The Receipts: How Russia Bought an American President | #5 The Laundromat

Trump might have failed at the casino business, but he was actually very successful at what he was really trying to do.

You think you know how this goes. Rich guy builds fancy casino, loses money, declares bankruptcy, gets bailed out. The end. But that’s the story he tells, and it’s not the actual story. The actual story is that his Atlantic City casinos were designed from the jump to do one very specific thing: convert dirty money into clean money. And he was weirdly, almost impossibly good at it.

The Taj Mahal opened in April 1990.[1] In its first 20 months of operation, FinCEN and the IRS found that it had broken anti-money-laundering laws 106 times.[1]

Which is a lot – but what’s even crazier is that this all happened in less than two years. In a casino that was supposed to have anti-money laundering programs in place by federal law.

Here’s the grift…

Let’s say you’re someone with money you got from doing things that are illegal. You know, like drug dealing, extortion, sex trafficking, the usual suspects. Well, obviously, you can’t just put the money in a bank. Deposits over ten grand get reported. Wire transfers get flagged. You need a way to turn twenty million in cash into something that looks legitimate; you can’t buy a legit sex lair penthouse with a suitcase full of cash. Unless it was in Trump Tower, apparently, but I digress…

Anyway, Trump’s casino solved this problem in eight steps.[2]

First, you walk in with your dirty cash. Second, you buy thousands of dollars’ worth of chips without proper paperwork. It’s a casino, it’s cash-heavy, nobody’s asking weird questions. Third, you don’t actually gamble. Or you gamble five hundred bucks and lose it on purpose just so you don’t seem sus. Fourth, you go to the cashier and cash out the remaining chips. The casino gives you a check. Fifth, the casino reports that check as legitimate casino winnings. Sixth, that money never gets flagged because on the casino’s books, it looks like revenue from the business. Seventh, it goes into the bank and gets wire transferred. Eighth, shell companies somewhere receive it as clean money from legitimate business operations.

The Taj Mahal’s part in the whole thing was that they didn’t keep track of the people who deliberately cashed out in smaller amounts to stay under the ten-thousand-dollar reporting threshold.[1] They knew what was happening. They didn’t stop it. They just didn’t document it.

In 1998, FinCEN fined the Taj Mahal $477,700 for currency transaction reporting violations.[1] This was for violations that happened between April 1990 and December 1991. The fine was for failing to file reports, failing to keep proper records, and failing to implement actual anti-money laundering controls.

Here’s the fun part of the story. Trump didn’t even own the Taj Mahal by 1998.[1] He’d already declared bankruptcy in 1991 and walked away from most of the debt. Someone else was running it when they got caught and fined. Trump collected the money while the place was operating, then the investors ate the loss when the feds came. Classic Trump!

But the scam was already baked deeply into the business by the time Trump got out of it, apparently. Because by 2015, FinCEN came back harder.[1] Ten million dollars. The Taj Mahal admitted to willfully violating anti-money laundering laws. Willfully. That’s the word that matters. Not accidentally. Not due to negligence. On purpose.

The statement from FinCEN at the time said the casino “has a duty to help protect our financial system”[1] and it repeatedly failed to do that duty. Between 2003 and 2013, the casino continued breaking the same laws it had broken in 1991. For a decade. With full knowledge that they’d already been caught and fined.

Looking back now, it seems obvious that Trump’s Atlantic City casino portfolio wasn’t a business.[5] It was infrastructure.

The Taj Mahal, Trump Castle, Trump Plaza, Trump Marina. All of them in the same Atlantic City market. All of them cash-heavy. All of them processing gambling transactions that nobody could really verify or trace.

Now, Atlantic City had been organized crime territory long before the Russians arrived. Italian families controlled the town for decades. But as their influence weakened in the late 1980s, the same pattern from Brighton Beach played out here – Russian organized crime filled the vacuum.[3]

And who was using them? You already know.

