The Receipts: How Russia Bought an American President | #7 The Front Company

What if the Russian mafia and Russian intelligence joined forces and moved into Trump Tower?

I’m serious.

This is about Bayrock Group. And once you understand what Bayrock actually was, the entire Trump-Russia thing stops being some mysterious shadowy conspiracy and becomes just… obvious. Like, embarrassingly obvious.

Let me start with the model itself.

In the 1980s, as the Soviet Union was collapsing, KGB Chairman Vladimir Kryuchkov had a problem. The whole system was about to fall apart. So he made a decision. He created over 600 companies. Real companies. Some worth billions. But they were all run by KGB operatives and their mob partners.

These weren’t side hustles. They were hibernating sleeper cells in the form of registered businesses. According to journalist Craig Unger, who actually studied this stuff,[10] Kryuchkov was following a playbook written decades earlier by Colonel Leonid Veselovsky, the KGB’s specialist in front companies. The whole thing was designed so that when the Soviet Union collapsed, the KGB and Russian organized crime wouldn’t collapse with it. They’d just rebrand as businessmen.

Now let me explain how it worked.

Bayrock Group was founded in 2001 by Tevfik Arif.[1][2] Arif had worked for the Soviet Ministry of Commerce for 17 years.[1] Now, in the Soviet Union, there was no private business. Everything was state-run. Every hotel, every factory, every store – all of it was owned and operated by the government. So when I say Arif “ran the department that managed Soviet hotels,” I mean he was a government official overseeing a state-controlled industry. He wasn’t an entrepreneur. He was a bureaucrat inside a system where the line between government, intelligence, and commerce didn’t exist. They were all the same thing.

After the USSR fell apart, guys like Arif suddenly had two decades of insider knowledge about how to run businesses, move money across borders, and work government connections – except now there were no rules. So, of course, he went into real estate. By 2001, he was claiming Bayrock had $2.5 billion in investment.[2] The company set up offices on the 24th floor of Trump Tower – right below the Trump Organization’s headquarters.[2] How convenient.

Then there’s Felix Sater.

Felix Sater’s resume reads like someone’s fever dream.[3] In 1991, in a bar in Midtown Manhattan called El Rio Grande, Sater smashed a cocktail glass and stabbed a commodities broker in the face with the stem.[3] The guy needed 110 stitches. Sater got convicted of assault in 1993 and spent 15 months in prison.[3] He was barred from the securities industry.

Then he ran a stock fraud. A “pump and dump” scheme through a company called White Rock Partners, working with alleged Russian mobsters.[3] The scheme bilked investors of at least $40 million. He pleaded guilty to racketeering in 1998.[3]

And then something weird happened. Right around the time he should’ve disappeared into federal prison, Sater became a government informant.[8]

Well, I guess it’s not really that weird.

For over 10 years, he provided intelligence to the U.S. government.[8] He gave the CIA information about Stinger missiles that were being sold by the Taliban. The CIA was offering $300,000 per missile just to buy them back. Sater dealt with that. He also provided a phone number for Osama bin Laden to U.S. intelligence.[8] Even coordinates for bin Laden. The kind of intel that gets you a medal.

Instead, Sater got a sweetheart deal. The prosecutors essentially buried his racketeering conviction. He paid a $25,000 fine. No prison time. No felony on his record.

Turns out, Sater had known Tevfik Arif since childhood – they both grew up in the Soviet Union before emigrating. So when Arif needed someone who could bring in Russian money and knew how to work both sides of the law, Sater was the obvious pick. By 2003, Sater was Bayrock’s managing director.[3]

Now, if you were a Russian in NYC at the turn of the century with a shady business venture – where would YOU set up shop?

Anyway, Bayrock’s offices were on the 24th floor of Trump Tower.

Trump’s offices were right above them. According to Trump’s own deposition, somebody from Bayrock walked upstairs and pitched him on a licensing deal:[2] Bayrock would develop luxury hotel projects in Fort Lauderdale, Phoenix, and New York. Trump wouldn’t build anything. Trump wouldn’t invest anything. All Trump had to do was let them put his name on the buildings in exchange for a cut. Bayrock handles the development, the financing, the construction, and the sales. Trump just shows up on the brochure.

