Category: Russia
From Trump Tower to Arson
The long, strange fall of Jacob Bogatin, a onetime partner of the “Brainy Don” Semion Mogilevich, now accused of murder in Virginia.
Once upon a time, Semion Mogilevich was one of the biggest gangsters in the world. The “Brainy Don” had his fingers in virtually every criminal activity imaginable, including murder, extortion, sex trafficking, weapons trafficking, money laundering, and even a stock fraud occurring right under the FBI’s nose.
In 2003, federal prosecutors unsealed an indictment charging Mogilevich in a $150 million stock fraud scheme involving YBM Magnex, a purported manufacturer of bicycles and magnets based outside Philadelphia. Also indicted was the company’s CEO, Jacob Bogatin.
The case drew attention from those of us investigating Donald Trump’s Russia ties because Jacob’s brother, David Bogatin, had bought five apartments in the newly opened Trump Tower in 1984 for $5.8 million. The money came from a gasoline-tax scam he was running in Brooklyn with the Colombo crime family. According to one of Bogatin’s partners in that scheme, Trump himself persuaded Bogatin to purchase the apartments “as an investment.”
Trump didn’t merely broker the sale. As investigative reporter Wayne Barrett reported in Trump: The Deals and the Downfall, Trump personally attended the closing—an unusual move for a developer, and one that suggested this was no ordinary real-estate transaction.
The Bogatin deal carried classic money-laundering red flags. Of the five condos, only one was in David Bogatin’s name; the other four were held by shell companies created the same day by attorney Marvin E. Kramer, who specialized in forming shelf corporations from his Coney Island office. “We didn’t think he was living in five apartments,” former New York assistant attorney general Ronda Lustman told me. Prosecutors quickly concluded that the purchases were intended to launder cash and conceal assets.
Bogatin wasn’t alone. From its earliest days, Trump Tower attracted Russian organized crime figures. Roughly a third of its units were owned by foreign corporations, many of which were registered in Panama or the Netherlands Antilles. It was one of only two buildings in New York that allowed anonymous buyers. “Trump Tower allowed people who wanted to hide their money to buy there because their names were never really published,” said Jim E. Moody, former deputy assistant director of the FBI.
Among its early residents was Vyacheslav Ivankov, one of Russia’s most feared vory v zakone—“thieves-in-law.” The FBI tracked him to a Trump Tower apartment while he directed Russian Mafia operations in the United States. Years later, another mobster, Vadim Trincher, ran a multimillion-dollar gambling ring from a Trump Tower apartment just floors below Trump’s own penthouse.
Another figure often mentioned in connection with Mogilevich is Felix Sater, a Russian-born stockbroker-turned-government-informant and real estate developer who became one of Donald Trump’s more controversial business partners, scouting property deals in Moscow. While some have speculated about ties between Sater and Mogilevich’s network, any link appears to run through Sater’s father, Michael Sheferofsky. In Putin’s People, journalist Catherine Belton reported that two former Mogilevich associates said Sheferofsky had “become an ‘enforcer’ for some of Mogilevich’s interests” in Brighton Beach, where he ran protection rackets with the Genovese crime family.
Whether Trump knew about the Bogatins’ mob ties in 1984 remains unclear. The FBI never questioned him about David Bogatin. “In retrospect, we should have been looking in that direction,” said Ronald Noel, a former FBI agent on the case. What’s certain is that Trump was eager to make the sale, so eager he showed up in person at the closing.
David Bogatin fled the country, settling first in Austria and later in Poland, where he launched one of the country’s first private banking chains. When a Warsaw newspaper exposed his past in 1992, he was arrested and extradited to New York, where he served eight years in Attica.
His brother was more fortunate. The YBM case never reached trial. Mogilevich remains a fugitive despite years on the FBI’s Ten Most Wanted list and a $5 million reward for his capture. Jacob Bogatin remained free on bail ever since.
Until this week.
On October 28, Jacob Bogatin, now 78, was arrested and charged with murder and arson for a blaze that killed a 36-year-old woman and destroyed three townhomes in Sterling, Virginia.
According to the Loudoun Times-Mirror, Bogatin lived in the complex with his girlfriend, Valeria Gunkova, the listed owner, in a unit under foreclosure. One day after the October 24 fire, Bogatin filed an insurance claim for more than twice what was owed on the property.
Investigators say surveillance footage showed a man resembling Bogatin walking away from the scene moments after the fire began. A search of his car turned up a bottle of lighter fluid and a grill lighter.
Bogatin had been free on a $1 million bond since 2003 in the YBM Magnex case. His home-monitoring restrictions were lifted a year later, and he was permitted to travel abroad on the condition that he not commit any crime.
After the Loudoun County fire, pretrial-services officer Keri Foster asked the court to revoke Bogatin’s bail. In her report, Foster noted that Bogatin had dutifully called in to report his home had burned down—without mentioning that he might have been the one who struck the match.
Empty Russian Promises
Large crowds gathered in Moscow Friday as Russian opposition leader Alexei Navaly was laid to rest.
Navalny’s aides claimed that he was on the verge of being freed in a prisoner exchange with the West when he died Feb. 16 in an Arctic penal colony. Early-stage discussions had begun to swap Navalny, Wall Street Journal reporter Evan Gershkovich, and ex-Marine Paul Whelan for Vadim Krasikov, who was convicted of killing a former Chechen separatist fighter in Berlin in 2019, according to The New York Times.
Meanwhile, President Biden still hasn’t delivered on his promise of “devastating” consequences if Navalny died.
To mark the second anniversary of Russia’s invasion of Ukraine and punish Russia for Navalny’s death, the Biden administration unveiled a sweeping package of sanctions on more than 500 people and companies, including some officials linked to the prison where Navalny died. But behind the scenes, administration officials were quietly downplaying the potential impact of the new measures, the Wall Street Journal reported.
The most effective punishment would be direct U.S. military aid to Ukraine, but a measure approving $60 billion in funding remains hopelessly tied up in the House of Represtatives.
That’s not to say the White House doesn’t have options.
Another devastating blow would be using some or all of the $300 billion in Russian assets frozen by the United States after the invasion to help Ukraine. On Tuesday, White House spokesman John Kirby said the administration was “exploring the option,” but cautioned that U.S. allies need to be on board. Public bickering at this week’s G20 meeting showed they aren’t behind it.
The administration has also held off on another powerful measure—a full embargo on the sale of Russian oil. The administration instead imposed an oil price cap that is increasingly unenforceable and allows billions of dollars to fund Moscow’s war machine. A full embargo on Russian oil would almost certainly unleash economic turbulence that the White House would rather avoid in an election year.
Finally, the United States could add Russia to the official list of state sponsors of terrorism along with Cuba, Iran, North Korea and Syria. Such a declaration would open the U.S. courts to lawsuits by victims of Russian aggression and allow them to claim damages from frozen Russian assets. There’s no doubt some reason why White House hasn’t pulled the trigger, but we don’t know what it is. Kirby has ducked questions on this subject in recent days.
To be sure, all of these options carry risk. But slapping Putin’s wrist with more ineffective sanctions only emboldens him.
The White House could use a good dose of Navalny’s courage.
Another Russian gangster who did business with Trump
It will never cease to amaze me that America elected a president with so many links to Russian organized crime.
There was Vyacheslav Ivankov whose FBI file contained numerous references to Donald Trump that the bureau refused to release to me. There was David Bogatin who spent $6 million to buy five separate units in Trump Tower. There was Anatoly Golubchik and Vadim Trincher, who went to prison for running an illegal sports betting ring in Trump Tower that catered primarily to Russian oligarchs.
Add another name to the list: The FBI’s file on Tamir Sapir, a Georgian developer who financed the construction of Trump Soho in Manhattan in 2008, shows he was under investigation for links to Russian organized crime.
A memo in the FBI file states that C-24, the FBI’s Russian Organized Crime squad in New York, was investigating Sapir for money laundering and extortion:
“NYO squad C-24 is currently involved in a money laundering and extortion investigation of TAMIR SAPIR, a naturalized Armenian citizen who immigrated from the former Soviet Republic of Georgia through Israel. SAPIR has residences in New York City, Long Island, and Mexico and he frequently travels to Moscow and other Eastern European countries.”
“SAPIR has approximately 12 companies incorporated in New York including ZAR REALTY which owns commercial and residential buildings in New York City. [Note: One of those residences was a condo on the 58th floor of Trump Tower.]”
“Additionally, SAPIR is believed to own a 150-foot pleasure yacht, the MYSTERE, registered in the Cayman Islands and three private jets, one being a Boeing 727 also registered in the Cayman Islands.”
“It is believed that SAPIR is a front for Russian organized crime money including activity for the President of Tartarstan.
Another FBI notes that Sapir allegedly paid a $5 million bribe to an employee of the New York Transit Authority to get employees to move into a building he owned.
The file lists numerous FBI investigations involving Sapir, some dating back to 1977.
Another FBI investigation involved Joy-Lud, a Manhattan electronics store that Sapir ran with Sam Kislin, a Ukrainian immigrant who was a major donor to Rudy Giuliani’s mayoral campaigns.
Joy-Lud catered to a Soviet clientele—with one notable exception. Donald Trump purchased 200 televisions on credit from Sapir and Kislin’s electronics store in the 1970s for his newly acquired Commodore Hotel.
I’ve asked the FBI to process these other files and will post them here when I receive them.
Russian Money in UK Politics
In The Godfather, Part II, mobster Hyman Roth is asked by reporters why he moving to Israel.
“I’m a retired investor living on a pension, and I wished to live there as a Jew in the twilight of my life,” Roth explains.
Sergey Kopytov is a retired Ukrainian politician living out the twilight of his life in eastern Europe. Like the fictional Hyman Roth, Kopytov invests in hotels. Except Kopytov’s hotels are not located in Cuba, but rather in the Crimean Peninsula, where he served briefly as finance minister in the pro-Russia Ukraine Party of Regions.
The Hyman Roth of the Godfather Part II was looking for a man who wants to be president of the United States. Roth had the cash to help elect him. “We’re bigger than U.S. Steel,” Roth says.
The very real Sergey Kopytov may been looking for a man who wanted to be the UK Prime Minister. And like Roth, Kopytov had the cash to help make it happen.
A $630,225 donation to the UK’s Conservative Party in February 2018—money helped install Boris Johnson in the prime minister’s office at 10 Downing Street—came from Kopytov, according to a bank alert sent to the National Crime Agency.
The bank alert, which tracked the flow of funds from Russia to Britain, was first obtained by The New York Times. It also was detailed in the latest issue of the UK magazine, Private Eye.
“We were able to trace a clear line back from this donation to its ultimate source,” an official at Barclays Bank wrote on January 2021. That “ultimate source” was Sergei Nikolaevich Kopytov.
If true, this raises troubling questions about Russian influence in UK elections. As in the United States, UK political parties are barred from accepting contributions from foreigners. The Conservative Party donation, however, was given a sheen of respectability. It was made in the name of Kopytov’s son-in-law, Ehud Sheleg. The Israeli-born Sheleg is a UK citizen and owner of a posh London art gallery, and a former treasurer of the Conservative party.
“I believe that the flow of funds which began with a $2.5 million payment from Kopytov to his daughter Liliya, and which ended with the $630k donation to the Conservative party was designed to conceal its origins from an impermissible donor and therefore the people responsible for designing the flow of funds committed an offense which potentially qualifies as a criminal offense,” the Barclays banker wrote in the alert. Sheleg’s wife, the former Liliya Kopytova, is a former Miss Ukraine 30 years his junior.
“Kopytov can be stated with considerable certainty to have been the true source of the donation,” the alert states. It adds: “Kopytov is a Russian resident and there is no indication that he has a UK passport or is on the UK electoral roll.”
It’s part of a pattern of Russian money and influence flowing into the UK Conservative Party. Boris Johnson played tennis in 2014 with Lubov Chernukhin, the wife of a Russian former minister, in exchange for a £160,000 donation. Chernukhin donated almost £2 million to the Conservatives.
Even as the Kremlin meddled in UK elections and sent assassins to kill two former Russian spies living in England, Boris Johnson defended his decision to take questionable money connected to Russia. “It’s very important that we do not allow a miasma of suspicion about all Russians in London—and indeed all rich Russians in London—to be created,” Johnson told the BBC. The future prime minister made those remarks in March 2018, one month after Sheleg’s donation to Johnson’s party and mere days after the poisoning of retired military intelligence officer Sergei Skripal.
A lawyer for the Shelegs told The New York Times that the couple received millions from Kopytov in the weeks before the 2018 donation. But that was “entirely separate” from the campaign contribution. The explanation given was that Kopytov’s money, which derived from a property sale, repaid a loan made to Sheleg by his family’s trust.
In May 2018, Ehud Sheleg gave another £750,000 donation to the Conservative party. (That donation was not covered in the bank alert.) He was named co-treasurer of the party three months later, and took over sole responsibility for the job the following year. Sheleg stepped down as the Conservative treasurer in 2021, a few months after Barclays filed its suspicious activity report. His representatives say there was no connection between the two events.
Sheleg was one of the biggest single donors to the Conservative party. In total, he gave £3.6 million to the Conservative Party, which got him knighted by the queen.
It remains unclear why nearly three years elapsed before Barclays filed its suspicious activity report about Sheleg’s 2018 contribution.
The $2.5 million that made its way to Sheleg began its journey in Kopytov’s Russian bank account. It then passed through Austria’s Raffeisen Bank, according to Private Eye. Raffeisen has the greatest exposure to Russia of any foreign bank, with €22.9bn of assets at risk. Readers of my book, Trump/Russia, will not be surprised to hear this as there’s a long history of dirty Russian money flowing through Raiffeisen. An infamous 2006 US State Department cable released by Wikileaks stated that that Raiffeisen served as a front for the Russian gangster Semion Mogilevich.
It took weeks for the $2.5 million to land in the Shelegs joint bank account in Britain. The day after it arrived, Sheleg made his contribution to the Conservative party.
The Barclays bank alert that sounded the alarm about Sheleg’s contribution states “that sources, including a Private Eye article note Ehud Sheleg’s close relations with Moscow… [and] connections with organized crime figures.”
Sheleg’s connections with Moscow including hosting the Russian ambassador to the UK in 2015. His organized crime ties relate to a franchise of his Halcyon art gallery in Cyprus. One of the men involved, Rustem Magdeev, is accused in UK court documents of having connections to organized criminals, a charge he denies.
The role of treasurer of the Conservative Party is often a springboard to the House of Lords, the upper house of British parliament. Seven of the last 10 treasurers were made barons.
An elevation to life peer may now be out of Sheleg’s reach. Questions have arisen in parliament about Sheleg and Kopytov. “Exactly what current and former links do the Sheleg-Kopytov family hold with key actors in the Russian state? Finally, has electoral law been broken and, relatedly, has our national security been compromised?” the chair of the Labour Party asked on the floor of the House of Commons last month. Stephen Kinnock, a Welsh MP who was threatened with a libel lawsuit for questioning Sheleg’s ties to Russia, asked when the former Conservative Party treasurer should be labeled a foreign agent.
In The Godfather, Part II, Hyman Roth’s plans to take over Cuba were foiled by Fidel Castro. Exposing Sergey Kapytov as the “ultimate source” of a Conservative Party donation may have foiled his plans as well.
Putin’s Architect
Not long ago, Italian authorities raided a sumptuous villa in the northern Italian town of Roncadelle. Inside, the Guardia di Finanza seized a world-class art collection: paintings by Picasso, Cezanne, Kandinsky, Modigliani, Miro, and Chagall. Some 143 works in all. Outside, there was a large Botero cat statue. In the nearby town of Montichairi, authorities also seized a Eurocopter EC130, worth an estimated 2 million Euros.
The artworks, the helicopter, and the Roncadelle villa all belong to Lanfranco Cirillo, the 63-year-old architect who has designed homes for Russian President Vladimir Putin and 44 other Russian oligarchs. Cirillo is perhaps best known as the architect of Putin’s $1.4 billion palace on the Black Sea—which earned him the nickname of “Putin’s architect.” (Cirillo didn’t deny his work on the project, but would not confirm the palace’s links to the Russian president.)
A lifetime of living large off the oligarchs has caught up with Cirillo. He faces charges in Italy of income tax evasion, money laundering, and violating laws for the protection of cultural assets. According to investigators, Cirillo failed to pay some 50 million euros in taxes from 2013 to 2019 and is said to have laundered the proceeds. But he’s unlikely to ever be held to account. Cirillo lives in Russia, where he was granted citizenship under a 2014 decree granted by President Putin.
For years, Cirillo accumulated a fortune in obscurity. In 2014, he told La Repubblica that he had thousands of employees and invoiced in the hundreds of millions of dollars. “I arrived from Italy 20 years ago with a suitcase as a representative of furniture from Mascagni of Bologna. Today 42 of the 116 Russian billionaires in the Forbes list are my clients,” Cirillo said. He had done dachas and banks, plane interiors and 20,000-square-foot mansions. Once, he said, he saw an oligarch’s wife slap her husband at a dinner. But Cirillo couldn’t name names. His wealth was built on discretion.
Not surprisingly, Cirillo was a great admirer of Vladimir Putin. “Like 92–93 percent of Russia’s population, I love our president and I think he is the right man in the right place in the current world situation,” Lanfranco said in a 2016 interview. A picture of Putin hung on the wall of his office and could be found on his now-defunct website, abitalia.com. Does he still sing the praises of his hero? Sitting in his luxurious home on the Black Sea, does Cirillo cheer as Russian soldiers lay waste to Ukraine? Or does he worry that Russia’s president has brought his new home to the brink of ruin?
Cirillo was a bridge, one of many that existed between the Russia’s ultrawealthy elite and the West. He allowed Russia’s oligarchs to live in an illusion. Yes, they were in Russia, but they were surrounded by the luxuries of the West. He stuffed the oligarch’s homes and planes with the finest furniture and kitchen cabinets from Europe and the United Kingdom. The tentacles of this operation even reached into America. One of the main suppliers of materials for Putin’s Palace was a company Cirillo controlled called Medea Investment LLC, registered in Washington DC., according to a Russian whistleblower, Sergey Kolesnikov.
Compared to the obscene wealth that surrounded and enriched him, Cirillo saw himself as a bit player. His job was to help the obscenely rich live in the baronial splendor to which they felt their corruption had entitled them. He was just a simple, poor architect, as he famously recounted in a 2009 conversation with oligarchs that was obtained by the Russian publication New Times. “I’m an architect, a simple person, I’m poor, very poor, I spent 50 million today, getting 25 (illegible), I have minus 25 million 800 (thousand) euros, for me it’s a lot of money, almost everything earned,” Cirillo said. No doubt these were trivial sums for his clients.
The bridges that people like Cirillo built between Russia’s ultrawealthy and the West now lie in ashes. The flow of luxury goods has ended. There are no more artisans carving rococo ornaments. No more consultants installing dream kitchens with Viking ranges and Subzero fridges. The meticulously-designed megayachts are being seized. The Versailles-style ballrooms he designed now stand empty. The glittering illusion Cirillo once sold to the oligarchs has been swiftly replaced by the darkness of the Soviet days from which they had all sought to escape.
Where are the sanctions on Putin’s Children?
This post has been updated to reflect that neither Putin nor his daughters are listed as partners of a company that owns a Biarritz home where Igor Stravinsky once lived.
The Biden administration is going after the children of Russia’s oligarchs.
Among those sanctioned in recent days were the wealthy sons of Putin’s former judo sparring partner; the son of the Kremlin chief of staff; and the brother and sister whose dad runs the Kremlin-backed Wagner mercenary group.
“The aid of these individuals, their family members, and other key elites allows President Vladimir Putin to continue to wage the ongoing, unprovoked invasion of Ukraine,” the White House said.
But one pair of names is absent from the list: Katerina Tikhonova and Maria Vorontsova. These are the adult daughters of Vladimir Putin.
If the Biden administration is going after the children of the oligarchs, aren’t the children of Putin fair game?
Putin has always been extremely protective of his daughters. “I never discuss my family with anyone,” Putin said in 2015. It’s taken years just to learn the most basic facts about them.
