Editor's Note, 8/10/15: Four years ago, Wayne Barett reported shady business deals ahead of Trump's flirtation with a White House run. After first exposing Trump’s ties to organized crime in his 1992 book, Barrett looked into his most recent business dealings and discovered the following:
• One associate who was an "unindicted co-conspirator" in a massive 2000 stock swindle—and escaped prison only by helping to convict 19 others, including six members of New York crime families
• Two associates who served prison time on cocaine charges• Another partner prosecuted for trafficking underage girls after a dramatic helicopter raid on a yacht off the Turkish coast• A pending lawsuit against Trump Soho that alleges daughter Ivanka, among others, made fraudulent misrepresentations
“I had no idea I would get hammered in the way I’ve been hammered,” Donald Trump declared in New Hampshire on May 11, five days before he dropped out of a presidential race he never formally entered.
Trump knew when he went to New Hampshire that he was about to be hammered again, this time on the front page of The New York Times, which, two days later, reported that hundreds of buyers at condo projects that bear his name were suing him. Trump then went on CNBC—in what turned out to be his last presidential TV interview—and blasted the author of the Times piece, Michael Barbaro, as well as NBC’s investigative chief, Michael Isikoff, and even one of the show’s hosts, Simon Hobbs. Two weeks earlier, Trump had been roasted by the president at the White House Correspondents' Dinner, and now, anyone with a question to ask looked at him as if he had barbecue fork in hand.
As late as this May 13 CNBC appearance, Trump was talking about two possible deadlines for his decision to run— May 22 and before June. Instead, he quit abruptly on May 16, reneging on his promise to attend the Tea Party’s South Carolina event on May 19. He has hinted that NBC forced his hand with its deadline for a $120 million, two-year, Celebrity Apprentice renewal offer. But, as inevitable as it may always have been that he would pull the plug on his presidential show, Trump appeared to depart in a hurried attempt to stanch the flow of bad press, no matter how hard he now wants to disguise it. His refusal to rule out a return to the campaign trail when he called in to Fox TV last Monday was surely just more bravado tease.
Trump quit at least in part because he finally realized what a harsh light this ego explosion was shining on every corner of his business empire, potentially exposing not only him and his many partners, but also his children Donald Jr. and Ivanka to intense scrutiny. An ongoing media investigation of Trump’s financial deals—beset by charges of fraudulent misrepresentation—would also have made it harder for NBC to continue touting him as a model American businessman.
In the days before Trump dropped out, he could certainly not have been too happy to hear from me again. We met in the late '70s for hours of taped interviews, and The Village Voice stories I wrote then resulted in a federal grand jury probe of his early deals, though, in the end, no indictment. When I published the first biography of the Donald in 1992, the New Jersey Division of Gaming Enforcement, which oversees casino licensing in Atlantic City, put Trump under oath and issued a 34-page report, confirming some of the ties to organized crime I described in the book and stating that they could not verify others. I was later visited repeatedly by gaming officials from Missouri when Trump applied for a riverboat casino license there; he wound up withdrawing the application.
While I was reporting that book in 1990, I was muscled out of Trump Castle and handcuffed overnight to a wall at the Atlantic City jail. I haven’t done much reporting about him since the book, but when his numbers shot to the top in recent presidential polls, I took another look and asked his office for an interview. His response was a letter threatening a libel suit.
Trump did sue Tim O’Brien, who was a research assistant on my Trump book, when Tim wrote a sequel in 2005. Now the national editor of the Huffington Post, O’Brien finally prevailed after years of litigation. I obtained—and not from O’Brien—a copy of the two-day deposition Trump gave in that lawsuit. The December 2007 transcript is a road map of the dark paths Trump’s business career has taken in recent years.
In addition to being a television personality, Trump makes a lot of his money these days licensing his name for various hotel and condo projects, not to mention mattress and vodka brands. His most frequent partner in the condo/hotel deals—some of which have become actual projects and some of which haven’t—has been a small development firm called the Bayrock Group, which was headquartered in Trump Tower on Fifth Avenue in 2005 when the partnership began. Trump and Bayrock joined forces on Trump Soho in New York and Trump International Hotel and Tower in Fort Lauderdale, announced and then canceled another Florida project called Trump Las Olas, and together pushed unsuccessful ventures in Colorado and Arizona. Two days before Trump’s 2007 deposition in the O’Brien case, however, The New York Times broke a story about a top Bayrock executive, Felix Sater (aka Satter). Sater had gone to prison for plunging the stem of a wine glass into a commodity broker’s face in a bar fight. He’d also narrowly averted jail a second time, when he was named an “ unindicted co-conspirator” in a massive federal fraud case in 2000. Sater cooperated in this probe of a $40 million stock swindle, which resulted in 19 guilty pleas and the conviction of six mobsters— including the nephew of Carmine “the Snake” Persico and the brother-in-law of Sammy “the Bull” Gravano. The wise guys were part of a “pump and dump” stock scam at the Wall Street firm, White Rock Partners, that Sater ran with Sal Lauria.
