Consider this story a reminder that the Trump-Russia collusion story is multi-pronged. At its heart, the Trump-Russia collusion story is likely a simple case of quid pro quo. But there appears to be a lot of seemingly separate instances of quid pro quo that took place. Among the list of things Russia seems to have been looking to receive from Trump’s possible Presidency were efforts to drop American sanctions on Russia, efforts to allow Russia’s ally Bashar al-Assad to reconquer parts of Syria he had lost to American-backed rebels, and efforts to allow Russia to legitimize their invasion of Ukraine. Among the list of things Trump seems to have been looking to receive during the Presidential campaign were assistance in defeating Hillary Clinton, and building a Trump Tower in Moscow.
But, the quid pro quo relationship between Trump and Russia likely began far before the 2016 election. Russian oligarchs, who basically work for Putin, were flush with cash that they wanted to get out of Russia. Trump was deeply in debt several times. It certainly appears that those two separate needs of Russia and Trump helped them form a mutually beneficial relationship.
One such example is what happened in 2008. To set the stage, recall that right before the crash of the housing market, Donald Trump pursued what would become an ill-fated project to build the second tallest building in Chicago. In order to get financing for such an immense project, Donald Trump had to personally guarantee a $640 million loan from Deutsche Bank with a guarantee of $40 million of his own money. When the housing market crashed, the new Trump Tower in Chicago had trouble selling its units for the exorbitantly high prices that were required to turn a profit. That’s where Trump’s trouble started. He wasn’t able to make the payments on the debt, and looks to have had trouble coming up with the $40 million he had guaranteed to secure his loan. So, likely as a stalling tactic, Donald Trump sued Deutsche Bank for $3 billion, blaming them for the housing market crash that had doomed his Chicago project:
Trump had taken out a $640 million loan — including $40 million he’d personally guaranteed — to finance the Trump Tower on the site of the old Chicago Sun-Times building.
When the Great Recession hit, it took a big bite out of the building’s luxury condo sales. Trump asked Deutsche Bank and his other creditors for more time to pay back his loans. When they denied an extension to the billionaire, he sued.
According to court documents obtained by the Daily News, Trump cited a “force majeure clause” in the original contract — one that said acts of God and impossible-to-predict circumstances let him out of the requirements. He wasn’t just looking to get off the hook — Trump also asked for $3 billion in damages, claiming the company’s “predatory lending practices” had hurt his reputation.
The suit was likely a ploy to gain better leverage at pushing his creditors for more time, and Deutsche Bank wasn’t having any of it.
In a counter-suit, the German conglomerate fired back that “Trump is no stranger to overdue debt” and called his lawsuit “classic Trump” after highlighting his casino’s bankruptcies.
The important thing to note from this story is that it appears Donald Trump simply did not have the $40 million he had guaranteed in order to receive his loan to build Trump Tower Chicago. However, his stalling tactic of suing Deutsche Bank appears to have paid off. While the competing lawsuits worked their way through the courts, it appears Donald Trump was able to come up with enough money to convince Deutsche Bank to agree to a settlement, and, shockingly, after being sued by Trump for $3 billion, agree to loan Trump even more money:
The two sides ended up settling on an agreement in 2010 that gave Trump a five-year extension on paying the money back. Deutsche Bank has since issued other loans to the billionaire.
So what happened? How did Deutsche Bank go from battling in court with Trump to loaning Trump more money in just 2 years time? Did the Trump Tower Chicago suddenly start turning a profit? That does not appear to be the case. It took through at least 2014 for anywhere close to all of the Trump Tower condos to finally be sold, meaning for years there were multiple expensive units sitting empty and taking a loss. And it appears that sales did not start to finally pickup up until 2012, two years after Deutsche Bank decided to renew their lending to Trump:
With two condominiums sold in the past six days, the developer has only six of the original 486 units left to sell.
It has taken a long time to get to this point. The New York developer began selling condos for the riverside skyscraper way back in September 2003. No other active condo project in downtown Chicago has been in its marketing phase for that long.
There have been bumps in the road. In 2007, Donald Trump cancelled early-buyer deals, allowing the organization to sell condos at new, higher prices. The next year, after sales had languished for about two years, Mr. Trump needed two extensions on the building’s $640 million construction loan.
“We’re not in a hurry to get rid of the last inventory, but the sales run is coming to an end,” said Ms. Martens, who has been selling in the building for seven years. The slowest point was in 2011, she said, “but sales kicked up in 2012, and it’s been good since then.”
So, how was Donald Trump able to satisfy Deutsche Bank such that they would consider loaning him even more money? The answer appears to be another real estate project that Trump was working on during the height of the housing market crash, a project that Trump was miraculously able to use to secure a huge profit even despite what was one of the worst real estate markets in decades.
