What Secrets Is Mueller Finding As He Investigates Trump's Shady Foreign Deals?-- Part II

-by Valley Girl

This is my second piece looking at an article by Adam Davidson. The present article appeared on August 21, 2017, in the New Yorker, entitled Trump’s Business of Corruption. You can find Part I of this two part series here. You'll notice in our titles Davidson’s subtitle, "What secrets will Mueller find when he investigates the President’s foreign deals?"

Before you read on, I hope you’ll watch this ~7 minute long Davidson interview for the New Yorker. Its good background, and it goes by very quickly. The New Yorker video resisted all efforts by DWT experts to embed the video here. Given that, I transcribed parts of it:

I’m not a legal reporter, I’m not a crime reporter, I’m a business reporter. And when a business is doing things that just don’t make sense, it just makes me keep wondering-- what’s going on, what am I missing?

... the theory of the case is pretty simple. This is right after the financial crisis, there’s not a lot of real estate deals to be had. It was the paradoxical period in Trump’s life. Because of The Apprentice, because of his TV stardom, he had never been more famous. He had never been thought of more as the model of a successful businessman, of a successful developer. And his business was in a lot of trouble... multiple bankruptcies, he was losing control of the casinos. There was a real need for cash.

[snip]
There’s a few reasons why these Georgians were interested in the Trump brand. So, part of it I think, that people have told me, it really clicks with what wealthy Russian men, or former Soviet Union men think of as manliness. They love the gold, they love the marble, the flash.. you know, the old guy with flashy clothes and the young, beautiful wife, and there’s a real brand synergy there that maybe there isn’t in other parts of the world.

Remember that the Trump Organization is switching to an international posture, with four or five people doing these international deals, with very little experience overseas. And they’re going in to very complicated countries with deeply corrupt economies, and really problematic interactions between business and politics. And eventually what happens, though, you are in bed with some really bad people.

[snip]
The reason I started caring about this story is when Donald Trump, in an interview with the New York Times, basically came out and said that if Robert Mueller the special counsel began investigating his business deals, he would consider that crossing a red line, and hinted that he might fire him. Now, I already knew a fair amount about the Trump Organization, and had the strong suspicion that if there was any kind of collusion, we don’t know if there was but there possibly was, it probably had its roots in business deal.

This is where I stopped transcribing. But if you go to the link, you’ll understand why Adam Davidson was so careful in his use of words in the video and throughout his writing. I certainly did!

I’ll summarize the present article by quoting key parts of it. The original is ~7000 words, so this was a challenge. The focus is Batumi, Georgia, on the Black Sea. Georgia was part of the former Soviet Union. Map of the region:

President Donald Trump’s attorney Jay Sekulow recently told me that the investigation being led by Robert Mueller, the special counsel appointed by the Justice Department, should focus on one question: whether there was “coördination between the Russian government and people on the Trump campaign.” Sekulow went on, “I want to be really specific. A real-estate deal would be outside the scope of legitimate inquiry.” … President Trump has been more blunt, hinting to the Times that he might fire Mueller if the investigation looks too closely at his business dealings.

Several news accounts have confirmed that Mueller has indeed begun to examine Trump’s real-estate deals and other business dealings, including some that have no obvious link to Russia. But this is hardly wayward. It would be impossible to gain a full understanding of the various points of contact between the Kremlin and the Trump campaign without scrutinizing many of the deals that Trump has made in the past decade.

One foreign deal, a stalled 2011 plan to build a Trump Tower in Batumi, a city on the Black Sea in the Republic of Georgia, has not received much journalistic attention. But the deal... involved unorthodox financial practices that several experts described to me as “red flags” for bank fraud and money laundering; moreover, it intertwined his company with a Kazakh oligarch who has direct links to Russia’s President, Vladimir Putin. As a result, Putin and his security services have access to information that could put them in a position to blackmail Trump.

Trump did very little to develop the Batumi property... In exchange for the million-dollar payment, he granted the right to use his name, and he agreed to visit Georgia for an elaborate publicity campaign, which was designed to promote Georgia’s President at the time, Mikheil Saakashvili …The campaign was misleading: the Trump Tower Batumi was going to be funded not by Trump but by businesses with ties to Kazakh oligarchs, including (those with close ties to Putin). Kazakhstan has the largest economy in Central Asia, based on its vast reserves of oil and metals, among other natural resources. Kazakhstan is notoriously corrupt, and much of its wealth is in the hands of (one) extended family and favored associates.

