The Receipts: How Russia Bought an American President | #6 The Lifeline

Every bank in America said no to Donald Trump.

That’s not an exaggeration. By the mid-1990s, Trump had bankrupted the Taj Mahal in 1991, the Trump Plaza Hotel and the Trump Castle Casino in 1992 – three Chapter 11 filings in two years. He’d lost $1.17 billion between 1985 and 1994 – more money than nearly any other individual American taxpayer in history.[12] He also didn’t pay income taxes for eight of those ten years.

In 1991 alone, his losses accounted for 1% of all losses declared by taxpayers nationwide.[12] When he finally ran out of money and needed his next loan – Citibank, JPMorgan, Bank of America, Wells Fargo, and Goldman Sachs all looked at his financial history, did the math, and passed.

Every. Single. One.

And then Deutsche Bank showed up.

Now, Deutsche Bank is this sprawling German financial institution that by the late 1990s was trying desperately to become a global powerhouse. They were expanding aggressively – and they went shopping in Russia. By 2005, their Moscow office was basically printing money. If you’ve been reading this series, you already know what happens when Russian money is involved.

Anyway, back to Trump. In 1998, when Trump was looking for financing for 40 Wall Street – a Manhattan building he wanted to renovate – Deutsche Bank was the only bank that said yes.

They loaned him $125 million.[1] Just like that. And remember, this isn’t the 125 million of today – which is a lot – it was $125 million in 1998 – about a quarter of a billion in today’s money.

So, the guy who couldn’t get a checking account at Chase suddenly had $125 million from a German bank with deep ties to Russian money. I wonder how that happened?

But this wasn’t how normal banking worked. Normal banks do due diligence. Normal banks look at a guy who’s defaulted on everything and say no. Deutsche Bank looked at Trump and saw an opportunity.

The guy who first brought Trump in was a banker named Mike Offit, who ran Deutsche Bank’s brand-new real estate lending division.[14] Offit needed big clients to compete with the established Wall Street firms, and Trump – blacklisted everywhere else – was available. They got friendly. They golfed together. They took helicopter trips to Atlantic City boxing matches. Trump was Offit’s best client, and Offit was Trump’s only banker.

After the 40 Wall Street deal went through, Offit started pushing for more. He tried to arrange hundreds of millions in additional financing for Trump’s Atlantic City casinos – including Trump Marina – another Atlantic City casino operation that was racking up money laundering violations. A top Deutsche Bank executive named Edson Mitchell discovered that someone had forged the signature of the credit officer who approved the Trump Marina loan.[14] So, somebody inside Deutsche Bank wanted to funnel money into one of Trump’s casinos badly enough to forge an internal approval. That’s pretty weird, right? The loan got killed. Offit was never accused of forgery, but he ended up getting fired anyway.

But by then, Trump was in the system. Trump and the banks had their tentacles wrapped around each other like two love-sick octopi.

Oh, and here’s another serendipitous connection. A guy named Justin Kennedy.

Justin Kennedy was the head of Deutsche Bank’s global real estate capital markets division.[4] He also happened to be the son of Supreme Court Justice Anthony Kennedy. The son of a sitting Supreme Court justice was the guy at Deutsche Bank overseeing loans to Donald Trump.

Starting in the early 2000s, Justin Kennedy oversaw all loans to Trump. Major loans. He helped Trump secure a $640 million construction loan for the Chicago tower project.[4] Under his watch over the next several years, Deutsche Bank would send Trump nearly $1 billion in total.[5] The son of a Supreme Court justice is the guy approving billion-dollar loans to someone who will eventually need favorable rulings from the Supreme Court. That’s quite a coninkydink – don’t ya think?

The commercial real estate division kept the relationship going through the 2000s – hundreds of millions in development loans. 

And then he defaulted on Deutsche Bank.

In 2008, he claimed the financial crisis was a “force majeure” – an act of God – and that Deutsche Bank was partly responsible for the crisis anyway, so he shouldn’t have to pay them back.[2] He sued them for $3 billion. They countersued. By 2010, they’d quietly settled – and his creditors ended up forgiving $287 million of the Chicago tower debt.[10] Then their private wealth division loaned him $54 million and another $45 million – to pay off the $99 million he still owed to a different division of the same bank.[2] They loaned him money to pay themselves back.

