17

THE MERGER

Not long after Eric Schneiderman was elected New York attorney general, his office began investigating a scam. Its targets were lured by the promise of “Trump University,” from which they were told they could learn from Donald Trump’s “handpicked experts” the “Trump process for investing in today’s once-in-a-lifetime real estate market.” Some seven hundred New Yorkers had fallen prey to this sales pitch, as had thousands of others nationwide.

When the victims got a call from the Attorney General’s Office about the case, some of them cried, they were so relieved. They had felt ashamed, and powerless, and many were quietly taking their lumps, pushing back the knowledge they’d spent up to $35,000 on real estate tips that they could have found with an internet search.

Like almost all New York politicians at the time, prior to the lawsuit, Schneiderman had made his own pilgrimage to Trump Tower. He’d traveled to Fifth Avenue and Fifty-Sixth Street, ridden the elevator to the twenty-sixth floor, sat before Donald Trump and his framed magazine covers, and asked for money. And he received a check: for $12,500 signed in Donald’s sharpie-wielding hand. After that Trump may or may not have introduced Schneiderman to other people who gave him money. Trump claimed he did.¹

By the next spring, the Trump University investigation was under way. Records were pulled. Witnesses were interviewed. On May 17, 2011, the New York Attorney General’s Office issued a subpoena to the Trump Entrepreneur Initiative, the name Trump had chosen after New York education regulators finally convinced him he could not call the operation a “university.”² The subpoena asked for a wide range of documents: emails, marketing materials, and information about the corporate structure of Trump University; set up, like all Trump companies, in a series of interrelated and nesting entities.

Most often, the details of a politician’s courtship of potential donors is hidden from the public. But we know some of what happened next because of a complaint the Trumps later filed against Schneiderman with the New York State Joint Commission on Public Ethics. Though the complaint was ultimately dismissed, Ivanka Trump’s accompanying sworn affidavit offers a rare view into a world where contributions and credit for soliciting contributions are the combined currency of power.

In May 2011, “the very same month Mr. Schneiderman launched his investigation into TEI,” Ivanka wrote, “Mr. Schneiderman had his former transition committee leader reach out to my husband, Jared Kushner, and I, requesting that we introduce Mr. Schneiderman to some of our young, wealthy and accomplished friends and colleagues. Mr. Schneiderman’s representative told us that Mr. Schneiderman was interested in establishing relationships with the ‘next generation of influential New Yorkers’ in the hopes of gaining their respect, thereby assuring their financial support of his future political aspirations.” By this time, records showed that Jared and Ivanka had given over $170,000 in political contributions.³

In these early years of their marriage—2010, 2011, 2012—Ivanka and Jared were indeed seen as the next generation of influential New Yorkers. They attended the Met Gala and fundraisers for Freedom to Marry. Ivanka was on the board of the New York City Police Foundation. People who know them say the couple strategized carefully. They had a playbook: “Who they would have to dinner, who they would get to know, where they would go on the weekend.”

Shortly after Schneiderman’s office issued the subpoena, Ivanka and Jared organized a breakfast for Schneiderman. “I agreed to oblige Mr. Schneiderman’s request,” Ivanka wrote, “and, on June 20, 2011, my husband and I hosted a meet-and-greet breakfast for Mr. Schneiderman at Jean Georges in the Trump International Hotel & Tower. At the breakfast, Mr. Schneiderman was introduced to and had the opportunity to speak with approximately 15–20 of our most accomplished friends and colleagues.” Ivanka was eight months pregnant at the time.

After the breakfast, Schneiderman sent a note on official State of New York, Office of the Attorney General, letterhead, handwritten in kind of a scratchy, teenage boy scrawl: “Jared and Ivanka,” it read. “Many thanks for the great breakfast. I love meeting people, and that was a great group. Good luck with your next big adventure. It is much more important than any of the rest of the stuff we deal with!” Ivanka wrote that she took this to be “a reference to the OAG’s investigation into TEI,” though she did not say whether Schneiderman raised the investigation at this breakfast.

