Earlier this week, Russ Baker, C. Collins and Jonathan Z. Larsen broke a story that caused a major splash. The article may prove a turning point in understanding the nature of the FBI’s investigation into the Trump/Russia connection — and why it may in fact be compromised.
In this week’s WhoWhatWhy Podcast with Jeff Schechtman, Baker and Larsen describe the story, the bizarre cast of characters and the tangled web they created. Most importantly, they explain what is at stake.
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Jeff Schechtman: Welcome to Radio WhoWhatWhy. I’m Jeff Schechtman.
Churchill said of Russia that it was a riddle wrapped in a mystery inside an enigma. Much the same might be said of trying to untangle the relationship between Trump and his associates on the one hand, and Putin and a high power cast of Russian oligarchs and mobsters on the other. There comes a time in every political scandal when it reaches a tipping point. For Iran Contra, it was perhaps the revelation of the weapon sales. For Watergate, perhaps the testimony of Alexander Butterfield about the existence of the White House tapes. For Trump and Russia, it may very well be the revelations from a bombshell story just out from WhoWhatWhy.org.
The story gives us a whole new view of the Trump-Russia connection. One that stretches from Trump Tower to the FBI to the Kremlin. Here to reveal and explain all of this on Radio WhoWhatWhy, I’m joined by Russ Baker: the founder and editor in chief of WhoWhatWhy and Jonathan Larsen, a former editor of the Village Voice and now a senior editor and board member of WhoWhatWhy. Russ Baker, Jonathan Larsen, thanks so much for being here.
Russ Baker: Thank you.
Jonathan Larsen: My pleasure.
Jeff Schechtman: Russ, I want to start with you because at the core of this story is this long running FBI investigation that was taking place that really involved things above and beyond politics. It really involved an international organized crime network. Talk a little about that first.
Russ Baker: I think the takeaway here is that Donald Trump was essentially partnered in business with a man who was connected to Russian organized crime and indirectly, to Vladimir Putin. The FBI knew about that and didn’t want any of that to come out, so we don’t see how the FBI can properly investigate Trump’s relationship to Russia.
Jeff Schechtman: Talk a little bit about what that investigation was all about, Russ.
Russ Baker: This goes back to the 1990s, when the FBI was becoming increasingly concerned about the organized crime from the former Soviet Union. I called it Russian organized crime; it’s basically from all of the various republics of the former Soviet Union – that they were getting foothold of the United States, they were getting into everything and they were particularly concerned that they were getting into Wall Street, they were getting into the financial system. As they saw more and more examples of this, they were looking to do something about it and they discovered a particular scheme, which was targeting vulnerable people, particularly elderly and unsophisticated investors and they managed to shut it down. In the course of shutting it down, they cut a deal with one of the defendants and he became a very important informant. This man, Felix Sater is essentially the core of our story, along with Trump himself.
Jeff Schechtman: Jonathan, Russ talked about the fact that this started back in the nineties. Talk a little bit about the even earlier aspect of Trump Tower and the Trump Tower as a place with something that the FBI was looking at back as early as 1983.
Jonathan Larsen: There were a lot of mobsters that seemed to be in and out of Trump Tower from its earliest days, including associates of the Union Concrete Boss, who actually built Trump Tower. He helped his girlfriend get two floors worth of apartments underneath Trump’s triplex. She not only bought those apartments, she ended up getting mob money to help finance them and Trump also arranged for a mortgage for her and the bank that did that didn’t ask her for any paperwork; she didn’t have to sign anything, which is kind of unusual. There were a lot of strange characters from very early on, including some that had some ties to Russia.
Jeff Schechtman: It was remarkable how many of these strange characters populated Trump Tower. It was almost like if you put it on its side as an oil field, anywhere you would drill, you would run into somebody with a Russian connection. Talk about why that might have been.
Jonathan Larsen: In the early days, there were a couple of Russian connections. There was a lot more of Italian organized crime. It’s hard to say how that could be. They seem to get the choicest floors, they would buy multiple apartments and this lady friend of the concrete boss actually demanded that she be able to put in a swimming pool, which actually meant they had to redesign the building and put in even more concrete; good for the concrete business. Why this was so, it’s very hard to say, but there certainly seem to be too many of them to be just a coincidence.
Russ Baker: One of the things I might add about that is that in terms of mobsters in general, certainly if you talk about the bling factor, I think they like the glitz and glamour associated with the Trump name and the building itself and as far as the people from the former Soviet Union whom we describe in some detail in the article, we only cover some of them who moved into the building and not to just get anybody who’s from those areas is necessarily involved in any sort of wrongdoing at all, but the fact of the matter is that when the Soviet Union came apart, all of these newly minted millionaires’ and billionaires’ questionable, perhaps you could say ill gotten fortunes, they had to get the money out of there and as you probably know Jeff, real estate is a favored method of money laundering.
