Editor’s Note: Part III of this in-depth, technical piece by a former IRS investigator raises more questions than it answers. But WhoWhatWhy believes this is an important service, since it touches a complex topic of considerable public import — one that may be a key component of special counsel Robert Mueller’s ongoing Trump-Russia investigation. We hope in coming weeks to explore many more of these questions in greater depth. And we welcome reader comments.
Martin J. Sheil is a retired branch chief of the IRS Criminal Investigation division.
At the same time Deutsche Bank was on a headlong pursuit of profits and willing to make risky investments, and Russian oligarchs were desperate to move their money out of Russia and enlist Deutsche to help them, Donald Trump — with a history of bankruptcies — was looking to invest in real estate in Manhattan. Deutsche was willing to lend to him.
Deutsche’s relationship to all these players raises intriguing questions as investigations into the Trump White House and its potential collusion with Russia continue. Deutsche is in the sights of not only Special Counsel Robert Mueller but also the US Attorneys of both the Southern and the Eastern Districts of New York.
In Part I, we introduced the reader to the totality of Deutsche Bank’s corruption over the past few decades in both the US and Europe, including the bank’s facilitation of tax evasion in the US through its promotion of illegal tax shelters. We noted that while Deutsche Bank has expanded globally, it has maintained a centralized management system noted for its lax risk management.
Part II covered concerns Congress has had about Deutsche Bank’s questionable activities, and highlighted an apparent lack of federal criminal investigation of the banking giant’s mirror trades. We examined Deutsche’s loan activity with Donald Trump, and followed the money with regard to Russian oligarchs. Along the way, we connected some dots linking Russian and Cyprus Banks.
Now, in Part III, we shift to Russian bank relationships with Deutsche, particularly those involving the president’s son-in-law and top adviser, Jared Kushner.
On April 28, 2006, Josef Ackermann, chairman of the management board and the Group Executive Committee of Deutsche Bank, signed a “cooperation agreement” with Vladimir Dmitriev Chairman of Vneshekonombank (VEB) — a government-owned Russian development bank.
The stated objective of this agreement was to further intensify the cooperation between the two institutions on selected projects under the Public Private Partnership (PPP) and Private Finance Initiative (PFI) structures in the Russian Federation. This “cooperation agreement” becomes more pertinent when we consider Jared Kushner’s relationship with Deutsche.
When he first filed the financial disclosure forms mandated for all federal employees, Kushner disclosed that he and his mother have a personal line of credit with Deutsche Bank worth up to $25 million. But at that time, Kushner failed to disclose the $285 million refinancing his firm received from Deutsche in October 2016 — a month before the presidential election, and just two months before the December 2016 announcement of Deutsche’s $7.2 billion mortgage securities settlement with the US Department of Justice (DOJ). While the previous administration’s DOJ agreed to the settlement, it’s reasonable to wonder: did officials fear that waiting later could endanger any enforcement action against Deutsche? Remember that President-elect Trump met with US Attorney for the Southern District of New York (SDNY) Preet Bharara in Trump Tower on November 30, 2016, along with advisor Steve Bannon and Jared Kushner to request that Bharara stay on at SDNY during the new administration. Bharara agreed.
The DOJ reportedly initially sought $14 billion from Deutsche. The final settlement concerned the bank’s sale of defective mortgage bonds, and detailed the awarding of toxic home loans and the deceiving of investors during the period between 2005 and 2007.
Ethics advisers have questioned whether conflicts of interest concerning what Trump owns could color his presidential policies and deal-making. But what he owes could prove just as influential, because those weighty debts aren’t easily shaken off.
The timing of the Deutsche refinancing transaction with Kushner and the subsequent media attention caused the Trump circle so much anguish that they issued an undated statement saying that Kushner would recuse himself from all future actions with parties involving Deutsche Bank.
But Kushner’s real estate holdings raise other questions. In 2015, Kushner’s company purchased the retail space in the former New York Times Building in Times Square from an entity called Africa-Israel Investments, headed by Russian oligarch Lev Leviev. An Uzbek-born Israeli citizen and a Russian oligarch, Leviev is considered one of the world’s wealthiest men, known as the “King of Diamonds” due to his extensive holdings in Africa, Israel and Russia.
Africa-Israel is heavily involved in real estate investment in Russia, Europe and the US, as well as in West Bank settlement construction activities.