This project was a mansion that Trump had purchased in South Florida in 2004 for a whopping price tag of $41 million. Trump put the property back on the market in 2006 for an even more eye-popping sum of $125 million. Now, real estate in South Florida had indeed spiked in the years from 2004 through 2006. South Florida was in many respects the epicenter of the housing bubble that precipitated the crash. If Donald Trump had managed to sell that property in 2006, it wouldn’t have been anything too unusual. It would have likely just been seen as an astute investment by Trump that had paid off handsomely. However, Trump was not able to sell the property in 2006, and in the spring and summer of that year, the housing market in South Florida started crashing, and it crashed hard.
By 2008, when Donald Trump was having trouble paying his loan guarantee to Deutsche Bank for the Trump Tower Chicago, real estate values in South Florida had crashed back to the same levels they had been at in 2004, when Trump bought his South Florida mansion for $41 million:
But, then something curious happened: Donald Trump sold his South Florida mansion, and not for anywhere near as low as the $41 million he had paid for it, which would have probably been a decent price considering the gyrations of the South Florida housing market at the time. Instead, he sold it for $95 million, netting a $54 million profit. How on earth could this have happened? Nobody was selling Florida real estate at levels anything close to 2006 prices anymore. It was 2008. The market was terrible. Why would anyone pay that amount?
As it turns out, it wasn’t just anyone who did pay that amount. It was a Russian oligarch named Dmitry Rybolovlev.
“The Russian” was Dmitry Rybolovlev, a cardiologist-turned-potash-magnate (Russian newspapers called him “the Fertilizer King”) whose net worth was estimated in the financial press to be well north of $10 billion. By 2008, when he first inquired about the mansion, Trump had already cut the price to $100 million, and Rybolovlev offered even less, $75 million.
But Rybolovlev is well known for buying homes as if he’s spending Monopoly money. His 24-year-old daughter Ekaterina bought Skorpios, the 74-acre Greek island where Aristotle Onassis married Jackie Kennedy, for a price estimated at $150 million or more. Then there’s the family’s $88 million apartment overlooking Central Park West, the $20 million home in Hawaii acquired from actor Will Smith and the $135 million residence in the Swiss resort of Gstaad. (To be perfectly fair, that one consists of two houses.)
Trump, sensing his fish had taken the hook, hung tough on his price. On July 15, 2008, Rybolovlev bought the house for $95 million (Trump says credits on the closing costs brought the total package to $100 million), believed to be the biggest home sale in American history.
Although some real-estate publications made much of the fact that the mansion was on the market for nearly two years before it sold, Digges, the real-estate agent who sold it, wasn’t surprised. “When you’re sitting in that price range, there’s not 50 people in line waiting,” she said. “People with that kind of money are not readily available.”
Confidentiality agreements, she said, prevent her from discussing exactly how Rybolovlev came into the picture other than to say that “the client came to me on a referral.” Trump himself has said he never met Rybolovlev, who conducted the entire transaction through intermediaries.
What makes the story even more unbelievable is that this Russian oligarch never moved in. He took the mansion which he had purchased at way above market price and razed it to the ground, subdivided the land, then sold at least one of the pieces of the land to an unknown buyer:
And last year, Rybolovlev gave up on the mansion, successfully seeking permission to tear it down and divide the land under it into three parcels.
Why did this Russian oligarch do all of this? Is he just a terrible businessman? Seems hard to believe that a man who had made billions could be a terrible businessman. More than likely, the reason goes back to the fact that Russian oligarchs, like the buyer of Trump’s mansion, have for years been trying desperately to move money out of Russia and into hard assets in other countries, hard assets such as American real estate:
By the Russian Central Bank’s estimate, around $350 billion has left Russia since 2008
So, this Russian oligarch got $95 million worth of his Russian rubles converted into American real estate. Not actually a bad deal when you consider that the value of the Russian ruble in U.S. dollars has cratered almost 65% since mid 2008. And what did Donald Trump get out of the deal: the cash he needed to satisfy Deutsche Bank.
Still, the question remains: why didn’t the Russian oligarch negotiate a little harder on the price of the property he evidently didn’t even really want? Why overpay by so much? Besides converting rubles to dollars, was there something else he was doing? Was this Russian oligarch buying something else from Donald Trump besides just a property? Those questions currently remain unanswered, but there are some signs that those questions might not remain unanswered forever.
This is not the only case of what appears to have been a quid pro quo between Trump and Russians long before the 2016 election. Donald Trump’s condo buildings in Sunny Isles, Florida have sold so many units to Russians that the area has been nicknamed “Little Moscow”:
The first of three identical 45-story Trump-branded condo buildings opened in this oceanfront city at a seemingly terrible time, just as the recession was dawning and the real estate market was starting to crumble.
Many other projects in South Florida floundered in the lead-up to the national housing collapse of 2008. But the Trump buildings were among those that survived, in part because the developers were able to turn to another business source seemingly immune to the factors dragging down the U.S. market: wealthy Russians looking to move their money out of the volatile post-Soviet economy.
“They were trying to save their butts, but in fact, they were saving ours,” said Jose Lima, who was a top salesman for the company that developed the Trump towers and marketed the units. He estimates that one-third of the 500 units he sold were bought by Russian speakers.