Katerina, a dancer-turned-mathematician, and Maria, a pediatric endocrinologist, have stayed out of the spotlight and taken on different surnames to obscure their connection to the most powerful man in Russia. At the same time, they have reaped the benefits of the corrupt system that keeps their father in power.
Katerina and her former husband, Kirill Shamalov, amassed a corporate portfolio reportedly worth $2 billion before their divorce in 2018. (Shamalov was sanctioned by the US Treasury in 2018; the UK sanctioned him February 24.)
An investigation by Alexei Navalny’s Anti-Corruption Foundation found Katerina headed a foundation that developed lands owned by Moscow State University. Her foundation, Innopraktika, collected $7.8 million from Russian-state owned companies and $7.3 million from unknown sources in 2015-2016.
Her older sister Maria also lived a life of luxury. Photos on social media showed her traveling the world, riding on expensive yachts, and hiring teachers abroad, according to an investigation by the Russian publication New Times.
Maria married a Dutch citizen named Jorrit Faassen, who worked at subsidiary of Gazprom. In 2010, while driving in Moscow, Faassen got into a confrontation with bodyguards of a Russian banker. Seven bodyguards forced Faassen’s BMW to stop, beat him with baseball bats, and damaged his car. The banker, Matvey Urin, had fucked with the wrong person. Faassen, described in media reports as a Putin family friend, remembered the license plate numbers of the bodyguards that attacked him. The next day, police arrested the businessman and the bodyguards. Weapons and drugs were found in their vehicles. Urin was sentenced to prison and his banks went out of business.
There are rumors that Putin had a “secret” third daughter with a cleaning woman-turned-multimillionaire, but Putin has never acknowledged the girl as his child.
Sanctioning the daughters would put Putin family assets in the West under the reach of sanctions.
One place to go looking for Putin’s assets in the West is in the French town of Biarritz, 15 miles up the coast from the Spanish border. This seaside resort town holds a special place in the hearts of the Putin family. In the summer of 1999, Putin was vacationing in Biarritz with his wife and daughters when he learned that President Yeltsin had anointed him as his chosen successor.
According to a report published February 26 by the French radio station Europe 1, Putin purchased a home on Rue de la Fregate in Biarritz where the Russian composer Igor Stravinsky once lived. Putin reportedly paid around $400,000 for the home in 1996, at which time he worked in the St. Petersburg mayor’s office on a pittance salary. The radio station says the French secret services confirmed the report. Europe 1 says the property is held in the name of one of Putin’s daughters.
Update: I spoke with Michael Anthony, who is listed as an officer of SCI Chalet les Rochers, the French company that controls the property on Rue de la Fregate. Anthony heads Anthony & Cie, a private wealth management advisory firm in France that serves ultra-wealthy clients. Anthony checked his records and tells me that neither Putin nor his daughters are partners of SCI Chalet les Rochers. He declined to name the listed partner(s), citing client confidentiality.
Katerina and her ex-husband, Kirill Shamalov, owned a different home in Biarritz. The seaside house was acquired for 4.5 million Euros in 2012 from one of Putin’s old friends, Gennady Timchenko. It’s not clear who owns the house on Avenue du General MacCroskey today. The French company that owns the house is in turn owned by a Monaco company, SCP Alta Maria, whose beneficiaries cannot be revealed, even on request.
Lyudmila Putin, Katerina’s and Maria’s mother, also spends time in Biarritz. Lyudmila was married to Putin for three decades before they divorced in 2013.
Putin’s ex-wife has come almost every year to Biarritz to “take the waters,” both before and after her divorce, Alexandre de Miller de La Cerda, Russia’s honorary consul in Biarritz, told TIME. “She stops either at the Miramar” – one of the town’s most luxurious hotels – “or in the house that belongs to our mutual friend from Putin’s St. Petersburg circle.”
Lyudmila acquired a $7.46 million home in Anglet, next to Biarritz, six months after divorcing Putin, OCCRP reported. The Anglet home is in the name of her second husband, a St. Petersburg businessman almost 20 years her junior. In recent days, the gate of the Anglet home was marred with graffiti reading ‘Putin suka!’ (a vulgar insult in Russian), ‘Putin’s mafia’ or ‘Slava Ukraíne’ (Glory to Ukraine).
Meanwhile, the US Treasury keeps noting how the Russians it is sanctioning are close to Putin’s daughters. Kirill Dimitriev, the head of Russia’s sovereign wealth fund who was sanctioned last week is close to Katerina and her ex-husband, the US Treasury noted in its release. It’s clear that being close to Putin’s daughters is part of being in the inner, inner Kremlin circle.
So why sanction the oligarchs’ children, and not Putin’s daughters? Is the US worried that it will be too much of a provocation for an already unstable man?
Why did the FBI raid homes linked to Oleg Deripaska?
Editor’s note: Post has been updated to replace photo of DC property misidentified as the Haft mansion.
Sometimes you go looking for one thing and you find something else. I have a theory that’s what happened on December 13, 2018, when authorities in Britain served a search warrant on a London storage unit leased by a company connected to the Russian aluminum tycoon, Oleg Deripaska.
The warrant, made at the request of the U.S. Justice Department, was executed in search of evidence of crimes committed by Deripaska’s one-time business partner, Paul Manafort. It doesn’t appear that there was much on Manafort in that London storage unit, but U.S. authorities had obtained something else – 11 boxes and 100,000 pages of documents from the company that controls the billionaire’s global property empire.
The target of the 2018 UK raid, London-based Terra Services, controls Deripaska’s luxury properties around the globe through a network of subsidiary companies. These homes include stunning villas in St. Tropez and Sardinia, a mansion in London’s Belgrave Square estimated at £50 million, a home in Paris near the Seine, and an estate with two marble palaces in Montenegro.
On Tuesday, FBI agents raided two properties connected to Deripaska in Washington and New York. Agents conducted simultaneous searches at the Haft mansion near DC’s Embassy Row and at 12 Gay Street in Manhattan’s Greenwich Village.
A spokeswoman for Deripaska told The New York Times that the searches were “being carried out on the basis of two court orders, connected to U.S. sanctions.” The U.S. Treasury Department sanctioned Deripaska in April 2018, for “having acted or purported to act for or on behalf of, directly or indirectly, a senior official of the government of the Russian Federation.”
That senior official of the Russian government may be none other than Vladimir Putin. The U.S. government received reports that Deripaska held assets and laundered funds on behalf of Russian President Vladimir Putin.
“I would like to ask: did you find Putin’s money in those abandoned houses?” Deripaska asked on Telegram the day after the FBI raided the New York and DC properties, an intemperate comment that was later edited out.
The sanctions on Deripaska mean that banks must steer clear of him and his money cannot enter the United States. According to Deripaska’s spokeswoman, the properties raided Tuesday were ultimately owned by the billionaire’s relatives.
But someone was paying the bills at the Haft mansion and 12 Gay Street. The property tax bill for the Haft mansion runs more than $132,000 a year.
Did the documents seized in the 2018 London raid provide evidence that Deripaska was violating sanctions with respect to the NY and DC properties?
I have a hunch they did.
First, whatever documents were in those 11 boxes seized by officers National Crime Agency, Britain’s version of the FBI, Deripaska did not want the U.S. authorities to see them. Over the course of 15 months, Terra Services challenged the warrant in five separate hearings. One of Terra’s arguments was that the materials in the boxes had little to do with Manafort, and the few pages that did involve him were already in the possession of the U.S. Justice Department. A British judge rejected Terra Services’ arguments for judicial review in March 2020, clearing the way for the documents to be sent to America.
Second, a previously-unreported court filing contended that Deripaska takes an extremely hands-on role in running his U.S. residences — down to the location of electric sockets. According to an affidavit filed in 2016 New York Superior Court, “Deripaska exercises dominion and control over NY properties.” The document cites emails Deripaska wanted kept secret that were obtained during discovery in a lawsuit filed against him by Alexander Gliklad, former chairman of a Russian coal company.
Gliklad’s lawyers cited an email from a U.S. realtor working for Deripaska that references the oligarch’s preferences for electronics and electrical outlets near his bed in 12 Gay Street. Other emails suggest Deripaska was involved in negotiating a price in a proposed sale of a $42.5 million townhome on the Upper East Side. (The document summarizing those and other emails was improperly redacted, allowing its contents to be read by selecting and pasting them.)
Third, and finally, the person in charge of Terra Services was involved in the purchase and management of the NY and DC properties. A few months before he was sanctioned by the U.S. Treasury, Deripaska handed control of Terra Services over to Pavel Ezubov, his 46-year-old cousin.
Ezubov, the son of a member of Russia’s Duma, or lower house of parliament, set up the Delaware corporation that acquired the Haft mansion in 2006 for $15 million, according to records obtained by OpenSecrets’ Anna Massoglia.
And Ezubov’s name showed up on a New York city building permit for a $42.5 million Upper East Side Manhattan townhome connected to Deripaska. On the permit, Ezubov listed his address at a rented mailbox, located a short walk from 12 Gay Street, where property tax bills for all of Deripaska’s New York properties are sent.
It would make sense if Ezubov is managing these properties because his name shows up elsewhere in connection with properties connected to Deripaska that are being run by Terra Services. This includes Hamstone House, a 10-bedroom English mansion that was reportedly the Duchess of Windsor’s favorite property.
Euzbov’s name also shows up in connection with what may be the most expensive piece of property connected to his billionaire cousin. Villa Herakles in St. Tropez includes a 15,000-square foot main house, a guest house, a 345-acre park, two swimming pools, a tennis court, and a helipad.
Renovations on Villa Herakles cost 17.9 million Euros, according to the contractor’s website. The same contractor also worked on another home controlled by a Terra Services subisidary, Villa Walkirie, on the Italian island of Sardinia.
In a French court decision, an unidentified gardener who worked on Villla Heracles in St. Tropez from 2006 to 2009 said that his “real employer” was Basic Element – Deripaska’s holding company that comprises, Rusal, the world’s No. 2 aluminum maker.
Admittedly, the connection between Terra Services and the U.S properties raided Tuesday is not as strong as it is with the homes Terra Services controls in Europe. But what better place to sort this out then the 11 boxes of company documents that Deripaska did not want the U.S. to see?
Julian Assange’s Russian Connection
Whatever you think of Julian Assange — hero or villain, journalist or thief, high-tech revolutionary or paranoid narcissist — there is no denying his commitment to the cause of transparency.
Assange has paid a steep price for revealing the U.S. government’s hidden history. As I write this, he continues to battle extradition to the United States where he faces criminal charges of disclosing classified material — a case that could set a dangerous precedent for investigative journalism in the most powerful country on earth.
But the story of Assange and Russia reveals another history he prefers to keep private: his own.
The story begins well before the 2016 U.S. presidential election, when WikiLeaks’ served as a conduit for the emails Russian intelligence officers had hacked out of the Democratic Party and the Clinton campaign. By that time, Assange already had a years-old relationship to Russia.
It was Russia that Assange would often look to as a place to escape his mounting legal problems, something he would later advise Edward Snowden to do. It was Russia that offered him much-needed funds to keep his organization afloat. It was Russia that alternately terrified him and fascinated him.
Given how much we do know about WikILeaks activities during the 2016 presidential election, we still know relatively little about the origins of Assange’s relationship with Russia.
When did WikiLeaks’ relationship with Russia begin? And how did it start?
We have compromising materials on Russia
It may come as a surprise that Julian Assange — a man the U.S. government considers the Kremlin’s most useful idiot — once announced that his next target was Russia.
The year was 2010. Assange and WikiLeaks were riding a wave of notoriety after publishing thousands of secret US government documents that it had obtained from Chelsea Manning. First came the disclosure of a classified military video of a US Apache helicopter killing 18 people, including two journalists working for Reuters. That was followed by the disclosure of thousands of classified documents on the wars in Afghanistan and Iraq.
Everyone seemed to be wondering who or what WikiLeaks would expose next, and in July 2010, Assange showed his hand in an interview with Russia’s Izvestia newspaper.
Izvestia: Do you have compromising materials on Russia?
Alexandra Ovchinnikova, “WikiLeaks Co-Founder Receives US Threats,” Izvestia, July 28, 2010
Assange: Yes, your government and businessmen. But not as much as we would like. The fact that most of your sites only post information in Russian limits our options. However, the Americans are helping us, they transmit a lot of materials about Russia.
Izvestia: Do you trust them in this matter?
Assange: Yes. Although, of course, we double-check all the information.
Izvestia: On which of the Russians has WikiLeaks already “opened a case”?
Assange: I will not name them. You will know them when we post the relevant content.
Assange must have been dismayed when no one else picked up the scoop he dropped in Izvestia, because WikiLeaks tried again in October.
“I think that Russian readers will learn a lot about their country,” WikiLeaks spokesman Kristinn Hrafnsson told Kommersant, a Russian business daily.
This time, the U.S. media took notice.
So did the Kremlin. An anonymous representative of the FSB, the successor agency to the KGB, said there was no cause for concern, but then warned that Russia could shut the WikiLeaks site down for good if it so chose.
In the end, WikiLeaks’ next target wasn’t Russia.
Instead, Julian Assange sought its help.
Seeking Russia’s help
At the same time as journalists were asking whether the Kremlin was about to get WikiLeaked, Assange was coming under tremendous pressure from law enforcement authorities in Sweden.
Prosecutors accused the WikiLeaks founder of raping and molesting two Swedish women during an August trip to Stockholm. In November 2010, a warrant was issued for his arrest. (In 2019, prosecutors dropped the charges, citing insufficient evidence)
With his options dwindling, Assange turned to an unlikely source for help.
In letter dated Nov. 30, 2010 that was obtained by The Associated Press, Assange asked the Russian consulate in London for a visa.
WikiLeaks claimed, without evidence, that the document was a forgery.
Assange’s Man in Moscow
There’s good reason, however, to believe that Assange isn’t telling the truth.
For one, Israel Shamir, the man Assange named as his “friend” in the letter, told Russian News Service radio, that he had personally brokered a Russian visa. But by the time it was approved in January 2011, Shamir said, it was too late. Assange was in British custody.
Russia “would be one of those places where he and his organization would be comfortable operating,” Shamir explained, according to the AP’s report. Asked if Assange had friends in the Kremlin, Shamir smiled and said: “Let’s hope that’s the case.”
A Russian-Israeli journalist and citizen of Sweden, Shamir is best known as an anti-Semitic writer. He has argued that the Jewish “blood libel” myth has a historical basis in fact and likened Jews to a virus. “I think it is every Muslim’s and Christian’s duty to deny the Holocaust,” he said.
Born a Jew in Siberia, Shamir claims to be Greek Orthodox Christian convert. Once a Zionist, he says he’s now an anti-Zionist. Once a spokesman for Israel’s left-wing Mapam party, he now travels in Russian right-wing circles. Shamir was a member of Florian Geyer, a group that was co-founded by the far-right ideologue Aleksandr Dugin, who had longstanding ties to Russia’s military, government and the security services. (The group shared its name with a Nazi SS cavalry division.)
Searching the Hebrew-language press, I found that Shamir’s own mother couldn’t understand what happened to her son. “He received a Zionist education. He was a Zionist activist. He did great things,” Esther Schmerler-Lomovski told Makor Rishon in 2003. “It pains me, what happened to him. I would like to understand it myself. I think it’s a disease. It’s a mental illness. He seems sane. He’s not disturbed. He seems smart. But there’s something unhealthy.”
Maybe Israel Shamir did go insane, or maybe he built quite a legend for himself. More than one reporter has pointed out Shamir’s ties to Russia’s security services. “From the late 1960s, people who knew him wondered if he were a KGB plant; at the BBC, while some found him charming, others considered he spent too much time at the Soviet Embassy,” Private Eye reported in 2011. Former Wikileaks staffer James Ball wrote in The Daily Beast that Shamir had “ties and friends in Russian security services.”
For former WikiLeaks staffer James Ball and Assange’s close friend, Daniel Domscheit-Berg, Shamir was a step too far. Both men left the group.
Assange, however, would brook no criticism of his friend. Instead of banishing Shamir back to the freezing expanses from whence he came, he had invited him to join his nascent operation in 2007:
Dear Israel/Adam:
Someone wrote saying they ‘refused to associate with an organization that would work with an anti-Semite like Israel Shamir.’ From a brief sampling of your writing … I did not find the allegation borne out. I found these samples to be strong and compassionate. I suspect the name ‘Israel Shamir’ is a realpolitik deadweight we are not yet big enough to carry … Writing under another name in the interim … may be an option.
Assange’s Moscow Mule, Private Eye, Feburary 18, 2011.
What was Assange’s response when Private Eye published this email? Private Eye was part of a conspiracy led by journalists from the Guardian who “are Jewish.”
Друзья (Friends of) WikiLeaks
A Russian visa was only one way Shamir was using his ties to Russia to help get his friend out of trouble.
He would also help establish a “Friends of WikiLeaks” foundation in Russia, ostensibly to raise money for an Assange visit to Moscow that never took place.
The Russian Friends of WikiLeaks has received no attention in the United States. It got a lot of attention in Russia because it was backed by the weekly magazine, Russian Reporter, which billed itself as WikiLeaks’ “official partner” in Russia.
One of the founders of Friends of WikiLeaks was Vitaly Leibin, the editor of Russian Reporter, a Putin-friendly publication owned by one of Russia’s most notorious oligarchs.
According to Leibin, Yandex, the Russian search giant, approached him with an offer to help WikiLeaks at a time when PayPal, MasterCard, and VISA were severing their ties to WikiLeaks. “Yandex.Money said that they were ready to guarantee that this will not happen and you can collect donations for WikiLeaks on their site,” Leibin told Vesti Radio. (Yandex denied this.)
Russian Reporter was an interesting partner for Shamir and WikiLeaks for another reason: Oleg Deripaska, the aluminum tycoon sanctioned by the U.S. Treasury for his close connection to the Kremlin, owned 30 percent of the Expert group that included Russian Reporter through his holding company, Basic Element.
(In 2017, Deripaska’s longtime U.S. lobbyist, Adam Waldman, would meet nine times with Assange in the Ecuadorian Embassy in London, according to the Guardian. Waldman was trying to broker a deal with the U.S. Justice Department about the investigation into Assange and Assange’s leaks of documents detailing the CIA’s cyberweapons known as “Vault 7.”)
How much money did Friends of WikiLeaks raise? Did Deripaska give money? What happened to the money raised by the fund?
Shamir wouldn’t say. “Dear Seth,” he wrote me in an email. “I suffered a micro-insult last year, and I hardly remember anything of the things you asked me about. Sorry, can’t be of help.”
Shamir Gets the Cables
Most revealing was the way Shamir used one of WikILeaks’ greatest coups — the release of thousands of secret U.S. State Department cables.
Before her arrest, Chelsea Manning had passed WikiLeaks 250,000 cables from U.S. embassies around the globe offering unvarnished commentary on countries and leaders.
According to emails obtained by the Swedish magazine, Expo, Shamir had expressed interest in the U.S. State Department cables in June, months before WIkiLeaks began publishing them in bulk.
“I have a lot of good guys who can help to analyze the treasure and it would be good to start spreading the news. I am now in Paris, and people want to know more! Tuesday I go to Sweden, and there is a whole operation for your benefit!” Shamir wrote.
Assange replied, “There certainly is! Tell the team to get ready. Give them my best. We have a lot of work to do.”
Later that year, Shamir had shown up at WikiLeaks’ HQ in Ellingham Hall in the north of England. Introduced to the team as “Adam,” Shamir quickly aroused suspicion among staff when he asked for the as yet unpublished cables concerning “the Jews.”
Former WikiLeaks staffer James Ball says Assange ordered him to give Shamir more than 90,000 State Department cables “covering Russia, all of Eastern Europe, parts of the Middle East, and Israel.” (Assange has denied this, too.)
First stop, Moscow
Cables in hand, Shamir traveled to Moscow in early December.
Shamir reportedly asked Kommersant for $10,000 to write articles based on the cables, sources told Russian journalist Julia Latynina and the Guardian. (A Kommersant representative told Latynina a fee was not discussed.)