Jeff Schechtman: Talk a little bit Russ, about why this investigation was so important to the FBI, this investigation into the Russian mob.
Russ Baker: The Russian mob had practices that you did not see with La Cosa Nostra and particularly at the end of the Soviet Union, it recruited many highly skilled people: computer scientists, mathematicians, financial whizzes and they went right where the money was, which is the financial system and Wall Street and what have you. They got in a big way and I think the FBI was late to realize what was going on and then there was this panic that the whole financial system of the United States and perhaps the world could be destabilized. As they began scrambling and identifying this issue as perhaps their number one problem, they focused on a man who was called the boss of bosses of this former Soviet Union organized crime, a fellow named Mogilevich and they began trying to figure out how to gather information on him and what we know is that this man that they turned, this Felix Sater was involved with Russian organized crime, that the financial wrongdoing that he was involved with, it was not just him but was being orchestrated from some other level. Also, his father allegedly was an associate of Mogilevich. This particular man, for whatever reason and we don’t know the details was considered to be an extremely, and I want to emphasize extremely high value asset, tremendously important figure in a tremendously, tremendously important operation.
Jeff Schechtman: Jonathan, talk a little bit more about Mogilevich and why he was so important and why he was considered such a real threat.
Jonathan Larsen: Because he had global reach. He was beginning to send emissaries to the United States to set up money laundering operations, stock fraud operations and the Feds were beginning to believe that just one phone call from him could practically bring down the financial system. Felix Sater was part of one of these original groups, as Russ explained and in the indictment that the FBI brought against them, they figured that he was responsible for at least $40 million of fraud against his victims. The fact that they would turn him and make him a cooperating informant was kind of astonishing because they certainly could have put him away in jail and they kept working with him and he ends up in Trump Tower and doing business with Trump. Why was that? That’s the great mystery at the heart of this. Were they helping through Trump to find out more about the Russian mob? Was it even conceivable that they were working with Trump directly? These are all things that will need to come out eventually, but that’s part of the mystery of this FBI operation at the heart of Trump Tower.
Jeff Schechtman: Russ, talk about how the FBI originally came to Sater.
Russ Baker: They came to him because of this so called pump and dump stock scheme that he was involved with. As I mentioned, this was this thing where they victimized elderly and unsophisticated investors and this was the kind of thing that there was pressure on the bureau to shut them down and they did. One of the perps in there was this Felix Sater and I guess for whatever reason, once they either talked to him or investigated him, they found out what sort of connections he had and they became very, very interested. They became interested in Felix Sater prior to Felix Sater as John said, moved into Trump Tower with this company called Bayrock, which was a real estate development firm. Bayrock and Donald Trump became partners in a number of ventures around the world, most notably the Trump SoHo Hotel and Condominiums that’s here in New York. He became very, very important, so important in fact, that according to Sater himself, he and Trump were extremely close and he had an office just on the floor below Trump’s and that he would just walk up the stairs and just pop in to hang out with the Donald! Remarkably, he even had business cards of his own: Felix Sater, the Trump Organization. Here you’ve got a guy who is identified with Russian organized crime, he seems to be tied in with the most powerful gangster in the world and the number one target of the FBI, as we know and there he is, hanging out with the Donald. Obviously, this a very, very interesting relationship and it’s a relationship that we’d like to know more about. Now, the problem is we can’t know much more about it because the FBI and the US Attorney’s Office has worked for years, the Justice Department has worked for years to suppress the details of this thing from coming out.
Jeff Schechtman: I know it’s a little complicated to explain, but give it a try Jonathan. Why in fact, the revelation of so much of this, particularly with regard to the relationship between Sater and Trump puts the whole Trump financial empire at risk?
Jonathan Larsen: The question is, did Donald Trump know that Felix Sater was a criminal and had this criminal history? If he did and he was in business with him in all of these various ventures as Russ mentioned, then he his liable for hundreds of millions of dollars from the other investors, people who bought condominiums, were co-investors in the hotel, like Trumps SoHo. In terms of Trump SoHo, that was really a Felix Sater operation from the beginning. He kind of thought it up. He got partners from Iceland, a bank called FL which seems to have relations with Putin and so he started bringing in Russian mob money to finance this so called Trump SoHo hotel. So, it was really more of a Sater SoHo than it was Trump SoHo hotel.
Jeff Schechtman: Russ, a lot of this money potentially was coming in at a time when Trump was in financial trouble as a result of some of his other operations.
