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Opinions A history of Donald Trump’s business dealings in Russia By David Ignatius Opinion writer November 2
President Trump takes questions from reporters before boarding Marine One (Drew AngereGetty Images)
MOSCOW — An ice-blue 14-story office tower called Ducat Place III is the building that President Trump might have constructed here, with help from a business friend named Howard Lorber who came with him to scout the market in 1996. But like so many other Trump adventures in Russia, this one proved a tantalizing but futile dead end.
Trump is angrily dismissive when questions are raised about his Russian contacts. He calls the investigation by special counsel Robert S. Mueller III a “witch hunt” and media reports about his Russia connections “fake news” and “fabrication.” He tweeted in January, shortly before his inauguration: “I HAVE NOTHING TO DO WITH RUSSIA — NO DEALS, NO LOANS, NO NOTHING!”
As the Mueller investigation accelerated this week with the indictment of former Trump campaign chairman Paul Manafort and the plea deal reached with former campaign foreign-policy aide George Papadopoulos, the context of the probe becomes newly important. How did Trump accumulate his network of Russian business contacts in the years before the 2016 campaign? What’s the prehistory of Trump and Russia?
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The Mueller investigation is still in its opening round, and it’s far too early to make any judgments about Trump’s own actions. A member of Trump’s inner circle told me that he advised the president recently, “This is the most innocent you’ve ever been of any allegation.” But to reach a judgment, you first must understand the history of Trump’s fascination, bordering on obsession, with Russian business deals.
The simple truth is that Trump has been hungry for Russia projects for more than three decades. He has repeatedly touted plans for a Moscow mega-development and has courted a steady stream of investors from the former Soviet Union for ventures in New York, South Florida and other locations. Trump has enjoyed playing the “big guy” in Moscow. As he bragged to a New York real-estate publication after a November 2013 dinner with prominent business leaders: “The Russian market is attracted to me.”
Trump’s Russia connections helped sow the seeds of Mueller’s investigation. The best example is the now-famous June 9, 2016, meeting at Trump Tower organized by Donald Trump Jr. with Russians who had links with the Kremlin. Mueller is investigating whether that meeting was part of a conspiracy to influence the 2016 election. But any potential criminal issues aside, the gathering embodied the Trump family’s 30-year involvement with wealthy tycoons from the former Soviet Union.
What follows is an attempt to explain Trump’s encounter with Russia as a narrative. Most of the details have surfaced before, but it has been hard to see the story whole, as a business saga. With Russia, as with so many other aspects of Trump’s business and political life, he has been more pitchman than builder. What’s clear, reviewing the facts, is that Trump’s claim he had “nothing to do with Russia” over the years is nonsense. 3:06 Inside the plan to develop a Trump Tower in Moscow
The Washington Post's Carol Leonnig and Tom Hamburger explain the Trump Organization's efforts to build a Trump Tower in Moscow. (Jenny Starrs, Meg Kelly/The Washington Post)
Trump’s business interest in Russia began in 1986. The flashy young tycoon met Soviet Ambassador Yuri Dubinin at a luncheon and, as he recounted in his 1987 book, “The Art of the Deal,” the two began “talking about building a large luxury hotel across the street from the Kremlin.”
With Dubinin’s encouragement, Trump flew to Moscow in July 1987 with his Czech-born first wife, Ivana, to check out potential sites. Trump wrote in his book: “It was an extraordinary experience. . . . We stayed in Lenin’s suite at the National Hotel, and I was impressed with the ambition of the Soviet officials to make a deal.”
But Trump was preoccupied with other business projects in the late 1980s, including buying an airline and the Plaza Hotel (which he lost after bankruptcies in 1991 and 1992, respectively), and the Russia hotel deal stalled.
Trump explored the Russian market again in 1996, with help from his friend Lorber, who is chief executive of Vector Group, a holding company that back then owned a Russian cigarette company and now owns Douglas Elliman Realty, one of the leading brokerage firms for super-rich Russians seeking property in the United States.