Russian Reporter, the Putin-friendly outlet partly owned by Oleg Deripaska, took Shamir up on the offer and started calling itself “the official partner of the Wikileaks website in Russia.”
Shamir’s articles for Russian Reporter contained a mix or both true and false information — a classic KGB disinformation tactic. His reports claim that the cables showed United States was a puppet master controlling global affairs and blamed Georgia’s then president for starting a war with Russia. In fact, the cables said the opposite.
It was a clever way to deal with the fallout from the cables.
“Unable to refute the compromising information contained in U.S. diplomatic cables, Russia’s intelligence services are trying to minimize the damage by distorting their content, using Russian Reporter as a conduit,” The Moscow Times reported, citing Andrei Illarionov, a former economic adviser to then-President Vladimir Putin.
Next stop, Belarus
Shamir next headed to Belarus. He arrived in Minsk in time to observe the Dec. 19 presidential election as WikiLeak’s “only Russian-speaking accredited journalist.” Lukashenko would declare himself the winner of the election with nearly 80 percent of the vote.
On Election Day in Belarus, the news service, Interfax, published an interview with Shamir in which he claimed that the cables contained a “Belarus dossier” and hinted at “black cash” being paid to undisclosed recipients. Interfax also reported that Lukashenko’s chief of staff, Vladimir Makei, met with Shamir.
Two days later President Lukashenko said the following:
“We’re simply going to publish certain documents. We’ll see how those who are published on the Belarusian WikiLeaks site — the supporters [of the opposition] and those who are working behind the scenes — react to this.”
In January 2011, Soviet Belarus, a state-run newspaper, began publishing extracts from the cables. Among those “exposed” as recipients of foreign money was the leading dissident, Andrei Sannikov, whom Lukashenko defeated for reelection, and Sannikov’s press secretary, who died under suspicious circumstances months before the election. (Sannikov was beaten by police in an Election Day protest, arrested on the way to the hospital, and then held in an undisclosed location, with no communication, for two months. He was ultimately charged with inciting protests and sentenced to five years in prison.)
“Because virtually every opposition leader was already under arrest at the time Shamir leaked the cables, the publication of these documents served to bolster, rather than prompt, the regime’s crackdown in the immediate aftermath of the presidential elections,” Kapil Komireddi wrote in Tablet magazine.
The relationship blossoms
Despite the damage he had done to WikiLeaks’ reputation, Shamir had somehow opened a door for Assange in Moscow.
In January 2012, Assange announced he would be hosting a show on Russia’s state-backed TV network, RT.
“The World Tomorrow” would be filmed in the Ecuadorian Embassy in London where Assange had taken refuge to avoid extradition to Sweden.
Once again, Russia was supplying Assange with much-needed cash. RT‘s purchase of a broadcasting license for Assange’s show came shortly after funding for WikiLeaks reportedly began “drying up.”
The following year, WikiLeaks personnel would help Edward Snowden take refuge in Russia. In an interview with DemocracyNow!, Assange said that he “advised Edward Snowden, that he would be safest in Moscow.”
RT’s editor-in-chief, Margarita Simonyan, visited Assange at the Ecuadorian Embassy in August 2013, where they discussed renewing his broadcast contract. Russian media subsequently announced that RT had become “the only Russian media company” to partner with WikiLeaks and had received access to “new leaks of secret information.”
Then came the DNC and Clinton campign hacks. “WikiLeaks actively sought, and played, a key role in the Russian campaign and very likely knew it was assisting a Russian intelligence influence effort,” the Senate Intelligence Committee concluded in the fifth volume of its multi-year inquiry into Russia’s efforts to interfere in the U.S. election. Assange received multiple visits at the Ecuador Embassy in London from RT employees during the summer of 2016.
In 2017, the government of Ecuador gave Assange diplomatic credentials and diplomatic immunity in order to allow him to leave its London embassy without fear of arrest by British police and take up a post in Russia. (Britain spoiled the plan by rejecting the appointment.)
As for Shamir, the nature of his relationship to Assange is unclear. (His son, Johannes Wahlstrom, remained part of Assange’s inner circle for years.) But there’s no denying that his association with WikiLeaks greatly benefited him. He writes a column for Russia’s largest daily, Komsomolskaya Pravda, and a blog on the ultra-nationalist newspaper, Zavtra.
Shamir remained an uncomfortable subject for Assange. It was a reminder of Assange’s own anti-Semitic leanings and his disastrous decision to hand over cables that were used to justify repression in Belarus. What’s more, Assange didn’t like discussing anything about himself other than his fame.
The man who dedicated his life to exposing government secrets didn’t want to reveal any of his own. Assange saw enemies everywhere, but he failed to see (or maybe he didn’t care to see) how his “friends” were using him to serve their own ends.
From Putin’s Kiss to Jeffrey Epstein
Tech investor Masha Drokova took an unusual path to Silicon Valley. First, she was a true believer in Vladimir Putin. Then she went to work did PR for Jeffrey Epstein.
There are numerous Russian women who are making substantial contributions in Silicon Valley. Only one can claim to have kissed Vladimir Putin, as Drokova famously did in 2009, and to have received a medal from Putin himself for “contributions to the fatherland.”
The 31-year-old Drokova has been very open about this and many other aspects of her life with one glaring exception: She will not discuss her work as a PR consultant for convicted sex offender Jeffrey Epstein. (Drokova did not respond to a request for comment for this article.)
Update: After this post was published, Drokova told me she did some PR work for Epstein as a favor but was never paid by him. See note at the end of this story.
But the secret was spilled by Jeffrey Mervis, a writer for Science magazine, who received an email from Drokova in August 2017 asking whether he wanted to interview Epstein, her client. No doubt there are others who received similar pitches who have not been so forthcoming.
It’s this Epstein-Putin connection — and Drokova’s ties to a figure of interest to the Senate’s Russia investigation — that has me wondering whether her life is following the whims of fate or someone’s directions. Because let’s face it, Epstein was an intelligence goldmine. He collected dirt on his rich and powerful friends, who over the years have included Bill Clinton, Donald Trump, Prince Andrew, Bill Gates, and Apollo Global founder Leon Black, who has his own connections to both Trump, Epstein and Russia. He had cameras in his house monitoring private moments. From an intelligence officer’s point of view, Epstein presented endless opportunities for blackmail.
Is Drokova’s life just a series of astonishing coincidences? Or might she be another Maria Butina or Anna Chapman, the sort of Russian woman who uses sex and charm to cozy up to powerful and connected American men in pursuit of information or influence? As I’ve written before, there’s a rich tradition of this Russia, going back to the KGB’s red sparrows.
It’s impossible to say for certain, but what is clear is that Drokova has a knack for showing up in places she doesn’t quite belong. First, she was the Putin superfan who befriended Putin’s critics. Then, she stunned many in her home country when she revealed that she is a proud permanent resident of the United States. She did public relations for Jeffrey Epstein and others despite a poor to middling command of English. Now, people entrust her with millions of dollars to invest in Silicon Valley based despite an investing philosophy — and I’m not making this up — that involves love and sex.
Putin’s Kiss
Let’s start at the beginning. In 2005, then 16-year-old Drokova joined Nashi, the Kremlin-sponsored youth group and rose to the rank of commissar, or core activist. Her spontaneous decision to plant a kiss on Putin’s cheek caught the eye of Danish filmmaker Lise Pedersen who chronicled Drokova’s time in the organization in the 2012 film, Putin’s Kiss.
Drokova was the softer face of an ugly movement. The writer Peter Pomerantsev described Nashi as “the Russian equivalent of the Hitler Youth, who are trained for street battles with potential pro-democracy supporters and burn books by unpatriotic writers on Red Square.”
Drokova didn’t beat people up but she did call for burning books and organized a campaign to throw shoes at then President Bush. (“A stupid action,” she told the Wall Street Journal years later, and one that led to her leaving the group.)
Her mentors included Vladislav Surkov, Nashi’s creator and the Kremlin’s former top political strategist. Drokova attended a 2009 conference organized by Surkov to work out a strategy for information campaigns on the Internet, Jeffrey Carr writes in Inside Cyber Warfare. In Putin’s Kiss, Drokova quotes Surkov’s famous line: “Putin was sent to Russia by God.”
She also worked closely with Konstantin Rykov, who went on to become the Kremlin’s “chief troll” as well as a figure of interest in the Senate’s investigation of Russian interference in the U.S. election. Drokova became a producer and presenter on Rykov’s Internet channel, Russia.ru. (More on him later)
Drokova’s departure from Nashi in 2010 came after she befriended a group of liberal journalists, the kinds of people Nashi marched through the streets to publicly denounce.
Opposition journalist Oleg Kashin, the film’s narrator, praises her bravery for supporting him in a protest after he is beaten within an inch of his life.
Others in Kashin’s circle, however, remained wary of “the girl with the big breasts [who] was sent to talk to liberals,” as one put it in Putin’s Kiss.
After leaving Nashi, Drokova put her propaganda skills to use in PR. Within a few years, she moved to the United States and began investing in Silicon Valley. It was a path that, as I’ve written, had been trailblazed by Russian oligarch Alisher Usmanov and Yuri Milner.
“Is She A Traitor? Nyet”
In 2017, the new and improved Drokova revealed on Instagram that she was a permanent resident of the United States. The news of Drokova’s U.S. green card caused a sensation in Russia, with many blasting her as a turncoat.
If you look closely at the photo of her visa above, you’ll see Drokova was granted an E16 visa. This is meant for “aliens of extraordinary ability” — aka the “Einstein visa.” (This is the same pathway through which Trump’s wife, Melania, gained U.S. citizenship.) It’s a category that, in theory, is reserved for people who are highly acclaimed in their field; the government cites Pulitzer, Oscar, and Olympic winners as examples.
Tech investor Esther Dyson, who sits on the board of Russian search engine giant Yandex NV, supported her visa application, according to Drokova. (Dyson also has a connection to Epstein. She traveled to Russia in the 1990s with Epstein where they posed for a photo outside the home of Soviet dissident Andrei Sakharov. She also attended the “Billionaire’s Dinners” that Epstein attended and helped pay for. )
While many in Russia mocked and derided Drokova, one notable figure rose to her defense: Konstatin Rykov, her former boss and the Kremlin’s “chief troll.”
One has to wonder whether Rykov was speaking for himself only. In Vol. 5 of its report on Russia, the Senate Intelligence Committee found that “Rykov has played a significant role in the Kremlin’s foreign and domestic influence efforts.” He also has ties to people outside the Kremlin who are associated with Russian intelligence services or pro-Kremlin political parties, the report noted.
Rykov was an early supporter of Trump and featured prominently in a Washington Examiner story headlined: “Putin loves Donald Trump.” (Trump tweeted out a link to this story in 2015, saying “Russia and the world has already started respecting us again!”) After Trump’s surprise victory, Russian elites congratulated Rykov, the Senate’s report notes.
On Election Day, Rykov hosted a party in Moscow that was attended by pro-Kremlin propagandist Maria Katasonova, and Jack Hanick, an American media consultant who is associated with U.S.-sanctioned oligarch Konstantin Malofeev and his pro-Kremlin propaganda media outlet Tsargrad TV.
Included in a list of guests Rykov invited to the election party in Moscow was Masha Drokova. (Drokova’s social media posts suggest she was in California at the time.)
The VC of Love
Next to Drokova’s name on Rykov’s election party guest list was the co-founder of NtechLab, Alexander Kabakov.
NtechLab is the creator of FindFace, which it bills itself as the best facial recognition algorithm in the world. NtechLab recently built a massive surveillance system in Moscow. Russia has also licensed the technology to the United Arab Emirates.
NtechLab was the first in a string of investments that Drokova started making in 2016 in early-stage tech companies. (The size of her investment has never been disclosed.) Another early stage investor in the company was Impulse VC, a firm based in Moscow that was backed by the Russian oligarch Roman Abramovich.
Other Drokova investments included StealthWorker, a service that connects employers with cybersecurity personnel. She invested more than $4 million in artifical intelligence startup DigitalGenius.
It’s yet another mystery how she came to invest millions at the same time she did PR work for Epstein and others. Why would a successful VC investor do PR? Whose money was she investing?
But it was only the start.
In 2017, Drokova started raising money for a Silicon Valley venture capital fund she founded, Day One Ventures. She has raised more than $70 million to date.
SEC filings show that Day One Ventures is backed by a small group of high-net-worth individuals, most likely from Russia.
Drokova had professional and expensive help setting up her fund, such as her New York lawyer from the firm of Willkie Farr. But it all seemed out of step for a carefree, almost childlike woman who said things like “Meditation is my Netflix.”
In 2018, Business Insider ran a remarkable article about Drokova’s VC fund headlined: This 28-year-old Silicon Valley investor builds businesses by helping entrepreneurs fall in love.
“Everyone is more productive when they fall in love,” Drokova explained. Really?
The article noted she sometimes recommends “sexual energy retreats,” or sets founders up on dates.
“It’s not necessarily matchmaking,” Drokova told the reporter, Zoe Bernard. “I just introduce them to my friends.”
Why anyone would entrust large sums of money to a person who says things like this is beyond me, but people have.
Twenty-five people invested more than $19 million in Day One Ventures Fund I. A total of 33 people have invested more than $52 million in her latest fund, Day One Ventures Fund II, according to a November 2020 filing.
One company receiving Day One Ventures money is a legal app called Do Not Pay. Its founder is Joshua Browder, the son of Bill Browder, one of Putin’s fiercest critics.
It’s one of the many absurd coincidences in Drokova’s life that render the word coincidence itself meaningless.
Drokova: “I never worked for Epstein”
Not long after this story ran, I called up Masha Drokova. To my surprise she answered.
Drokova told me she met Epstein once and agreed to do some work for him as a favor, without knowing about his sordid past. “I quickly find out I shouldn’t be connected with this person,” Drokova told me over the phone. “I didn’t do research in the beginning, which I very much regret.”
“I met him and he asked me, ‘I need connections with the media,'” Drokova told me. “I introduced him to some people. I dig deeper. Oh fuck, it’s a very bad story.”
She admitted she did send a pitch to Jeffrey Mervis, the writer for Science magazine. She also sent similar pitches to some of her friends. “Some of my friends told me: Do you know this person?” she said.
But Drokova was insistent that she was never paid by Epstein. There are bank statements that will show this, she told me. She added that she asked about hiring a lawyer to correct the record about the nature of her work for Epstein. She was told it would cost $50,000 and there was no guarantee of success so she gave up.
Drokova got off the phone before I could ask her a report that banking regulators in New York published about Epstein’s relationship with Deutsche Bank.
The report notes that the Deutsche Bank team monitoring Epstein’s accounts received an alert “about payments to a Russian model and Russian publicity agent.” (The bank’s monitoring team ignored the alert after a member of the team stated “[s]ince this type of activity is normal for this client it is not deemed suspicious.”)
If this wasn’t Drokova, then who was it? How many Russian publicity agents were working for Epstein?
It turns out the answer is more than one. In a follow-up conversation, Drokova tells me that there was yet another Russian publicity agent who was being paid by Epstein. But Drokova wouldn’t tell me the name of this Russian PR agent because she says it would ruin her life.
Facebook’s Russian (Gangster) Money
Much has been written about how Russia used Facebook to influence U.S. voters in the 2016 election. Few people realize that Facebook was built with the help of Russian money.
Alisher B. Usmanov, an Uzbek-born mining magnate and one of the world’s richest men, poured nearly $900 million into Facebook before it went public in 2012. For a time, he was one of the social media giant’s biggest investors.
CEO and founder Mark Zuckerberg said at the time that Facebook carried out “extensive due diligence” on this investment. That means the company would have had to have known that that its biggest outside investor was a man viewed in business, diplomatic, and intelligence circles as a gangster.
Such information wasn’t hard to come by. In 2007, two years before Usmanov invested in Facebook, Craig Murray, a controversial former UK ambassador to Uzbekistan, denounced the metals tycoon as a “vicious thug, criminal, racketeer, heroin trafficker and accused rapist.” Murray made these charges in a blog post on his website (see copy here), that was subsequently removed under legal threat from the UK firm Schillings. Similar allegations were made a few days later on the floor of the European Parliament.
Facebook’s crack due diligence team clearly didn’t see Usmanov as a risk. But Megafon, a Russian mobile phone company in which Usmanov had invested, did. Take a look at this disclosure in Megafon’s initial public offering in 2012:
Gafur Rakhimov was sanctioned by the U.S. Treasury in 2012. “Rakhimov is one of the leaders of Uzbek organized crime with a specialty in the organized production of drugs in the countries of Central Asia. He has operated major international drug syndicates involving the trafficking of heroin,” the Treasury Department stated.
Rakhimov, a man Usmanov has known for years, is a heroin kingpin. Sorry, an alleged heroin kingpin.
Usmanov’s ties to Rakhimov were no secret. The Observer of London reported in 1998 that Usmanov “admitted that he had known Rakhimov for 20 years, and had met him regularly in Tashkent and London, but denied that they have a business relationship and that Rakhimov was involved in drugs.” In 2007, Usmanov gave The Guardian another explanation of his Rakhimov ties. “I only knew him since he was a neighbor of my parents,” he said.
Alexander Litvinenko, a former Russian spy who defected and was famously poisoned with radioactive polonium, did some digging into Gafur Rakhimov. This is from a file made public during an official UK inquiry into Litvinenko’s death.
Komsomol was a Soviet Communist youth league. (When the Soviet union fell, former Komsomol bosses like Mikhail Khodorkovsky used their connections to acquire ex-Soviet assets.) The Solntsevo gang is Moscow’s most powerful organized crime group. (Usmanov has long denied any ties to organized crime groups.)
Litnvinenko goes on to note that Usmanov has connections with three former KGB officers, one of whom “saved” Usmanov from a “violent confrontation with Chechnian crime bosses.”
Testimony given in a German criminal case in 2007 identified Usmanov as a representative of the Solnestsevo Mafia.
Even so, Usmanov shrewdly assessed that, in the West, even a reputed gangster can buy respectability. “Putin’s Kremlin had accurately calculated that the way to gain acceptance in British society was through the country’s greatest love, its national sport,” Catherine Belton writes in her excellent book, Putin’s People. In 2007, Usmanov did just that by acquiring a large stake in London’s Arsenal football club.
If buying a football club was a ticket into British society, investing in a Silicon Valley unicorn like Facebook may have been a way for Usmanov to gain respectability in the United States.
Usmanov told Forbes that he got a call in 2009 from his associate, Yuri Milner, who asked him whether he had ever heard of Facebook.
“No,” Usmanov replied. “[But] my nephews know it.”
Milner ran Digital Sky Technologies (DST) Global, an investment firm backed with Usmanov’s money.
Born in Moscow, Milner attended the Wharton School of Business in the 1990s. After a stint at the World Bank, he returned to Russia to work at Bank Menatep, which was founded by former Komsomol boss Mikhail Khodorkovsky. Milner ran Menatep’s investment banking division, Alliance-Menatep, and rose to the position of deputy chairman.
Menatep rang alarm bells at the CIA in the 1990s because the bank was said to be “one of the main conduits for the transfer of Communist Party wealth abroad,” Belton wrote in Putin’s People. A leaked CIA report obtained by The Washington Times in 1994 stated that senior Moscow officials believed that Menatep was “controlled by one of the most powerful crime clans in Moscow.”
The bank collapsed in 1998 and Milner began investing in Russian Internet companies. Milner founded Digital Sky Technologies in 2005.
Usmanov acquired a large stake in DST in 2008 and helped finance investments in major Internet companies in Russia, including VKontakte, Russia’s version of Facebook. “Usmanov is interpreted as a person who, on the Kremlin’s instructions, buys up various Russian [Internet] properties,” a Russian executive told The Atlantic’s Julia Ioffe.
In 2008, Milner came calling in Silicon Valley looking for a place to invest Usmanov’s money. Goldman Sachs introduced him to Mark Zuckerberg and a deal was struck.