In September, there was more outreach, Ivanka said, from a Schneiderman advisor, who “said that Mr. Schneiderman would ‘greatly appreciate’ if I attended a fundraising event for newly elected California Attorney General Kamala D. Harris as Mr. Schneiderman’s guest. He also asked that we make a substantial contribution to Ms. Harris’s re-election campaign.” Ivanka’s father, Donald Trump, wrote a five-thousand-dollar check to Harris’s campaign, but Ivanka attended the fundraiser, “an intimate gathering of New York business people. I was one of only a small handful of Mr. Schneiderman’s personal guests.” There was more courting, more outreach, and “on January 12, 2012, my husband and I met Mr. Schneiderman for dinner at Lure Fishbar in Manhattan. Marc Lasry, billionaire and co-founder of Avenue Capital Group, and his wife, also joined us for dinner that evening.” Lure Fishbar is a short walk down Prince Street from the Trump SoHo, a restaurant at the time popular with people from the financial sector.

There was another encounter, this one unplanned, on June 30, 2012, at “a wedding we were both attending at Cipriani Wall Street.”⁴ The wedding was of Sean Eldridge and Chris Hughes, the Facebook co-founder; other guests included Mark Zuckerberg and his wife Priscilla Chan, then–Newark mayor Cory Booker, and Senators Chuck Schumer and Kirsten Gillibrand.⁵ There was a big jazz band, and four hundred guests. “This time,” Ivanka wrote, “Mr. Schneiderman was far more outspoken than he had ever been before, volunteering that the OAG’s investigation was ‘very weak’ and stating that it was a ‘non-event’ which was ‘going nowhere’. Without me even inquiring, he assured me that he had ‘no intention of moving forward’ with a lawsuit and that TEI should just ‘be patient’ and ‘let things play out’. Mr. Schneiderman went on to volunteer that his office was ‘highly bureaucratic,’ and that one of the ‘most difficult’ aspects of being Attorney General was managing the ‘hundreds of attorneys’ on his staff. He asked that we give him time to ‘go through the motions,’ to satisfy the long-time staff members of his office.”

Not long after the wedding at Cipriani, Schneiderman’s team invited Ivanka to a fundraising dinner for the American Friends of the Yitzhak Rabin Center at the Plaza Hotel, where Schneiderman was going to be honored. “Not wanting to disappoint Mr. Schneiderman, I purchased a ticket and attended this event,” Ivanka wrote. Nor, she alleged, did he let up. His staff “repeatedly called my assistant” to set up a dinner date with her and Jared; “after many failed attempts” they met for drinks at the bar at the Four Seasons Hotel. At that meeting, two hours long, Ivanka said, Schneiderman “talked openly with me about his aspirations for higher office and his frustration with what he thought was a lack of leadership from government leaders. Mr. Schneiderman also talked extensively about what he believed to be the importance of friendship and loyalty, qualities that he commented were ‘so rare in politics.’ ”⁶

Finally, Ivanka Trump wrote Eric Schneiderman a check for five hundred dollars.

In August 2013, the State of New York sued Trump University for swindling thousands of Americans out of millions of dollars.⁷ Donald Trump soon filed his ethics complaint against Eric Schneiderman, along with Ivanka’s affidavit, claiming that Schneiderman “aggressively targeted” the Trump Organization, using the threat of a lawsuit as a way to ply funds from the Trumps. (Schneiderman denied the allegations, and the case was ultimately dismissed.) To help advance the complaint, Trump turned to a man who understood New York’s ethics laws better than anyone: David Grandeau. The former executive director of the New York Temporary State Commission on Lobbying, had, in the year 2000, caught Trump and Roger Stone running a fake grassroots campaign against legalized gambling in New York and levied the largest lobbying fine in New York history against Donald Trump. For his work on the case against Schneiderman, Grandeau charged Trump double his normal rate, so he could be sure he had covered his fee when Trump inevitably refused to pay the second half.⁸

The Trumps’ complaint was filed on December 3, 2013. On the same day, a story appeared in Vanity Fair called “Big Hair on Campus,” outlining the Trump University scam and profiling its victims.⁹ “Too bad about New York Magazine,” Donald Trump tweeted, misidentifying the magazine that had run the story, “but there’s a much bigger one out there, currently doing a story on me to get even, that I’ll soon discuss!”¹⁰

Two months later, the New York Observer ran a seven-thousand-word story titled “Clockwork Eric.” It was accompanied by a picture of Schneiderman, in a bowler hat, staring through a triangle, wielding a pen, in the style of the dystopian Stanley Kubrick crime file “Clockwork Orange.” The story argued that Schneiderman’s modus operandi was to threaten potential targets with investigation while simulta­neously raising money from them. There was also a lengthy defense of the Trump Organization’s actions in Trump University, saying “it strains credulity to think an intelligent person would believe a three-day real estate seminar was an actual university.”¹¹

(It should be stipulated that Schneiderman had behaved awfully, though not for the reasons the Observer wrote about. Years later, Jane Mayer and Ronan Farrow wrote a New Yorker exposé of Schneiderman that documented a series of violent relationships with women.¹² Schneiderman resigned soon after.)