That should have been the end. The commercial side cut him off. But Deutsche Bank’s private wealth management division picked him right back up – different department, fresh start, same bank. They loaned him $125 million for the Doral golf course in 2012, $170 million for the Old Post Office hotel in DC, and millions more across other deals.[1]

He burned one side of the bank to the ground and another division rebuilt the bridge for him. These weren’t tiny favors. This was systematic, ongoing, structured lending to a man that literally no other bank on the planet would touch.

Meanwhile, Deutsche Bank itself was running – wait for it – a massive money laundering operation. Deutsche Bank and Donald Trump – both laundering Russian money. It’s like a real-life version of Mr. and Mrs. Smith, right? Or, maybe a better analogy is that they were both bangin’ the boss’ daughter – and what a crazy mess if they didn’t know about each other.

Anyway. The bank’s Russian operations weren’t just about doing business with Russian oligarchs. Deutsche was actively facilitating capital flight. They had something called mirror trades.[6] And once you understand how they work, you’ll see why this is basically the casino scam in a three-piece suit.

So, a  Russian oligarch would call Deutsche Bank’s Moscow office and buy $10 million in stocks with rubles. Normal securities purchase, nothing weird. At the exact same time, a related company – sometimes literally the same people using a shell company – calls Deutsche Bank’s London office and sells the exact same stocks. Same shares, same amount, same day. But the payout is in dollars. Money walks into Moscow as rubles and walks out of London as clean Western currency. Different building from the casino, but it was basically the same con.

Deutsche Bank’s mirror trade operations involved $10 billion in suspicious transactions.[7] Ten billion. With a B. This wasn’t three sketchy deals in a back office somewhere. This was industrial-scale money laundering. The bank’s own compliance officers raised more than 100 internal alerts. And nothing happened. Deutsche Bank paid $425 million in fines to New York state.[6] 

But, did anyone go to jail? Hell no!

Tim Wiswell – the American who ran the Russian equities desk and presided over the mirror trades – got fired and moved to Bali. He was never charged. German prosecutors opened a criminal investigation, raided Deutsche Bank’s offices, then dropped the whole thing a year later, citing “insufficient evidence.” They gave the bank a $15.8 million fine instead.

The bank itself pleaded guilty to wire fraud (acknowledging at least 29 employees engaged in illegal activity), paid the $425 million to New York, paid £163 million to the UK’s FCA, and that was it. $10 billion in suspicious transactions. Zero prison time.

Now, here’s the part that ties this whole thing together.

Deutsche Bank wasn’t just lending Trump money. They were sending him customers. According to David Enrich’s reporting in Dark Towers, Deutsche Bank employees organized get-togethers between Trump and wealthy Russian clients who wanted to buy real estate anonymously through shell companies.[15] The bank was literally matchmaking between Trump properties and Russian money that needed a place to land.

So, Trump takes Deutsche Bank loans to buy and develop properties – Doral, the Old Post Office, Chicago. Then Russians buy units in Trump properties through anonymous shell companies. Reuters found at least 63 Russians bought $98.4 million worth of condos across seven Trump towers in southern Florida alone.[16] Trump gets the sales revenue and licensing fees. The Russians get clean American real estate. And Deutsche Bank gets a cut on both sides – fees on the loans going out, and fees on the mirror trades bringing Russian money in.

Oh, and a Russian state-owned bank – Gazprombank – deposited at least $500 million into Deutsche Bank’s American subsidiary around the same time DB was lending Trump his biggest loans.[15] So the loan money itself may have literally come from Russian state funds. Let that sink in.

And Trump’s own business partners? They had direct ties to Russian organized crime. One of them – a guy named Felix Sater – had an office in Trump Tower, on the same floor as Trump. But that’s the next essay.

So let’s just lay this out. Deutsche Bank is Trump’s only lender. Deutsche Bank is also running a $10 billion Russian money laundering operation.[7] Trump owes Deutsche Bank around $340 million by 2016 – more than he owes any other single creditor on earth.[3] The bank is introducing him to Russian buyers. A Russian state bank is depositing hundreds of millions into Deutsche Bank’s American accounts. And the buildings Trump is developing with those loans? Russians are buying units in them through anonymous shell companies. Trump isn’t just borrowing from the pipeline. He’s part of it.

But there’s more. Because of course there’s more.