“We were not asking for board seats and even assigned our voting rights to Mark, which sent a strong message that we are not seeking any influence over Facebook’s operations,” Milner told Forbes. “We started to invest in Facebook in 2009 and continued through 2011.”
It was an offer than would have been hard for Zuckerberg to refuse. Milner’s offer valued Facebook at $10 billion, above what other investors were willing to pay at the time. And Milner demanded little in return, something he has pointed to when reporters started to question Russia’s investment in Facebook. “If this had all been an influence operation,” Milner wrote later, “we would surely have sought some control over the companies.”
Milner sold off all of his firm’s Facebook holdings after the IPO. Usmanov also invested his own money in Facebook, and it remains unclear whether he has completely closed his position. (A 2014 Bloomberg article noted Usmanov made a “gradual reduction” in his Facebook holdings.)
Perhaps Usmanov’s Facebook investment was just a shrewd, well-researched bet. In 2017, however, new information surfaced that suggested there were other factors at play.
The Paradise Papers, a secret trove of documents leaked from an offshore law firm, revealed that Kremlin cash was financing Usmanov’s investments.
The money came from Gazprom Investholding, a subsidiary of the Russian gas giant, Gazprom, which has been sanctioned by the U.S. Treasury Department. Usmanov was CEO of Gazprom Investholding from 2000 until 2014.
In his censored blog post, Craig Murray, the former UK ambassador to Uzbekistan, wrote that Gazprom Investholding was a main conduit to export Russian corruption:
Alisher Usmanov had risen to chair of Gazprom Investholdings because of his close personal friendship with Putin. He had accessed Putin through Putin’s long time secretary and now chef de cabinet, Piotr Jastrzebski. Usmanov and Jastrzebski were roommates at college. Gazprom Investholdings is the group that handles Gazprom’s interests outside Russia. Usmanov’s role is, in effect, to handle Gazprom’s bribery and sleaze on the international arena, and the use of gas supply cuts as a threat to uncooperative satellite states.
Murray claimed in another 2007 blog post that “It was Usmanov who engineered the 2005 diplomatic reversal in which the United States was kicked out of its airbase in Uzbekistan and Gazprom took over the country’s natural gas assets. Usmanov, as chairman of Gazprom Investholdings paid a bribe of $88 million to Gulnara Karimova [the daughter of Uzbekistan’s president] to secure this.”
Russian opposition leader Alexei Navalny also has accused Usmanov of bribing Dmitry Medvedev, a former Russian president and prime minister with an $83 million mansion. (Usmanov succesfully sued Navalny for libel.) Navalny’s representatives recently called for the West to sanction Usmanov.
Remember that $880 million Usmanov said he invested in Facebook?
Well, in 2009, Gazprom Investholdings loaned $920 million to Kanton Services Ltd., Usmanov’s British Virgin Islands-registered firm. A large chunk of that money arrived three months before Facebook announced its deal with Milner. (Usmanov has denied using state funds to invest in Facebook.)
Two years later, Kanton took a majority stake in DST USA II. When Facebook went public in 2012, DST USA II sold 25 million shares of Facebook for more than one billion dollars.
Did Usmanov’s influence over Facebook end there?
We can only hope. But consider what happened to VKontakte, Russia’s version of Facebook. In 2014, Usmanov forced the founder of VKontakte, Pavel Durov, to resign. Durov said he believed he was forced out because he refused to cooperate with the FSB, the successor agency to the KGB. VKontakte is now a tool of Russian government influence operations, according to the Senate Intelligence Committee.
Interestingly, Volume 5 the Senate Intelligence Committee’s report on Russia noted that VKontakte reached out to the Trump campaign in 2016, asking whether Trump wanted to put a campaign page on the site. The ensuing discussion is heavily redacted, although Usmanov’s name lights up a few footnotes.
Facebook is many times more powerful than VKontakte. Alisher Usmanov should never have been allowed anywhere near it.
Jeffrey Epstein, Leon Black, and Russia
Leon Black, co-founder of the private equity giant Apollo Global Management, has agreed to step down from his duties as CEO after an independent review found he had paid $148 million to the convicted pedophile Jeffrey Epstein over a period of four years.
The New York Times notes that Black’s millions bankrolled Epstein after he pleaded guilty in 2008 to a prostitution charge involving a teenage girl. Black’s payments to Epstein were made between 2013 and 2017.
Why would a sophisticated man like Leon Black, a billionaire with a reputation to protect, associate with and pay millions to Epstein?
The independent report commissioned by Apollo from the law firm, Dechert, provides an answer:
Black viewed Epstein as a confirmed bachelor with eclectic tastes, who often employed attractive women. However, Black did not believe that any of the women in Epstein’s employ were underage. Black has no recollection of ever seeing Epstein with an underage woman at any time.
“A confirmed bachelor with eclectic tastes.” OK, sure. And Hannibal Lecter is a erudite psychiatrist with unusual appetites.
The Dechert report notes that Black trusted Epstein and confided in him on “personal matters.” Epstein had intimate knowledge of Black’s personal finances. Black regularly visited Epstein to discuss business or meet “well known businessmen, political figures, diplomats, scientists and celebrities” who gathered at Epstein’s enormous New York townhouse.
For the conspiracy-minded, the connections between the two men are interesting in light of reports that Epstein collected dirt on powerful men and had cameras in his house monitoring private moments.
And let’s not forget Epstein’s ties to intelligence services. Alex Acosta, Trump’s former labor secretary who led the prosecution of Epstein in Florida said he had been told “Epstein ‘belonged to intelligence’ and to leave it alone,” according to Vicky Ward’s report in The Daily Beast.
No one has yet noted something I pointed out more than a year ago, namely, Black’s numerous ties to Russia, Donald Trump, and Russian money.
Both Black and Trump were friends of Epstein’s at different times. Black also socialized with Trump and Jared Kushner, as the photo at the top shows. Apollo loaned $187 million to Jared Kushner’s family real estate firm.
Volume 5 of the Senate Intelligence Committee’s Russia report establishes that Leon Black accompanied Trump during his 1996 visit to Moscow to pursue real estate deals.
Trump’s trip to Moscow was organized by investor Bennett LeBow, who was trying to get Trump to develop a site he owned in Moscow. Not only did he serve up a site for Trump, LeBow lined up financing from Apollo Group, a then six-year-old private equity firm.
Black told the Senate Intelligence Committee that he did not recall any compromising behavior during the trip. He also did not recall the event in the photograph above.
Black did recall going to a concert with Trump, followed by a “discotheque.” Black later added that he and Trump “might have been in a strip club together.”
Moscow strip clubs were well-known as a potential source of kompromat or blackmail.
For years in Russia there were a number of Russian government officials or others who were exposed in these strip clubs doing not very nice things that their wives, if they have wives, probably didn’t know about. I think most of us appreciated that there was that risk in these types of clubs.
Peter O’Brien, CFO of the Russian-government controlled oil firm Rosneft, as quoted in Vol. 5 of the Senate intelligence committee’ Russia report.
It’s worth noting that the Moscow trip was not part of Dechert’s investigation into Black’s dealings with Epstein. The report says it reviewed documents dating back to 1998.
In 2011, Black was back in Russia, this time for a one-on-one meeting with Russian President Vladimir Putin.
Black committed to help Russia set up a $10 billion sovereign wealth fund, the Russian Direct Investment Fund (RDIF).
It was a privilege to help the fund, Black told Reuters, and described Russia’s “strong political leadership” as an advantage for investors at a time of global economic and financial difficulty. Black was named to the advisory board of the RDIF in 2011.
Four years later, after Russia invaded Crimea, the U.S. Treasury imposed sanctions on the RDIF. `
Kirill Dmitriev, CEO of the RDIF, makes numerous appearances in the Mueller Report. After Trump’s election, it was Dmitriev who wrote received an email that read, “Putin has won.” It was also Dmitirev who met in the Seychelles island with Erik Prince after Trump’s election.
Black also knows many Russian oligarchs. He met with the notorious aluminum tycoon Oleg Deripaska in Russia and the United States prior to Deripaska being sanctioned by the United States in 2018. Black knows Allen Vine, whom Black described as “consigliere” to the Russian oligarch Suleiman Kerimov, who was sanctioned by the United States in 2018.
And he does business with Vladimir Potanin, one of the world’s richest men. Unlike Deripaska and Kerimov, Potanin has not been sanctioned the U.S. government.
Potanin is a large investor in U.S. companies, including Apollo Global. In a 2014 court filing in her divorce, Potanin’s wife, Natalia, listed Apollo Global Management LLC as one of the companies in which her husband has had a financial interest.
Why did Black have such close connections to Russia? Did Epstein, who had an intimate knowledge of Black’s personal affairs, know the answer?
Zero Hedge, Russia, and the Business of Conspiracies
Note: On December 23, 2019, I was notified that a criminal complaint (see English summary here) had been filed against me with the Bulgarian prosecutor general’s office by the subject of this piece, Krassimir Ivandjiiski. I was given a deadline of December 31 to take down this piece. I refuse to do so.
For my lastest story in The New Republic magazine, I tried to figure out where conspiracy theories come from. The answer took me on a strange reporting journey that led to the Smoky Mountains of Tennessee. It’s a long read, but a good one, and you can read it here.
The story mentions Zero Hedge, a popular financial blog. There wasn’t room in the TNR piece to get into it, but Zero Hedge and What Does It Mean have a lot in common. They have both found that Russia and conspiracies are good for business.
Zero Hedge, with its mix of gloom-and-doom financial analysis, current events, conspiracies, and pro-Russia commentary, is one of the most popular sites on the Internet. It ranks in the top 2,000 of all Internet sites worldwide, meaning that it pulls in more than a million views every day.
Zero Hedge says its mission is “to widen the scope of financial, economic and political information available to the professional investing public” and it does that by refusing to follow what it calls the “pro-US script.”
Instead it follows the pro-Russia script.
It runs stories that hew the Kremlin line, such as how the poisoning of a double agent in England was staged by British intelligence operation or how the Steele Dossier was created by Internet trolls. Throw in commentary from a self-described “Kremlin troll” and writings from Russia Insider (which the Trump State Department describes as “an English-language publication linked to pro-[Russian] government oligarchs”) and you see how many think Zero Hedge is some kind of Russian disinformation operation.
Despite its pro-Russia leanings, or perhaps because of them, Zero Hedge a critical part of the right-wing conspiracy ecosystem. This became clear when Facebook temporarily blocked Zero Hedge in March, prompting howls of outrage from people in President Trump’s circle like his son, Don Jr., Nigel Farage, and Katie Hopkins. (The ban was lifted, and Facebook told Breibart that it was the result of a “mistake with our automation to detect spam.”)
A few days later, Australian Internet providers blocked customer access to Zero Hedge after a gunman killed 51 people in a New Zealand mosque.
The Australian ISP ban had less to do with the site and more to do more with the people who read it.
Zero Hedge readers were sharing links to the shooter’s live-streamed video of the massacre, which many of them thought was a hoax.
Yes, these are people who are so narcissistic that they think the mass slaying of 51 unarmed people in a mosque is all about them.
Who is behind Zero Hedge?
All posts on Zero Hedge are written under the pseudonym of Tyler Durden, the character played by Brad Pitt in the film Fight Club. “Anonymity is a shield from the tyranny of the majority,” reads the Zero Hedge “manifesto.”
Of course, anonymity is also a shield for someone who has something to hide.
In a 2016, a former Zero Hedge employee named Colin Lokey, who wrote much of the site’s political content, told Bloomberg that he felt pressure to frame issues on the site in a way that felt disingenuous.
“I tried to inject as much truth as I could into my posts, but there’s no room for it,” Lokey explained. “Russia=good. Obama=idiot. Bashar al-Assad=benevolent leader. John Kerry= dunce. Vladimir Putin=greatest leader in the history of statecraft.”
Lokey identified the other Durdens at Zero Hedge as Dan Ivandjiiski, a Bulgarian-born financial analyst banned from the industry in 2008 for insider trading, and Tim Blackshall, a credit derivatives strategist in San Francisco. In a telephone interview, Ivandjiiski told Bloomberg that he and Blackshall had been “on the payroll.”
Neither Ivandjiiski nor Blackshall own Zero Hedge directly. The site is owned by ABC Media Ltd. In one lawsuit, ABC Media was identified as a Bulgarian company.
Indeed, ABC Media Ltd. is listed on Bulgaria’s corporate registry.
Founded in 2011, ABC Media (АБЦ Медия) is a single member LLC. The sole proprietor is Daniel’s father Krassimir Ivandjiiski (Красимир Иванджийски).
If you can read Bulgarian, here’s the company’s corporate filing.
In addition, Zero Hedge’s domain name is registered under Krassimir’s name at an address in Sofia, Bulgaria.
Who is Krassimir Ivandjiiski?
Krassimir Ivandjiiski has an interesting background.
Born in Bulgaria in 1947, he was educated at the First English Language School in Sofia and the Warsaw School of Economics.
As a young man, Ivandjiiski worked in the Bulgarian the Ministry of Foreign Trade, before leaving to join the military and begin a career as a journalist. He became a “special envoy before 1990 to the most important political and military conflicts.” He spent more than 12 years abroad as a foreign in Prague, Warsaw and Vienna, then in Africa — Harare and Addis Ababa.
Craig Pirrong, who blogs at Street Wise Professor, wrote that this is the perfect resume for a spy:
That is an intel operative’s CV with probability 1. Probability 1. Every one of those jobs was a classic cover. There is no doubt in my mind whatsoever—none—that Mr. Ivandjiiski senior was a member of the Bulgarian Committee for State Security (Държавна сигурност or DS for short)—the Bulgarian equivalent of the KGB. And remember that Bulgarian DS was the USSR KGB’s most reliable allied service during the Cold War. It carried out wet work in western countries, notably the “umbrella murder” of Georgi Markov in London. It was linked to the plot to assassinate the Pope; although in the topsy-turvy world of intelligence, it is also alleged that the CIA fabricated the case against the DS. Regardless of the truth about the links to the attempt on John Paul II, it was a very, very, very nasty operation. (The African stops in Ivandjiiski’s resume makes it highly likely that his path intersected that of another charmer, Igor Sechin, who was a “translator” in Africa.)
On his website, Krassimir Ivandjiiski assures us that he had nothing to do with the KGB and he will sue anyone who says otherwise. Zero Hedge has attacked Pirrong as “the world’s favorite finance ‘expert’ for Wall Street hire.”
In 1994, after the Soviet Union collapsed, he began publishing a Bulgarian tabloid, Strogo Sekretno (Top Secret), which describes itself as the country’s only independent newspaper. Strogo Sekretno is published by a separate company, Primex-7 Ltd., also owned by Ivandjiiski, senior.
I found out about Strogo Sekretno because it often runs the fake conspiracy stories created by What Does It Mean. Krassimir Ivandjiiski also published Bulgaria Confidential which has run stories that have nothing to do with Bulgaria such as drug trafficking in Montana.
The site is also filled with pro-Putin, anti-Semitic garbage:
- “The US dollar is built on the so-called ‘Jewish Mafia’. This is not some racial prejudice, but a proven truth.” Source
- Millions of people in Russia and around the world were stunned to see Israeli Prime Minister Netanyahu in the Victory Parade in Moscow on 9 May. This hideous spectacle let the genie out of the bottle: “What is it? What’s going on with the Zionist Netanyahu and at whose expense?” Source
- “Chabad is a “racist, criminal Jewish supremacist doomsday cult.” Source
- “It doesn’t take a genius to recognize that Talmudic behavior is the real cause of Anti-Semitism.” Source
Zero Hedge, for the most part, steers clear of such outright anti-Semitism, but is nevertheless very popular with the sort of people who like the hatred Krassimir Ivandjiiski likes to spew.
Just look at the Zero Hedge comments section: a lot of racists and crackpots are reading. Don’t believe me? Do a search for the n-word or “joo” in the Zero Hedge comments section.
What Is This All About?
In a word, money.
“They care what generates page views. Clicks. Money,” Colin Lokey, the former Zero Hedge employee, told Bloomberg.
Zero Hedge says they have nothing to do with the Russian government or any government. “We have also never accepted a dollar of outside funding from either public or private organization – we have prided ourselves in our financial independence because we have been profitable since inception,” the site wrote.
As my story on What Does It Mean shows, this may very well be true. It would be nice if Vladimir Putin were secretly running things, but the sad truth is sites like Zero Hedge don’t need to take marching orders from Russia; they gravitate to it on their own because it keeps the audience happy.
And keeping the audience happy is what really matters. An audience comprised of racists, anti-Semites, extreme right-wingers, and conspiracy wingnuts is a valuable one. They are all credulous fools, and, as all dime-store preachers know, the credulous are easily monetized.
Krassimir Ivandjiiski, who did not respond to emails sent to ABC Media and Strogo Sekretrno, wrote on his site that the only reason his name is connected to Zero Hedge is because “they even did not have $30 for the initial registration.”
That may have been true at one time, but the web domain registration fee is spare change for Zero Hedge today. Dan Ivandjiiksi, who didn’t respond to questions, lives in a multi-million dollar mansion.
It’s possible that Zero Hedge is registered in Bulgaria because it’s somehow connected to a Kremlin disinformation operation. It’s also possible that Zero Hedge is registered in Bulgaria for financial (tax?) reasons.
The bottom here is the bottom line. Conspiracies are big business.
Impeachment Showcases Putin’s Skill at “Working with People”
Few people realize that Vladimir Putin was once asked how his past experience as an officer in the KGB helped him as a politician. His answer related to his experience “working with people.” (работы с людьми)
For Fiona Hill, the former National Security Council and Russia expert who delivered powerful testimony last month before the House impeachment inquiry, “working with people” is not as innocent as it sounds.
It is a bit of what she calls “KGB jargon” that reveals a great deal about Putin’s nearly two-decades long hold on power. And it also sheds light on what has befallen our current political order here in the United States.
During Putin’s days as a spy in the 1970s and 1980s, the KGB was all about “working with people,” a euphemism for what might better be described as working on people. Rather than repressing, detaining, or killing critics and opponents of the Soviet regime, Yuri Andropov’s KGB decided it would try to win them over using guile, patience and, most importantly, leverage. “It means studying the minds of the targets, finding their vulnerabilities, and figuring out how to use them,” Hill writes in her insightful 2012 book, Mr. Putin, Operative in the Kremlin.
Hill lays out how Putin has used this skill to great effect in winning over the Russian political elite as well as its citizens, nearly half of whom still approve of his performance as he approaches the 20th anniversary of his election as president. It’s also quite clear that one of the people with whom Putin has been diligently “working” is President Donald Trump.
The Russian leader has had ample opportunity to work with Trump over the course of more than a dozen phone calls and in-person meetings, including the two-hour private meeting in Helsinki that offered the relaxed, informal setting that Putin prefers. “To be able to work with people effectively,” Putin has said, “you have to be able to establish a dialogue, contact.”
While we know when the two leaders have spoken, including a phone call between Trump and Putin shortly after the Ukraine election is of particular interest to House investigators, we know little about what they have discussed. Even Trump’s former director of national intelligence, Dan Coats, said he did not “fully understand” what the two leaders had discussed privately in Helsinki. But Trump has given us some clues about a frequent topic of conversation.
Putin has repeatedly told Trump that Russia did not interfere in the 2016 U.S. presidential election. “He just — every time he sees me, he says, ‘I didn’t do that.’ And I believe — I really believe that when he tells me that, he means it,” Trump told reporters in 2017. The president went even further the following year in Helsinki when he said he didn’t “see any reason why” Russia would have interfered, citing the Russian president’s “strong and powerful” denial.
Putin has called working with people “the most complicated work on the face of the Earth,” but for an experienced KGB case officer Trump isn’t a tough study. The president’s deep insecurity about being perceived as an illegitimate leader is painfully obvious.
This insecurity is at the root of his false claims about the “millions and millions” of illegal ballots that cost him the popular vote in 2016 or his “massive landslide victory.” Trump cannot stomach the fact that he was elected by a minority of the people.