Sater, the son of a reputed Russian mob boss, whose mini–storage locker contained two unlicensed pistols and a shotgun, actually worked out of a penthouse office in Trump’s new building at 40 Wall Street. Lauria, who pled guilty to a racketeering charge in the pump-and-dump case, later claimed in a memoir he published that he’d been on talking terms with Trump.
“What kind of interaction did you have with Mr. Sater,” Trump was asked in the O’Brien deposition back in 2007.
“Not that much,” he replied. “I dealt mostly with Tevfik.”
Trump was referring to Tevfik Arif, the founder and chairman of Bayrock, who’d told the Real Estate News shortly before Trump’s deposition that Donald " has been very helpful to us from the beginning and he's been very helpful in opening some doors." In his deposition, Trump praised Arif’s “international connections,” and detailed half a dozen “phenomenal” prospective tower deals with Arif, including ones in Moscow, Yalta, Warsaw, Istanbul, and Kiev. He boasted that Arif was prepared to give Trump a 20 to 25 percent interest in his overseas projects, plus management fees and a possible percentage of gross, without Trump investing a nickel—just for the use of his name. “It was almost like mass production of a car,” Trump testified. His suit claimed that Arif canceled these lucrative projects because of O’Brien’s book, and he urged O’Brien’s lawyers to question Arif, confident that his friend would verify these damages.
By the next year, however, Arif began to look as much like a liability as Sater. (Trump testified that Arif had assured him Sater was not a partner, though court records indicate that he had a 50 percent “executive membership interest” in the Bayrock affiliates doing the Trump developments). In a 2009 civil complaint Jody Kriss, who served for five years as the finance director at Bayrock, alleged that the firm was a “racketeer-influenced and corrupt organization” that Arif and Sater “operated through a pattern of criminal activity.” In addition to charging them with embezzlement and various forms of fraud, Kriss alleged they had engaged in “extortion by means of threats of torture and death.” The complaint also claims that Bayrock steered a $1.5 million placement fee in 2007 to Sater’s convicted partner Lauria for a financing deal involving Bayrock’s projects with Trump in Soho, Fort Lauderdale, and Phoenix.
In a separate lawsuit against a former tech executive, Bayrock lawyers contend that the techie downloaded thousands of documents in the company’s system and gave some to Kriss, including emails “related to a sealed criminal matter” that federal prosecutors in Brooklyn are pursuing. The judge who sealed many papers in the ongoing Kriss civil suit, making reference to a criminal probe related to Bayrock, also sealed the ongoing criminal case of Sal Lauria, who has a cooperation agreement with the government. These orders make it impossible to determine what the criminal matter, or even some of the civil court issues (including Bayrock’s defense), might be.
Arif is such a fabulist, according to the Kriss complaint, that he even “pretends to be Turkish to avoid connection to his questionable past in Russia.” He spends a lot of time in Istanbul and, last October, was arrested aboard the largest for-charter luxury yacht in the world and charged with "encouraging" and "facilitating" prostitution. Turkish military police conducted a helicopter raid on the Savarona, a 16-suite, steam-powered, white vessel once used by Turkey’s founder, Mustafa Ataturk, and rented out for $40,000 a day. Nine Russian and Ukrainian women were detained and then deported; two were reportedly only 16 years old and had come to Turkey at Arif’s behest. Media reports indicated that naked men, some of whom were top government officials as well as Russian, Israeli, Kazakhstan, and Turkish executives, were busted in suites strewn with used and unused condoms.