Russ Baker: Well, that’s a key point: that as his fortunes went south with problems with his decisions against the advice of all kinds of people, taking huge risks with all of those casinos in Atlantic City and all kinds of other things went south, yeah he had more and more problems and it is at this period that we see not just Felix Sater and the potential connections to the Mogilevich outfit and to Putin but we see all these other figures and entities tied into Ukraine, Russia, Georgia, Kazakhstan and so forth, all of these oligarchs again tied back to the approval of the Putin regime and they’re basically propping Donald Trump up. The issue becomes, when the FBI is looking at the issue of whether Russia meddled in the election, there’s a much larger issue, which is why did they like Donald Trump? What did they expect Donald Trump could or would do for them? To answer that question, you got to go back and look at this whole history of these people and these entities playing a critical role in his financial fortunes and their own relationships back to Putin.
Jeff Schechtman: Why then, now that so much of this is exposed, why does this present a problem for the FBI now in terms of its own priorities and where its investigation is going, Russ?
Russ Baker: We know that the FBI has strived mightily to keep this from coming out. There were some lawyers involved with a suit on behalf of someone who worked for Sater’s company who’s been trying to get to the bottom of some of this and they have been slammed down very, very hard, extraordinary measures where they’ve essentially been told, they say that they should not tell any of this to Congress. If the FBI is so concerned that none of this come out for some reason, one wonders how they could do that on one hand and on the other hand, be able to fairly and thoroughly investigate everything that we need to know about Donald Trump and Russia.
Jeff Schechtman: Why was the FBI, in your view and both of you can respond to this, Russ start with you, why was the FBI so concerned about this not coming out?
Russ Baker: We don’t know the full why. We can speculate. One of the likely issues here is simply the kind of posterior covering that goes on. The FBI was working with a man who was guilty of extensive crimes and they advocated for him to be let off with a slap on the wrist, if that. They did that because they were using him. This is very, very similar to what happened in the notorious case of the mob leader Whitey Bulger up in Boston. This was a huge problem for the FBI, one of its biggest embarrassments in its history. It was basically protecting this criminal while he was continuing to commit crimes, including murders ostensibly because he was so high value. What Felix Sater was doing, if anything and we don’t know. He may have gone straight and done nothing wrong but for some reason, they’re very, very concerned that that relationship not be revealed. Of course, it would be very interesting to find out what that is about.
Jonathan Larsen: Let me add that this could be embarrassing for the FBI in other ways. One of the FBI agents who was basically handling Felix Sater is now working for President Trump in his private security operation. Two of the prosecutors who helped work out the original deal and then spoke later on behalf of Sater in court proceedings are now working for the law firm that is supposed to be sorting out President Trump’s conflicts of interest. There are kind of cross currents here that could be embarrassing, I think to the FBI and to Donald Trump.
Jeff Schechtman: How close did this investigation bring them to being able to do anything with respect to Mogilevich, Russ?
Russ Baker: Well, that’s the rub. We don’t really know if it was successful or if it was a colossal failure. Obviously, if it was a colossal failure, that’s not the kind of thing that they want to come out either, especially why make this sort of a deal if you’re not going to succeed. The indications are that they didn’t really succeed. We know that Mogilevich was on the FBI’s most wanted list and we know that several years ago, they removed him very mysteriously. We don’t know why they removed him, there’s nothing as far as we know. Reports one sees that world girdling criminal empire is very much still operating all over the place and now in many, many different facets and industries. What that was about, did they succeed, we don’t know?
Jeff Schechtman: What do we know about the connection between Mogilevich and Putin?
Jonathan Larsen: You can’t operate in Russia without getting along with Putin. I think he put him in jail once very briefly to show that he was sort of in control, but let him off soon thereafter. The assumption is that they work pretty close together.
Russ Baker: Yeah, that’s right, what Jon said. Also, in Russia, there is no clear line between the official establishment and, let’s say, the unofficial establishment. Most experts believe that the government and the so called legitimate oligarchs and the underworld are intertwined in so many different ways that you can’t even sort it out. Experts also say that Putin and Mogilevich are close. I think the most important thing of all is a man named Ivankov who was Mogilevich’s lieutenant who came to the United States to run operations for him, who by the way, when the FBI wanted to find him, the first place they found him was living in Trump Tower. Then, they couldn’t track him down and then they next found him at Trump’s Taj Mahal. I think that’s very significant. That man later returned to the Soviet Union and he stated on one occasion that Putin and Mogilevich were very close. Shortly thereafter, he was assassinated by a sniper while walking on the streets of Moscow.
Jeff Schechtman: What is the status of Felix Sater today, Russ?
Russ Baker: We don’t know the exact status of Felix Sater, but he is certainly alive and well. This is another fascinating development. As you may know, in January, there was a meeting held at a hotel in New York City and at that meeting were Michael Cohen, Trump’s personal attorney and Felix Sater and they met with a Ukrainian member of Parliament who is pro-Moscow. What we are told from news accounts is that at that meeting, the Ukrainian presented a proposed peace plan for Ukraine, which seemingly had been approved by or perhaps sponsored by Putin himself and there he is, meeting with Felix Sater and Trump’s lawyer. According to this parliamentarian, they then agreed and Cohen took that proposal in an envelope and brought it to then national security advisor, General Michael Flynn. There’s been some backpedaling on that story but it seems to be true. That’s very, very interesting: that this mob person tied into Putin is still so active that he’s able to sit down with Trump’s personal lawyer and work something like this!