The “Clockwork Eric” article was accompanied by an unusual editors’ note: “The day before this story went to press, someone from Mr. Schneiderman’s press operation apparently told another publication, ‘Donald Trump ordered up a hit piece in his son-in-law’s newspaper to retaliate against Schneiderman for bringing a lawsuit against him.’ Bullshit. The notion that Mr. Trump can ‘order’ the Observer to publish or not publish a story is ludicrous.”

By this time, Jared had a new editor in chief, his fourth. Ken Kurson had known the Kushners since before Charlie went to jail. A former speechwriter for Rudy Giuliani, he had been working for the political consulting firm Jamestown Associates when Jared hired him to edit the paper. He had an indie rock band, called the Lilacs.

The Schneiderman assignment caught the attention of the New York Times and BuzzFeed News. According to the Times, Kurson had made various attempts to recruit a writer for the Schneiderman story, beginning just around the time Schneiderman brought his suit. One writer he approached said of Kurson: “He didn’t say ‘hit piece’ in so many words, he said Eric Schneiderman is going after Jared’s father-in-law and he’s a bad guy and we’re going to do something about that.” But the first writer passed, and as with the Dick Mack story, another writer was sought: this time, a Rutgers poli-sci graduate who was managing an ice cream store in Maplewood, New Jersey, named Bill Gifford. After several weeks, Gifford concluded that he was supposed to write a “smear piece” and decided against it. “He does come to my shop,” Gifford told the Times, referring to Kurson. “He did want to give me this opportunity, but I do feel like he might have been using me. To even call me a journalist is a reach, and to write such an important piece on an important person . . .” he said, tailing off.¹³ The person who ultimately wrote the story, Michael Craig, told BuzzFeed News that he was “not discouraged or encouraged” to have a particular angle. Kurson said he wasn’t trying to assign a story “to suit a particular agenda,” and said he did not recall saying anything negative about Schneiderman.¹⁴

In early 2014, the idea of using of Jared Kushner’s newspaper as a way to “get even”—in Donald Trump’s words—caused a stir in media circles. But in an environment where Jared Kushner and Ivanka Trump were seen as red-carpet Democratic Party donors, the ice-cream-store-manager, Trump-influenced-hit-job story came and went. Few noticed.

The Trump and Kushner families were joining their worlds, molding facts to augment their power over law enforcement, over the truth itself. It was a small canary, signaling the world to come.

 

In 2011, facing default on his family’s 666 Fifth Avenue debts, Jared needed to convince his lenders—including billionaire Tom Barrack—to extend the repayment period. Tall and polo-playing, Barrack is an Angeleno of Lebanese Christian descent who grew up speaking Arabic. He is a friend of Middle East royalty and also of Donald Trump. The two had met in the 1980s when Barrack was working for the seller of the Plaza Hotel when Trump was buying, and Barrack played a role when Trump was negotiating a position in the Riverside yards project in the 1990s. In 2011, the Washington Post reported, Trump called Barrack, asking him to meet with his son-in-law. “Donald called and said: ‘Look, I have no idea what’s going on,’ ” as Barrack later told the Post. “ ‘Jared has some deal you have an interest in.’ ”¹⁵

Jared flew to California, alone, and met with Barrack without lawyers, asking, as Barrack told the story, that he accept the new payment plan, even though Barrack stood to lose out on millions of dollars. Jared argued that it was better than losing everything. “After 75 minutes,” the Post wrote, “Barrack agreed to help, concluding that ‘it seems like it is in everyone’s interest to restructure this.’ He said he called Trump and told him: ‘You should get down on your knees that your daughter found this kid. He is out of central casting. He was respectful, he was totally up to date on the facts and the numbers and had a very persuasive demeanor.’ ”¹⁶