Arif insisted that he was just “entertaining friends” and that the girls brought on board were there for “dancing and singing.” Gondoz Akerniz, who worked for Arif and rented the yacht, told the same reporters that if Arif “comes here to meet friends and talk about investments, and I order models for them. I don’t know if they’re underage or not.” When the incident, which allegedly involved a prominent Israeli billionaire and a senior Kazakhstan official, blew up in the international media, the case was quickly concluded. At an April hearing, a judge dismissed the charges against Arif, though four lesser-known businessmen directly implicated in bringing the girls aboard were convicted. A final report on the reasons for the dismissal has yet to be issued, though the fact that the women refused to testify, denied they were prostitutes, and immediately left Turkey did weaken the prosecution.
At the time of the boat bust, reporters called Trump’s office and were told that he hadn’t spoken to Arif “in years,” even though Arif remains a partner in Trump Soho, a $450-million hotel/condo project where Trump actually has both an ownership and management role, unlike his licensing deals. Five days after Arif’s arrest, Trump launched what has turned out to be his presidential tease.
Another partner in Trump Soho is the Russian émigré developer Tamir Sapir, who lives in a $5 million Trump Tower condo. Though his net worth was first pegged at $2 billion by Forbes in 2006, Sapir’s company claimed to have “ only $4,000 in cash and cash equivalents” in 2009. And Sapir’s lawyers recently claimed in a court case that Sapir’s “ deteriorating mental condition” has prevented him from writing anything but his signature “for 10 years,” meaning he was out of it when he consummated the Soho deal with Donald in 2005. A year earlier, Fred Contini, Sapir’s onetime executive vice president and top aide, pled guilty to participating in a racketeering conspiracy with the Gambino crime family for 13 years—both prior to and after his hiring by Sapir in 1996.
Sapir, whom Trump calls a “ great friend,” introduced Donald to Bayrock and is best known for his $500,000 payment to lobbyist and former U.S. Senator Al D’Amato for a single call to the Metropolitan Transportation Authority to help him retain a lucrative lease with the agency. He was also fined $150,000 for decorating his yacht with 29 animal carcasses in violation of endangered species laws, including a stuffed lion and python-covered bar stools.
Trump Soho finally opened a year ago. Nineteen unit buyers are now suing, accusing Bayrock, Sapir, Donald Trump, Ivanka Trump, and Donald Jr., among others, of “an ongoing pattern of fraudulent misrepresentations and deceptive sales practices.” Among these purportedly “reckless” claims “to induce sales” were Ivanka Trump’s assertions to Reuters and to the London Times in June 2008 that 60 percent of the 391-unit Tower were sold, at a time when documents later submitted to the New York attorney general indicated that only 14.5 percent had been sold. ( The Soho’s response papers quibble with these numbers, suggesting they may have sold a handful more units than they reported to the New York attorney general.) The project was announced during the grand finale of the 2006 Apprentice, and Ivanka did a cleavage-baring ad for it, tagged “ Possess Your Own Soho.”
Trump is now trying to put some distance between himself and the Soho project, which is discounting units by 25 percent and is at best a third sold. But the suit says he is listed in official documents as “actively involved” in the condo offering. In addition, he manages the hotel, which happens to be the entire building. That’s because an unprecedented city zoning agreement limits condo owners to living in the 46-story tower 120 days a year, allowing Trump, acting as a fee-collecting agent for the unit owners, to rent them out as hotel suites the rest of the time. He, Ivanka and Donald Jr. also own an 18 percent interest in the project. Ivanka and Donald Jr. did not respond to requests for comment.
What may prove particularly damaging to Trump Soho is the contention in the lawsuit that the project was marketed as an investment because of the hotel arrangement, with sales agents touting prospective nightly charges of up to $1,000 and annual returns of 153 percent. That may make securities fraud part of this case—as vigorously as the Trump Soho lawyers deny it—and courts typically take securities fraud more seriously than consumer deception.
The Soho’s lawyers have petitioned to dismiss the case, but if it survives that motion, it could have been in the headlines while candidate Donald was in Iowa, as might the ongoing criminal case involving Bayrock and Lauria. Either of these, or the probe of Trump’s for-profit university just launched by New York Attorney General Eric Schneiderman, would have put a crimp in the campaign.