Of course, Trump said yes. He didn’t ask who these people were. He didn’t look into Sater’s criminal history. He just said yes.

Or maybe he did – and he just didn’t care.

Pretty soon, Sater had business cards printed up identifying him as a “Senior Advisor to Donald Trump.” A couple of years later, he had an office on the same floor as Trump.[3]

Trump later said, under oath, that he wouldn’t recognize Sater if he walked into the room. The guy with business cards that said “Senior Advisor to Donald Trump.” The guy with an office on his floor. He said he wouldn’t recognize him.

Anyway, Bayrock hired Felix Sater as its managing director. A man who stabbed someone with a broken glass. A man who committed securities fraud. A man with mob connections. A man who was also actively cooperating with U.S. intelligence. And somehow the FBI – the agency that knew exactly who Sater was and what Bayrock looked like – never stepped in. They needed Sater’s intel more than they needed to stop whatever Bayrock was doing. So they looked the other way.

In 2006, Bayrock and Trump announced Trump SoHo.[5] It was supposed to be a 46-story luxury hotel and condo complex in Lower Manhattan. Trump didn’t build it. He didn’t invest any money in it. All Trump did was let Bayrock slap his name on the building in exchange for 18% equity.[5] Bayrock handled everything else. The development, financing, construction, and sales.

And then, guess what started happening?

Between 2010 and 2013, at Trump SoHo, 77% of units were purchased with cash.[5] That’s not normal. That’s not how real estate works in America. Real estate purchases are financed with mortgages. Cash buys by shell companies are what happens when you need to move money that you can’t explain.

The shell companies were formed days or weeks before they bought their units. A lawsuit filed by two Bayrock executives alleged something specific:[4] that Bayrock was using Trump’s branded properties to launder money. That Bayrock was “substantially and covertly mob-owned and operated” and “backed by oligarchs and money they stole from the Russian people.”[4] The lawsuit said the whole operation was designed to take stolen Russian money, buy properties under Trump’s name, and clean it on the other side.[5]

Trump wasn’t charged.

But the lawsuit didn’t say he was the criminal. It said he was being used. His name was the product. His brand was the cover. The lawsuit was eventually settled confidentially in 2015. And Trump SoHo itself? It was such a mess that Trump’s name was stripped from the building in 2017. It’s called The Dominick now.

The people behind Bayrock weren’t random businessmen. There’s a guy named Tamir Sapir who partnered with Bayrock on Trump SoHo.[12] Sapir wasn’t just rich. He was connected.

Behind him was a trio of Kazakh oligarchs: Alexander Mashkevich, Patokh Chodiev, and Alijan Ibragimov.[12] These three guys controlled Eurasian Natural Resources Corporation,[13] which basically owned 12% of Kazakhstan’s entire industrial production.[13] That’s a level of wealth and power that puts you in the oligarch category. And Kazakhstan was basically a Russian vassal state at this time. Which means money flowing through Kazakhstan often meant money that Putin’s people controlled.

Then in September 2010, Turkish police rappelled down from helicopters onto a superyacht called the Savarona.[7] They were looking for a prostitution ring. They found it. Tevfik Arif was on that yacht.[7] Turkish prosecutors alleged that Arif had financed a scheme that brought Eastern European models aboard the yacht for parties with wealthy businessmen.[7] Some of those models were minors. Arif was arrested.[7]

He was acquitted in 2011.[1] Four other people on that yacht were convicted, but the women had been instructed not to testify, and prosecutors couldn’t prove Arif specifically financed the operation – just that he was on the boat. So he walked. But the fact that the founder of the company Trump had been partnering with for nearly a decade got arrested for allegedly running underage girls on a superyacht – and nobody in Trump’s orbit blinked – yeah – that tracks.

Nobody was investigating. Nobody was asking questions. Trump was getting equity in a massive Manhattan development project without investing a dime, and the money was flowing in from people with direct ties to Russia and Russian intelligence.

Then there’s Michael Cohen.

Everyone knows that Cohen worked for Trump and became his personal fixer.[12] But here’s something interesting I found. His uncle was a Brooklyn doctor named Morton Levine. Levine owned a catering hall called El Caribe that became infamous as a hangout for Russian and Italian mobsters.[11] A 1993 FBI affidavit accused Levine of providing medical services to the Lucchese crime family.[11] Michael Cohen had a stake in that business.[11] He held that stake for years.