Around this time, the Trumps also needed money, and Jared, in turn, helped them find it. Donald Trump was on the hook, personally, for part of a loan he had guaranteed to build the Trump Tower Chicago. Before the financial crisis, Trump had borrowed $640 million from Deutsche Bank, a large German bank willing to take on risky loans from high-profile clients as a way to establish itself in the United States. A German institution, Deutsche Bank’s history was entwined with the history of the country. It was founded in the nineteenth century to buttress German companies overseas. It financed the chemical company that supplied the gas for the Auschwitz death camp, and later provided loans for rebuilding the German economy after the war.¹⁷

By the turn of the twenty-first century, Deutsche Bank was pressing its way into the US market. And Donald Trump needed a banker: he was a decade past his Atlantic City crash and still unable to borrow from mainstream American banks. To demonstrate his family’s commitment to the building, Donald Trump promised that Ivanka, then just a year out of college, would be put in charge of the project.¹⁸ He courted Deutsche Bank’s leadership, personally guaranteeing $40 million of the total. Trump got his $640-million loan, a feat that, he boasted at the Chicago tower ribbon cutting in September 2008, was “virtually impossible.” He added: “The banks are shut down, but we got this one built.”¹⁹

Two months later, Trump was on the brink of default. So he sued Deutsche Bank. “This action arises out of defendant Deutsche Bank’s attempt to derail the successful completion of one of the most acclaimed construction projects to be built in the United States in recent times,” the lawsuit began. It went on to accuse the bank of acting in “bad faith, breach of fiduciary duty, fraudulent inducement and self-dealing.”²⁰ Trump claimed that he couldn’t pay back the loan because the financial crisis was a force majeure, an act of God, and that Deutsche Bank was partially responsible for the crisis, anyway. He asked for billions of dollars in damages. Deutsche Bank countersued.

Eventually, the cases were settled, but Trump still had to pay, out of his own pocket, the $40 million he had personally guaranteed. To get it, Trump turned to a surprsing source: another division of Deutsche Bank. Around the time Trump was introducing Jared Kushner to Tom Barrack, Jared Kushner was introducing the Trump family to his private banker. Rosemary Vrablic, who wore her greying hair short and whose attire tended to conservative blazers and slacks, managed the great wealth of her Deutsche Bank clients, structuring investments to avoid tax authorities and acting as a sort of a financial concierge. Her unit—Private Wealth—dealt with clients with “many homes, ex-wives, and many children” as Vrablic described it in a 1999 interview with the American Banker.²¹

Vrablic was an old Kushner family friend. She’d known the Kushners prior to her career at Deutsche Bank, when she’d worked at the Bank of America. When Vrablic moved to Deutsche, Jared and Seryl moved their business there. (The family prohibition on doing business with German entities didn’t extend to Deutsche Bank.) Deutsche Bank had a large real estate division to handle commercial real estate, but Trump had just defaulted and sued that division. So Deutsche Bank allowed him to take out loans for commercial real estate—through Vrablic’s Private Wealth division.

In early 2012, with the Chicago loan still unsettled, the Trump family business got the go-ahead for two major projects: a lease for the Old Post Office building in Washington for a planned Trump hotel, and the acquisition of the Doral golf resort, a fabled set of golf courses on the outskirts of Miami that had fallen into bankruptcy.

There’s an origin story about the Doral golf resort, as chronicled in Forbes. The headline read, “How Ivanka Trump Got The Doral Resort (And The Blue Monster) For A Bargain Basement Price And Had A Baby At The Same Time.” The story reported that when the resort went underwater following the real estate crash, “Ivanka Trump swooped in and got the deal of a lifetime.” One hundred and fifty million dollars was the price cited, for a property including “land alone that could be worth close to $1 billion.” As she told the story to Forbes, just before she gave birth, she got a call saying that the sellers had chosen another bidder. Days later, she got another call, saying that the deal was back on again. Ivanka flew to Doral to view the property when Arabella was just a week old. The Trumps told Forbes they would spend $200 million on renovations.²² (In a later press release, that amount swelled to $250 million.) But as with most things Trump, especially having to do with origin stories, the account elided the truth.