Today, there are so many Russians living in this city, a 1.8-square-mile collection of high-rise condos and upscale strip malls with caviar shops and Russian delis about 25 minutes north of Miami Beach, that locals call it “Little Moscow.” And the Trump brand has been dominant — with six condo skyscrapers in Sunny Isles carrying its logo.
Some journalists have understandably questioned if what was actually going on between Donald Trump and all of these Russian buyers of his real estate was, in fact, money laundering:
It’s important to keep this trait in mind when trying to make sense of the Russia story. Trump’s affinity for Russia, after all, is causing problems for him. It has created tensions with his own staff and his Republican allies in Congress. Most voters now believe he has something to hide. And the constant talk of Russia on television clearly enrages Trump.
He could make his life easier if only he treated Vladimir Putin the way he treats most people who cause problems — and cast Putin aside. Yet Trump can’t bring himself to do so.
This odd refusal is arguably the biggest reason to believe that Putin really does have leverage over Trump. Maybe it’s something shocking, like a sex tape or evidence of campaign collusion by Trump himself. Or maybe it’s the scandal that’s been staring us in the face all along: Illicit financial dealings — money laundering — between Trump’s business and Russia.
Trump also had a habit of selling real estate to Russians in all-cash deals. Money launderers like such deals, because they can turn illegally earned cash into a legitimate asset, usually at an inflated price that rewards the seller for the risk. One especially dubious deal was Trump’s $95 million sale of a Palm Beach house to a Russian magnate in 2008 — during the housing bust, only four years after Trump had bought the house for $41 million.
So, it was quite interesting news when it was reported that a top money laundering prosecutor was added to the Mueller investigation team:
Attorney Kyle Freeny has reportedly transferred from the Justice Department’s highest profile money laundering case to join special counsel Robert Mueller’s investigation into ties between Moscow and President Trump’s campaign. Freeny was spotted at a Washington courthouse Friday along with other members of Mueller’s team as Jason Maloni, a spokesman for Trump’s former campaign chairman Paul Manafort, testified before a grand jury. It’s not clear when exactly Freeny became involved in the Russia probe, but court records cited by Politico said she withdrew from a Justice Department case against the “Wolf of Wall Street” producers on June 26. She is the 17th lawyer known to be working for Mueller’s ongoing probe. Mueller’s office confirmed Freeny’s involvement in the investigation but did not provide further details, according to Politico. She has been working for the Justice Department’s Money Laundering and Asset Recovery Section since last year.
And what could this money laundering prosecutor be working on within the Mueller investigation? It sure looks like it could be this $95 million sale of Trump’s South Florida mansion to a Russian oligarch:
This sale of the mansion has now become part of U.S. special counsel Robert Mueller’s investigation into potential Trump links to Russia, according to Bloomberg.
Not only that, but it appears the Mueller investigation is interested in Donald Trump’s relationship with Deutsche Bank, as well:
Deutsche Bank AG provided records to special prosecutor Robert Mueller’s investigation after receiving a subpoena several weeks ago, according to a person briefed on the matter.
One other thing to consider regarding this Russian oligarch, Dmitry Rybolovlev, who helped bail Trump out of a financial mess in 2008. It seems Dmitry Rybolovlev may have also taken a keen interest in the 2016 election. During the campaign, Rybolovlev’s private jet was spotted in the same place as Donald Trump’s jet on multiple occasions due to what Rybolovlev described as “pure coincidence”:
Rybolovlev had previously given only a terse explanation for the coinciding flights before McClatchy published a story this week describing how their aircraft pulled into gates at the Charlotte Douglas International Airport less than an hour apart on Nov. 3, 2016. Rybolovlev’s jet landed shortly before Trump appeared at a rally in nearby Concord. Rybolovlev’s plane had first flown to the airport in Concord, and then took a 24-minute flight to Charlotte, where Rybolovlev spent the night.
Last Oct. 30, four days before his second Charlotte visit and on the same day that Trump was in Las Vegas, Rybolovlev’s plane landed at Las Vegas’ McCarran International Airport early in the afternoon and taxied to the private hangar of casino tycoon Sheldon Adelson, flight records obtained by McClatchy show. Rybolovlev’s plane was only on the ground for about an hour and 20 minutes, even less than the two hours reported earlier.
Oh, and another thing interesting about this Dmitry Rybolovlev: he was recently detained in Monaco and is being investigated by Switzerland for bribery, corruption, and influence peddling:
Russian billionaire Dmitry Rybolovlev was charged by Monaco prosecutors in relation to a probe into corruption and influence peddling in his long-running dispute with Geneva art dealer Yves Bouvier.
Rybolovlev and three others were charged Wednesday, prosecutor Sylvie Petit-Lelair said by telephone, adding that she couldn’t confirm the exact charges against them. Rybolovlev and the others were released after being detained overnight for questioning, subject to security constraints on their movement, Petit-Leclair said. Herve Temime, a lawyer for Rybolovlev, didn’t immediately respond to requests for comment.
There are surely many shoes yet to drop from the Mueller investigation regarding Donald Trump’s relationship with Russia. Don’t be surprised if this is one of them.