In July, the Israeli newspaper Haaretz ran an article entitled “Who Is Lev Leviev, the Israeli Billionaire With Ties to Jared Kushner and Putin?” This article referenced various media stories describing a number of business and social relationships that connect Leviev to Vladimir Putin and Kremlin-related businesses, as well as to the Trump Organization.
Leviev was a business partner of Prevezon Holdings, the Russian firm that was accused of money laundering by the DOJ, and that was represented by Natalia Veselnitskaya, the Russian lawyer who arranged a meeting with Donald Jr. during the campaign — offering “dirt” on Hillary Clinton. Prevezon got off with a $6 million fine. Haaretz called it a “slap on the wrist.”
Leviev has been open about his desire to do a real estate deal with Donald Trump in Russia. He may have the connections to pull this off. He told the New York Times that he was a “true friend” of Russian President Vladimir Putin, largely through his work with the Moscow Jewish Museum, the Russian Jewish Congress and his close ties to Russia’s Chief Rabbi, Berel Lazar. However, Leviev’s company said in a statement to the Washington Post that Leviev “does not have a personal relationship” with Putin but that he has met the Russian leader on a few occasions.
Eager to discuss the possibilities of building Trump Tower Moscow, Donald Trump visited the Russian oligarch Aras Agalarov (referenced in the Steele dossier) in Moscow in November 2013. He brought along Alex Sapir and Rotem Rosen as advisers. Rosen had been employed as the CEO for Africa-Israel USA, which is closely related to Leviev’s Africa-Israel Investments. Rosen has also been considered Leviev’s “right-hand man.”
Alex Sapir is the son of Tamir Sapir, now deceased, who allegedly sold electronics to the KGB from his Manhattan storefront. The elder Sapir also long funded Trump projects, including Trump Soho, through his company, Sapir Properties.
By now, most readers are familiar with Kushner’s multiple financial disclosure omissions as well as the multiple foreign contacts he omitted from his SF-86 — the form, signed under oath, which is required of all federal employees applying for security clearance.
Former National Security Adviser Michael Flynn initially omitted five-figure payments from Russia in 2015 on this form, and six-figure payments from Turkey in 2016. Flynn had multiple contacts with Russian Ambassador Sergei Kislyak, some of which were recorded by US intelligence and at least one of which Flynn lied about to the FBI. Flynn was ultimately fired because he lied to Vice President Mike Pence about his conversations concerning sanctions with Kislyak. He has pleaded guilty to one count of perjury in this regard.
Kushner also omitted from his security clearance form several telephone contacts with Kislyak.
Additionally, Kushner neglected to mention that — subsequent to another meeting with both Flynn and Kislyak at Trump Tower in December 2016 — he’d had a Trump Tower meeting with Sergei Gorkov, head of the sanctioned Russian bank VEB, who had received training from the Russian intelligence agency FSB.
VEB had provided financing for Trump Tower Toronto — as Kushner surely knew previous to his meeting with Gorkov.
Less than a month after the secret Kushner/Gorkov meeting, Erik Prince, brother of Secretary of Education Betsy Devos, at the suggestion of UAE Crown Prince bin Zayed, met covertly with Kirill Dmitriev, a representative of Russian Direct Investment Fund (RDIF) in the Seychelles — an archipelago off the coast of East Africa and a well-known bank secrecy haven. RDIF is under US sanctions. RDIF’s parent company is VEB. VEB is also under sanctions. Five days after the Seychelles meeting, Anthony Scaramucci, Trump senior advisor, met with Kirill Dmitriev of RDIF in Davos, Switzerland. Dmitriev is also under sanctions.
It is worth noting here that the International Emergency Economic Powers Act (IEEPA) makes it unlawful for a person to violate, attempt to violate, conspire to violate, or cause a violation of any license, order, regulation, or prohibition issued under this chapter (50 USC Chapter 35 Section 1705). IEEPA is the statute that controls sanctions. Penalties include fines up to $1 million and a statutory maximum prison sentence of up to 20 years’ imprisonment.
September 12, 2013 UAE announces a plan to invest $5 billion in Russian infrastructure projects in a deal between Russian Direct Investment Fund (RDIF) and the Abu Dhabi Department of Finance, marking the highest investment to Russia from the Emirates. RDIF head Kirill Dmitriev and Crown Prince Mohammed bin Zayed al Nahyan, the commander of the UAE’s army, signs a Memorandum of Cooperation which became official at the end of 2013.