Nor is the president able to accept the U.S. intelligence community’s assessment that Russia interfered in the 2016 election. A former aide, Hope Hicks, told Special Counsel Robert Mueller’s investigators that whether or not Russia had an impact on the election or not didn’t matter to the president because “people would think Russia helped him win.” Hicks astutely described the intelligence assessment as Trump’s “Achilles heel.”
Another leader might let the matter drop, but a former KGB case officer recognizes the issue of election interference – the very same one the U.S. intelligence community found Putin ordered — is a vulnerability he can skillfully exploit. It provides an opportunity for the Russian president to create the shared understanding necessary to “achieve results,” in working with people. “You need to make that person an ally,” Putin has said, “you have to make that person feel that you and he have something that unites you, that you have common goals.”
It’s not hard to see how destructive this shared understanding that Russia didn’t interfere in the election has been to Trump’s presidency. The July 25 phone call with Ukrainian President Volodmyr Zelensky that is at the heart of the House impeachment inquiry was in part an attempt by Trump to cast doubt on Russian interference. Similarly, Trump’s potentially criminal efforts to obstruct his own Justice Department’s investigation into Russian interference are the fruits of the poisoned seeds planted and carefully nurtured by Putin.
After the uproar over Trump’s comments in Helsinki, which he swiftly walked back, the president no longer publicly voices his doubts about Russian interference. He leaves it to surrogates like Republican Senator John Kennedy of Louisiana, who show loyalty to the president by voicing his feelings. Asked recently whether it was Russia or Ukraine that hacked the computer servers of the Democratic National Committee, Kennedy replied, “I don’t know, nor do you, nor do any others.”
Likewise, Hill called out Republican members of the intelligence committee for suggesting that Russia did not attack the election but somehow Ukraine did. “This is a fictional narrative that has been perpetrated and propagated by the Russian Security Services themselves,” she said.
Hill stopped short of accusing the Trump of serving the Kremlin’s interests for fear of creating more fodder that the Russians could use against American democracy in 2020.
At the same time, she made it perfectly clear that anyone who pushes the debunked theory that Ukraine interfered in the 2016 presidential election – as Trump did on Fox & Friends the day after Hill testified — is serving Russia’s interests.
Surely, not even Putin could have imagined the uproar that would flow from his shared understanding with the American president, but the upcoming impeachment vote in Congress is in no small measure a testament to the remarkable power of Putin’s skills at “working with people.”
The Problem with “Letting the Voters Decide” about Donald Trump
Nikki Haley, the former South Carolina governor and President Trump’s former UN ambassador, is out with a new book this week. Casting her lot with Trump and his base, Haley says she doesn’t think her former boss has done anything to merit impeachment.
“There’s just nothing impeachable there, and more than that, I think the biggest thing that bothers me is the American people should decide this. Why do we have a bunch of people in Congress making this decision?” Haley told CBS’ Norah O’Donnell.
Ralph Reed, the former executive director of the Christian Coalition who was so fond of telling us during the Clinton impeachment hearings that “character matters,” agrees with Haley.
“Let the voters decide who should be president! This impeachment inquiry is a sham and is an attack on our democracy,” Reed tweeted.
“Let the voters decide” is fast becoming the impeachment battle cry of Trump and his band of loyal Republicans who say the president’s only real “crime” was winning the 2016 election.
But Trump’s defenders have it backwards. Impeachment is the only remedy left for a president who has welcomed, solicited, and extorted foreign interference in our elections. Letting the voters decide is a fine idea when elections are free and fair, but there is simply no guarantee that an election will be free and fair as long as Trump’s name is on the ballot.
The framers of the Constitution worried about foreign interference in elections, which they saw as chief among “the most deadly adversaries of republican government.” But the framers surely never anticipated a president like Trump who would make foreign interference in domestic politics an element of his statecraft.
As the impeachment inquiry in Congress has made painfully clear, the scheme that Trump and his personal lawyer, Rudy Giuliani, cooked up in Ukraine took advantage of a beleaguered country’s need for help battling Russian invaders and sought to use it for Trump’s political advantage back home. Congressionally-appropriated money for Javelin anti-tank weapons was held hostage as the White House tried to coerce Ukraine’s new president into announcing an investigation of a company connected to Joe Biden’s son.
To be sure, politics is a dirty business and candidates have been slinging mud in elections for as long as we’ve had them. But using the power of the presidency to coerce a shaky democracy into investigating the family of a political opponent is so breathtakingly corrupt that it manages to undermine American democracy, damage the rule of law, weaken a U.S. ally, and undermine our national security all at the same time.
The cry of “let the voters decide” signals a retreat to safer ground from the earlier, now abandoned position that no such quid pro quo occurred. An anonymous whistleblower followed by a parade of current and former members of the administration who defied the White House told Congress a sordid story about the administration’s shady goings-on in Ukraine. That led Gordon Sondland, a hotelier who serves as Trump’s ambassador to the European Union, to “refresh” his recollection and concede, contrary to his earlier denials, that not only was there an ultimatum given to Ukraine, but he was the one who had delivered it.
Letting the voters decide might be a plausible if Ukraine were the only instance of foreign interference in a Trump election, but it isn’t. Russia interfered in the 2016 election in what Special Counsel Robert Mueller called a “sweeping and systematic fashion” to help elect Trump, and the campaign welcomed some offers of Russian assistance, such as the June 2016 Trump Tower meeting with a Russian attorney whose offer of dirt on Hillary Clinton was described as “part of Russia and its government’s support for Mr. Trump.”
Not much has changed. Offers of help from abroad were still welcome in the Trump campaign, even after Special Counsel Robert Mueller sent Trump’s campaign chairman, his lawyer and a campaign aide to prison for lying about Russia. The president told ABC News’s George Stephanopoulos in June that there was nothing wrong with accepting dirt from foreign governments. “It’s not an interference, they have information — I think I’d take it,” Trump said — a statement that was noted by the anonymous whistleblower in his complaint laying out the details of the president’s efforts to shake down Ukraine.
The trial of Roger Stone, Trump’s longtime political advisor, is a reminder of the lengths the Trump campaign was willing to go in order to benefit from Russian interference in the 2016 election. As early as April 2016, Stone was informing the Trump campaign of upcoming Wikileaks email dumps of emails stolen from the Democratic Party by Russian intelligence. Prosecutors said that Stone repeatedly lied to Congress about his contacts with Wikileaks because “the truth looked bad for the Trump campaign and the truth looked bad for Donald Trump.”
The toxic combination of foreign interference and Trump’s desire to win at all costs also may go a long way to explaining Trump’s strange attraction to tyrants and strongmen like Vladimir Putin. Trump was clearly willing to punish Ukraine because it wasn’t willing to “do us a favor,” as he put it, and help the president politically. Just imagine what Trump would do for a country that did help him win.
As new details emerge, one can’t help but wonder how many other times the Trump White House solicited foreign interference in episodes that we don’t yet know about. How many testimonies collected by Special Counsel Robert Mueller might have been “refreshed” had courageous insiders stood up to Trump’s bullying and blown the whistle? How many witnesses were less than forthcoming because of the intimidation Trump openly directed at those who stood in his way?
In the end, impeachment isn’t about who wins, regardless of what Trump says. It’s about whether Congress believes foreign governments belong in our elections and whether a leader who welcomes help from abroad or tries to extort it is worthy of letting the people cast their votes for him.
On Red Sparrows
“There is a colossal institute of co-opted Soviet girls,” an ex-KGB man told a room full of U.S. senators. “There were many, many co-opted Soviet girls with different appearance, different talents.”
Appearing before the Senate Judiciary Committee that day in 1970 was a KGB defector named Yuri Krotkov, testifying under the alias of George Karlin.
Krotkov, a Soviet screenwriter, playwright and radio correspondent who defected in 1963, called these women “swallows” because like the birds, they are “gentle” and “soft.”
Krotkov said he “recommended” — procured, one might say — “swallows” for the KGB. “The swallows are clever girls,” Krotkov continued, “they want all sorts of jobs with foreigners, they dream about them, even if it is risky, because they hope, they would marry them, maybe they would go abroad.”
One of his swallows became a mistress to Sukarno, the president of Indonesia. Another was used to seduce Maurice Dejean the French ambassador to the Soviet Union from 1955 to 1964.
The goal, Krotkov said, was to use these “swallows” to get these foreigners to do something for the KGB.
Today, these sorts of women are better known as “sparrows,” after the best-selling 2013 book Red Sparrow by former CIA officer Jason Matthews (highly recommended, and the way) and film starring Jennifer Lawrence.
The closest thing we have to a real-life “swallow” or a “sparrow” these days is Maria Butina, the redheaded Russian graduate student who went to prison for acting as a clandestine Russian foreign agent. According to the Justice Department, Butina worked at the direction of a high-level official in the Russian government, Alexander Torshin.
Prosecutors initially accused Butina of offering sex in exchange for a job. That allegation was soon withdrawn, with prosecutors saying they had misread a text.
During her time in the United States, Butina did have affairs well-connected older men, such as Paul Erickson, who helped her gain entree into Republican circles. With help from Erickson, Butina infiltrated the National Rifle Association, met with Donald Trump Jr. at an NRA annual meeting, and came very close to a meeting with President Trump. You can read more about that here.
Another man who had a romantic affair with Butina was Patrick Byrne, then the chief executive of Overtstock.com. You can read what Byrne told me about his relationship with Butina and the FBI here.
A few months ago, I met with Byrne at a hotel in downtown San Diego and he told me a story that, I think, reveals a lot about Maria Butina.
Byrne wrote part of the story last month on his blog, Deep Capture, but his account leaves out what I view as the most revealing part.
In the spring 2018, Byrne was visiting Washington, D.C. when he got a message from Butina. She somehow knew that he was in town and asked to come by his hotel room. Butina had received a master’s degree in international relations from American University and she wanted to show him her diploma. She arrived and after a while pulled out her cellphone and showed him a picture of her transcript.
“…. Then she swiped the screen. I was staring at a subpoena she had received from the Senate Intelligence Committee a few weeks earlier. She told me about being questioned by Senate Intel, about how the forces of the [U.S. government] were closing in on her.”
Missing from that account is something Butina told Byrne in that hotel room. According to Byrne, Butina told him that the Senate Intelligence Committee had spent “about a third of their time” asking about him, Patrick Byrne. “They have a stack of every message, every text, every email we every wrote,” Byrne said Butina told him.
It was the last time Byrne saw Butina. A few weeks later she was arrested on charges of being an unregistered foreign agent. Butina pleaded guilty and was sentenced to 18 months in prison. She was released last month and returned home to Russia where she was welcomed as a hero.
There’s a good reason why Byrne left out the part about the Senate Intelligence Committee asking about him: It wasn’t true.
I checked with Butina’s attorney, Robert Driscoll. Butina’s Senate testimony isn’t public but he had a copy and he reviewed it at my request. “No reference to Patrick after a pretty close skim,” he emailed me.
I relayed this to Byrne:
According to Byrne, he told her to go home to Russia. She told him she couldn’t. If she did, she would serve 15 years in prison. As Butina’s heroic welcoming in Moscow shows, this, too, was a lie. He told her to go to the FBI. She said that, as a Russian, she couldn’t.
Some will no doubt say that perhaps Byrne was lying. I don’t think so. When he told me this story, he seemed to believe it. Even so, he encouraged me to go check this account with Driscoll. That’s not something a liar would do.
I think Butina told Byrne a well-crafted lie. Since her testimony was sealed, she knew whatever she told Byrne about would be impossible to verify. Also, it’s no secret that Byrne saw himself at the center of various intrigues. Thus, it was a lie that he would be likely to accept without much fuss.
The question is why. Why would Butina lie to Byrne? Why was she using him and what for? Had someone told her to make this approach Byrne? Did she hope to provoke a reaction? Did she know that Byrne was talking to the FBI?
I wrote Butina several letters in prison to see if she was willing to talk about this. She never responded. As often happens with intelligence-related matters, we are left with more questions than answers.
But it’s a revealing glimpse into the world of woman who was much more than a foreign grad student. A “sparrow” or a “swallow” was a beautiful seductress. Maria Butina was using her brains as well as her body.
The Origins of the Internet Research Agency
The Internet troll factory in St. Petersburg was a surprise to Americans during the 2016 election. In Russia, it was an open secret from its very inception.
Payments Weekly and Free Food!!!
In August 2013, an intriguing posting for jobs in St. Petersburg, Russia appeared on social networks:
“Internet operators wanted! Work in a chic office in OLGINO!!!! (m. Old Village), payment 25,960 rubles per month. Objective: posting comments on specialized Internet sites, writing thematic posts, blogs, social networks. Screenshot reports. The work schedule is selected individually <….> Payment is weekly, 1,180 per shift (from 8:00 to 16:00, from 10:30 to 18:30, from 14:00 to 22:00). PAYMENTS WEEKLY AND FREE FOOD !!! Official or contractual employment (optional). Training offered! ”
Novaya Gazeta, the fiercely independent Russian newspaper, sent one of its correspondents to find out what it was all about.
Their queries took them to an address in Olgino, a historical neighborhood in St. Petersburg.
The Novaya Gazeta reporters were told they would be required to write 100 comments a day on specified articles. As an example, the reporters were told to write that the recently concluded G-20 summit in St. Petersburg was a great honor for Russia.
The goal was to increase the visibility of these articles in the same way that writing reviews on Amazon boosted product sales, the reporters were told. Robots could do the job, but the sites often blocked them so it was decided to have humans do the work.
Within a few years it would be wreaking havoc in elections around the world, but even in its early days, the group had bigger plans.
It was in the process of recruiting people for an even bigger project that would begin in 2014.
The name of the business was the Internet Research Agency.
“Masha Hari”
The Novaya Gazeta reporters were able to figure out who was behind the Internet Research Agency almost immediately because they recognized a former colleague.
Her name was Maria Kuprashevich (Марию Купрашевич).
The reporters knew Kuprashevich because she had been sent undercover to work in the advertising department at their newspaper, Novaya Gazeta.
In fact, Kuprashevich worked in the PR department of Concord Catering, a company owned by Yevgeny V. Prigozhin, the oligarch known as “Putin’s chef.” Novaya Gazeta dubbed her “Masha Hari” after the famous woman who spied for Germany during World War I.
Prigozhin was a convicted criminal whose connections ran all the way to the top chain of Russian command. Prigozhin had been found guilty of robbery and was a member of an organized crime group that practiced fraud and involved “minors in prostitution,” as I wrote in Trump/Russia:
He served nine years in prison and was released in 1990, opening a hot dog stand as the Soviet Union collapsed around him. He then managed a chain of grocery stores and in 1997 opened a restaurant in an old ship called New Island that became one of St. Petersburg’s hottest restaurants. And it was through that restaurant that Prigozhin not only became wealthy, but fell into Putin’s inner circle.
Russian president Vladimir Putin dined at New Island with French president Jacques Chirac in the summer of 2001. Prigozhin personally served the two heads of state. Putin not only became a regular at New Island, but Prigozhin became the Russian president’s favored caterer, which earned him his derisive nickname. He was awarded lucrative contracts to provide lunches to Moscow schoolchildren and feed Russian soldiers.
In return, the Kremlin called on him to perform jobs that it did not want attributed to the state.
Facing West
The first Western journalist to take note of the Internet Research Agency was Max Seddon, then writing for Buzzfeed (now with The Financial Times).
Seddon got hold of internal organization documents posted online by anonymous hackers.
Seddon’s June 2014 story in Buzzfeed showed that the organization was reaching far beyond Russia’s borders. In the internal documents were guidelines on posting in the comments sections of Fox News, The Huffington Post, The Blaze, Politico, and WorldNetDaily.
Few, however, were paying attention.
By the time Seddon’s story ran, the Internet Research Agency had upgraded to a four-story office building on Savushkina Street in St. Petersburg and the troll factory was in full operation.
IRA employees known as “specialists” were expected to create false online personas on these sites known as “sock puppet” accounts complete with fake names and photos.
Specialists had to maintain six Facebook accounts publishing at least three posts a day and discussing the news in groups at least twice a day. By the end of the first month, they were expected to have won 500 subscribers and get at least five posts on each item a day. On Twitter, the were expected to manage 10 accounts with up to 2,000 followers and tweet 50 times a day.
“We had to write ‘ordinary posts’, about making cakes or music tracks we liked, but then every now and then throw in a political post about how the Kiev government is fascist, or that sort of thing,” one former employee told The Guardian of London. For this, she was paid 45,000 rubles ($790) a month. English-language trolls could earn up to $1,000 a month.
Working conditions were miserable. Employees were fined for being a few minutes late or not reaching the required number of posts each day. Editors imposed fines if they found posts had been cut and pasted or were ideologically irrelevant.
Another cache of internal documents smuggled out by IRA employees and published by the St. Petersburg publication Moi Region included the following job description:
TROLL. The purpose of the troll is to produce a quarrel which offends his interlocutor. It is worth remembering that trolling is not writing articles to order. It is a deliberate provocation with the goal of ridiculing your opponent.
Cited in Information Wars by Richard Stengel
The organization’s paid trolls were being given specific themes to write about that included the United States.
The USA
US policies are aimed at achieving a unipolar world. They are ready to destroy any country to achieve their goal.
The EU and NATO act on the orders of the United States. Because of this, Europe cannot establish relations with Russia.
The internal problems of the United States are violence, terrorism, obesity—but they try to teach the whole world how to live!
The only thing America ever gave the world was Coca-Cola and that turned out to be poison.
Stengel, Information Wars
Employees told the Russian news site MR-7 that training was provided by a “bearded, intelligent man” who printed out particularly illiterate posts, passed them around and sighed.
Another journalist even managed to film surreptitiously inside the IRA, which looks like any modern office anywhere:
A Troll Abroad
What Seddon other Russian journalists had caught a glimpse of was a much larger story that would only become clear when Special Counsel Robert Mueller indicted the Internet Research Agency and its top officials.
According to the special counsel’s indictment, the Internet Research Agency was already planning on interfering with the 2016 U.S. presidential election by May 2014.
The Internet Research Agency had formed a department that was called, among other things, the “translator project.” Its stated goal was “spread[ing] distrust towards the candidates and the political system in general.”
The translator project focused on the U.S. population and conducted operations on social media platforms such as YouTube, Facebook, Instagram and Twitter.
Two employees traveled to the United States to “gather intelligence” in June 2014, according to an indictment filed by the special counsel’s office. Aleksandra Krylova, the organization’s third-highest ranking employee, and Anna Bogacheva, director of the translator project’s data analysis group, made stops in Nevada, California, New Mexico, Colorado, Illinois, Michigan, Louisiana, Texas, and New York.
Prior to the trip, the two women had worked with their colleagues to plan itineraries and purchase equipment, including “cameras, SIM cards, and drop phones.” They also worked on various “evacuation scenarios” and other security measures for their trip.
Another employee traveled to Atlanta, Georgia in November 2014.
A memo distributed inside troll factory shows how they had used the intelligence gathered from the U.S. trip to formulate angles of attack that were sure to produce a deliberate provocation:
Main idea:
The ongoing series of accidents in the United States, caused by the lack of American authorities concern for the safety of their citizens.
We are forming a negative post condemning the policy of the American authorities.
News:
In Texas, a three-year-old boy died by accidentally shooting himself with a pistol found in a bag.
Theses:
In Houston, a three-year-old boy found a loaded pistol in his mother’s bag and accidentally shot himself in the head. The child was taken to the hospital by helicopter, but it was not possible to save his life.
According to police, the woman left an open bag with weapons on a shelf and for several minutes went into another room. The child somehow took out a bag and found a gun. So far, no charges have been brought in this case, TASS reports.
In the United States, several similar tragedies have recently occurred. So, in January, in the state of Florida, a two-year-old child died by shooting himself in the chest with a pistol, which he found in the interior of the parent’s car. And a few days earlier in Missouri, a five-year-old boy shot his nine-month-old brother from a revolver found at home.
Output:
The irresponsibility of the American authorities, not paying attention to such incidents, leads to accidents. The weapons that every US citizen has (practically) are in the public domain and, as a result, fall into the hands of children.
