chase real estate, and sub­se­quent­ly claim attor­ney-client priv­i­lege for the trans­ac­tion. Canada per­mits the for­ma­tion of anony­mous shell com­pa­nies, and British ter­ri­to­ries have pushed back against reg­istries track­ing com­pa­ny own­er­ship. Australian author­i­ties even hes­i­tat­ed to impose anti-mon­ey laun­der­ing restric­tions on accountants.

In the U.S., one ben­e­fi­cia­ry of the influx of for­eign offi­cials’ mon­ey is the cur­rent pres­i­dent. For decades, as mul­ti­ple news reports and inves­ti­ga­tions have found, President Donald Trump’s build­ings — those he helped build and those to which he licensed his name — have drawn alleged klep­to­crats who may be look­ing to fun­nel some of their mon­ey out of their countries.

Both Trump and the Trump Organization have denied that they engaged in any illic­it activ­i­ty in attract­ing the funds, and denied any wrong­do­ing along the way — as do all of these relat­ed for­eign offi­cials. But for years, Trump and his busi­ness part­ners may have prof­it­ed from the con­tin­ued will­ing­ness of Western gov­ern­ments to per­mit for­eign actors — arms deal­ers and nar­co-traf­fick­ers, dic­ta­to­r­i­al rulers and their cronies — to set up anony­mous shell com­pa­nies, skirt past anti-mon­ey laun­der­ing checks, and stash their mon­ey in New York or London or Paris.

All of this was, for years, per­fect­ly legal. Due to new require­ments out of the Treasury Department, which reveals the iden­ti­ty of the actu­al own­er of numer­ous pur­chas­es across cer­tain cities in the U.S., the best days of laun­der­ing-via-real-estate in American real estate may be behind us. But that hasn’t stopped Trump prop­er­ties from prof­it­ing from anony­mous shell com­pa­nies to this day, as we’ve seen hap­pen­ing recent­ly at the Trump International Hotel and Tower in Vancouver.

Now, two years into Trump’s pres­i­den­cy — and thanks large­ly to the work of pro-trans­paren­cy activists — details have final­ly begun to emerge about the alleged klep­to­crats and for­eign cor­rupt offi­cials who were drawn to invest­ing in Trump-linked properties.

A num­ber of for­eign rul­ing fam­i­lies and offi­cials turned to apart­ments and build­ings linked to Trump’s com­pa­nies to safe­guard their funds. Some are still in pow­er. Some have since been deposed. But their involve­ment in Trump-linked prop­er­ties rais­es any num­ber of ques­tions about poten­tial influ­ence they may have on the pres­i­dent, giv­en his con­tin­ued involve­ment in the Trump Organization. While Trump and his asso­ciates have denied that the exis­tence of such finan­cial involve­ment has had any undue influ­ence over his work as pres­i­dent, plen­ty of oth­ers — includ­ing con­gres­sion­al Democrats — believe oth­er­wise

The Republic of Congo

Who: The rul­ing Sassou-Nguesso fam­i­ly
Where: Trump International Hotel & Tower, New York
Context: Last month, promi­nent anti-cor­rup­tion watch­dog Global Witness, which often tracks illic­it funds mov­ing from cor­rupt offi­cial into the West, uncov­ered that the daugh­ter of the long-time ruler of the Republic of Congo, Denis Sassou-Nguesso, had alleged­ly pil­fered mil­lions of dol­lars from state cof­fers to pur­chase a lux­u­ry apart­ment at the Trump International Hotel & Tower in New York. While there’s no indi­ca­tion the Trump Organization broke the law, Global Witness unearthed prop­er­ty doc­u­ments list­ing assort­ed trans­ac­tions that showed Claudia Sassou-Nguesso alleged­ly used a Portuguese mid­dle-man to move mil­lions through a shell com­pa­ny, then used an American law firm to pur­chase a $7.1 mil­lion unit over­look­ing Central Park. (For years, allow­ing shell com­pa­nies to pur­chase real estate was not ille­gal in New York, although those behind shell com­pa­nies now have to iden­ti­fy who the ben­e­fi­cial own­er of said com­pa­ny is.)