March 17, 2014 President Obama announces sanctions against high-ranking Russian officials for Russian annexation of Crimea.
July 17, 2014 President Obama announces further sanctions against Russian banks, energy and defense companies relative to the Russian incursion of Crimea.
October 2016 Jared Kushner’s business receives a $285 million loan from Deutsche Bank relative to property Kushner’s company purchased from Lev Leviev’s Africa-Israel Inc.
October 2016 Trump’s campaign team announces that Kushner will recuse himself from any involvement with Deutsche Bank.
November 8, 2016 Donald Trump elected President of the US.
November 30, 2016 US Attorney SDNY Preet Bharara meets on the 26th Floor of Trump Tower with President Elect Donald Trump, Steve Bannon and Jared Kushner. Trump asks Preet to stay on as US Attorney.
December 2016 SDNY announces $7.2 billion settlement with Deutsche Bank regarding Deutsche’s involvement in toxic mortgage securities 2005-2007. It is noted that SDNY originally recommended a $14 billion fine for Deutsche.
December 1, 2016 Michael Flynn and Jared Kushner meet with Russian Ambassador Kislyak and discuss establishing back-channel communications with Putin in Russian embassy.
December 2016 Flynn has multiple undisclosed contacts with Kislyak.
December 13, 2016 Jared Kushner meets secretly with Sergei Gorkov, President of VEB. VEB is under sanctions. VEB has a cooperation agreement with Deutsche Bank. VEB has a supervisory role over RDIF which is also under sanctions.
December 2016 UAE Crown Prince Mohammed bin Zayed al-Nayan meets with Kushner and Steve Bannon in an undisclosed meeting.
December 29, 2016 Flynn tells Kislyak that Trump will ease sanctions.
January 11, 2017 Erik Prince — founder of Blackwater, brother to Secretary of Education Betsy Devos and classmate of Carter Page at the Naval Academy — has “one beer” with Kirill Dmitriev — head of RDIF and former Goldman Sachs banker — on Seychelles Island. Mohammed bin Zayed and Alexander Mashkevich — Kazak businessman associated with Bayrock and Trump Tower Soho — are also known to be in the Seychelles at the same time.
January 17, 2017 Anthony Scaramucci, senior advisor to Trump on the Executive Committee of the Presidential transition team, meets with Kirill Dmitriev of RDIF at Davos, Switzerland.
January 30, 2017 New York State DFS announces a $425 million fine against Deutsche Bank and UK’s FCA announces a $204 million fine against Deutsche Bank with regard to “failing to have proper controls to stop customers from transferring billions from Russia to offshore bank accounts using mirror trades.
January 2017 US Attorney SDNY Preet Bharara issues a settlement for $95 million with Deutsche Bank regarding their questionable tax practices pertaining to their use of insolvent shell companies.
February 2017 National Security Adviser Michael Flynn is fired for lying to VP Pence about his discussion of sanctions with Russian Ambassador Kislyak.
March 2017 President Trump fires US Attorney SDNY Preet Bharara despite originally promising to retain him.
March 10, 2017 Congresswoman Maxine Waters writes a letter to Committee Chair Jeb Hensarling requesting that the Committee conduct a formal assessment of DOJ’s reported investigation in SDNY of Deutsche Bank’s $10 billion Russian money laundering through mirror trades activity.
July 27, 2017 The Senate votes overwhelmingly, 98-2, to impose new sanctions on Russia. The House passes the measure, 419-3. The bill targets Russia’s aggression in Ukraine and Syria. President has until January 29, 2018 to implement.
January 29, 2018 President Trump’s State Department announces no actions will be taken on Sanctions with regard to Russia.
Kushner must have forgotten about the promise he made to recuse himself from contact with any parties at Deutsche, in addition to the requirement to note down his meetings/contacts on his security clearance form. It is plausible that Kushner and his attorneys were not aware of the cooperation agreement between Deutsche Bank and VEB. But this wasn’t Kushner’s first omission.