A similar case has been filed by buyers at Trump International in Fort Lauderdale, the other Bayrock/Sapir project. Rejecting parts of a dismissal motion in December 2010, Judge Adalberto Jordan’s 24-page ruling noted that “sales literature ballyhooed the building as a profitable investment allowing a favorable income share.” The 298-unit project, which was a focus of the recent New York Times story, has been such a disaster that it was halted shortly before it was completed and is empty and locked now. Trump, who had limited his exposure in this Bayrock/Sapir deal to licensing his name and possibly managing the hotel, abruptly pulled out in 2009, when they stopped paying him a monthly promotional fee for the use of his name. But the Jordan decision cites Trump’s smiling announcement about the project—“It’s with great pleasure that I present my latest development”—as evidence of why buyers thought they were buying Trump when they made their deposits.
Jordan dismissed many claims against Trump precisely because he was merely renting his name, but he did find that “these allegations seem to suffice to define” Trump and his company as persons who “advertise for sale or lease” and thus, under the terms of federal law, might be potentially liable for the apparent default. Trump and his partners insist that both this and the suit against Trump Soho are cases of buyers’ remorse in a sagging real-estate market from folks too busy to read the fine print of a contract, which tells purchasers to disregard other marketing promises.
The Trump family has also gone into business with two convicted cocaine traffickers, one in Turkey and another in Philadelphia. Engin Yesil, whose development company was said to “ own the Turkey rights” for a $500 million project called Trump Towers Istanbul, was sentenced to a six-year prison term on cocaine charges in the U.S. 20 years ago. He says now that he “delegated” his Trump “royalties” to Dogan Holdings, a giant Turkish developer and media company that was just fined an extraordinary $2.5 billion for dodging corporate taxes in Turkey for years. When asked in the O’Brien deposition about the Istanbul project, Donald deferred to his son, who he said was handling the deal. In 2009, Ivanka did a huge press event in Istanbul, announcing that 45 percent of the units were already committed.
Trump Tower Philadelphia also involves a former cocaine dealer, Raoul Goldberg, aka Goldberger. Sentenced to 46 months in prison in 2000 on the coke conviction, he was technically on probation when he brought the site for the 45-story tower to Trump in 2005. And even though it’s only a license and management deal for Trump, Ivanka and Donald Jr. were so involved that they worked on spa and restaurant deals for the complex. Goldberg, who has suddenly “disappeared” from the project just as Felix Sater did, told Philadelphia Magazine in 2006 that he talked to Ivanka or Donald Jr. “every day.”
At a climactic moment in his 2007 deposition, Trump was asked to “put aside Bayrock.” Other than “this situation,” his interrogator wondered, “have you ever before associated with individuals you knew were associated with organized crime?”
“Not that I know of,” he testified.
In fact, Trump’s recent history with this catalog of criminals and cads is but an update on my earlier book, which listed dozens of mob relationships from concrete to casinos.
In one instance in the 1980s, Trump paid $8 million to buy out two mob-tied business associates when he feared his gaming license wouldn’t be approved. He wrote a letter to a federal judge on behalf of a mob-connected cocaine dealer whose helicopter company serviced his casinos and whose girlfriend had two Trump Tower apartments. He structured the purchase of a plot of land from a top leader of the murderous Scarfo crime family in Atlantic City so that his name would not appear in the transaction. He put a winsome but ostensibly penniless woman closely associated with the Gambino-connected head of the concrete drivers union in a triplex with Trump Tower’s only swimming pool right beneath his own apartment.
Trump threatened to sue over the book but never did. The gaming officials who questioned Trump under oath about 14 of the many charges in my book didn’t contradict any of these facts; they just viewed them more benignly.
Trump also claimed during this questioning by gaming authorities that he didn’t know that his lawyer, mentor, and close friend, Roy Cohn, represented Genovese godfather Fat Tony Salerno—though their two names appeared in the same paragraph about former clients in Cohn’s 1986 Times obituary. Trump’s answer was an effort to disassociate himself from Cohn because my book alleged that Cohn had brokered a Trump meeting with Salerno—which Trump denied—and he was aware that Barron Hilton had been denied a casino license for a lesser relationship with a lesser mob lawyer.
These kinds of associations once caused Trump worry about retaining his gaming licenses (he is still the largest shareholder in a public company that owns three of Atlantic City’s struggling casinos, but license renewal is no longer required). Perhaps he finally realized that in a presidential campaign, which requires filing detailed financial disclosures, the vetting of all sorts would be much tougher. Then a gang of questionable associations like this would’ve converted a candidacy into a scandal, damaging his star status, business prospects, and even his family.
Valerie Bogard, Bryan Finlayson, Nichole Sobecki, Barry Shifrin, and Katie Thompson contributed reporting to this article.