Instead of protecting the country’s citizens from weapons and drugs, US authorities continue to develop aggression around the world, not paying attention to what is happening inside the country.
A Terrorist Attack in Louisiana?
On September 11, 2014, residents in St. Mary Parish, Louisiana got a disturbing text message: “Toxic fume hazard warning in this area until 1:30 PM. Take Shelter. Check Local Media and columbiachemical.com.”
Twitter accounts were lighting up with reports of an explosion at a Columbia Chemicals plant.
There was even a screenshot of what looked like CNN’s home page, with the plant explosion leading the news.
There was a Wikipedia page, a YouTube video of a man showing his TV screen with masked ISIS fighters next to footage of an explosion. But if anybody bothered to check, there was no explosion; the CNN page, the Wikipedia page, the YouTube video were all fakes.
As Adrian Chen revealed in his incredible story in The New York Times Magazine it was a hoax pulled off by the Internet Research Agency.
This was a modern twist on an old spy game, one that was very familiar to the Office of Strategic Services, the OSS, the World War II predecessor of the Central Intelligence Agency, as I wrote in Trump/Russia:
The OSS didn’t have the benefit of social media, but the operatives in its Morale Operations branch used what they called “rumors” as weapons of war against Nazi Germany. According to a now-declassified 1943 field manual, the OSS developed a special class of gossip called “subversive rumors.”
This form of scuttlebutt could be used “to cause enemy populations to distrust their own news sources” and “to create division among racial, political, [and] religious” groups within a country. Subversive rumors could be used to “create confusion and dismay with a welter of contradictory reports.” The OSS believed that the best fake gossip was simple, plausible, and vivid, the more “strong emotional content” the better. “Rarely can [rumors] by themselves change basic attitudes,” the OSS field manual declared in highlighting the limits of their new word-of-mouth weapon. “Their function is to confirm suspicions and beliefs already latent; to give sense and direction to fears, resentments, or hopes that have been built up by more materialistic causes; to tip the balance when public opinion is in a precarious state.”
The Soviet KGB also understood the nature of rumors. The KGB’s Service A was the unit tasked with running aktivnye meropriiatiia—covert “active measures” designed to sow distrust against the West. One example included developing fraudulent info about FBI and CIA involvement in the assassination of President John F. Kennedy. Another was Operation Infektion, a KGB-planted rumor that the AIDS virus had escaped from a biological weapons lab in Fort Detrick, Maryland. Thousands of people were involved in the active measures operations, which were integrated into the whole of the Soviet government, and they surely would have been familiar to Vladimir Putin, who was just beginning his KGB career in 1980, a time when the CIA estimated that the annual cost of the Soviet Union’s active measures program was no less than $3 billion a year. In the 1990s, the United States asked Russia to stop these rumor campaigns, but Sergei Tretyakov, a high-ranking Russian spy who defected to the United States in 2000, said nothing changed. “Russia is doing everything it can today to embarrass the U.S.,” Tretyakov said in a 2008 book, Comrade J. “Let me repeat this. Russia is doing everything it can today to undermine and embarrass the U.S.”
What the Internet Research Agency really represented was a modern Russian version of the old OSS rumor factory and KGB active measures division. Social media gave the St. Petersburg operatives a power the likes of which neither the OSS nor the KGB could have imagined. The OSS had to send operatives into enemy territory to plant rumors; the KGB planted the AIDS rumor in a newspaper in India. The modern influence operative didn’t have to leave his or her desk in St. Petersburg. In the hands of a spy, Facebook, Twitter, and YouTube were machines for the rapid transmission of rumors. But one needed to flip through the musty pages of the OSS field manual to see how well their creed holds up today, and just how accurately the St. Petersburg troll factory was able to wreak havoc on the American public during the 2016 presidential election.
In February 2016, an outline of themes for future content was circulating inside the Internet Research Agency. The organization’s “specialists” were instructed to post content that focused on “politics in the USA” and to “use any opportunity to criticize Hillary and the rest (except Sanders and Trump—we support them).”
The Internet Research Agency’s sock puppet accounts would produce pro-Trump social media postings, pro-Trump Twitter accounts, pro-Trump rallies, pro-Trump political ads.
By September, the IRA was spending $1.25 million a month on operations on “Project Lakhta,” which involved Russian domestic audiences as well as foreign audiences in the United States and elsewhere.
More than 80 people were working in the American part of the translator project by July 2016 and employees were posting more than 1,000 pieces of content per week, reaching between 20 and 30 million people in the month of September alone.
Conclusions
- When you hear of foreign actors making big plans to influence the West, believe them. Information operations are cheap, and they work.
- It’s fairly easy to figure out who is behind these operations, but in Russia it doesn’t matter which oligarch is behind it. They are proxies for the Kremlin.
- Russian information operations test out strategies and themes and spend years refining them.
- Read critically. Verify everything before you trust it.
Exclusive: Trump/Russia on Manhattan’s E. 64th Street
There’s a single block on Manhattan’s Upper East Side that perfectly embodies the conflicted state of relations between the Trump family and Russia.
The block is East 64th Street in Manhattan between Madison and Fifth avenues, one of the poshest in the city.
Residents and owners have over the years included Trump’s children, the family of Jared Kushner, a Russian oligarch, a Soviet-born billionaire and major GOP donor, and the family of another Russian oligarch friendly with Ivanka.
The story of East 64th Street isn’t a story of collusion over a cup of borrowed sugar, but rather a story about the global elite — people from all over the world who are connected by networks of money, power and influence that concentrate themselves in cities like New York and London.
Just across the street from Central Park, you’ll find the limestone mansion that Trump’s children once called home. Don Junior, Ivanka and Eric Trump moved into 10 E. 64th Street after their mother, Ivana, was granted sole custody in her tumultuous 1992 divorce. Ivana still lives in the building.
Across the street, at 11 E. 64 Street, sits a mansion owned by Oleg Deripaska, the Russian oligarch and aluminum tycoon who has been sanctioned by the U.S. government.
Deripaska’s stake in the building was revealed in a case brought in New York by Alexander Gliklad, who was seeking billions in dollars from Deripaska:
U.S. government sanctions prevent Deripaska from selling the pied-a-terre he purchased a decade ago for $42.5 million from art dealer Alec Wildenstein.
Complicating matters, Deripaska’s house was occupied last year by the ex-wife and children of Roman Abramovich, another Russian oligarch connected to Putin who is perhaps best known for his ownership of London’s Chelsea Football Club.
Dasha Zhukova, Abramovich’s ex-wife, listed her address as 11 East 64th Street on this New York City property record a year ago:
Perhaps not coincidentally, Dasha Zhukova happens to be good friends with Ivanka Trump. The two women have known each other for more than a decade and were photographed together at the U.S. Open tennis tournament during the 2016 presidential election. Abramovich and Kusher have met three to four times in social settings, Bloomberg reported.
Another owner on East 64th Street is Ukrainian-born Len Blavatnick, one of the richest men in the world. Blavatnik spent $90 million to buy a Gilded Age limestone townhouse at 19 E. 64th St.
Blavatnik is a business partner of his 64th Street neighbor, Oleg Deripaska. The two have stakes in Rusal, one of the world’s biggest aluminum producers, although Deripaska was recently forced by the U.S. government to give up control of the company.
One of Rusal’s major shareholders, SUAL Partners Limited, was founded by Blavatnik and the sanctioned Russian oligarch Viktor Vekselberg. Blavatnik resigned from Rusal’s board two days after Donald Trump was elected president.
Blavatnik, who is now a citizen of both Britain and America, donated $1 million donation to Trump’s inauguration
During the 2016 election, Blavatnik contributed another $6.35 million to leading Republican candidates and incumbent senators.
The top recipient was Senate Majority Leader Mitch McConnell, who raked in $2.5 million for his GOP Senate Leadership Fund under the names of two of Blavatnik’s holding companies, Access Industries and AI Altep Holdings.
Marco Rubio’s Conservative Solutions PAC and his Florida First Project received $1.5 million through Blavatnik’s two holding companies. Lindsey Graham of South Carolina received $800,000 from Blavatnik’s company. Ohio Governor John Kasich took $250,000 from Blavatnik and Arizona Senator John McCain another $200,000.
Blavatnik had tried to buy 19 E. 64th St. for years. He even sued the previous owners, the Wildenstein family, when an earlier deal fell through. His lawsuit describes the building in almost loving terms:
The Kushners long had a presence on the block as well. A family company purchased 26 E. 64th Street in 1989 and sold it 2007, the same year that Jared met Ivanka.
Finally, the last person I could find connected to Trump on this fascinating block was Verina Hixon, who used to rent an apartment at 14 E. 64th Street. She was kicked out for nonpayment of maintenance fees.
Hixon’s story is just as wild as any of her better-known neighbors. The Daily Beast ran a story about her titled “The Party Girl Who Brought Trump to His Knees.”
In 1982, the Austrian-born, Swiss-educated Hixon bought four apartments in Trump Tower for $10 million. The apartments were widely believed to belong to Hixon’s “friend,” John Cody, head of a local Teamsters union that was closely linked to the Cosa Nostra. Cody went to jail, Hixon went bankrupt and lost the Trump Tower apartments.
She found a new home on East 64th Street where she befriended Ivana Trump. Ivana visited Hixon’s $20 million chalet in St. Moritz, Switzerland. Ivana brought along her dachshunds who relieved themselves all over Hixon’s home and that was the end of their friendship.
Exclusive: Who is Sergey Yatsenko?
Anyone who has followed the story of Trump and Russia knows the name of Carter Page, the bullet-headed Trump campaign advisor who became the subject of a top-secret investigation into whether he was or was not a Russian agent.
Less well-known, in fact hardly known at all, is Page’s 59-year-old business associate, Sergey Yatsenko.
In his testimony before the House intelligence committee, Page described Yatsenko as an “old friend” and “an international advisory board member” of his New York-based firm, Global Energy Capital LLC. The Mueller report describes Yatsenko as a “senior advisor” working with Page on a contingency basis.
An examination of Yatsenko’s background reveals more: a wealthy, well-connected man with a past that suggests — but doesn’t prove — connections in Russian intelligence circles. Page didn’t respond to a message left seeking comment; Yatsenko could not be reached.
Page and Yatsenko met while Page was the deputy branch manager of Merrill Lynch’s office in Moscow from 2004-2007. At the time, Page was working on large deals involving the Russian gas giant, Gazprom, “such as buying of a stake in the Sakhalin oil and gas field in the Sea of Okhotsk,” Bloomberg reported.
(Interestingly, Page’s boss at Merrill’s Moscow office, Allen Vine, left in 2006 to work for Suleiman Kerimov, a Kremlin-connected tycoon and member of the upper house of Russia’s parliament who has been sanctioned by the U.S. Treasury.)
When he met Page, Yatsenko was then Gazprom’s deputy chief financial officer. He worked on large deals involving the takeover of Roman Abramovich’s oil giant Sibneft as well as a $200 million loan from Deutsche Bank.
Most interesting to me was Yatsenko’s position on the board of Gazprombank from 2008-2009. Gazprombank has backed projects by Dmitry Firtash, a Ukrainian billionaire, who was indicted in Chicago for bribery. Prosecutors have called Firtash an “upper echelon” associate of Russian organized crime. (Despite its name, Gazprom only holds a minority stake in Gazprombank.)
After leaving Gazprom in 2010, Yatsenko joined forces with Page and relocated to London. He also acquired a small fortune in European real estate.
A £3 million flat in fashionable Chelsea and a £6.2 million six-bedroom home in Kensington are held in the name of Yatsenko’s wife, a banker based in London who specialized in Russian energy deals.
According to sources, Yatsenko’s wife also holds property in the south of France, via a real estate investment company. The property is worth an estimated 3 million Euros.
Russian corporate records show Yatsenko holds a stake in the Severyanin (Northerner) Homeowners Association 31, a corporate town was built in 2006 for top Gazprom employees. Another co-owner is Mikhail Putin, a second cousin of the president, who had worked in Gazprom’s medical department.
Page, by contrast, is a man of limited resources. The Mueller report notes that he was forced to draw down his life savings to support himself and pursue his business. Page represented himself in his now-dismissed lawsuits against the Democratic National Committee and Yahoo! parent Oath Inc. He told the House intelligence committee that, in 2016-17, he was living off passive investments.
The mystery then is what drew Yatsenko into business with a nobody, a man few in the Russian energy sector had ever heard of before he joined the Trump campaign. “I can poll any number of people involved in energy in Russia about Carter Page and they’ll say, You mean Jimmy Carter?’” one veteran Western investor in Russian energy told Politco’s Julia Ioffe.
Could their relationship have something to do with the fact Page had attracted the attention from Russian spies like Alexander Bulatov in 2008 and Victor Podobnyy in 2013, who called Page an “idiot” who got “hooked on Gazprom“?
These links were part of the reason the FBI sought an October 2016 warrant to surveil Page. That warrant has been heavily criticized because it was also partly based on information provided by the former MI6 agent Christopher Steele, who was hired to gather dirt on the Trump campaign. Much of the warrant remains redacted.
An interesting detail is found buried in a Russian public disclosure filed by Gazprombank: Yatsenko graduated in 1984 from Singapore University with a degree in Chinese language.
To anyone who understands life in the former Soviet Union, Yatstenko’s education in Singapore leaps off the page. Studying abroad didn’t just happen for Soviet citizens the way it does in the West, not without approval from the highest circles of power.
Posing as a student was a cover employed by agents of the KGB. A CIA paper noted: “A substantial number of [KGB] students go for a year or more as exchange students or as trainees with Soviet organizations working abroad.”
The year Yatsenko joined Gazprom — 2002 — was a time when the Russian gas giant was heavily recruiting ex-spies. Even the company’s deputy chief executive, Valery Golubev, was an ex-KGB agent.
When Yatsenko left Gazprom in 2010, a curiously-worded report noted that his departure from the company “is most likely connected with the transfer to another job outside the Gazprom group and is not caused by any conflict.”
Yatsenko certainly maintained his influence after partnering up with Page. In December 2016, Yatsenko arranged meetings for Page and Kazakhstan’s ambassador to the United Kingdom, Page told the House intelligence committee.
Yatsenko told Bloomberg he worked with Page to help a Russian investor explore an oil investment in Iraqi Kurdistan, and advising a Chinese investor looking to buy Russian oil assets in Eastern Siberia. There were discussions about natural-gas-powered vehicles in Russia, possibly in partnership with Gazprom, but sanctions put an end to those talks.
“[Page] understands what’s going on in Russia,” Yatsenko told Bloomberg in 2016. “He doesn’t make strong judgments.”
The CEO of Overstock Has More to Say about Maria Butina, the FBI … and Don Jr
Editor’s note: After I published my Q&A with Overstock CEO Patrick Byrne about his relationship with Maria Butina and the FBI, I sent him a link. He responded with additional comments to expand upon and clarify some of the things he said, so I am reposting the entire Q&A with Byrne’s additional comments indicated in bold.
Not long ago, I had an email exchange with Patrick Byrne, the CEO of Overstock.com, about his relationship with Maria Butina, the Russian gun-rights activist who was sentenced to prison after she tried to set up an back-channel between the Trump campaign and the Kremlin.
Byrne told me three high-ranking officials (whom he calls “X,Y, and Z”) in the Obama administration directed him to “resume a romantic relationship” with Butina. He says the Russia investigation started when he contacted the FBI (which he refers to as the “Men in Black”) about Butina in July 2015. Byrne says he has a “non-standard relationship” with the FBI.
I have concerns about Byrne’s credibility, as I noted in a previous post, and I’ve tried, with limited success, to verify his claims. What I’ve been able to confirm is that Byrne and Butina did meet in July 2015, they had a brief romance and they kept in touch until Butina’s arrest three years later.
I spoke to Butina’s attorney, Robert Driscoll, on Sunday, by phone from Tallahassee, Florida, where he was visiting his client in prison. Driscoll has long suspected Byrne was a government informant, but it wasn’t a major focus of his efforts. In a letter last month to the Justice Department, Driscoll noted the government had “flatly denied” his speculation that Byrne was a government informant. He now says believes that Byrne was passing information about his client to the government.
The Justice Department declined my request for comment, although, interestingly, my email was routed to Peter Carr, former spokesman for Special Counsel Robert Mueller’s office. Carr is now with the Office of Professional Responsibility, which will be handling any investigation into Byrne’s claims.
So there things stood until this week, when Byrne’s story took on a life of its own. Overstock issued a press release in which Byrne announced, “I am the notorious ‘missing Chapter 1’ of the Russian investigation.” (The company’s stock fell more than 30 percent on the news.) On Thursday, The New York Times followed up with a story on Byrne’s claims.
I believe people need to hear what Byrne told me — this guy is the CEO of a publicly-traded company, after all — so here goes:
Q. You met Maria Butina at Freedom Fest in July 2015.
A. Correct.
Q. You began dating shortly thereafter.
A. No. We had an intellectual discussion for 90 minutes. She knew all about me already.
She told me there was a circle in Russia of about 150 liberals, from across the Russian power structure, including the oligarchs. They watched my videos on liberalism. They know about my relationship with Milton Friedman. They discuss things I say and write.
I should make clear that Maria is an unusually impressive young woman. Chosen for a school for which 30 brainiac children from across Russian get selected each year. Graduated No. 2 in her class. Super-conversant on the history of liberalism, from the Greeks to Locke and Jefferson. Knows U.S. history and the Constitution better than about 99 percent of millennials. Also, the Greater Moscow Power Lifting Champion (or something like that). I have taught at the university level (teaching fellow at Stanford, visiting prof at Dartmouth), known a lot of smart young people, and she is pretty remarkable. She came across as far more adult and capable than a typical 26-year-old should.
She also told me that General Mikhail Kalashnikov had started a gun rights group in Russia [Право на Оружие — Right to Bear Arms]. But the main function of the group was really to be a club for liberals. “Believe it or not, Dr. Byrne, General Kalashnikov was a liberal, too!” Maria told me.
And he had selected he had selected her to lead it.
“Do you know what this means in our culture, Dr. Byrne, that a man like General Kalishnikov would select a 23-year-old female, to lead such a group?” Maria asked me.
She mentioned that there are 50 oligarchs who run Russia, but seven who really run Russia, and that she, Maria, was well known to four of them. She mentioned that she might end up president of Russia someday. Or that at least there were people grooming her for that.
She took care to explain that they were loyal Russian people, “President Putin is our president, no one is talking about anything inappropriate,” she said.
But they wanted to discuss liberalism, and what a post-Putin age might look like in terms of U.S.-Russian relations.
I’m sensing that this may seem odd to you. It’s no so odd for me. Especially since I started being called this kind of stuff. But even before blockchain. But I already sense that you are one of those guys who rolls his eyes a lot, so I’ll stop there.
They had sent her with a message for me to come to Moscow to speak on Bitcoin, then go to the Altai Mountains to a resort that would be shut down for three days so I could meet with 40-45 people from across the Russian power structure — government, oligarchs — to discuss liberalism, John Stuart Mill, Hayek, and global relations, and what a post-Putin age might look like.
We parted after meeting that day in Vegas, her stipulating that we would text to make future arrangements and that she would be texting me under the guise of us having a romantic relationship.
I reported that night to my clearance authority (where I once kept a low level clearance due to some minor advisory work I do in foreign policy).
I gave a description of the situation and wanted to know:
- May I introduce her to some senior thinkers in the foreign policy establishment (My hope was to Yenta her in to talking to some senior thinkers in the foreign policy establishment whom I know through the Council on Foreign Relations. I thought she would be interesting for someone to spend an afternoon talking to, and perhaps her dreams of a back channel for peace might ring a bell with someone.)
- Is it OK if I travel to Russia on her invitation?
- Or should I cut her out of my life as being a security risk?
I learned later that my report “sent up a flare over Washington” that very night. July 2015: That is when the Russian investigation started, not July 2016. That is the big coverup.
I got contacted by Men In Black (I do not like using the acronym “FBI”). They were unclear, but seemed to suggest that I should learn more then they would decide, but were not sure. It went back and forth for two months.