Donald Trump Jr. sent Kushner an email inviting him to a Trump Tower meeting on June 9, 2016 with several Russians associated with Russian oligarch Aras Agalarov, including attorney Natalia Veselnitskaya — who had represented Prevezon Holdings in a civil forfeiture case in the southern district of New York (SDNY). This case involved the laundering of proceeds — some of which were transferred through Deutsche Bank — ripped off from the $230 million in Russian taxes Bill Browder paid on his Hermitage company. The email subject of the proposed Trump Tower meeting — cc’d to Paul Manafort — was “Russia – Clinton – Confidential.” Kushner originally omitted mention of this now infamous meeting on his security clearance form.
Lost in the hoopla over the June 9 Trump Tower meeting is the Prevezon association.
A New York Times article reported that federal prosecutors in SDNY claimed Prevezon, which admitted no wrongdoing in the civil forfeiture suit, laundered proceeds of an alleged Russian tax fraud through Manhattan real estate. Further lost in the volume of reporting was that “Prevezon and its partners relied in part on $90 million in financing from a big European financial institution, court records show. It was Deutsche Bank.”
If this case had actually gone to trial, and if the DOJ had prevailed and obtained a forfeiture for the full $230 million allegedly laundered, would Deutsche Bank have been left holding the bag on their $90 million financing? How would that have affected Lev Leviev, business partner to Prevezon Holdings? Would it have uncovered the long-time relationship between Leviev and Pyotr Katsyv, the VP of Russian Railways at the center of the Hermitage tax ripoff?
While the exact reasons for the Prevezon forfeiture settlement are unknown, it should be noted that Nikolai Gorokov, a lawyer representing Sergei Magnitsky’s family, was able to photocopy documents contained in a Russian case file targeting two people involved in the $230 million scheme that traced the money to Russia. Gorokov mysteriously fell from a window in Moscow about a month before he was due to testify in the Prevezon case. But the documents he photographed were admitted into evidence just days before the settlement was reached.
The settlement came as a surprise to some. According to an article in Business Insider, Louise Shelly — an illicit-finance expert who was set to testify in support of the US government — told CNN the day after the case was settled that she was concerned about the possibility that “political pressure” had been applied to the US Attorney’s office in SDNY.
It is noted that the Prevezon forfeiture case was settled, but the criminal investigation of the money laundering that permeated this case has not been officially closed by the SDNY as of this writing.
It is further noted that the New York Times reported on December 22, 2017, that the US Attorney for the Eastern District of New York has requested documents from Deutsche Bank relative to Jared Kushner’s companies. It is unknown at this time what this EDNY inquiry is focusing on.
A Google search of Natalia Veselnitskaya would have forewarned Kushner, Manafort and Trump Jr. of what they were walking into on that June 9 meeting — if they did in fact not know. Not as evident was Deutsche Bank’s association with Trump, Kushner, Leviev et al.
Trasta Komercbanka Connect
Trasta Komercbanka was a Latvian-located financial institution that played a prominent money-laundering role in the Prevezon forfeiture case and in other cases involving the so-called Global Laundromat. Deutsche Bank acted as a “correspondent bank” for Trasta until 2015, according to an article in the Guardian. This meant that Deutsche provided dollar-denominated services to Trasta’s non-residential Russian clients. This service was used to move money from Latvia to banks across the world. In 2014, only two Western lenders were willing to accept international dollar transfers from Latvian banks — Deutsche Bank and Germany’s Commerzbank. Latvia’s deputy finance minister, Maija Treija, said the money sent via Trasta was “either stolen or with criminal origin.” The now-defunct bank was used as a vehicle to get money out of the former Soviet Union and “into the EU financial system,” she added.
According to a 2014 article by bne IntelliNews, Trasta Komercbanka was co-owned by Igors Buimisters and Ivan Fursin — a one-time member of the Russian Parliament for the “Party of Regions.” Latvian financial market regulators believe Fursin indirectly controlled between 20 and 33 percent of Trasta. Fursin is a junior partner of Ukraine’s gas and chemical oligarch Dmitry Firtash in the gas trading company Rosukrenergo, which has handled Ukrainian gas imports from Turkmenistan since 2005, and has been the subject of multiple investigations. The article further notes that Firtash and Fursin also own Ukrainian lender Nadra Bank and Misto Bank, and share partnership interests in other gas-related companies.
