As the investigation into Russian influence in the 2016 election now carries on into 2018, special counsel Robert Mueller is keeping quiet on details.
But one thing does seem clear: A year after President Trump took office, the crime of foreign money laundering has become an important focus of the investigation.
Or, as Stephen K. Bannon purportedly told Michael Wolff in his bestselling book, Fire and Fury, “You realize where this is going… This is all about money laundering.”
Here’s what is known:
- Among the first Trump associates to be indicted last year was campaign manager Paul Manafort, who is accused of laundering money by purchasing several properties in New York and Virginia. Manafort, who has worked for pro-Kremlin officials in Ukraine, has pleaded not guilty and is expected to stand trial later this year.
- Mueller has hired several prosecutors with experience in prosecuting financial crimes such as money laundering, including Andrew Weissman, chief of the Justice Department’s criminal fraud section. “I don’t think he (Mueller) would have brought them onto his team if that wasn’t going to be an area that would be focused on,” says former federal prosecutor Kenneth McCallion, who helped investigate ties between Trump and New York Mafia figures in the 1980s.
- Several published reports say Mueller’s team has issued subpoenas to Deutsche Bank for records pertaining to Trump associates. Deutsche Bank was the only major commercial bank willing to lend to Trump after his string of bankruptcies. It has also been accused of laundering Russian money by the New York State Department of Financial Services.
“It’s important that Mr. Mueller find out what happened there, because Deutsche Bank was known as having extensive, intensive relationships with money from former Soviet republics generally and Russia in particular,” says Jonathan Winer, former deputy assistant Secretary of State for international law enforcement.
As they try to figure out what all this means for Trump, his family and his associates, Mueller’s team has its work cut out for it.
Since the 1990’s, money has flowed into the West from the former Soviet Union and a lot of it has gone to buy expensive mansions and hotels.
“Russian money was looking to really find a home outside Russia, in Western Europe and the United States, and real estate was one of the investments of choice,” McCallion said.
Trump has repeatedly denied having any business deals inside Russia, but money from the former Soviet Union was used to finance some of his branded properties, including the Trump Soho in New York and the Trump International Hotel and Tower in Toronto. (Both properties have since changed their names.)
In addition, the Trump Organization has marketed and sold numerous properties to wealthy people from the former Soviet Union.
“In terms of high-end product influx into the U.S., Russians make up a pretty disproportionate cross-section of a lot of our assets, say in Dubai and certainly with our project in Soho and anywhere in New York,” Donald Trump Jr. said in 2008.
Doing business with people from the former Soviet Union is not illegal. But real estate companies, like banks, are supposed to exercise due diligence to make sure they’re not receiving money gained through illegal activities such as drug sales and tax evasion.
Real estate transactions are especially difficult to trace because of the widespread use of offshore corporations to mask the purchasers’ true identities, Winer says.
None of this means Trump or his family knowingly took illegally laundered money, but certain transactions have raised questions for congressional investigators.
Among them was Trump’s 2008 sale of a Palm Beach mansion to Russian fertilizer king Dmitri Rybolovlev for almost $100 million, nearly twice what Trump had paid for it four years before.
Paying too much for properties is a classic form of laundering illegally gotten money. In the process, it also can secure the loyalty of a person like Trump who’d had money troubles, says Democratic Congressman Eric Swalwell of California, a member of the House Intelligence Committee.
“A Russian tactic is to invest in individuals through overpaying, for example, bailing people out… or preying on individuals who are in financial distress. So that would be an effort to try to make someone like you or somebody receptive to you, and then hope they would act in your interest or that they would fear that your investments in them would be revealed, and so you’re in a blackmail or extortion or compromat–as they call it–type of position,” Swalwell said.
Swalwell isn’t saying that happened here.
But, he notes, “Donald Trump has not helped himself in disproving this in the ways that he speaks about Vladimir Putin and how much he admires him and can’t say a bad thing about him, and the ways he has talked about reducing NATO’s role in being a check in the world on countries like Russia, and the ways that he has been open to reducing sanctions or not even implementing sanctions that were passed by congress when he was elected president. So he certainly is acting in their interests, and what we want to find out is, is there a nefarious reason for that?”