Federal investigators tracked the Russian mob out of Brighton Beach, Brooklyn, straight to Atlantic City.[3] Vyacheslav Ivankov, who everyone called Yaponchik, ran extortion and racketeering operations from Brooklyn and had a working relationship with Trump Tower[4] (feds found the number in his phone when they arrested him). Between March and April 1993, Ivankov visited the Taj Mahal nineteen times.[3] Nineteen times. He gambled over two hundred fifty thousand dollars in that single month.[3]

The casino was the preferred gambling spot for Russian mobsters living in Brooklyn.[3] That’s how the FBI described it. Not one of the options. The preferred one. Because it worked.

The slip-ups tell you everything. The 106 violations in twenty months.[1] The failures to file Currency Transaction Reports.[1] The gamblers cashing out in small amounts to avoid reporting.[1] The complete absence of the kind of controls that every other casino was supposed to have. These weren’t mistakes. They were methods.

Trump went bankrupt with his casinos six times.[6] Trump Taj Mahal in 1991. Trump Castle in 1992. Trump Plaza in 1992. Trump Hotels and Casino Resorts in 2004. Then, Trump Entertainment Resorts again in 2009 and 2014. The bankruptcies were real. People lost jobs, contractors didn’t get paid, and stockholders got wiped out.

But Trump didn’t go bankrupt personally.[5] He’d already pulled money out before the bankruptcies hit. Bonuses. Salaries. Management fees. His jet got paid for. His lifestyle didn’t change. He shifted his personal debts onto the casinos and then let them collapse.

Meanwhile, what was flowing through those casinos during their profitable years? Illegal money getting laundered.[5] Russian money.[3] Organized crime money. Money that couldn’t exist as money in America, turned into money that could, and moved out again before the feds caught up.

The casinos failed as casinos. But they succeeded spectacularly as laundromats.[7]

By 2016, the Taj Mahal closed.[1] After getting hit with the ten-million-dollar fine, it couldn’t operate. The building got sold and eventually turned into the Hard Rock. But for more than twenty years, it did its actual job perfectly. Twenty years of moving dirty money through a casino that looked like a legitimate business to anyone just checking the books.

Now listen to this. Trump’s financial statement got better with each bankruptcy.[5] His net worth got reported as higher. His brand got stronger. His access to credit actually improved because by the time the feds fined the casinos, Trump had already moved on. The money he needed had already moved through. The casinos were just the vehicle, and once they’d served their purpose, it was fine to let them burn.

This is what I keep coming back to. The thing he’s actually good at isn’t building businesses. It’s creating vessels for moving money, getting what he needs, and leaving everyone else to deal with the consequences. His dad did it with real estate in Queens. He scaled it up. Atlantic City was just the first time I could actually see the mechanism.

And when one of his mechanisms for personal gain stops being useful, it doesn’t matter what it is or who loses. Thousands of employees who showed up every day thinking they worked for a real business have lost their jobs whenever he’s decided to pull out, cut his losses, and declare bankruptcy.  His employees lost their income, their health insurance, their livelihoods – and none of it mattered, because the infrastructure had already done what it was built to do, and the people inside it were never the point.

The question that started this whole thing was simple: Why did Trump keep declaring bankruptcy and getting richer? Now I’m starting to understand. He wasn’t declaring bankruptcy because his businesses failed. He was declaring bankruptcy after they succeeded at something else entirely. And when the casinos finally burned through their usefulness, he needed a new source of money.

And boy, did he find one.

A German bank with a Russian problem.

That’s the next essay.

SOURCES:
[1] FinCEN: Trump Taj Mahal $10M Fine
[2] CNN: Trump Taj Mahal Money Laundering
[3] Peter Grant: Russian Intelligence and Brighton Beach
[4] Seth Hettena: Russian Mobster in Trump Tower and Taj Mahal
[5] Washington Post: Trump’s Businesses Full of Dirty Russian Money
[6] Salon: Trump Casino Money Laundering
[7] Paste: Trump Was a Money Launderer