None of the enti­ties involved — includ­ing the Trump Organization and the hotel’s board — raised any red flags about why the daugh­ter of the Republic of Congo’s dic­ta­tor, who has remained in pow­er for over two decades, would have the means to spend mil­lions on an apart­ment in the Trump build­ing. The Republic of Congo gov­ern­ment, mean­while, claimed that the entire pur­chase was a “pri­vate affair” and that the con­tract at the heart of the claims is clean.

The apart­ment pur­chase pales in com­par­i­son to the near­ly $70 mil­lion the Sassou-Nguesso fam­i­ly has spent on lux­u­ry goods and real estate in France. Because President Trump per­son­al­ly ran the com­pa­nies that may have prof­it­ed from the deal through the 2016 cam­paign, the Democratic-led House is in the process of sub­poe­naing records about the president’s finances, which would shed some light on the transaction.


Who: Former Haitian dic­ta­tor Jean-Claude “Baby Doc” Duvalier
Where: Trump Tower, New York
Context: Kleptocrats’ desires for Trump-linked con­dos stretch­es back decades: The first known deal between Trump and a blos­som­ing klep­to­crat hap­pened in 1983, when Haitian dic­ta­tor Jean-Claude “Baby Doc” Duvalier snagged a $1.65 mil­lion unit in Trump Tower, which had just been completed.

As Transparency International, an anti-graft orga­ni­za­tion focused on com­bat­ing grand cor­rup­tion, tab­u­lat­ed, Duvalier pil­fered some $800 mil­lion from Haitians in the 1970s and ’80s, mak­ing Duvalier one of the most noto­ri­ous, and lucra­tive, klep­to­crats in the past half-cen­tu­ry. Switzerland in 2011 passed anti-mon­ey laun­der­ing leg­is­la­tion col­lo­qui­al­ly known as “Lex Duvalier.”

As with oth­ers, Duvalier used mid­dle­men and cut-outs to pur­chase the apart­ment, includ­ing American lawyers and a French friend. But Duvalier didn’t hide his tracks well. As inves­ti­ga­tors lat­er uncov­ered, Duvalier loot­ed the state trea­sury via writ­ing checks — some of which, accord­ing to one of the inves­ti­ga­tors hired by the Haitian gov­ern­ment to track down Duvalier’s loot, includ­ed “Apartment in Trump Tower” writ­ten on them. The Trump Organization has denied any wrongdoing.


Who: Former Transportation Minister Ziya Mammadov
Where: Trump International Hotel and Tower, Baku, Azerbaijan
Context: Rather than park his mon­ey in a high-end real estate pur­chase, Mammadov part­nered with the Trump Organization to con­struct a brand new building.

Trump’s project with Mammadov, slat­ed to rise in Azerbaijan’s cap­i­tal of Baku, even­tu­al­ly fell apart due to sag­ging demand and late pay­ments from Trump’s Azeri part­ners, accord­ing to The New Yorker. But before Trump Hotel Baku col­lapsed, the project was taint­ed by seri­ous finan­cial malfea­sance. From Mammadov’s alleged con­nec­tions to Iran’s Revolutionary Guard Corps front com­pa­nies to the fact that the Trump Organization attempt­ed to build the project in the midst of the Azeri regime’s trans­for­ma­tion into a klep­to­crat­ic dic­ta­tor­ship, there’s a rea­son The New Yorker dubbedthe build­ing Trump’s “worst deal.” (The Trump Organization denied that it knew about any of Mammadov’s alleged cor­rup­tion, or his alleged ties to Iran’s Revolutionary Guard Corps.)

And then there’s Mammadov him­self. Described by one U.S. State Department offi­cial in a leaked cable as “noto­ri­ous­ly cor­rupt even for Azerbaijan,” While he’s denied par­tic­i­pa­tion in any cor­rupt activ­i­ties, Mammadov stands at the cen­ter of a pat­tern of alleged cor­rup­tion across the coun­try. Or he did until recent­ly: In 2017, the Azeri dic­ta­tor announced that he’d fired Mammadov from his post as trans­porta­tion min­is­ter. The rea­son? Mammadov’s alleged corruption.