Trump visited Georgia in April, 2012, at a politically vulnerable time for Saakashvili. (In 2007) Transparency International and other N.G.O.s were reporting that élite corruption-- in which wealthy, politically connected people receive better treatment from courts, prosecutors, and government administrators-- was rampant in Georgia... few Western investors or brands were willing to put money into the country. Saakashvili himself was increasingly unpopular, and the Trump deal was meant to help salvage his reputation.

Saakashvili showed Trump around Tbilisi, the capital, and Batumi. Georgian television covered the events fawningly, promising viewers that Trump would soon build a second tower, in Tbilisi. One broadcaster proclaimed that Trump was the world’s top developer. At the groundbreaking ceremony in Batumi, Saakashvili said that the tower was “a big deal . . . that changes everything around here.” At another event, beneath a banner that proclaimed “trump invests in georgia,” he thanked Trump for being part of the project... He also awarded Trump the Georgian Order of Brilliance. Trump, in turn, praised Saakashvili. “Everybody in the world, they speak of Georgia and the great miracle that’s taking place,” he said. Saakashvili-- “He’s one of the great leaders of the world.”

Virtually none of the things that Saakashvili and Trump said about the deal were true.

The announcement of the Batumi tower was handled with cynical opportunism by both Trump and Saakashvili, but that was not the deal’s biggest problem. The developer that had paid Trump and invited him to Georgia-- a holding company known as the Silk Road Group-- had been funded by a bank [B.T.A. Bank of Kazakstan] that was enmeshed in a giant money-laundering scandal. And Trump, it seemed, had not asked many questions before taking the money.

But nobody (before had) seemed willing to put money into Batumi. Saakashvili and other Georgian officials sought financial backers, but they could not get anyone to invest in a run-down Georgian port.

Then, in 2005, something remarkable happened. Saakashvili and President Nazarbayev, of neighboring Kazakhstan, announced that B.T.A. Bank-- the largest bank in Kazakhstan-- was giving several hundred million dollars in loans to help develop Georgia. The loans would pay for the construction of hotels in Batumi, the expansion of the Georgian telecommunications industry, and the growth of a Georgian bank. Curiously, all the loans went to subsidiaries of one company: the Silk Road Group, which specialized not in real-estate development but in shipping crude- and refined-oil products, by rail, from Kazakhstan to other countries. The Silk Road Group, which had annual revenues of roughly two hundred million dollars, was planning, in an instant, to venture into several new industries. Compounding the risk, this expansion involved taking on a debt one and a half times its annual revenue.

In the years before the Trump Tower Batumi deal, B.T.A. Bank became entangled in a spectacular crime. [See article for details.] The former chairman of the Kazakhstan B.T.A. Bank, Ablyazov, fled the country for London-- taking billions of dollars in bank funds with him.

In 2010, when a Trump Organization executive, Michael Cohen, began negotiating with the Silk Road Group about licensing Trump’s name for the Batumi tower, Ablyazov was facing eleven lawsuits in the U.K. The Kazakh government, which had indeed seized control of B.T.A. Bank, had sued him to reclaim ten billion dollars that he had allegedly siphoned out of the country.

It would have taken only a Google search for the Trump Organization to discover that the Silk Road Group had received much of its funding from B.T.A. Bank, which, at the time of the Batumi deal, was mired in one of the largest fraud cases in recent history. The Silk Road Group had even been business partners with the central figure in the scandal: Ablyazov and the Silk Road Group were two of the owners of a bank in Georgia. I asked Cohen, who visited Georgia with Trump, if he had been concerned about the Silk Road Group’s connection to B.T.A. Bank. “I didn’t even know that B.T.A. was involved in this entire scenario up until the moment you told me,” he said. [only a Google search away]

I recently spoke with John Madinger, a retired U.S. Treasury official and I.R.S. special agent, who used to investigate financial crimes. He is the author of “Money Laundering: A Guide for Criminal Investigators.” When I told him what Cohen had said to me, he responded, “No, no, no! You’ve got to do your due diligence. You shouldn’t do a financial transaction with funds that appear to stem from unlawful activity. You have to care-- otherwise, you’re at risk of violating laws against money laundering.”

When I described to Madinger the various entities and transactions involved in the funding of the Trump Tower Batumi, he said, “That is what you would expect to see in a money-laundering operation: multiple shell companies in multiple countries. It’s designed to make life hard for people trying to follow the transaction.”