Lorber is a fascinating, little-noted member of Trump’s inner circle. Trump described him last year as one of his two closest friends; they’ve helped each other’s children in business, and Lorber introduced Trump to David Friedman, who is now U.S. ambassador to Israel; Friedman’s former partner, Marc Kasowitz, became Trump’s lawyer. Lorber even made a cameo appearance in a 2005 episode of “The Apprentice.”
The Trump-Lorber foray in Moscow began with Lorber’s business partner (and close Trump friend) Bennett LeBow, who had acquired the Liggett tobacco company in 1986. One subsidiary, called Liggett-Ducat, marketed the company’s cigarettes in Russia. And Liggett-Ducat had a 98-year lease on a prime development site in central Moscow.
With his usual panache, Trump announced plans for a $250 million investment that would include a “Trump International” complex on the Liggett-Ducat site at a November 1996 news conference in Moscow. “We have an understanding we will be doing it,” he said.
Trump bragged about his plans in January 1997, when he and Lorber met visiting Russian politician Aleksandr Lebed in New York. A 1997 New Yorker profile of Trump captured their exchange and showed the breadth of Trump’s hopes for Moscow investment and business connections.
“We are actually looking at something in Moscow right now, and it would be skyscrapers and hotels, not casinos. Only quality stuff. . . . And we’re working with the local government, the mayor of Moscow, and the mayor’s people. So far, they’ve been very responsive. . . . I always go into the center.”
The Moscow mayor Trump cultivated was Yuri Luzhkov. John Beyrle, then U.S. ambassador to Russia, offered this blunt summary of Luzhkov’s approach in a 2010 cable to Washington: “Corruption in Moscow remains pervasive with Mayor Luzhkov at the top of the pyramid. Luzhkov oversees a system in which it appears that almost everyone at every level is involved in some form of corruption or criminal behavior.” Beyrle’s cable was published by WikiLeaks.
Whatever inside track Trump thought he had with Luzhkov in 1996, the deal petered out. Trump’s business troubles were mounting at home, and financing may not have been available. Handsome towers were built at sites called Ducat Place II and III, but not by Trump.
The Trump International Beach Resort in Sunny Isles. (Angel Valentin/for The Washington Post)
The Russian moneymaker for Trump in the 2000s turned out, instead, to be investment in U.S. properties bearing his name. Russians were eager to move their capital into fancy condo apartments in New York and Florida. Here, again, his friend Lorber was well connected.
Lorber’s real-estate firm Douglas Elliman, hoping to profit from the Russian market, hired a string of Russian-speaking agents who could help rich clients find high-end properties.
“If you didn’t target the Russian billionaires, then you shouldn’t be in the business,” said Dolly Lenz, a former Douglas Elliman broker, in a 2008 article in the New York Observer. Lenz told USA Today last year that she had sold about 65 apartments in Manhattan’s Trump World Tower to Russian buyers. “They all wanted to meet Donald,” she said.
One magnet for Russian money was a private resort called Fisher Island in Biscayne Bay, just off Miami. Lorber has been a director of the Oceanside at Fisher Island Condominium Association since 2000 and is currently a director of the Fisher Island Club.
Among Fisher Island’s many Soviet-born property owners have been Aras Agalarov, a Russian-Azerbaijani magnate who sponsored Trump’s Miss Universe 2013 pageant and whose pop-singer son Emin organized the June 2016 meeting at Trump Tower; and Felix Sater, a Russian-born former adviser to Trump who worked with the Bayrock Group that helped develop the Trump SoHo project in New York.
(Lorber declined to comment through Vector’s public-affairs consultant, Emily Claffey of Sard Verbinnen & Co.)
Trump’s business deals in South Florida illustrated his blend of panache and caution, his hunger for Russian cash and his ability to skirt disaster. He sold his name to condo projects in an area called Sunny Isles Beach, helped pump up the market there and walked away unscathed when it crashed.
“The city has earned the nickname ‘Little Russia’ for its high percentage of Russian-speaking residents,” notes the Douglas Elliman website, pitching high-rises there to prospective buyers. The Miami Herald reported that according to U.S. Census data, nine percent of Sunny Isles Beach households have Russian origins, the largest percentage of Russians in Miami-Dade County.
Sunny Isles is a case study in how Trump does business. It was once a decidedly un-chic beachfront north of Miami, “a place where your uncle who lives on Social Security would go on vacation,” says Peter Zalewski, a Florida real-estate consultant. But after it incorporated as a separate jurisdiction within Miami-Dade County, with business-friendly local managers, it became a magnet for investment — and was rebranded as “Florida’s Riviera.”
Trump’s name graces a string of sleek buildings along this strip of coast. First was the Trump International Beach Resort, a complex completed in 2004. Then came Trump Palace in 2006; Trump Towers I, II and III, built in 2007, 2008 and 2009; and Trump Royale in 2008. But Trump’s developer friends plunged into Sunny Isles at the wrong time. According to a 2010 article at SouthFloridaCondos.blogspot.com, unit prices at the three Trump Towers buildings dropped nearly 40 percent from the 2005 pre sales period. As the market crashed, the construction loan for Trump Towers had to be restructured. Trump Hollywood, another glitzy project further north, was driven into foreclosure in 2010.
Trump deftly distanced himself from the developers’ troubles, telling the Sun-Sentinel that he questioned their “timing.” But the condo market gradually improved, thanks in part to Russian buyers. A Reuters investigation found that 63 people with Russian addresses or passports have purchased $98.4 million of property in Trump-branded condos in South Florida.
Trump also had a personal infusion of Russian cash in the liquidity-starved 2008 market. That year he sold for a handsome $95 million a Palm Beach waterfront mansion he bought at auction in 2004 for just $41.35 million — more than doubling his money at a time when much of the South Florida market was underwater. The buyer was Russian oligarch Dmitry Rybolovlev.
Dezer Development, the real-estate company that helped attach Trump’s name to six projects in Sunny Isles Beach, saw Trump’s presidential campaign as a promotion opportunity. “It’s a free press release,” Gil Dezer told Bloomberg News in August 2016.
Donald Trump Jr. arrives at Trump Tower in New York City. (Stephanie Keith/Reuters)
Helping build the Trump-Russia pipeline in the fragile 2008 market was Donald Trump Jr. He was a keynote speaker at the June 2008 Russian Real Estate Summit in Moscow, where he touted the Trump Organization’s plans to build condos and hotels in Moscow, St. Petersburg and Sochi. At a New York real-estate conference in September 2008, Trump Jr. was frank about the tide of Russian money supporting the family business.
“In terms of high-end product influx into the U.S., Russians make up a pretty disproportionate cross-section of a lot of our assets. . . . We see a lot of money pouring in from Russia,” said the young Trump, according to a Sept. 15, 2008, article about the conference. He said he had made a half-dozen trips to Russia during the previous 18 months.
A project that had significant financing from former Soviet Union investors was Trump SoHo, a 46-story condo-hotel project in Lower Manhattan that opened in September 2007. One development partner was the Sapir Organization, founded by Tamir Sapir from Georgia. Another partner was Bayrock, founded by Tevfik Arif, a Kazakh-born businessman who brought in Sater. As has been widely reported, Sater went to prison in 1993 after stabbing a man, and later became an FBI informant.
For the elder Trump, these ex-Soviet investors were important assets for the future. He said in a deposition in a Trump SoHo lawsuit: “Bayrock knew the people, knew the investors. . . . And this was going to be Trump International Hotel and Tower Moscow, Kiev, Istanbul, etc., Poland, Warsaw.”
Trump Jr. continued traveling to Russia and Eastern Europe, prospecting for business. He was interviewed in May 2012 before giving a speech to a real-estate conference in Riga, Latvia. His comments, captured on YouTube, explain why the Trump Organization saw the former Eastern Bloc as crucial: “It’s a part of the world that now you’re starting to see some amazing architecture, some incredible real estate, you’re seeing a real big boom in wealth. . . . We have something that’s very relevant in that sector.”