Meanwhile, Maria was writing me, asking me to Moscow, then Montenegro, then Rome, Paris, etc. Watching my YouTube videos on liberalism. Pretending to be fall in love.
Finally, in September, I sent word to the U.S. government that I was not going to meet Maria again (lest I get in some hassle with the U.S. government) unless I was given the word “Greenlight.” They sent: “Greenlight.”
So I went to meet her for the second time in September 2015 at hotel room in New York City with the idea that we would spend a few days talking, getting to know each other, a possible trip to Russia and the purposes thereof. It was a two-bedroom suite. She arrived first. When I arrived, she made clear immediately (as in, less than three seconds) that she had not been pretending and wanted to make it romantic. I was putty in her hands.
Q. You had done some work for the FBI in the past?
A. I helped the Men in Black twice before.
[Note: Byrne forwarded two links to me. One is a Sports Illustrated story that discusses Byrne’s friendship with ex-NBA player Bison Dele, who disappeared while sailing in the South Pacific in 2002. The other is a link to his talk about naked short selling and corruption on Wall Street, Deepcapturethemovie.com]
I have also had the honor of playing a tiny, tiny role in three peace events in my life. So again, while Maria’s story may seem odd to you, I know that are times where tiny events lead to something good happening. Like peace. I’ve seen it. I know there are a lot of deep thinkers who argue that Maria had to be a Red Sparrow because they have seen the movie. You make your own call.
Q. What happened next with you and Butina?
A. I saw her sporadically (every 4-6 weeks?) from September 2015 through March 2016. Initially my estimation was:
- 66% chance this is an opportunity of some kind. Maybe just getting a chance to preach the gospel of Liberalism and freedom in Russia. Maybe some good contacts. Maybe push the peace ball a couple of yards down the field.
- 33% chance this is a risk
The Men In Black’s lack of responsiveness or concern was odd.
As the September 2015-March 2016 wore on, my estimation changed. Maria was spending less time talking about John Locke and John Stuart Mill, more time talking about the political circles in which she was swanking around.
She let me know [Alexander] Torshin, had told her to focus on Hillary, Rubio, Cruz, and Trump. Whichever of the four won, she was to have a contact in their administration.
[Note: Torshin was the deputy governor of the Central Bank of Russia who prosecutors say was directing Butina’s activities in the United States]
This kind of talk was especially concerning. So the Men in Black’s lack of apparent interest or concern was frustrating to me.
Around February, she asked me to fly to Russia, give a talk in St. Petersburg on Liberalism and Bitcoin, then spend an hour with Putin (who would be in town). The Men in Black studied, came back, said it was too dangerous, don’t go, break up with Maria. So I did. (I was also stage four of two things at once at the time, and they were on the brink of starting to yank out organs, so I was not going to argue.)
The Men in Black then had me get involved with a corruption case involving a federal official. That ran a couple of months. Something deeply unusual and troubling came out of that experience that led me to wonder if I was involved in law enforcement or political espionage.
On July 1, 2016, they came back and said, “What a mistake we made. Russia, Russia, Russia. We want you to know that the U.S. government never asks something like this but we are here to ask you to rekindle a romantic relationship with Maria. The orders are coming from X, Y, and Z.”
[Byrne declined to name these officials.]
“The USA never, ever does this, but these circumstances are so extraordinary, that you are being asked to do this. We want to remind you that you can refuse.”
And the agents were clearly extremely discomfited and unhappy about the whole thing. But the request came from X, Y, and Z.
The Men in Black are extremely honorable, straightforward men (and women), and there was no leering and rubbing of hands with excitement. They were clearly extremely discomfited. They reminded me several times that I could refuse the request (I suspect they were secretly wishing I would refuse it, in fact). No one would think less of me if I refused it, etc. All that kind of stuff. They were quite uncomfortable about it all. But…. X, Y, and Z were sending the request, and it was their job to communicate it. That is the reason I do not like using the initial “FBI” when explaining this. It seems unfair to them. As far as I could tell, they were hijacked from the top.
I decided that I had gotten sucked into what was starting to seem a lot more like political espionage than law enforcement. I knew this was all going to end up in front of a jury, or in television, or in the history books, and I did not want to disgrace our country or Maria by carrying out those orders. I would have if I had thought them legitimate. I’ve done lots of stranger things for our country, related to tracking down Brian William’s murderous brother in Mexico, for example but this smelled like skunk, so I decided to do two things instead:
- Lie to the feds. I would wine and dine and romance Maria, and give the public perception that we were once again romantically involved. I would blow her away with being this unbelievably romantic gentleman to her. I would report that I was back in the saddle, but all the while 100% NEVER TOUCH HER. I knew I had to be 100% pure on that bright line, so when the day came that it was all unearthed (which I knew would happen), the record would show that actually I had not laid a finger on her. (I understand that she and her lawyer have confirmed to other journalists that I was a total, perfect gentleman to her during that second phase we spent time together).
- Set up X,Y, Z for felony charges down the road
Q. You conveyed all of this to the Justice Department, including the name of the three higher-ups in the Obama administration in April 2019?
A. Yes on April 30 I told them all of this, including that the U.S. government had know all about Maria in July 2015 from me, and had known about each of her subsequent meetings (e.g. Don Jr.) before she had them, and had let them all occur.
Q. On May 20, 2016, Butina and Torshin attended the National Rifle Association convention in Louisville, Kentucky and shared a table with Donald Trump Jr. at a private dinner. Is that what you’re talking about?
Editor’s note: In earlier version, Byrne suggested that Butina had made him aware of a possible second meeting between Butina and Don Trump Jr. Butina’s attorney, Robert Driscoll denied that such a meeting took place and, after some back and forth discussions, I gave Byrne an opportunity to revise his answer.
The truth is I am not completely sure, but the answer is, “Most likely.” I will distinguish what I surmise from what I know. And when telling you what I know, I will distinguish between what I know with total confidence, and when I am unusually vague. Please remember that I am somewhat foggy on things come the latter part of March, 2016 and into Spring. Rough time medically.
At some point in the first three months of 2016 Maria spoke of some meeting being arranged/to be arranged with Don Jr. via some of the Republican Party bigwigs with whom she had been schmoozing. In her description, it was to occur in a clandestine manner, it was to occur at a convention of conservatives of some kind, and was to occur somewhere in the South (I vaguely but not confidently remember “Tennessee”). It was not clear how stable or firm a plan it was, but it was clear that she had her Republican big shots working it.
Something I do remember with total clarity, however, is that the Men In Black were completely disinterested and indifferent. I was perplexed: I offered to whisk her off to somewhere exotic instead just to block such a meeting. They consulted then returned with this answer: We’re just going to let it play out. That is when they told me a fib to keep me in check, along the lines of Sometimes when spies come to the U.S. we might just follow them and see where they go, who they meet…. But I knew there is no way they would do that, certainly not meeting the son of the likely presidential nominee. Not in this case. That, coupled with the fact (not yet explained) that I, around about the same time, had been involved in a corruption matter, and it also played out in a way that seemed fishy, made me think…. they were leaving something out.
Since this all blew up, it may surprise you to know, I have often tried to follow news about this as little as possible, so as to keep my own memory fresh for the day the right people asked me for the truth. Eventually that became impossible, but I tried. So it was only more recently that learned from a news broadcast about Maria (which I have generally avoided, frankly) that among the people she met while here was Don Jr. I could not have told you where until today, when I learned it from your question, that she met Don Jr. in a private dinner in May, 2016, with Torshin. (However, that is not completely true: when I saw Maria some year or more later, I believe she confirmed to me she had met Don Jr. I am not sure, and I never asked the circumstances.)
Was that private meeting she was discussing with me in the first three months of 2016, the one that I remembered being a clandestine meeting at a convention of conservatives somewhere in the South, maybe Tennessee, the private dinner that happened in May at an NRA convention in Kentucky? I can’t be sure, but I would think so. The details match up pretty well. Especially if Driscoll has confirmed she only meeting with Don Jr.
Also…. Did I make clear, Maria and I stopped speaking in early April? I was asked to break it off, I was super-sick, and I did. It was only around July 1 (+/- 7 days?) that the request came to revive things. So we were not in contact while the dinner played out.
However, if it was May, then it happened well after they had made me feel batshit crazy for thinking there might be anything unusual about this Russian grad student, very bright and admirable, but connected to Russian senators and oligarchs, swanking around with big shots who were getting her in touch with the son of the possible next president. Boy, did they gaslight me on that one. They made me feel like some kind of conspiracy nutjob to think that there might be anything problematic about that. Guess the joke was on me.
Anyway, it was shortly after that — the period I was telling them of talk of arrangements being made for her to meet Don Jr., and they were brushing them off as silly to worry about — that she asked me to Russia to speak and meet Putin, and they came back and told me to break it off and get her out of my life. And as I said, I was right in that window that any recrudescence of disease would have led to organs getting pulled out as a next step. So I folded and disappeared from the scene. Probably first or second week of April 2016. I did not see her again until October 2016, I believe.
Q. What happened after you spoke to the Justice Department?
A. I learned that Maria was transferred 9 days later from a SHU unit [solitary confinement] in a prison in Virginia to the nicest women’s camp in the federal system. So I give great compliments to the DOJ. Nothing happens in 9 days normally. But I think they heard my story, checked out some of the basic claims, and moved her out of isolation by the end of the following week (May 9). The following Wednesday they announced John Durham.
[Note: John H. Durham, the U.S. attorney for the District of Connecticut, is investigating the origins of the special counsel’s probe into Russian interference in the 2016 election. News broke about his investigation on May 13. The Washington Post reported that the investigation had begun “in recent weeks.”]
I should make clear that I have no idea what connection there is, if any, between my coming forward and any subsequent events, including Durham’s appointment. I make no claims in that regard. I know only that I spoke twice to the DOJ, on April 5 and 30. I am under the impression that there are numerous other whistle-blowers coming forward, with tales that amount to political espionage conducted not just against Republicans, but against Hillary Clinton, by certain high-level actors (X, Y, and Z). Mine may well be (and probably is) a footnote to a footnote to the whole story. I hope so.
Q. It’s a fascinating story, but I need to report it out. Is there someone who can corroborate this?
Sara Carter has had some recent confirmation from the Department of Justice. I don’t know what your connections are like there, but that’s why you get paid the big bucks! I’m not in the convincing business. I am simply in the business or letting the world know what happened. My rabbi told me “You let feds do fed jobs, you do your job. You are a citizen. Your country is ripping itself in two. Your job is to come forward to the public.” So I have.
[Note: Byrne’s “rabbi” is Warren Buffett. Byrne’s father, John, was the CEO GEICO, one of Buffett’s companies, and Patrick has known Buffett for years.]
I watched this unfold for the last year knowing I had a lot of the answers, and in late June decided (and was advised by my rabbi) that I had a moral duty to come forward. So I have. It is proving interesting to see how long it takes the world to get it.
Ok, Seth, I have qualms. From what you have written so far, I fear that when you learn the full truth you will seek to distort it because it conflicts with some things you have written so far. On the other hand, I have it on good authority that you are a legitimate, honest reporter. I have given you a ton. I have a mountain more. Let us see how you represent what I have told you before going any further.
OK, signing off for now. Busy week ahead.
Overstock CEO Patrick Byrne on Maria Butina and the FBI
“July 2015: That is when the Russian investigation started, not July 2016. That is the big coverup.”
Editor’s note: There is an updated version of this post available here.
Not long ago, I had an email exchange with Patrick Byrne, the CEO of Overstock.com, about his relationship with Maria Butina, the Russian gun-rights activist who was sentenced to prison after she tried to set up a backchannel between the Trump camapign and the Kremlin.
Byrne told me three high-ranking officials (whom he calls “X,Y, and Z”) in the Obama administration directed him to “resume a romantic relationship” with Butina. He says the Russia investigation started when he contacted the FBI (which he refers to as the “Men in Black”) about Butina in July 2015. Byrne says he has a “non-standard relationship” with the FBI.
I have concerns about Byrne’s credibility, as I noted in a previous post, and I’ve tried, with limited success, to verify his claims. What I’ve been able to confirm is that Byrne and Butina did meet in July 2015. Butina’s attorney, Robert Driscoll, has confirmed that they did have a romantic relationship. Driscoll also says the government “flatly denied” his speculation that Byrne was a government informant.
The Justice Department declined my request for comment, although, interestingly, my email was routed to Peter Carr, former spokesman for Special Counsel Robert Mueller’s office. Carr is now with the Office of Professional Responsibility, which will be handling any investigation into Byrne’s claims.
So there things stood until this week, when Byrne’s story took on a life of its own. Overstock issued a press release in which Byrne announced, “I am the notorious ‘missing Chapter 1’ of the Russian investigation.” (The company’s stock fell more than 30 percent on the news.) On Thursday, The New York Times followed up with a story on Byrne’s claims.
I believe people need to hear what Byrne told me, so here goes:
Q. You met Maria Butina at Freedom Fest in July 2015.
A. Correct.
Q. You began dating shortly thereafter.
A. No. We had an intellectual discussion for 90 minutes. She knew all about me already.
She told me there was a circle in Russia of about 150 liberals, from across the Russian power structure, including the oligarchs. They watched my videos on liberalism. They know about my relationship with Milton Friedman. They discuss things I say and write.
They had sent her with a message for me to come to Moscow to speak on Bitcoin, then go to the Altai Mountains to a resort that would be shut down for three days so I could meet with 40-45 people from across the Russian power structure — government, oligarchs — to discuss liberalism, John Stuart Mill, Hayek, etc.
We parted after meeting that day in Vegas, her stipulating that we would text to make future arrangements and that she would be texting me under the guise of us having a romantic relationship.
I reported that night to my clearance authority (where I once kept a low level clearance due to some minor advisory work I do in foreign policy).
I gave a description of the situation and wanted to know:
- May I introduce her to some senior thinkers in the foreign policy establishment (My hope was to Yenta her in to talking to some senior thinkers in the foreign policy establishment whom I know through the Council on Foreign Relations. I thought she would be interesting for someone to spend an afternoon talking to, and perhaps her dreams of a back channel for peace might ring a bell with someone.)
- Is it OK if I travel to Russia on her invitation?
- Or should I cut her out of my life as being a security risk?
I learned later that my report “sent up a flare over Washington” that very night. July 2015: That is when the Russian investigation started, not July 2016. That is the big coverup.
I got contacted by Men In Black (I do not like using the acronym “FBI”). They were unclear, but seemed to suggest that I should learn more then they would decide, but were not sure. It went back and forth for two weeks.
Meanwhile, Maria was writing me, asking me to Moscow, then Montenegro, then Rome, Paris, etc. Watching my YouTube videos on liberalism. Pretending to be in love.
Finally, in September, I sent word to the U.S. government that I was not going to meet Maria again (lest I get in some hassle with the U.S. government) unless I was given the word “Greenlight.” They sent: “Greenlight.”
So I went to meet her for the second time in September 2015 at hotel room in New York City with the idea that we would spend a few days talking, getting to know each other, a possible trip to Russia and the purposes thereof. It was a two-bedroom suite. She arrived first. When I arrived, she made clear immediately (as in, less than three seconds) that she had not been pretending and wanted to make it romantic. I was putty in her hands.
Q. You had done some work for the FBI in the past?
A. I helped the Men in Black twice before.
[Note: Byrne forwarded two links to me. One is a Sports Illustrated story that discusses Byrne’s friendship with ex-NBA player Bison Dele, who disappeared while sailing in the South Pacific in 2002. The other is a link to his talk about naked short selling and corruption on Wall Street, Deepcapturethemovie.com]
Q. What happened next with you and Butina?
A. I saw her sporadically (every 4-6 weeks?) from September 2015 through March 2016. Initially my estimation was:
- 66% chance this is an opportunity of some kind. Maybe just getting a chance to preach the gospel of Liberalism and freedom in Russia. Maybe some good contacts. Maybe push the peace ball a couple of yards down the field.
- 33% chance this is a risk
The Men In Black’s lack of responsiveness or concern was odd.
As the September 2015-March 2016 wore on, my estimation changed. Maria was spending less time talking about John Locke and John Stuart Mill, more time talking about the political circles in which she was swanking around.
She let me know [Alexander] Torshin, had told her to focus on Hillary, Rubio, Cruz, and Trump. Whichever of the four won, she was to have a contact in their administration.
[Note: Torshin was the deputy governor of the Central Bank of Russia who prosecutors say was directing Butina’s activities in the United States]
This kind of talk was especially concerning. So the Men in Black’s lack of apparent interest or concern was frustrating to me.
Around February, she asked me to fly to Russia, give a talk in St. Petersburg on Liberalism and Bitcoin, then spend an hour with Putin (who would be in town). The Men in Black studied, came back, said it was too dangerous, don’t go, break up with Maria. So I did. (I was also stage four of two things at once at the time, and they were on the brink of starting to yank out organs, so I was not going to argue.)
The Men in Black then had me get involved with a corruption case involving a federal official. That ran a couple of months. Something deeply unusual and troubling came out of that experience that led me to wonder if I was involved in law enforcement or political espionage.
On July 1, 2016, they came back and said, “What a mistake we made. Russia, Russia, Russia. We want you to know that the U.S. government never asks something like this but we are here to ask you to rekindle a romantic relationship with Maria. The orders are coming from X, Y, and Z.”
[Byrne declined to name these officials.]
“The USA never, ever does this, but these circumstances are so extraordinary, that you are being asked to do this. We want to remind you that you can refuse.”
And the agents were clearly extremely discomfitted and unhappy about the whole thing. But the request came from X, Y, and Z.
I decided that I had gotten sucked into what was starting to seem a lot more like political espionage than law enforcement. I knew this was all going to end up in front of a jury, or in television, or in the history books, and I did not want to disgrace our country or Maria by carrying out those orders. I would have if I had thought them legitimate. I’ve done lots of stranger things for our country, but this smelled like skunk, so I decided to do two things instead:
- Lie to the feds. I would wine and dine and romance Maria, and give the public perception that we were once again romantically involved. I would blow her away with being this unbelievably romantic gentleman to her. I would report that I was back in the saddle, but all the while 100% NEVER TOUCH HER. I knew I had to be 100% pure on that bright line, so when the day came that it was all unearthed (which I knew would happen), the record would show that actually I had not laid a finger on her. (I understand that she and her lawyer have confirmed to other journalists that I was a total gentleman to her).
- Set up X,Y, Z for felony charges down the road
Q. You conveyed all of this to the Justice Department, including the name of the three higher-ups in the Obama administration in April 2019?
A. Yes on April 30 I told them all of this, including that the U.S. government had know all about Maria in July 2015 from me, and had known about each of her subsequent meetings (e.g. Don Jr.) before she had them, and had let them all occur.
[Note: On May 20, 2016, Butina and Torshin attended the National Rifle Association convention in Louisville, Kentucky and shared a table with Donald Trump Jr. at a private dinner.]
I learned that Maria was transferred 9 days later from a SHU unit [solitary confinement] in a prison in Virginia to the nicest women’s camp in the federal system. So I give great compliments to the DOJ. Nothing happens in 9 days normally. But I think they heard my story, checked out some of the basic claims, and moved her out of isolation by the end of the following week (May 9). The following Wednesday they announced John Durham.
[Note: John H. Durham, the U.S. attorney for the District of Connecticut, is investingating the origins of the special counsel’s probe into Russian interference in the 2016 election. News broke about his investigation on May 13. The Washington Post reported that the investigation had been picked “in recent weeks.”]
Q. It’s a fascinating story, but I need to report it out. Is there someone who can corroborate this?
Sara Carter has had some recent confirmation from the Department of Justice. I don’t know what your connections are like there, but that’s why you get paid the big bucks! I’m not in the convincing business. I am simply in the business or letting the world know what happend.
I watched this unfold for the last year knowing I had a lot of the answers, and in late June decided (and was advised by my rabbi) that I had a moral duty to come forward. So I have. It is proving interesting to see how long it takes the world to get it.
[Note: Byrne’s “rabbi” is Warren Buffett. Byrne’s father, John, was the CEO GEICO, one of Buffett’s companies, and Patrick has known Buffett for years.)