With minimal due diligence, Trump Organization executives would have noticed that the Silk Road Group exhibited many warning signs of financial fraud: its layered and often hidden ownership, its ornate use of shell companies, its close relationship with a bank that was embroiled in a financial scandal... But by 2012 Trump was struggling in the U.S. market. His biggest investment, in American casinos, had proved ruinous, and he was now a minority owner of a near-bankrupt business. Trump had defaulted on loans multiple times, and nearly every bank in the U.S. refused to finance deals bearing his name. And so Trump turned to people in other countries who did not share this reluctance to give him money.

At the time, the Trump Organization had only a handful of staff members involved in dealmaking. His children Ivanka Trump and Donald Trump, Jr., assumed a management role in many of these foreign projects... Trump, Jr., helped oversee the Batumi deal.

The Financial Action Task Force... is led by representatives from thirty-seven nations. In 2007, the task force issued a report about the use of real-estate projects for money laundering.

The report states that money launderers often find that “buying a hotel, a restaurant or other similar investment offers further advantages, as it brings with it a business activity in which there is extensive use of cash.” Casinos-- like the one planned for the Trump Tower Batumi-- are especially useful in this regard. The casino was to be owned by the Silk Road Group and its partners.



So many partners of the Trump Organization have been fined, sued, or criminally investigated for financial crimes that it is hard to ascribe the pattern to coincidence, or even to shoddy due diligence. In criminal law, there is a crucial concept called “willful blindness”: a person can be convicted of a crime even if he was unaware of certain aspects of the crime in which he was engaged. In U.S. courts, judges routinely explain to juries that “no one can avoid responsibility for a crime by deliberately ignoring what is obvious.”

John Madinger, the former Treasury official, said that, in any deal that might involve money laundering, there is one critical question: “Does the financial transaction make economic or business sense?” In recent years, a lot of residential housing has been built in Batumi, but most of it has consisted of what Colliers, the market-analysis firm, calls “low-segment”-- down-market-- apartments. The Trump Organization, with its extensive experience in the luxury real-estate market, could surely sense that it would not be easy to enlist hundreds of wealthy people to buy multimillion-dollar condominiums in Batumi. I asked several New York real-estate developers to assess the proposed tower... one, who spent years making deals in the former Soviet Union, told me, “A forty-seven-story tower of luxury condominiums in Batumi is an insane idea. I wouldn’t have gone near a project like this.”

[Note, however, how this insane idea would have appealed to Trump’s massive ego-- I just couldn’t leave this part out, below.]

Melanie A. Bonvicino, who handles communications for the Silk Road Group, told me that the Trump Tower Batumi deal demonstrated an openhearted vision. “With the Batumi project, Trump was once again able to demonstrate his keen business sense,” she wrote in an e-mail. “Donald Trump in his role as futurist and visionary ordained the region as the next big thing. Mr. Trump had an immediate grasp over the geopolitical significance of the Republic of Georgia and its Black Sea region, acknowledging its vast potential by jointly transforming this hidden gem into the next Riviera. In the élite realm of global residential and commercial real-estate developers, the Trump moniker was and remains synonymous with Coca-Cola, Pepsi, and Michael Jackson.”

Keith Darden is a political scientist at American University who has written extensively on the use of compromising information-- kompromat-- by former Soviet regimes against people they want to control. He told me that Kazakh intelligence is believed to collect dossiers on every significant business transaction involving the country. This would be especially true if a famous American developer was part of the deal, even if it would not have occurred to them that he might one day become the U.S. President. “There is no question-- they know everything about this deal,” Darden said.

Darden explained that Kazakh intelligence agents work closely with their Russian counterparts.

Robert Mueller has assembled a team of sixteen lawyers. One of them is fluent in Russian, and five have extensive experience investigating and prosecuting cases of money laundering, foreign corruption, and complex financial conspiracies. The path from Trump to Putin, if one exists, might be found in one of his foreign real-estate deals.

When Mueller was appointed special counsel, his official writ was to investigate not just “any links and/or coordination between the Russian government and individuals associated with the campaign of President Donald Trump” but also “any matters that arose or may arise directly from the investigation.” Much hinges on the word “directly.” Sekulow, Trump’s lawyer, insists that Mueller’s mandate essentially stops at the Russian border. Pawneet Abramowski, a former F.B.I. intelligence analyst, told me that Sekulow’s assertion is nonsensical. “You must follow the clues,” she said. When investigating a businessperson like Trump, “you have to follow the money and go wherever it leads-- you must follow the clues all the way to the end.”

In his article, Adam Davidson is giving Mueller what amounts to a very clear road map for following many of the clues. And these, one hopes, will ultimately prove to be part of Trump’s undoing. Listen to the two-bit hustler... hustling: