As Trump Enters Year Two In Office, Mueller Looking At Money Laundering

Jan 17, 2018
Originally published on March 27, 2018 1:17 pm

Updated on Jan. 17 at 6:12 p.m.

As the investigation into Russian influence in the 2016 election now carries into 2018, Justice Department special counsel Robert Mueller is keeping quiet on details.

But one thing does seem clear: A year after President Trump took office, the crime of foreign money laundering looks as though it has become an important focus.

Or, as former White House chief strategist Stephen Bannon told Michael Wolff in his bestselling book, Fire and Fury, "You realize where this is going ... This is all about money laundering."

Here's what is known:

  • Among the first Trump associates to be indicted last year was campaign manager Paul Manafort, who is accused of laundering money by purchasing several properties in New York and Virginia. Manafort, who has worked for pro-Kremlin officials in Ukraine, has pleaded not guilty and is expected to stand trial later this year.
    Manafort's attorneys have pointed out the charges he is facing date from years before he joined the Trump campaign and don't have any bearing on any alleged collusion between the Trump team and Russians.
  • Mueller has hired several prosecutors with experience in prosecuting financial crimes such as money laundering, including Andrew Weissman, chief of the Justice Department's criminal fraud section.
    "I don't think he (Mueller) would have brought them onto his team if that wasn't going to be an area that would be focused on," says former federal prosecutor Kenneth McCallion, who helped investigate ties between Trump and New York Mafia figures in the 1980s.
  • Several published reports say Mueller's team has issued subpoenas to Deutsche Bank for records pertaining to Trump associates. Deutsche Bank was the only major commercial bank willing to lend to Trump after his string of bankruptcies. It has also been accused of laundering Russian money by the New York State Department of Financial Services.
    White House attorneys have denied the reports of the subpoenas, but the bank has made no comment one way or the other. All it has said is that it cooperates with investigators but will not comment on individual cases.

People familiar with big financial crime cases say the role of Trump's bank could be critical.

"It's important that Mr. Mueller find out what happened there, because Deutsche Bank was known as having extensive, intensive relationships with money from former Soviet republics generally and Russia in particular," says Jonathan Winer, former deputy assistant Secretary of State for international law enforcement.

Deutsche Bank has paid hundreds of millions of dollars in fines to American, British and European regulators after admitting its role in some big financial crimes.

Trump and his family have not been implicated and the president maintains that he has done nothing wrong. Outside critics have maintained all along, however, that Trump's real estate empire has been the Western terminus for a clandestine pipeline of illicit money from the Eastern Bloc.

Former prosecutor McCallion said the laundering of money became a global issue for law enforcement not long after the fall of the Soviet Union.

"Russian money was looking to really find a home outside Russia, in Western Europe and the United States, and real estate was one of the investments of choice," McCallion said.

Trump has repeatedly denied having any business deals inside Russia, but money from the former Soviet Union was used to finance some of his branded properties, including the Trump Soho in New York and the Trump International Hotel and Tower in Toronto. (Both properties have since changed their names.)

In addition, the Trump Organization has marketed and sold numerous properties to wealthy people from the former Soviet Union.

"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, say in Dubai and certainly with our project in Soho and anywhere in New York," Donald Trump Jr. said in 2008.

Doing business with people from the former Soviet Union is not illegal. But real estate companies, like banks, are supposed to exercise "due diligence" to make sure they're not receiving money gained through illegal activities such as drug sales and tax evasion.

Real estate transactions are especially difficult to trace because of the widespread use of offshore corporations to mask the purchasers' true identities, Winer says.

None of this means Trump or his family knowingly took illegally laundered money, but certain transactions have raised questions about his business relationships.

Among them was Trump's 2008 sale of a Palm Beach mansion to Russian fertilizer king Dmitri Rybolovlev for almost $100 million, nearly twice what Trump had paid for it four years before.

Paying too much for properties is a classic form of laundering illegally gotten money. Entire sections of London have been snapped up by wealthy foreign owners as ways to park cash garnered elsewhere, but the people who buy them are never home. So neighborhoods sit empty with no one home, a phenomenon dubbed "Lights out London."