Even before the financial crisis, the golf industry had been under pressure as millennials shied away from the game.²³ By 2011, the Doral Golf course was in distress; the industry considered it past its prime. Its owners had filed for bankruptcy after the financial crash, and a committee of debtors needed to evaluate the sale, which then had to be approved by a bankruptcy judge. The Trumps seduced the debtors with a bid that came with a promise: they would buy the course outright, without any financing, for $170 million. Their offer carried “the greatest economic value, including the ability to quickly consummate a transaction without financing or other contingencies,” according to a document filed in bankruptcy court.²⁴ But the Trumps did not pay $170 million in the end, they paid $150 million, for both the property and the business. And they did get financing, from a banker who’d flown down to Miami to walk the course: Rosemary Vrablic.

According to Miami-Dade County land records, the Trumps paid $105 million for the property portion of the business, but borrowed more than that—$106 million—against it, promising to give the bank the course and the resort buildings if they defaulted. The Trumps then borrowed another $19 million, also through Rosemary Vrablic, also collateralized by Doral. The Trumps now held $125 million in loans secured by property for which they’d paid $105 million. Documents in the public record do not explain the discrepancy.

In August 2012, two months after closing on the Doral, the Trumps got yet another loan from Deutsche Bank: for $48 million, to pay off the commercial real estate division of Deutsche Bank for Trump’s personal guarantee on the Chicago tower. One division of the bank was paying off another division of the bank. “No one has ever seen anything like this,” New York Times finance editor David Enrich said in an interview for the Trump, Inc. podcast. “In fact, a lot of the people I’ve talked to at the bank, and previously at the bank, had initially insisted this just hadn’t even happened. It’s not the way it worked at all. And it is the way it worked and it’s just so extraordinary and unusual that no one believed it to be possible.”²⁵ To protect themselves from future losses, banks are usually loath to do business with companies that have defaulted on their loans and then sued them. Deutsche Bank was an exception.

After his wife’s family business closed on the Doral and Chicago loans with his own personal banker, Jared Kushner took a signature step. He asked the editor of another New York Observer offshoot, the Commercial Mortgage Observer, to write a profile of Rosemary Vrablic. The editor, Carl Gaines, was aware that Kushner was a Vrablic client, and balked.

“Just go meet with her,” Kushner said. “You’ll figure something out.” The resulting profile included the following line: “the mere mention of her name yielded descriptors you’d probably want in someone handling your money.” It also quoted people who touted Vrablic as “one of the top private bankers to the U.S. ultra-high-net-worth community” and “a really good client advocate, but also someone who can balance the interests of the institution.” She was also described as someone who “combines that with a very strong and deep skill set—across products.”

The article ended with a disclaimer that “Ms. Vrablic’s past clients include Observer Media Group publisher Jared Kushner.”²⁶ It did not mention her work for Jared’s wife on Doral, or Chicago.

On a foggy Wednesday around the time the article landed, in February 2013, Vrablic took the elevator to the twenty-sixth floor of Trump Tower. Her rapport with Donald Trump was clear, an executive with knowledge of the meeting told the New York Times, which wrote that “Mr. Trump’s assistant greeted her as an old friend, and she seemed relaxed with Mr. Trump and his daughter.” Around the same time, Deutsche Bank produced a promotional video, featuring Ivanka Trump, touting the bank’s work.²⁷

 

The Doral golf course deal marked another turning point for the Trump Organization: around this time, it began spending large amounts of its own cash on deals. Trump had proudly called himself the “King of Debt,” but in this period he changed course and began to park cash around the country: a $7-million mansion in Beverly Hills, a $16-million winery in Virginia. Even with aggressive borrowing, Trump still put $25 million of his own money into the Doral deal. “He had incredible cash flow and built incredible wealth,” Eric Trump told the Washington Post when reporters David Fahrenthold, John O’Connell, and Jack Gillum first reported on the cash outlays, which grew to total over $400 million. “He didn’t need to think about borrowing for every transaction. We invested in ourselves.”²⁸ The available evidence suggested Donald Trump did not have limitless cash.

