Deutsche Bank, Russian money laundering, and Trump’s finances

By Robert A. Vella

Oh, what a tangled web we weave when first we practice to deceive!

You just couldn’t make this stuff up.  It takes a wild imagination to write science fiction as I do, but it’s doubtful I could ever conceive of such a fanciful story as the real one I’ll share with you today.  It involves a giant international financial institution, an elite group of wealthy Russian oligarchs, and an American business celebrity who later became President of the United States under the most bizarre and improbable circumstances.

Yesterday, police raided the offices of Deutsche Bank in Frankfurt, Germany.  From:  Deutsche Bank offices raided in connection with Panama Papers

Police in Germany have raided the offices of Deutsche Bank in connection with the Panama Papers revelations and as part of an investigation into alleged money laundering.

About 170 police officers, prosecutors and tax inspectors searched six Deutsche Bank offices in and around Frankfurt, the public prosecutor’s office said. Investigators are looking into the activities of two Deutsche Bank employees who allegedly helped clients to set up offshore companies to launder money, it added.

The Panama Papers, published by the Guardian and a consortium of international journalists in April 2016, revealed how offshore tax havens including the British Virgin Islands were used to hide billions of dollars.

The prosecutor’s office said it had seized written and electronic business documents. Police cars were parked outside the headquarters of the bank, Germany’s biggest lender.

Although the raid doesn’t appear to involve Russians or Donald Trump, Deutsche Bank has a long history of shady dealings with them.  Just last year, it was heavily fined in a money laundering scheme.  From:  Deutsche Bank fined for $10 billion Russian money-laundering scheme

The giant German lender was hit with about $630 million in penalties on Tuesday over a $10 billion Russian money-laundering scheme that involved its Moscow, New York and London branches.

It follows a $7.2 billion settlement Deutsche Bank reached with the U.S. Department of Justice last month over toxic mortgage assets and the $2.5 billion it agreed to pay in 2015 over interest rate manipulation.

The latest fines penalize Deutsche Bank (DB)’s failure to deal with a stock-trading scheme that enabled some of its clients in Russia to improperly move huge sums of money out of the country and into offshore accounts, according to regulators.

The story gets a lot weirder when Trump enters the picture.  From:  Is Donald Trump’s Dark Russian Secret Hiding in Deutsche Bank’s Vaults?

It sounded like an exhausted parent scolding a tantrum-prone toddler with a penchant for tossing toys from his stroller.

In November 2008, Steven Molo, an attorney for Deutsche Bank, wrote a letter to the Supreme Court of New York about one of the company’s most troublesome clients. At issue was $640 million that client had borrowed in 2005 to fund construction of a new hotel in Chicago. The client had personally guaranteed the loan, but a few years later, the Great Recession devastated the economy, and he defaulted on his payment, with $330 million outstanding. Deutsche was seeking an immediate $40 million from the client, plus interest, legal fees and costs.

The debtor in question: Donald Trump, the future president of the United States.

Instead of paying up, the New York real estate mogul countersued, claiming the 2008 crash was a force majeure event—one that Deutsche had helped precipitate. Therefore, he argued, he wasn’t obliged to pay back the money. Instead, he claimed Deutsche owed him money—about $3 billion in damages.

[…]

As a result of these maneuvers, by the mid-2000s, U.S. financial institutions had stopped lending to Trump for his building projects. Deutsche was the only one still willing to work with him.

After Trump burned the bank, Deutsche shunned him as well. But Trump soon found a creative way to get off its blacklist—and return to solvency.

‘Are You Fucking Kidding Me?’

Two years after Molo wrote his letter to the court, Trump settled his feud with the German bank. How he did it was bizarre: He paid back Deutsche with a massive lifeline—from Deutsche. Only this time he eschewed its real estate team—which wanted nothing to do with him—and got a loan from its private wealth division. This group typically deals with high-net-worth individuals, not real estate transactions, but in 2010 it not only lent him the money he owed its real estate team but also reportedly gave Trump another $25 million to $50 million in credit.

Deutsche employees in New York were surprised by the bank’s decision. When asked whether it was normal to give more money to a customer who was a bad credit risk and liked to sue, one former senior staff member at the bank put it succinctly: “Are you fucking kidding me?”

Over the next few years, the money kept rolling in for Trump. He took out two mortgages against a resort in Miami and a $170 million loan to finish his hotel in Washington, D.C. According to Bloomberg, by the time Trump was elected president of the United States in November 2016, he owed Deutsche around $300 million, an unprecedented debt for an incoming president. (His June financial disclosure showed he owes the bank $130 million, which is due in full in 2024.)

The loans to Trump weren’t the only abnormal behavior at Deutsche. Around the same time he received his new line of credit, the bank was laundering money, according to the New York State Department of Financial Services (DFS). Russian money. Billions of dollars that flowed from Moscow to London, then from London to New York—part of a scheme for which European and American regulators eventually punished the bank.

Was the timing of this illicit operation and the loans to Trump coincidental? Or evidence of something more sinister—a critical chapter in the president’s long history of suspicious business deals with Russian and post-Soviet oligarchs? In January, Trump claimed the former, tweeting in his usual bombastic style: “I have nothing to do with Russia—no deals, no loans, no nothing.” But the president’s refusal to accept the assessment of his intelligence agencies—that Moscow meddled in the 2016 election—has, among other things, fueled suspicions about his ties to Russia.

Robert Mueller is now trying to find out the truth about those suspicions. The special counsel is investigating Russian interference—from the hacking of the Democratic National Committee (DNC) to alleged coordination between the Trump campaign and Moscow. So far, his team has charged key Trump campaign officials Paul Manafort and Rick Gates with money laundering, as well as other offenses. He’s also gotten two former advisers, Michael Flynn and George Papadopoulos, to plead guilty to lying to the FBI and cooperate with the probe.

Now, however, Mueller appears to be following the money, trying to determine if Trump has a financial connection to Russia—one that might at least partly explain his behavior. In December, the German newspaper Handelsblatt reported that the special counsel’s office has subpoenaed Deutsche Bank, demanding data and documents related to people or entities tied to the president and those close to him. The White House says the subpoena doesn’t directly pertain to Trump or his family’s accounts. But if the president has a dark Russian secret, the German banking giant’s money-laundering scandal may be key to finding out what it is.

Further reading:  Trump’s commerce secretary oversaw Russia deal while at Bank of Cyprus