Critics wonder whether Trump is one of the people who benefits on the receiving end of a pipeline that runs to the United States — or whether he might have an even deeper relationship with wealthy Russians.

"A Russian tactic is to invest in individuals through overpaying, for example, bailing people out ... or preying on individuals who are in financial distress," says Rep. Eric Swallwell (D-Calif.)

"So that would be an effort to try to make someone like you or somebody receptive to you, and then hope they would act in your interest or that they would fear that your investments in them would be revealed, and so you're in a blackmail or extortion or compromat--as they call it--type of position," Swalwell said.

In other words, irrespective of what relationship Trump's campaign might have had with the Russian attack on the 2016 election, the question becomes whether Trump might want to frustrate Mueller's investigation because of what it might uncover about his personal finances.

Swallwell said he isn't suggesting that Russians might be blackmailing Trump, which has come up before in this story. But he did say Americans deserved an answer about what he called Trump's unwillingness to criticize Russian President Vladimir Putin and take positions friendly to Moscow.

"He certainly is acting in their interests, and what we want to find out is, is there a nefarious reason for that?"

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As President Trump marks one year in office, NPR is checking on ways that his private business interests have fit with his public role. One area to consider involves his financial dealings with Russians. Special counsel Robert Mueller has brought money laundering charges against former Trump campaign chairman Paul Manafort, and there are signs that Russian money laundering has become a big part of the Mueller investigation. NPR's Jim Zarroli reports.

JIM ZARROLI, BYLINE: When Mueller assembled his team of investigators, he included several people with experience prosecuting money laundering. Kenneth McCallion is a former federal prosecutor who has written about Trump.

KENNETH MCCALLION: They have substantial decades of experience in the area, and I don't think he would have brought them onto his team if that wasn't going to be an area that would be focused upon.

ZARROLI: And these investigators will have their work cut out for them. Over the years, huge amounts of money have poured into the United States from foreign dictators, drug dealers and Mafia leaders. And McCallion says since the 1990s, much of the dirty money has come from the former Soviet Union.

MCCALLION: Russian money was looking to really find a home outside Russia in Western Europe and the United States, and real estate was one of the investments of choice.

ZARROLI: Banks and real estate companies are required by law to know who they're dealing with, but much of the money coming from the former Soviet Union has come through offshore companies that are difficult to trace. President Trump has denied doing any deals inside Russia, but Russians have been big buyers of his condominiums, and several of his real estate deals in New York and Toronto, for instance, have been financed with money from oligarchs with ties to the Kremlin.

ERIC SWALWELL: You see a number of financial contacts over the years that individuals have had with Russia.

ZARROLI: Democratic Congressman Eric Swalwell of California says there's nothing illegal about doing business with investors from the former Soviet Union. But Swalwell, who sits on the House Intelligence Committee, says Trump's friendliness toward Russian President Vladimir Putin does raise questions about his motives.

SWALWELL: He certainly is acting in their interests. And what we want to find out is, is there a nefarious reason for that?

ZARROLI: Swalwell says the Russian government has a long history of using money to buy influence.

SWALWELL: Oftentimes it's through real estate dealings. Sometimes it's through preying on people in financial distress.

ZARROLI: Swalwell points out that Trump himself has gone through numerous bankruptcies and is said to have had difficulty getting credit from major banks. The one big exception was Deutsche Bank, to which he owes more than $130 million and which has paid big fines in New York state for money laundering. Jonathan Winer is a former State Department official.

JONATHAN WINER: It's important that Mr. Mueller find out what happened there because Deutsche Bank was known as having extensive, intensive relationships with money from former Soviet republics generally and Russia in particular.

ZARROLI: Now, as Trump enters his second year in office, there's evidence Mueller is examining his ties to the bank. Mueller's team reportedly subpoenaed records from Deutsche Bank involving people tied to the Trump Organization. What all this means is unclear. The Trump Organization is a privately held company that releases few public records, and Trump himself has refused to release his tax returns. Jim Zarroli, NPR News, New York.

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