In 2011, a court dismissed a case Trump had brought against Tim O’Brien, a financial journalist for the New York Times (and later for Bloomberg Opinion) who researched Trump’s net worth for his book TrumpNation. Contrary to Trump’s repeated claims that he was a billionaire, O’Brien’s sources and documents put Trump’s wealth at the time the book was published, in 2005, as more like $150 to $250 million. “Comfortably wealthy,” as O’Brien put it, but not “remotely close to being a billionaire.” Deutsche Bank, according to documents released in the lawsuit, valued Trump’s assets at $788 million.²⁹

There was a clue about where all the cash was coming from. A golf writer, James Dodson, had been previewing a course with Eric Trump at the Trumps’ newly acquired North Carolina golf course. “So when I got in the cart with Eric, as we were setting off,” Dodson said later in an interview with WBUR public radio, “I said ‘Eric, who’s funding? I know no banks—because of the recession, the great recession—have touched a golf course. You know, no one’s funding any kind of golf construction. It’s dead in the water the last four or five years.’ ”

“And this is what he said. He said: ‘Well, we don’t rely on American banks. We have all the funding we need out of Russia.’ I said: ‘Really?’ And he said: ‘Oh, yeah. We’ve got some guys that really, really love golf, and they’re really invested in our programs. We just go there all the time.’ ”³⁰ (Eric Trump later said in a tweet, “This story is completely fabricated.”)

 

In 2012, with his business increasingly in foreign licensing deals, hotel management, and golf course acquisition, there was a particular building project that Donald Trump very badly wanted: the redevelopment lease for the Old Post Office building in Washington, DC. The Old Post Office is a striking building on the stretch of Pennsylvania Avenue between the Capitol and the White House. With a 315-foot-tall bell tower, the 1899 Romanesque revival structure is listed on the National Register of Historic Places. For years, the General Services Administration, the branch of the federal government in charge of buildings, had struggled to make something of this prized property, which had been reduced to renting portions for a low-end food court. But the agency was slow and lumbering, and beset by scandal. It finally put the building out to bid.

In February 2012, not long after Donald Trump’s pursuit of his birtherism crusade, the federal government selected the Trump Organization as its preferred bidder. According to a February 2012 press release, “GSA determined the Trump Organization proposal represented the strongest development team, best long term potential for the local community, and most consistent stream of revenue for the Federal Government.”³¹ There was an outcry, and one protest from a rival who called the GSA decision “unlawful and unwise.” The protest went on: “either GSA failed to properly assess the hundreds of publicly accessible records regarding Trump entity bankruptcy and loan defaults related to real estate development projects that Trump had a duty to disclose; or alternatively Trump’s proposal failed to fully disclose these bankruptcies and loan defaults.” The rival bidder wrote, correctly: “Trump is an unreliable business partner. Trump has a distinctly different posture at bid and award press conferences and unfavorable history revealed in bankruptcy and court proceedings that emerge as the project fails. The record reveals that Trump projects often fail, and fail publicly. In those instances of failure, Trump has often walked away arguing that: (1) the Trump organization only lent its name through licensing and/or (2) the Trump organization disparages or sues the business partner in GSA’s position; while (3) suggesting the failure is anyone else’s fault other than Trump’s.”³²

Four former GSA officials said in interviews the GSA had no choice: Trump had the highest bid, which under the law, the GSA was required to select. And the White House instructed them not to play politics. This was Obama acting apolitically, as he thought a president should, and Trump using Obama’s uprightness to gain advantage.

In public, GSA officials noted Trump’s bid contained a guarantee of financing from Colony Capital, Tom Barrack’s firm, which, GSA thought, had a good reputation. They also privately pointed out that Donald Trump wasn’t really involved in the negotiations with the federal government: Ivanka was. Here was a glamourous, statuesque businesswoman with a degree from Wharton, a television star, negotiating with government bureaucrats. One GSA official, no friend of the Trumps, described Ivanka Trump’s business in an interview as “completely separate” from her father. Donald Trump’s daughter said she was so committed to running the hotel for the long haul that she hoped her infant daughter, Arabella, would grow up to run it.³³

Lease negotiations continued for a year and a half. Colony Capital dropped out. Trump was willing to put up around $40 million, but still needed financing. And so, he turned again to Rosemary Vrablic, to obtain his largest loan yet from the private banking division: $170 million, putting up as collateral the lease itself. That meant that if he defaulted, the lease would belong to the bank, rather than revert to the federal government. According to one academic analysis, the loan to value ratio was unusually high.³⁴ More than that, Trump succeeded in something else through a financial sleight of hand: he set up an LLC that would create a 7.45 percent equity share in the Old Post Office project for each of his three oldest children, thereby using the value the deal created to divert tens of millions of dollars of future earnings from himself to his children, tax-free.³⁵