When Trump’s campaign was ramping up in 2016, a woman named Tammy McFadden – an anti-money laundering compliance officer at Deutsche Bank – started looking at accounts belonging to Jared Kushner, Trump’s son-in-law.[9] What she found was cryptocurrency transactions. Lots of them. Going to Russian individuals. The money flows didn’t make sense. So McFadden did her job. She flagged it. She sent it up the chain.[8]

Her supervisor called the Kushner claim “unfounded.” When McFadden pushed back, she got routed to Kushner’s own relationship manager at Deutsche Bank. The case got closed. No investigation. No escalation. Just closed.[9]

McFadden kept pushing. She’d also flagged Epstein and over a hundred other politically connected clients shielded from AML review. She was doing her actual job. And in 2018, Deutsche Bank fired her.[9]

It’s the flip side of the casino story. At the Taj Mahal, they solved the problem by never building real compliance in the first place – no controls means no flags. At Deutsche Bank, they had the controls, they had the flags, they even had the person doing the flagging. So they got rid of the person. Different method, same result. The money keeps moving.

And in the weeks leading up to the 2016 election, Kushner was approved for a $15 million credit line and a $370 million refinance.[10] Almost $400 million, approved right before a presidential election, for the candidate’s son-in-law. Nothing to see here, right?

Let’s name what this is.

Deutsche Bank needed Trump – he was their biggest real estate client in America. Trump needed Deutsche Bank – the only place on earth willing to lend him money after decades of defaults and bankruptcies. That dependency meant Deutsche Bank had to ignore what was happening on his accounts, on Kushner’s accounts, across their entire Russian operations. Trump got his loans. Deutsche Bank got its fees. The Russian money kept flowing. And the compliance officers who asked questions got fired.

This is what happens when someone owes you more than you can afford to lose. You stop enforcing your own rules. You start protecting them instead.

That’s the lifeline. Not just the loans. The complicity.

And the thing I keep coming back to is how none of this makes sense if you look at it like normal banking. Deutsche Bank watched Trump’s casino company file for bankruptcy again in 2004. And again in 2009. His bondholders and stockholders lost more than $1.5 billion on Atlantic City alone.[13] They had the financial statements. They had the credit reports. They knew exactly who they were dealing with. And they kept writing checks.

After that Chicago tower default, any normal bank would have cut him off permanently. Deutsche Bank gave him more money. Their private wealth division loaned Trump $54 million and another $45 million – to pay off the $99 million he still owed to a different division of the same bank.[2] They loaned him money to pay themselves back. And his the bank ultimately forgave roughly $287 million of the Chicago tower debt.[10] After he sued them.

So ask yourself the question that no one at Deutsche Bank seems to have asked: Why? Why would a bank keep writing nine-figure checks to a man who had lost over a billion dollars, declared bankruptcy six times, defaulted on their own loan, and then sued them for $3 billion?[13] What business model is that?

Unless someone, somewhere, thought it would eventually pay off in a way that doesn’t show up on a balance sheet.

The KGB identified him. Moscow tested him. Brighton Beach surrounded him. The casinos laundered the money. And Deutsche Bank made sure he never ran out of credit while all of it was happening. Every essay in this series, the same machine just gets bigger. And nobody keeps feeding a machine that doesn’t work.

Next up: the business partner with Russian mob ties, an office on Trump’s floor, and a plan to build Trump Tower Moscow. The front company.

SOURCES:
[1] NPR: Trump Inc – Deutsche Bank Relationship
[2] WNYC: Trump Inc – Deutsche Bank, It’s Complicated
[3] CNBC: Deutsche Bank Loaned $2 Billion to Trump Over Two Decades
[4] Law & Crime: Justin Kennedy Helped Trump Secure Loans at Deutsche Bank
[5] Democracy Now: Kennedy’s Son Loaned Trump $1 Billion
[6] NY DFS: Deutsche Bank $425M Mirror Trades Enforcement Action
[7] OCCRP: Deutsche Bank $10 Billion in Suspicious Russian Transactions
[8] Jacobin: The Epstein Whistleblower Who Was Silenced
[9] The Lever: The Compliance Officer Who Flagged Epstein – And Lost Her Job
[10] CBS News: Trump’s Chicago Tower Debt Forgiven
[11] Wikipedia: Josef Ackermann
[12] New York Times: Decade in the Red – Trump Tax Figures Show Over $1 Billion in Business Losses
[13] ProPublica: Why Did Deutsche Bank Keep Lending to Donald Trump?
[14] New York Times: Deutsche Bank and Trump – A Bond Born of Necessity and Ambition
[15] The Daily Beast: Deutsche Bank Helped Trump Connect With Rich Russians for Anonymous Real-Estate Deals
[16] Foreign Policy: How Russian Money Helped Save Trump’s Business