Russian businessman Aras Agalarov, Miss Universe 2013 Gabriela Isler and Donald Trumpat the 2013 Miss Universe pageant in Moscow, Russia. (Irina BujoAP)
The apex of Trump’s personal fascination with Russia may have been 2013, when he brought the Miss Universe pageant to Moscow and talked, yet again, of building a “Trump Tower” there. His business partner in the pageant was Aras Agalarov, president of Crocus Group, a shopping-mall developer. Forbes magazine notes that he has been called “the Trump of Russia” because of his glitzy personal marketing.
Trump and Agalarov formed an ebullient partnership over a dinner in Las Vegas on June 15, 2013, captured on the Internet. As Trump began hyping the pageant, he even tried to draw in Russia’s president himself, tweeting on June 18, 2013: “Do you think Putin will be going to The Miss Universe Pageant in November in Moscow — if so, will he become my new best friend?”
The Miss Universe red carpet was rolled out Nov. 9, 2013. Emin Agalarov sang a song, and Miss Venezuela was crowned the winner. A story published that day by RT touted Trump’s latest business plans for Russia, quoting him: “I have plans for the establishment of business in Russia. Now, I am in talks with several Russian companies to establish this skyscraper.” Aras Agalarov was quoted saying he was participating in talks to be Trump’s partner in the project.
Agalarov hosted a dinner for Trump at the Moscow branch of Nobu, which he owned. The co-host was Herman Gref, the chief executive of Sberbank, Russia’s largest bank, and a close adviser of President Vladimir Putin. An ebullient Trump saluted Agalarov in a Nov. 11 tweet: “I had a great weekend with you and your family. You have done a FANTASTIC job. TRUMP TOWER-MOSCOW is next.”
The Trump-Agalarov contacts continued. Trump’s daughter Ivanka visited Moscow in February 2014 and toured Crocus City Hall. Emin Agalarov performed at a golf tournament the next month at the Trump National Doral, near the family property at Fisher Island. Like so many seemingly imminent Trump-Moscow deals over the years, the skyscraper plan stalled. 4:17 What we know about the June 2016 Trump Tower meeting
Here's what we know so far about Donald Trump Jr.'s meeting with a Russian lawyer during his father's presidential campaign in June 2016. (Video: Elyse Samuels, Jenny Starrs/Photo: Jabin Botsford/The Washington Post)
And then, finally, came an event that Mueller is said to have examined carefully — the meeting in June 2016 where Russian lawyer Natalia Veselnitskaya met with Trump’s inner circle. It helps to recall the long history of Trump’s business dealings with Russia when you read this June 3, 2016, email to Trump Jr. from Rob Goldstone, the publicist for Emin Agalarov:
“Emin just called me to contact you with something very interesting. The Crown prosecutor of Russia met with his father Aras this morning and in their meeting offered to provide the Trump campaign with some official documents and information that would incriminate Hillary and her dealings with Russia and would be very useful to your father. This is obviously very high-level and sensitive information but is part of Russia and its government’s support for Trump — helped along by Aras and Emin.”
To which Trump Jr. answered: “I love it.” The meeting took place on June 9 with, among others, Trump Jr., Jared Kushner, Manafort and Veselnitskaya, a lawyer with links to the Kremlin. Veselnitskaya says her real goal was to lobby the Trump team to oppose the Magnitsky Act, which she described in a May 31, 2016, memo as “the beginning of a new round of the Cold War,” echoing Putin’s line.
As the new president was taking office, the Trump brand sparkled brighter than ever for Russians. The Miami Herald reported on Jan. 30 that in November 2016, Russians topped the list of foreigners looking for homes in the Miami area.
Oren Alexander, one of the top brokers at Douglas Elliman, explained the post-election trend to the Herald: “There’s no doubt that Russian buyers think America is a good place to be again.” Among the places that attracted Russian purchasers, he said, were Sunny Isles Beach and Fisher Island.
Mueller’s investigation might tell us whether any of these Trump-Russian business connections improperly melded into the 2016 campaign. But at the core of Trump’s interaction with his Russian friends is an insight they have shared ever since Soviet days: Politics may be transitory, but real estate is forever.
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