 

In 2015, Jared Kushner entered into a business deal of his own that would lead to an outsized loan with Deutsche Bank: his company bought six retail floors of the former New York Times Building from the Israeli-Uzbek billionaire Lev Leviev for $296 million. Then, just over a year later, the Kushners went to Deutsche Bank to refinance their investment. They got a generous appraisal that said the property was worth $170 million more than they had just paid for it. The Kushner Companies argued the increased value flowed from the more lucrative tenants they would bring in to “better position” the retail floors. When the refinancing went through, the Kushners still owned the building, and now had an extra $74 million in cash.

The prestige location of the former New York Times building, as it turned out, was not able to create that much new value. There were a string of legal disputes with the tenants, and some moved out, or never moved in. Kushner Companies defaulted on a piece of its debt.³⁶ As of the spring of 2019, a large, prime, first-floor property was available, with a sign in the window directing interested parties to contact raeleasing.com.

 

During this period of remarkable transactions with the Trumps and the Kushners, Deutsche Bank had a systemic, serious problem: from 2011 to 2015, New York regulators found, it was laundering money for wealthy Russians. A consent order signed by the bank, which means the bank accepts the facts as laid out, showed in devastating detail the internal workings of Deutsche Bank.³⁷ There was pressure to bring up profits post-financial crisis, insufficient compliance staff, and an overall go-along, get-along culture that allowed billions of dollars to be laundered from Moscow to London and New York. Moreover, Deutsche Bank was already on notice for rate rigging, lax oversight and failing to comply with US economic sanctions. It would end up paying billions of dollars in fines.

For the Moscow scheme, the New York regulators fined the bank $425 million, finding it had displayed “compliance deficiencies” that “spanned Deutsche Bank’s global enterprise. These flaws allowed a corrupt group of bank traders and offshore entities to improperly and covertly transfer more than $10 billion out of Russia.” Deutsche Bank’s failure to comply with banking laws “could have facilitated capital flight, tax evasion, or other potentially illegal objectives,” the consent decree said.³⁸

The scheme involved “mirror trades,” whereby a Deutsche Bank trader in Moscow, acting on behalf of a client, would make a purchase, for, say, a billion rubles of stock in a Russian company like Gazprom or Sberbank. Then, in London, another Deutsche Bank trader would make a sale of the same amount of Gazprom or Sberbank stocks, collecting the sales price in pounds, or euros, or US dollars. What the bank didn’t ferret out—and should have, under the law, was that the buyer and the seller were secretly related. Their connection was hidden by nesting shell companies.

There were plenty of signals that Deutsche Bank could have seen, had it been looking. One Deutsche Bank trader was told, “I have a billion rouble today. . . . Will you be able to find a security for this size?” This is not the way most people buy securities—by saying how much they want to spend: rather, a legitimate investor would select the company first. At one point, a single attorney without training in compliance with anti-money-laundering laws served as Deutsche Bank Moscow’s head of compliance, head of legal, and its anti-money-laundering officer, “all at the same time.”

When they announced the consent order, New York regulators did not make any connection to the Trumps or the Kushners. But the coincidence caught the attention of David Enrich, the New York Times finance editor, who has written the book Dark Towers: Deutsche Bank, Donald Trump and an Epic Tale of Destruction. “They were laundering money for wealthy Russians and people connected to Putin and the Kremlin in a variety of ways for almost the exact time period that they were doing business with Donald Trump,” Enrich said in an interview for the podcast Trump, Inc.³⁹

 

Trump was not done with Deutsche Bank after the Old Post Office deal. In 2014, he bought another golf course—this time from a United Arab Emirates group, with another $63 million in cash—in Turnberry, Scotland, the kind of course that won Trump status in his beloved golf world. After purchasing this property, the New York Times reported, he went to Deutsche Bank in early 2016, asking it to expand his Doral loan so he could put that money into Turnberry. Vrablic’s division recommended the loan. Her superiors rejected it. She appealed to Frankfurt, where the bank is headquartered, but this time, according to the New York Times’ reporting, her superiors refused, saying that Donald Trump had become too controversial, and the reputational risk was too great.⁴⁰

