Special counsel Robert Mueller’s team has reportedly taken an interest in the massive bank responsible for helping Robert Mercer—Trumpism’s most generous billionaire backer—allegedly dodge paying billions in taxes.
Reuters confirmed on Tuesday a report from German newspaper Handelsblatt that Mueller subpoenaed Deutsche Bank for information on President Donald Trump and his family’s bank accounts there.
The bank has long been of interest to Congressional investigators looking into connections between Trump, his associates, and the Kremlin. Mueller and his team also likely have a host of questions for the bank.
But on at least one matter, the facts are clear: Deutsche Bank sold financial products to Trump mega-donor Robert Mercer’s hedge fund that helped it avoid a tax bill the size of Somalia’s GDP.
Starting in 2000, according to a Senate report, Mercer’s Renaissance Technologies bought financial products called “basket options” from Deutsche Bank and Barclay’s. Basket options let hedge funds slash their tax rates on some investments in half, as Business Insider detailed in 2013. The options do this by essentially making short-term profits look like long-term capital gains. The IRS decried the practice in a 2010 memo, but that didn’t stop Renaissance Technologies.
On July 22, 2014, Senate investigators—on a committee whose ranking member was Sen. John McCain—released a report finding that over several years, Renaissance Technologies avoided paying more than $6.8 billion in taxes. Those savings came thanks in large part to the basket options it bought from Deutsche Bank.
The IRS holds that Renaissance Technologies owes them billions. But Renaissance Technologies disputes that, and according to Bloomberg, they are locked in a secret legal battle to settle the bill. Sources told The Daily Beast in October that the IRS commissioner will likely need to sign off on any deal. Trump recently named an interim IRS commissioner, David Kautter. Kautter headed the tax practice at the law firm Ernst & Young when it helped clients dodge paying the IRS more than $2 billion in taxes.
In the years since that report came out, McCain has become one of Robert Mercer’s top targets, as McClatchy has detailed. Robert Mercer and his daughter Rebekah have generously backed Kelli Ward, a far-right candidate who unsuccessfully primaried McCain in 2016. Shortly after McCain was diagnosed with cancer, Ward said he should step down from his Senate seat.
“As a Christian, I know there can always be miracles,” she said in an interview. “But the likelihood that John McCain is going to come back to the Senate and be at full force for the people of our state and the people of the United States is low.”
The special counsel’s office isn’t the only law enforcement team that has taken interest in Deutsche Bank this year. This past January, the bank agreed to pay a $425 million fine to New York’s Department of Financial Services. As Bloomberg detailed, that payout was to settle allegations that the bank from 2011 to 2015 helped Russians move $10 billion out of the country — in other words, per the New York regulators, that the bank let traders “engage in a money-laundering scheme.”
Deutsche Bank attorneys signed a consent order saying their work with Russians was “highly suggestive of financial crime.”
Ties to Russia’ “Bank of Spies”
Deutsche Bank also has deep ties with Vnesheconobank, or VEB, the Russian state-owned development bank that’s known in U.S. intelligence circles as the de facto financial house of spies. (For years, VEB’s official website listed as its American representative a man sitting in an Ohio prison for espionage-related crimes.)
The two banks signed a cooperation agreement in 2006, "with a view to further intensifying the cooperation between the two institutions." The agreement was signed by VEB chairman Vladimir Dmitriev.
In 2016, Dmitriev left VEB. He became the head of development of Deutsche Bank “OOO,” according to his Bloomberg executive profile (“OOO” is the Russian acronym for LLC, limited liability company.)
"Mr. Dmitriev served as Chairman of Executive Board and Member of Management Board at State Corporation Bank for Development and Foreign Economic Affairs (Vnesheconombank) since June 2007 until February 18, 2016," the biography reads. "He served as Chairman of Supervisory Board of State Corporation Bank for Development and Foreign Economic Affairs (Vnesheconombank) from 2004 to February 18, 2016 and its Member of Supervisory Board until February 18, 2016."
Dmitriev's name is cannot be found on Deutsche Bank's website and a request for comment to Deutsche Bank was not immediately returned.
Dmitriev left VEB in February 2016 and was replaced by Sergey Gorkov, a crony of Russian President Vladimir Putin and one-time member of Russia’s federal security service. In October 2016, Trump’s son-in-law Jared Kushner received a loan from Deutsche Bank as refinancing for his Manhattan property. In December 2016, Gorkov met with Kushner in New York.
The bank has long had a business relationship with Trump and his business empire. The Financial Times reported this past August that Deutsche Bank was happy to lend to Trump when other lenders were skittish because of his financial troubles.
“Sometimes a business will look at a client who can’t do business elsewhere,” a former Deutsche managing director told FT. “It makes the overall picture economic.”
The bank lent $170 million to the Trump Organization in 2014 to help finance his redevelopment of the Old Post Office building in downtown D.C., as FT noted. The historic building is halfway between the White House and the Justice Department’s headquarters, and is now known as Trump Hotel Washington, D.C.