Who: Former Kazakhstani offi­cial and oli­garch Timur Kulibayev
Where: Trump Tower Batumi, Batumi, Georgia
Context: Earlier this year, Kazakhstan’s long-time dic­ta­tor Nursultan Nazarbayev announced he’d be step­ping down from the pres­i­den­cy after near­ly three decades in pow­er. While the country’s polit­i­cal future is sud­den­ly uncer­tain, one name has con­sis­tent­ly been bandied about as a poten­tial suc­ces­sor: Timur Kulibayev, Nazarbayev’s son-in-law and one of the most pow­er­ful busi­ness­men in the country.

Kulibayev is worth some $3 bil­lion, and has pre­vi­ous­ly been con­nect­ed to ques­tion­able deal­ings in the West, includ­ing sig­nif­i­cant­ly over­pay­ing for a London-area man­sion once owned by Prince Andrew. (He’s denied any alle­ga­tion of finan­cial malfea­sance, as has the Trump Organization.)

After Trump’s deal in Georgia first came online in 2011, Kulibayev’s busi­ness­es signed on to help finance Trump Tower Batumi, a planned enclave full of con­dos along Georgia’s Black Sea coast­line. As McClatchy described,  thebuilding’s fund­ing was also con­nect­ed to the scan­dal-plagued BTA Bank, which had recent­ly been over­seen by for­mer Kazakhstani oli­garch Mukhtar Ablyazov. (BTA Bank recent­ly sued for­mer Trump asso­ciate Felix Sater regard­ing the Trump Organization’s pro­posed plans to con­struct a Trump Tower in Moscow, although this law­suit is not relat­ed to the plans in Georgia. Sater is fight­ing the suit.) Despite a ground­break­ing cer­e­mo­ny in 2012, the plans for the Georgian tow­er even­tu­al­ly fal­tered, and the Trump Organization has since pulled out.


Who: Former Almaty may­or Viktor Khrapunov
Where: Trump SoHo, New York
Context: One of the unfor­tu­nate real­i­ties of the post-Soviet space is that many of the nom­i­nal “pro-democ­ra­cy” oppo­nents of the cur­rent dic­ta­to­r­i­al regimes made their own for­tunes in much the same way as regime insid­ers. Such is the case in Kazakhstan, where Viktor Khrapunov is want­ed on alle­ga­tions of swip­ing some $300 mil­lion via all man­ner of cor­rupt deal­ings while may­or of Almaty, Kazakhstan’s largest city. (Khrapunov denies the charges.)

Thanks to ongo­ing court cas­es sur­round­ing Khrapunov’s wealth, the pub­lic has learned that Khrapunov’s step-daugh­ter owned three apart­ments at the for­mer Trump SoHo apart­ment build­ing in New York. The funds used to pur­chase the units alleged­ly wound through assort­ed off­shore shell com­pa­nies, as well as a for­mer bank linked to ter­ror­ist financ­ing. The hotel pur­chas­es were appar­ent­ly made to try to estab­lish Khrapunov’s step-daughter’s U.S. res­i­den­cy, but they also helped her father hide some funds fun­neled out of Kazakhstan. (The Trump Organization denies any wrongdoing.)

The Philippines

Who: Special envoy to the U.S. for Trade, Investment, and Economic Affairs Jose E.B. Antonio
Where: Trump Tower at Century City, Manila, Philippines
Context: Before his appoint­ment as Filipino spe­cial envoy to the U.S., Jose E.B. Antonio had steered Century Properties Group, a Filipino com­pa­ny that helped finance the con­struc­tion of the $150-mil­lion Trump Tower in Manila. There are ques­tions aplen­ty about Trump’s ongo­ing involve­ment with this Trump Tower, but the president’s most recent finan­cial dis­clo­sures indi­cate that his com­pa­nies were, as of 2016, still prof­it­ing from the building.

Antonio’s involve­ment with a Trump prop­er­ty while liais­ing direct­ly with Washington on behalf of Manila rais­es a raft of eth­i­cal ques­tions — not least of which how the White House will ensure that Trump’s pri­vate inter­ests don’t cloud American inter­ests in its rela­tion­ship with the Philippines. (The Trump Organization has denied that the president’s for­eign entan­gle­ments, like those with the Philippines, have affect­ed American pol­i­cy.) Meanwhile, while there’s no indi­ca­tion Antonio has engaged in grand cor­rup­tion, he remains one of the wealth­i­est scions in the Philippines, a coun­try that Transparency International recent­ly ranked among the bot­tom half of the most cor­rupt coun­tries in the world.