In the summer of 2016, Enrich reported, an anti-money-laundering specialist from Deutsche Bank named Tammy McFadden, based in Jacksonville, Florida, got a computer readout alerting her to a financial transaction between the Kushner Companies and “Russian individuals.” It was McFadden’s job to investigate, and determine whether the transaction was suspicious enough to alert the US Treasury, as banking laws required. McFadden decided the financial transfer needed to be reported, and told her superiors. Usually, such a recommendation would go to the next level of anti-money-laundering specialists. In this case, after input from Rosemary Vrablic’s private banking unit, in New York, the transaction was not reported.⁴¹

When asked about this, years later, by Axios HBO’s Jonathan Swan, Jared Kushner brushed it off. “That’s probably the 20th story between the Washington Post and the New York Times where they’ve accused companies or me of something that’s been very salacious. Nothing that they’ve accused us of has panned out in any way.”⁴²

 

In early February 2014, during the period of all of the Deutsche Bank loans and just three months after Donald Trump had flown to Moscow for the Miss Universe contest, Jared Kushner and Ivanka Trump took their own trip to Russia with Arabella, then a toddler. Among other reasons, the Kushner family made the trip to attend a gala for Moscow’s Jewish Museum and Tolerance Center, and for four days of Russian travel, including a visit to the ballet in St. Petersburg with Arabella.⁴³ While in Russia, with the possibility of a Trump Tower Moscow still very much alive, Ivanka toured Crocus City, the Moscow commercial complex, with Emin Agalarov, the pop-star son of the oligarch Aras Agalarov.⁴⁴

The Kushner family trip was hosted by Dasha Zhukova,⁴⁵ then the wife of Putin friend Roman Abramovych, a Russian-Israeli billionaire victor of the aluminum wars and owner of the British Chelsea Football Club. By the time of the gala at the Jewish Museum in Moscow, Zhukova had a financial tie to the Kushners as well as one of friendship; Thrive Capital, a firm that Jared’s brother Josh had started and in which Jared owned a stake, had invested in her online art-selling platform, Artsy.

Ivanka posted a photo on Instagram of the Jewish Museum gala with Zhukova and Wendi Murdoch. Also at the gala, as reported by Bloomberg News: Leonard Blavatnik, a Ukrainian-born British-American businessman, who was about to be a major donor to Republican political causes,⁴⁶ and Viktor Vekselberg, owner of the Renova group and the fourth-richest person in Russia. The dinner, which included an exhibition of Andy Warhol portraits of twentieth-century Jewish luminaries, raised $4.5 million.⁴⁷

The trip was a display of the Kushners’ increasingly transnational view of the world and their ever-strengthening cross-border ties with the international oligarchy, the jet-setting class of people who controlled resources, money, and real estate around the globe. A world of possibilities opened up that night.

Before the month was out, however, Viktor Yanukovych fled Ukraine, and Putin sent tanks and troops to invade Crimea. President Obama imposed severe economic sanctions. The European Union followed suit. Everything about the business relationship between Russians and Americans—and between the Trumps and the Kushners and their Russian counterparts—was drastically altered.

 

Early in 2015, Miriam Elder, then the world editor for BuzzFeed News, began to notice something she saw as odd: the New York Observer was publishing regular columns by a writer with “a slavishly pro-Kremlin bent.” Elder, who had previously covered Russia for the Guardian, started counting: “the reporter, Mikhail Klikushin, has written 15 articles for the outlet since November 2014. He has no online presence—in English or Russian—beyond the stories he has written for the Observer, which have also been picked up by other outlets.”

Ken Kurson defended the hire. “Of all of the strange, unfair, preposterous attacks made on the Observer or me personally,” he said in an email, “the Klikushin one was the craziest.” “He’s a writer,” he told Elder. “He lives in the tristate area. He’s a Russian national who has been in America for at least 10 years or so.” Elder was skeptical. The “articles are remarkable in how directly they line up with pro-Russian propaganda points,” she wrote. “The Kremlin regularly issues talking points, either via official statements or, more often, by reports in state-run or Kremlin-friendly media.”⁴⁸ The Observer kept running Klikushin’s articles, but it began labelling them as “opinion.”

This was now just months before Trump announced his campaign for president.