Why Robert Mueller Has Trump SoHo in His Sights – Vanity Fair
Sater’s history, after all, would have likely raised eyebrows. In order to stay out of prison in the wake of his 1998 conviction for stock fraud, he became a clandestine asset for the F.B.I. and other government agencies. His case came up during Loretta Lynch’s confirmation hearings for attorney general in 2015. Asked why the records in Sater’s fraud conviction were sealed, she responded that Sater had provided “information crucial to national security and the conviction of over 20 individuals, including those responsible for committing massive financial fraud and members of La Cosa Nostra.”
There are differing accounts of exactly what Lynch may have been referring to, but according to one of his business associates, Salvatore Lauria, Sater became involved in a plan to buy anti-aircraft missiles on the black market for the C.I.A. As Lauria tells the story in his autobiography, The Scorpion and the Frog, with Langley’s backing, Sater agreed to participate in a complicated scheme to buy a dozen Stinger missiles from Afghanistan with tracking devices. The missile deal fell through, but after 9/11, Sater called Lauria to say the terrorist attacks had made them so valuable that they “were now going to be the F.B.I.’s new best friend,” according to the writ. (Sater’s attorney, Wolf, described the book as “completely false.”)
Meanwhile, Bayrock’s relationship with Trump dates back to 2002, when the company first leased space in Trump Tower and Trump was still licking wounds over his Atlantic City over-expansion a decade earlier, after which he had a more difficult time borrowing money. British billionaire Richard Branson said he once had a one-on-one lunch with Trump in which the future president vowed to spend the rest of his life seeking revenge against those who failed to help him. “He began telling me about how he had asked a number of people for help after his latest bankruptcy and how five of them were unwilling to help,” Branson wrote in a blog post last fall. “He told me he was going to spend the rest of his life destroying these five people. He didn’t speak about anything else, and I found it very bizarre.”
Meanwhile, in Russia, oligarchs and mafioso were on the ascent. According to James Henry, a former chief economist at McKinsey & Company who consulted on the Panama Papers, since the 1990s, some $1.3 trillion in illicit capital had poured out of Russia, meaning that hordes of cash needed to be laundered. In Manhattan luxury real estate, the Russians, among many other nationalities, found an ideal vehicle. “We in the U.S. government repeatedly saw a pattern by which criminals would use condos and high-rises to launder money,” said Winer, who oversaw anti-money laundering operations in the Clinton administration. “It didn’t matter that you paid too much, because the real-estate values would rise, and it was a way of turning dirty money into clean money.”
Foreign money, often untraceable, began transforming the high-end Manhattan real-estate market, and the pools of cash that Bayrock promised appealed to Trump. By 2003, Sater was working there in a position variously described as managing director and chief operating officer. His actual proximity to Trump is unclear. On the one hand, Trump had famously testified under oath that he barely knew Sater, that he probably wouldn’t recognize him if they were in the same room, and that he had no knowledge of Sater’s criminal past. But it has been widely reported that Sater did business deals with Trump, that he took Trump’s kids to Moscow, and that he was given a business card identifying him as a senior adviser to the Trump Organization.
Its other principals—wealthy émigrés from the former Soviet Union who knew how to get backing from Russia’s richest oligarchs—were more than familiar with the clientele who sought Trump-branded luxury condos. And under his agreement with Bayrock, Trump would not have to put up a single penny, but he would still get 18 percent of the profits—merely for licensing his name—as Bayrock financed and developed the 46-story Trump-branded luxury condo in SoHo. In 2006, Trump plugged the building on The Apprentice, referring to it as “my latest development.” “When it’s completed in 2008,” he said, “this brilliant $370 million work of art will be an awe-inspiring masterpiece.”
There were other Trump-Bayrock projects on the boards as well, in Phoenix, Fort Lauderdale, and elsewhere. In order to execute the plans, however, Bayrock and a partner, the Sapir Organization, had to raise roughly $1 billion. But there was one major problem: presumably no banks would lend to Bayrock if they knew about Sater’s convictions. On the other hand, according to Oberlander, hiding Sater’s past invited serious legal jeopardy. “Inducing a bank to lend money based on fraudulent loan application—i.e., concealing Sater’s criminal past—is bank fraud,” said Oberlander. “If you know that the loans were procured by fraud yet stay involved, it’s a conspiracy to violate money laundering and racketeering statutes.”
When Bayrock began to develop Trump SoHo, Sater led the way, now spelling his name “Satter,” as he told the Times, to “distance himself from a past” and to throw off anyone searching his name on Google. Two days after Bagli’s piece appeared in the Times, on December 19, 2007, Trump gave a deposition in a lawsuit he filed against author Timothy O’Brien. When Trump was asked, under oath, if he had learned about Sater’s criminal past, Trump testified that he was “looking into it because I wasn’t happy with the story. So I’m looking into it.”
Because this deposition was marked “Confidential” and kept under seal, Trump may not have expected it to become public, said attorney Lerner. Regardless, Trump’s knowledge of Sater’s past was now a matter of court record. And, according to Winer, if someone in Trump’s situation failed to investigate such allegations that person would be “open to charges of ‘willful blindness’ in terms of the knowledge he had.”
“The responsible course of action would have been to have Sater resign and to disclose Sater’s past to interested parties,” said Lerner. But, according to Sater’s e-mails, rather than extricate himself from the deal with Bayrock, Trump apparently saw the predicament as an opening to renegotiate his fees; in an e-mail written to two investors sent a few days later, Sater wrote: “Donald . . . saw an opportunity to try and get development fees for himself.”
In the end, Sater remained managing director of Bayrock through 2010. Trump also continued to participate in the venture and enjoy its profits. Once condos in the building were finally for sale, however, its problems began in earnest. The building’s no-man’s-land neighborhood—not really SoHo—with its grand entrance beside Varick Street and the chaotic approach to the Holland Tunnel—made it a difficult sell. It was explicitly marketed to prospective buyers overseas as a second or third home, with the challenging proviso that owners could live in their apartments only 120 days a year, and never for more than 29 consecutive days in any 36-day period. In 2010, 15 condo buyers filed suit, charging the Trumps and Bayrock with “an ongoing pattern of fraudulent misrepresentations and deceptive sales practices.” According to The Daily Beast, among the claims made to spur sales were Ivanka Trump’s proclamations to Reuters and to The London Times in June 2008 that 60 percent of the 391 units in the building had been sold. Documents later submitted to the New York attorney general showed that only 15 percent had found buyers.
The suit was eventually settled, and the plaintiffs received 90 percent of their deposits back. But that wasn’t the end of it. In 2014, four years after its opening, more than two-thirds of its condos remained unsold. The Web site Curbed headlined a story: “Trump SoHo Heads to Foreclosure Due to Unsellable Condos.”