Jonathan Larsen: By the way, when he surfaced at that meeting, he seemed to have gone back to his original spelling, which is S-A-T-E-R but the entire time he was being handled by the FBI, he gave his name at S-A-T-T-E-R, which is one reason why people cannot trace his criminal past and why many of his business associates had no idea that he was a convicted felon.
Jeff Schechtman: Russ, I want to come back to this idea of why the FBI is so compromised as a result of this, particularly with respect to any further ongoing investigation with regards to Trump and the Russian connection.
Russ Baker: I think it’s because in order to tell the public or Congress or some combination everything that they know about Trump’s relationship with Russia and the back history and the origins, they would have to tell this story that we’re telling here, but the whole story, all the other details. I think they simply can’t do it. It’s problematical on a whole host of fronts and it’s probably a deep embarrassment as well.
Jonathan Larsen: Even if it weren’t an embarrassment, they just don’t like to tell details of operations they’ve run because it gives inside into how they work an operation like this and they’d be very reluctant to reveal an operation this extensive.
Jeff Schechtman: What do you expect the reaction to this story to be, Russ?
Russ Baker: It’s hard to tell. Of course, there have been so many revelations large and small coming at us, seemingly by the hour that one really can’t tell. But, we would hope that this very thorough look at the larger picture behind this sort of more specific focus about hacking and so forth, the effort to get at the bottom of the whole matter to try to understand why Donald Trump seems to be so close with Vladimir Putin, what, if anything, Vladimir Putin or the Russians may have on him, that this would be seen as compelling enough and persuasive enough that the failure of the FBI – which we think would be a failure of the FBI to get to the bottom of this – could be circumvented through the appointment of an independent prosecutor or some kind of independent body to look into this whole matter.
Jeff Schechtman: It does seem that there are really three specific buckets and areas of investigation in all of this, and that’s what makes part of it so complicated. There’s the financial side, the criminal side and the political side.
Jonathan Larsen: Right, Jeff. I think if this were really opened up, we’d find out just how much of Trump’s operation was financed, not just through Russian banks but through Russian mobsters, and money laundering and that could be quite revealing. That’s quite different than the rest of this investigation that Comey is conducting.
Jeff Schechtman: Finally, Russ, talk a little bit about the work that you and Jonathan and your associates have done in putting this story together. Give us a little background in how all of this came together over a period of several months.
Russ Baker: This was a team effort. The third member of the team: C. Collins did a tremendous amount of research on this, pouring over a large number of legal documents, extremely complicated technicalities in attempting to figure out what this all means. And then Jon and I came in to provide additional context, to do additional research and the three of us worked together very closely on this. And now we brought in more of our team, including a lot of editors and fact checkers, lawyers and so forth. It’s really a terrific team effort and it has to be with something of this enormity.
Jeff Schechtman: Russ Baker, Jonathan Larsen, the story appears at WhoWhatWhy.org. I thank you both for sharing some of this and encourage folks to read the whole story. Thank you both.
Russ Baker: Thank you, Jeff. Hi, this is Russ Baker. If you liked that podcast, please free to share it and help others find it by rating and reviewing it on iTunes.
Also, if you’d like to see us continue to do this kind of hard hitting investigative journalism, we need your help. Please support our work. Go to WhoWhatWhy.org/donate
Donald Trump (The White House), Assistant Attorney General Leslie R. Caldwell (DoJ / Wikimedia), Michael Cohen (IowaPolitics.com / Flickr – CC BY-SA 2.0), Vyacheslav Ivankov (Alchetron / public domain), XMark partners Ed Deck and Gary Uher in background image (Bill Pugliano / Getty Images), Aimzhan Tokhtakhunov (Mikhail Popov / Wikimedia – CC BY-SA 3.0), Semion Mogilevich (Mark Nilstein / Getty Images), Felix Sater (591J / Wikimedia – CC BY-SA 4.0), Vladimir Putin (President of the Russian Federation – CC BY 4.0), Leo Taddeo (USAOSDNY / YouTube) and Sater Business card (Boing Boing – CC BY-NC-SA 3.0).
Related front page panorama photo credit: Adapted by WhoWhatWhy from FBI seal (Andy L / Flickr – CC BY 2.0), Vladimir Putin (President of Russia), Semion Mogilevich (Mark Nilstein / Getty Images), Felix Sater (591J / Wikimedia – CC BY-SA 4.0) and Donald Trump (Gage Skidmore / Flickr – CC BY-SA 2.0).