He also bought $17.3 million worth of Trump properties over a five-year period. Where’d that money come from?[11] Cohen married into the Shusterman family, a Ukrainian taxi business family,[12] and did business with a Ukrainian politician named Viktor Topolov, whose associates had direct ties to Semion Mogilevich[12] – the “boss of bosses” of the Russian mafia, who was literally on the FBI’s Most Wanted List.[12]

And Cohen worked directly with Sater. They were partners on various Trump projects.[9] Cohen handled the financial side, while Sater handled the Russian relationships. Sater, in particular, was handling the relationship with people who could move Russian money.

In 2015, Sater sent an email to Cohen.[9] The email said, “I will get Putin on this program, and we will get Donald elected president.”[9] Another email said, “Our boy can become president of the USA, and we can engineer it.”[9] Sater was talking about a Trump Tower Moscow deal that was supposed to generate half a billion dollars for Trump. He was claiming he could get Putin’s people on board. He was claiming they could engineer Trump’s election using real estate deals as the cover.

So, let’s start connecting some dots here.

The Bayrock play wasn’t an outlier. It was a template. It was the updated version of Kryuchkov’s playbook. You create a real company. You staff it with intelligence operatives and mob guys. You partner with someone famous who needs money. You move money through his properties. You use the profits to fund political operations. You elevate the asset that owes you money. An asset that Russia’s interests are tied to.

And remember Deutsche Bank from the last essay? The bank that was Trump’s only lender while simultaneously running a $10 billion Russian money laundering operation? Deutsche Bank provided the financing. Bayrock provided the buyers. The bank loaned Trump money to build and brand properties, and then Russian money flowed in through Bayrock’s shell companies to buy the units. Deutsche Bank got fees on the loans going out. Bayrock cleaned the money coming in. Trump got his name on buildings and his cut of the sales. The whole thing elevated his brand like a decades-long political campaign – where no one serious took him seriously – but regular people were sold on what a great businessman he must be. When, really, nothing could be further from the truth.

Kenneth McCallion, a federal prosecutor, said something public about this.[6] He said “They saved his bacon,” referring to Bayrock saving Trump from bankruptcy.[6] Trump was drowning in debt in the early 2000s. Multiple failed casinos. Failed businesses. Billions in red. Bayrock’s money essentially rescued him.[6] In exchange, he became the perfect cover for Russian oligarchs who needed to move capital and needed access to U.S. political power.

John Sipher, a former CIA officer, said about Trump’s people that “To Trump’s people, it was like a moth to a flame.”[6] They saw Russian money as a solution. They didn’t ask questions about where it came from. They didn’t ask about the connections to intelligence agencies or organized crime. They just took it.

And the system worked exactly as designed.

Trump got rescued financially. His brand was applied to luxury properties funded by Russian money. That money got cleaned. Russian intelligence got access to an American businessman who was grateful, indebted, and politically ambitious. And by the time anyone started asking serious questions, Trump was running for president.

This is what a KGB-designed front company looks like when it grows up and gets expensive suits. Not sinister shadows. Just normal business. Just property development. Just partnerships. Just money.

But that’s exactly how the Soviets designed it.

Next up: the same scheme, different countries. The network behind Bayrock took the model international – Panama, Toronto, and Azerbaijan.

Same shell companies. Same Russian money. Same brand on the building. The international pipeline.

SOURCES:
[1] Wikipedia: Tevfik Arif
[2] Wikipedia: Bayrock Group
[3] Wikipedia: Felix Sater
[4] PBS: Sater Lawsuit on Laundering Through Trump Projects
[5] New Republic: Trump’s Russian Laundromat
[6] Foreign Policy: Russian Money Saved Trump’s Business
[7] Bloomberg: Arif Yacht Prostitution Raid
[8] BuzzFeed: Sater as FBI Informant
[9] Salon: “We Will Get Donald Elected” Email
[10] Gaslit Nation: Craig Unger on KGB Front Companies
[11] Bklyner: Cohen’s El Caribe Connection
[12] CNBC: Trump’s Network and Russian Mobsters
[13] Wikipedia: ENRC