Who: Vice pres­i­den­tial can­di­date and bil­lion­aire Hary Tanoesoedibjo (Hary Tanoe)
Where: Trump International Hotel and Tower Bali, Bali, Indonesia; Trump International Hotel Lido, Java, Indonesia
Context: Described by The New York Times as a “bil­lion­aire media mogul with his own polit­i­cal ambi­tions,” Hary Tanoe’s vice pres­i­den­tial run in 2014 ulti­mate­ly fell short. But that hasn’t stopped Tanoe from dream­ing of future polit­i­cal prospects. Even after that unsuc­cess­ful run, Tanoe has hint­ed that his future lies in pol­i­tics — includ­ing at the pres­i­den­tial level.

Amidst these flir­ta­tions with pub­lic office, Tanoe entered into a part­ner­ship with Trump to help finance con­struc­tion of two so-called “six-star” lux­u­ry resorts in Bali and West Java. Trump’s com­pa­ny agreed to the part­ner­ship despite Tanoe’s dubi­ous finan­cial his­to­ry, which includes gov­ern­men­tal alle­ga­tions of tax fraud that have fol­lowed him the past few years — and the fact that he was banned from trav­el­ing abroad in 2017 after alleged­ly send­ing threat­en­ing text mes­sage to Indonesia’s deputy attor­ney gen­er­al, as the Financial Times reported.

Tanoe’s work with Trump has raised plen­ty of unan­swered ques­tions. Some of them have to do with con­cerns about access­ing Chinese state funds to finance Tanoe’s projects, which, if true, would link Trump direct­ly a Chinese state-owned com­pa­ny — at a time when ten­sions between Beijing and Washington are greater than they’ve been in decades. Given how involved Trump has been in craft­ing U.S.-China poli­cies, the poten­tial for Chinese invest­ment in the Indonesian prop­er­ty offers Beijing lever­age against the American pres­i­dent, an unprece­dent­ed sit­u­a­tion in the his­to­ry of Sino-American rela­tions. (Tanoe denies any wrong­do­ing, and the Trump Organization has stood by its Indonesian projects and partners.)

Former Soviet Union

Who: Former Soviet offi­cial Tevfik Arif
Where: Trump SoHo, New York; Trump International Hotel and Tower Fort Lauderdale, Fort Lauderdale, Florida; Trump International Hotel & Residences Phoenix, Phoenix, Arizona; Trump Tower Moscow, Moscow, Russia
Context: No list of links between Trump busi­ness­es and dubi­ous for­eign offi­cials would be com­plete with­out a nod to the ongo­ing ques­tions sur­round­ing the Trump campaign’s involve­ment with Russia. While Arif, a Kazakhstan-born for­mer Soviet offi­cial, wasn’t men­tioned in the final report from spe­cial coun­sel Robert Mueller, Arif’s finan­cial entan­gle­ments with Russia date back years.

The founder of Bayrock Group and busi­ness part­ner of Felix Sater (who once wrote that he and for­mer Trump lawyer Michael Cohen would “get Putin on this pro­gram and we will get Donald elect­ed”), Arif’s finan­cial his­to­ry is poten­tial­ly the murki­est of all the cur­rent and for­mer gov­ern­men­tal offi­cials Trump’s com­pa­nies have worked with. Some of the projects panned out (such as one in Florida), while oth­ers nev­er got off the ground (such as one in Moscow).

Still, Arif’s Bayrock repeat­ed­ly helped fund Trump-linked projects, as mul­ti­pleinves­ti­ga­tions have found. (Arif and the Trump Organization have denied any finan­cial wrong­do­ing.) Arif’s con­tin­ued abil­i­ty to use Bayrock to keep Trump-linked prop­er­ties afloat a decade ago raised numer­ous eye­brows, espe­cial­ly giv­en that much of the source of his financ­ing remained ulti­mate­ly unclear — and much of which emerged from the noto­ri­ous­ly cor­rupt for­mer Soviet space. Even more notably, Arif’s Bayrock act­ed, as Bloomberg’s Timothy O’Brien wrote, as a “bridge” between Trump and Russian investors, accel­er­at­ing the ques­tions that con­tin­ue to cir­cle the pres­i­dent even after the com­ple­tion of the Mueller report.


Original source: Think Progress