These connections take on importance in light of the recent Paul Manafort money-laundering indictment, which lists multiple financial transactions relative to a Cyprus shell company called Lucicle Consultants. A July 19, 2017 New York Times article, while noting that the precise ownership of Lucicle is unclear, links Ivan Fursin with Lucicle through an offshore entity called Mistaro Ventures, listed on a government form that Fursin filed in Ukraine. Mistaro transferred millions to Lucicle in February 2012 shortly before Lucicle made a $9.9 million unsecured loan to Jesand LLC, a Delaware shell company that Paul Manafort used to buy real estate in New York.
The Daily Beast, in an 11/02/17 article written by Betsy Woodruff, was able to link Fursin to Russian organized crime — quoting an expert in that area who indicated that Fursin was a senior figure in the Semion Mogilevich crime organization. Mogilevich is known as the Vor of Vors of Russian organized crime, and is referred to as “the brainy don.” Firtash has publicly acknowledged that he owes his start in the gas business to Mogilevich, who was at one time listed as one of the FBI’s most wanted criminals.
And Fursin chaired the Ukrainian anti-money-laundering committee from 2012 to 2014.
No one has conclusively connected Donald Trump — or any of his family — to any Deutsche Bank money laundering, or bogus tax shelter activities, to this point. But will the DOJ investigation aggressively pursue that possibility should it ultimately surface in the mirror trades probe or any other probe currently open? Who will make that decision?
While Rep. Maxine Waters (D-CA), the Ranking Member of the Committee on Financial Services, is awaiting answers to her questions, other notables have raised similar questions with regard to the relationship between President Donald Trump, his son-in-law and senior advisor Jared Kushner, Deutsche Bank and the potential ongoing criminal investigation(s) of Deutsche Bank by the Justice Department in SDNY.
The Washington Post quoted at length former Federal Elections Commission (FEC) chairman Trevor Potter, who said that the Deutsche problem presents “enormously complex and worrisome issues” both for the president and for the bank’s officials.
The idea that the bank might offer the president better terms in return for the government going easier on the terms of enforcement and fines is truly horrific. … Anyone the president appoints in the Justice Department or Treasury is going to be aware — could not fail to be aware — that the president has a real stake with that enormous loan outstanding. … As a result, everyone will be in fear of making a decision that might anger the president, their boss, or might cause him trouble.
Ethics advisers have questioned whether conflicts of interest concerning what Trump owns could color his presidential policies and deal-making. But what he owes could prove just as influential, because those weighty debts aren’t easily shaken off — and because the Trump family’s real estate business could rely on Deutsche funds for future work. There are many unanswered questions with regard to the Justice Department’s money-laundering investigation of Deutsche’s mirror trades. The same is true of the possible criminal tax investigation into whether the Bank is in violation of its non-prosecution tax shelter agreement with the DOJ. Here are some salient questions:
- If any criminal investigation leads to Trump et al, how should the executives at Deutsche Bank interact with President Trump and his cabinet — given the hundreds of millions of dollars of loans Deutsche made to him that he personally guaranteed?
- How do they handle his credit situation should he default on his loans, and/or if one or more of them get targeted in the investigation(s)?
- Will the Treasury Department maintain an aggressive posture towards Deutsche Bank with regard to prospective tax and money-laundering investigations related to Deutsche and/or RenTech?
- Will the Secretary of Treasury order FinCEN to comply with Congressional committee requests for information with regard to potential money laundering or criminal tax or Bank Secrecy Act violations by those associated with the president or by Deutsche?
- What will the Treasury Department’s (OFAC) posture be with regard to any potential sanctions violations by Deutsche?
The overriding questions here focus on the Department of Justice. The question as to who exactly is the lead attorney running the DOJ criminal investigation(s) of Deutsche Bank, as well as to the identity of the supervisors, and who the ultimate arbiter on the final decisions regarding the investigation(s) might be, takes on added significance in light of the words of Sally Yates — a career Justice Department attorney who was fired by President Trump.
The strict separation between the Justice Department and the White House applies to even the most mundane of criminal investigations and nowhere does it matter more than when the investigation reaches into the White House itself. In short, no one at the White House should have anything to do with any decision about whom or what to investigate or prosecute. Period. We must do more than rubberneck as we drive past this car crash. We all have a responsibility to protect our Justice Department’s ability to do its job free from interference. The very foundation of our justice system — the rule of law depends on it.
That’s why it matters.
Martin J. Sheil can be reached at email@example.com via an encrypted Proton email address.
Related front page panorama photo credit: Adapted by WhoWhatWhy from globe (OpenClipart-Vectors / Pixabay).