Ok, Seth, I have qualms. From what you have written so far, I fear that when you learn the full truth you will seek to distort it because it conflicts with some things you have written so far. On the other hand, I have it on good authority that you are a legitimate, honest reporter. I have given you a ton. I have a mountain more. Let us see how you represent what I have told you before going any further.
The Strange Case of Eurotech
The company that links Paul Manafort, Anthony Pellicano, the Mafia, and action star Steven Seagal
Bruce Bigelow was a San Diego journalist and friend of mine who sadly passed away after a hiking trip in Utah at the age of 63.
A few weeks before his untimely death last year, Bruce and I shared a beer at a local bar in San Diego with game three of the NBA finals playing the background.
Bruce had spotted my book in Barnes & Noble and he wanted to catch up. He also had a story he wanted to share with me about a strange little company in San Diego that tried to sell the finest in Soviet technology.
Eurotech, Ltd. was trying to bring to market a foam that that had been developed in Russia and used to control the nuclear disaster at Chernobyl’s Reactor No. 4.
It might sound like the setup for a bad joke but Eurotech had convinced some investors to part with their money. The company’s shares had soared more than 800 percent in a few months from 1996 to January 1997. “Not bad for an enterprise with no sales, four employees and a strategy focused on striking deals in the risky, raucous business world of Russia,” as Bruce put it in his story.
At first glance, Eurotech seemed respectable. The chairman of the publicly-traded company was James D. Watkins, a retired Navy admiral and former chief of Navy operations who had served as energy secretary in the first Bush administration.
Things were less clear on close inspection. One Eurotech board member, Karl Krobath, was a business advisor to Nordex GmbH. That’s a name that ran alarm bells in the CIA in the 1990s, which suspected Nordex of smuggling drugs, weapons, and even nuclear technology for the Russian Mafia. Eurotech also was introducing automated parking garage technology in Moscow’s Arbat district in partnership with the notoriously corrupt local mayor’s office.
To Bruce, Eurotech looked like a classic “pump-and-dump” stock scam, where a company cashes out on sales of illegally inflated stocks. Eurotech’s shares were sold in private placements that evaded disclosure to the U.S. Securities and Exchange. As readers of my book know, this is the same murky world that Felix Sater operated in the 1990s in his days at the Mafia-linked White Rock Partners.
Bruce did a little digging and learned that no one working at Chernobyl had ever heard of Eurotech or its foam, called Ekor, and the company’s claims that it was part of a $3.1 billion cleanup was dubious, at best.
Bruce’s story, which ran in February 1997, left a mark. The Nordex advisor left the board followed shortly by the rest of the board and the company moved to Virginia.
A few days after Bruce’s story ran, he noticed someone sitting in a car parked on the street outside his house. The car stayed around for several days. An editor told Bruce he was just being paranoid.
Around the same time, he got a call from a private investigator in Los Angeles, who told Bruce that he was taking over press operations for Eurotech. If he had any questions for the company, this investigator told Bruce, he was the man to call.
I asked Bruce if he felt threatened. “No, it was just qualitatively different,” he told me. “This was not a typical PR/marketing firm. So it felt more intimidating in that sense.”
The private eye’s name was Anthony Pellicano.
*
I wrote to Pellicano at the Terminal Island prison in San Pedro where he was serving his 15-year sentence on 78 counts of wiretapping, racketeering, conspiracy and wire fraud.
Pellicano didn’t know anything about who was parked outside Bruce’s house and barely remembered Eurotech except for a possible connection to the mayor of Moscow, Yuri Luzhkov.
But Pellicano has other interesting ties to the Eurotech story.
His case unraveled in 2002 when Los Angeles Times journalist Anita Busch walked out to her car to find a dead fish with a red rose in its mouth on the cracked windshield along with a note that read “Stop.” Busch believed that the threat was related to a story she was working on involving a dispute between actor Steven Seagal and his former producer, Julius R. Nasso. The FBI soon learned that Pellicano was behind the fish incident. Seagal was one of Pellicano’s clients.
Nasso, an associate of the Gambino organized crime family, had produced 10 films starring Seagal, including On Deadly Ground and Under Siege 2, and Out for Justice but their relationship ended in 1999. Nasso sued Seagal for $60 million.
(Interestingly, Nasso has an uncle, also named Julius Nasso, who ran a concrete company that partnered with S&A Concrete, the Mob-connected firm that built Trump Tower.)
Seagal claims that in February 2001 he was visiting Nasso in Brooklyn when he was ordered into a car and ushered into the back room of a Brooklyn steakhouse, Gage & Tollner. There, Seagal was threatened by a Gambino family captain, who told Seagal that he would be required to pay earnings from his movies to Nasso. The feds were listening in and the extortion plot got Nasso sentenced to prison for a year.
Around the same time of Seagal’s back room meeting in the steakhouse, Nasso purchased 500,000 shares of Eurotech at 33 cents a share.
How did Nasso come to learn about this company trying to market Russian foam? Probably through his friend and partner, Paul Manafort.
*
In January 2001, Eurotech agreed to pay Paul Manafort $300,000 a year to help it bring its superfoam to market. Eurotech subsequently hired Davis Manafort to raise capital on its behalf in exchange for a 4 percent finder’s fee. The guy who hired Trump’s future campaign chairman was the late Don Hahnfeldt, a one-time Florida lawmaker.
In addition, Manafort acquired 2,500,000 shares of Eurotech at 33 1/3 cents per share, through one of his companies, John Hannah LLC.
That name might ring a bell. John Hannah LLC is the same company that paid $3.675 million in 2006 for Manafort’s apartment 43G in Trump Tower.
On the same day that Manafort acquired his shares in Eurotech, Julius Nasso also acquired 500,000 shares in the company.
Nasso and Manafort, along with producer Paul Cohen and actor Danny Aiello, were partners together in a short-lived film production and distribution company formed in 2001 called Manhattan Pictures International. Another investor in Manhattan Pictures was Fred Trump’s right-hand man, Brad Zackson.
Manafort apparently saw film making as a natural extension of his work representing corrupt dictators around the world like Ferdinand Marcos and Mobutu Sese Seko.
“In many respects, a lot of what makes a film successful also makes lobbying successful,” Manafort told the New York Daily News. “You need to understand the demographics of the country whether it’s a candidate or a motion picture. In films, like successful campaigns, you need to know how to create messages.”
The company produced Enigma, starring Kate Winslet, and a few other films and then shut down.
During a search of Paul Manafort’s storage locker, the FBI came across some boxes relating to Manhattan Pictures and Julius Nasso.
Manafort is now in prison. Nasso, out of prison, is back producing movies. And his old friend Steven Seagal has gotten very, very close to the president of Russia. He’s now Vladimir Putin’s special envoy to the United States.
Who is Aron Shaviv?
Updates with additional background.
The name of Aron Shaviv, a British-born Israeli campaign consultant with an impressive resume, has surfaced lately in investigations of underhanded election plots by Russia.
The Senate Intelligence Committee recently took an interest in Mr. Shaviv as part of its investigation into the Trump campaign’s ties to the Russian government.
According to a scoop by independent journalist Scott Stedman, Shaviv’s name was mentioned in a subpoena issued in April 2019 by the Senate Intelligence Committee to Walter Soriano, a British security consultant whose connections to Israeli intelligence and Russian oligarchs was the subject of one of my previous posts.
On his website, Shaviv claims to have helped elect 14 heads of state, including Israeli Prime Minister Benjamin Netanyahu.
It’s unknown whether Shaviv did any work for the Trump campaign or why the Senate Intelligence Committee is interested in him. But that isn’t the end of his problems.
One country that’s absent from Shaviv’s impressive roster of clients is the tiny Balkan state of Montenegro. Shaviv was the chief consultant for the pro-Russian party Democratic Front in the 2016 Montenegrin parliamentary elections.
My friend Alon Eisenberg pointed me to a report this week in The Times of Israel that suggested Shaviv had another, less overt mission there. According to prosecutors in Montenegro, Shaviv took part in a plot led by two Russian military intelligence officers to overthrow Montenegro’s government and stop it from joining NATO. Police broke up the plot on the eve of the country’s parliamentary elections.
Shaviv’s partner in this was an ex-CIA officer named Joseph Assad, who was working as Shaviv’s security consultant. Prosecutors suspected that Assad’s real job in Montenegro was to help coup plotters flee the country after assassinating the country’s prime minister, The New York Times reported.
“During the investigation that was launched against Joseph Assad and eight others for creating a criminal organization and attempting terrorism, the prosecutors found evidence that Shaviv, a UK and Israeli citizen, also committed a crime. So we have ordered an extension of the investigation,” Cadjenovic told Balkan Insight.
In the run up to the Montenegrin parliamentary elections, one of Shaviv’s companies received 1.5 million Euros from a Czech company — codenamed “S.” The Czech company’s CEO and representatives are Russian, Cadjenovic said. Assad was paid out of this fund.
Four men identified as ex-FBI agents are also said to be under investigation for their role in the attempted coup backed by Russia.
Shaviv was born in Oxford, England in 1979 and made aliyah to Israel as a teenager. He became a captain in the Israeli Defense Forces and served as a “field agent for a civilian intelligence agency,” according to an archived version of his company’s website.
Shaviv got his start in politics in 2006 working for Avigdor Lieberman, an influential Israeli politician who has long been investigated — but never charged — for receiving millions of dollars from Russian oligarchs like the notorious Michael Cherney and others connected to Vladimir Putin.
While working in government for Lieberman, then the minister of strategic affairs, Shaviv set up a private consulting firm, Shaviv Strategy & Campaigns, began consulting for politicians throughout Europe and Africa. Shaviv’s clients include past and current presidents and prime ministers of Israel, Thailand, Cambodia, Poland, Romania, Kenya, Congo, Bulgaria, Cyprus, Serbia and the European Commission, according to the company’s website, which also cites its work for U.S. presidential elections.
In 2012, Shaviv played a role in the U.S. presidential election. He ran iVoteIsrael, which sought to get U.S. citizens living in Israel to vote in the American election with messages like this:
Shaviv said iVoteIsrael received its financial backing from the “[Sheldon] Adelsons of the world.” Reporters found that iVoteIsrael’s corporate filings listed the Manhattan address of the Ronald S. Lauder Foundation. iVoteIsrael claimed 80,000 Americans living in Israel voted in 2012, with the majority overwhelmingly casting ballots for Republican Mitt Romney.
In 2015, Shaviv was campaign manager and chief strategist for Netanyahu’s re-election. As the vote approached, polls showed Netanyahu on the verge of losing. But then on Election Day, in a move straight out of the Cambridge Analytica playbook, Netanyahu bombarded right-wing voters with millions of fearmongering text messages warning them — falsely — that Arabs were going to the polls in “droves.” Netanyahu won.
See this excellent report, featuring Shaviv, on how Netanyahu won:
The iVoteIsrael campaign won Shaviv a political consulting award from Campaigns & Elections and the Netanyahu campaign victory earned him international consultant of the year honors from American Association of Political Consultants.
But Montenegro and his alleged role in an attempted coup has cast a dark shadow over his bright career. He tweeted that he has been “PNGed” — presumably a reference to being made persona non grata — after the alleged coup attempt.
In May 2017, Shaviv said there are two theories about what happened in Montenegro.
“The first theory would be to believe that it is a failed Russian operation involving an Israeli political consultant, a retired Serbian general, a former CIA agent and some villagers with hunting rifles,” a Democratic Front press statement quoted Shaviv as saying.
But, “if there is anything to be learned from the recent past, Russian military operations neither look like that nor fail like that.”
Time to Put a Lie about Felix Sater to Rest (Updated)
Of all the characters in the Trump/Russia saga, few are more fascinating than Felix Sater.
Sater is many things: a Russian emigre, the son of a gangster, an ex-con, and the guy who scouted real estate deals in Moscow for Donald Trump.
He was also a very valuable informant to the U.S. government for many years, as you can see from some photos I recently came across regarding Evgeny Shmykov, an ex-spy who was Sater’s long-time contact in Russia:
The guy that Shmykov stands shoulder-to-shoulder with? That’s Ahmad Shah Massoud, the anti-Taliban leader assassinated right before the 9/11 attacks.
These photos got some attention on Twitter, but as always, whenever Sater’s name comes up, people inevitably connect him to a powerful Russian Mafia boss named Semion Mogilevich, known as “the most dangerous mobster in the world.”
It’s time to put this to rest.
There is no, I repeat, no credible evidence linking Sater to a Russian Mob boss who was on the FBI’s 10 Most Wanted List.
In writing my book, Trump/Russia, I spent quite a bit of time looking for evidence of the Sater-Mogilevich connection. In the end, I concluded that it just wasn’t there. To paraphrase Robert Mueller, if I had found evidence that Sater was connected to Mogilevich, I would so state.
There’s no doubt Sater did have ties to Russian organized crime. Sater’s father, Michael Sheferfofsky, was a Russian gangster who pleaded guilty in 2000 to two counts of extortion for shaking down businesses in Brooklyn.
Update: In her 2020 book, Putin’s People, Catherine Belton wrote that she spoke to two former Mogilevich associates in 2018 who told her that Sater’s father “become an ‘enforcer’ for some of Mogilevich’s interests” in Brighton Beach, Brooklyn. Another British journalist, Paul Wood, told me in 2019 that he spoke with someone from Mogilevich’s organization who told him that there is a link between Sater himself and Mogilevich.
Even so, proof is still lacking. There’s no mention of Mogilevich in Sherorfksy’s criminal file.
So where does this claim come from?
The Sater-Mogilevich link is found in a Supreme Court petition for a writ of certiorari in Palmer v John Doe. 14-676.
This sounds like credible evidence. It’s convinced many people, including me, as my 2017 blog post shows.
The thing is it’s bullshit. Yes, I know. Mea culpa, mea culpa, mea maxima culpa.
While reporting my book, Trump/Russia, I tried to get to the bottom of this. I asked Richard Lerner, the attorney who wrote the Supreme Court petition, how he learned about the Sater-Mogilevich connection.
He somewhat sheepishly admitted that it comes from a website called Deep Capture.
This is where things get weird.
Deep Capture was written by Mark Mitchell, a former editor at Columbia Journalism Review, to “expose the ‘deep capture’ of American institutions by powerful and corrupt financial interests.”
Bankrolling Deep Capture was Patrick Byrne, the CEO of Overstock.com, a publicly-traded online retailer.
Byrne is famous for, among other things, a 2005 conference call with investors that touched on subjects ranging from:
“Miscreants, an unnamed Sith Lord he hopes the feds will bury under a prison, gay bath houses, whether he is gay, does cocaine, both or neither, and an obligatory, not that there is anything wrong with that, phone taps, phone lines misdirected to Mexico, arrested reporters, payoffs, conspiracies, crooks, egomaniacs, fools, paranoia, which newspapers are shills and for who, payoffs, money laundering, his Irish temper, false identities, threats, intimidation, and private investigators,” wrote Mark Cuban, the basketball team owner, investor, and host of Shark Tank.
That’s just a sampling. You can read the full thing here.
Byrne has also accused reporter Bethany McLean of giving Goldman Sachs traders blowjobs and said on live TV that he knew for a fact of a fax machine in the offices of CNBC where every morning hedge funds send in “instructions” for journalists. Authorities at Salt Lake City’s airport arrested him in 2013 when they found a loaded handgun in his carry-on luggage.
Sater is one of Byrne’s “miscreants” who appears as a recurring character in Deep Capture, where he is described to this day as a “Mafia boss” and “a Russian mobster and a member of the Mogilevich organization (controlled by Semion Mogilevich).”
To give you a taste of Deep Capture, check out this now-deleted post that describes … well, just read it for yourself:
A month or so after that, an offshore businessman who had provided some information to our investigation received in the mail a beautiful, lacquered, Russian matryoshka doll. And inside this doll, there was a slip of paper.
On the paper was the letter “F” — with a cross on it. The businessman knew right away that the letter “F” stood for “Felix” – Felix Sater.
The businessman said he had called Felix Sater to see what the deal was with the doll. And after talking to Felix, the businessman invited Patrick Byrne to a greasy spoon diner in Long Island. It was urgent, aid the businessman — so Patrick made haste.
And when Patrick arrived at the diner (along with two other people, who can testify to this) the offshore businessman, discarding with formalities, said, “This meeting can be very short. I have a message for you from Russia.”
The message, said the businessman, was this: “‘We are about to kill you. We are about to kill you.’ Patrick, they are going to kill you – if you do not stop this crusade [the investigation into destructive market manipulation], they will kill you. Normally they’d have already hurt you as a warning, but you’re so weird, they don’t know how you’d react. So their first step is, they’re just going to kill you.”
According to the businessman, this threat had come straight from the mouth of Felix Sater.
Maybe this did happen. Then again, maybe the moon landing was faked. Maybe the Illuminati controls the world. Maybe 9/11 was an inside job.
I’m pretty sure it didn’t happen.
Editor’s note: I am striking my snarky comments because I was wrong. Patrick Byrne has shown me evidence that this conversation did take place. In a recorded 2007 phone call, a transcript of which is in my possession, Byrne’s associate was told: “And there’s a beautiful box and inside is a matryoshka and I opened up the last matryoshka and inside is an F with a cross on it, which is for Felix.” I was also played the recording of this call. A clear threat was relayed to Mr. Byrne, who did not make this story up. I owe him an apology.
Patrick Byrne emailed me August 4 to say:
“For the record, your email reminded me that Felix wrote me once (while I was very ill) and denied being the source of the Russian death threat against me. He was quite gentlemanly, and I think I said I would post it. However, I think I was in a cardiac unit at the time, come to think of it, and it never got done.”
Byrne didn’t answer my questions about what evidence he has for the Sater-Mogilevich connection, which can still be found on his website.
In 2016, a Canadian judge ordered Byrne and Mitchell to pay $1.2 million (Canadian) over published claims that Altaf Nazerali, a Vancouver businessman, was a gangster, an arms dealer, a drug trafficker, a financier of al-Qaida and member of the Russian and Italian Mafias.
Nazerali is mentioned in the deleted post quoted above about Sater and the matryoshka doll. Nazerali is described as a friend of Sater’s, although I’d wager that they never met.
The judge wrote that Mitchell and Byrne “engaged in a calculated and ruthless campaign to inflict as much damage on Mr. Nazerali’s reputation as they could achieve. It is clear on the evidence that their intention was to conduct a vendetta in which the truth about Mr. Nazerali himself was of no consequence.” Read the decision here.
A month before the ruling was issued, Byrne announced he was taking an indefinite personal leave of absence from Overstock.com to battle stage 4 Hepatitis C. He returned to his duties a few months later.
The Supreme Court of Canada dismissed Mitchell and Byrne’s appeal in August 2018 and affirmed a seven-figure award.
Maybe you think Sater a bad guy. Maybe you think he made amends for his criminal past. Either way, a man whose life is far more fascinating than most of ours will ever be doesn’t need to be embellished with fiction.
We’re Responding to Russia. Don’t Tell the President
During the just-concluded G20 summit in Osaka, Japan, President Trump cynically told Russian President Vladimir Putin not to meddle in our elections.
The president might think that the ongoing Russian efforts to interfere in American democracy is all just a big joke. But his administration doesn’t.
It was only a few days earlier that Trump accused The New York Times of a “virtual act of treason” for a June 15 story that revealed that U.S. Cyber Command had placed “implants” — software code that can be used for surveillance or attack — deep inside the Russian electrical grid. Still mad about the story two days later, he tweeted that it was “fake news” and called on the newspaper to release its “phony” sources.
Even Putin was puzzled by the president’s reaction. “I am not sure how we should interpret that — if it means that they disclosed real information or it was a planted story,” he said during his annual “Direct Line” with Russian citizens. “But in any case, we have to respond one way or another; we must understand what this is about.”
Putin was asking the right question. What about the report had prompted the president’s unhinged response? Why was the president so upset about a report that the U.S. government was, after years of inaction, finally fighting back against Russian cyberattacks?
The little-noticed answer lies buried in defense legislation and executive orders signed by Trump himself. Although written in dense bureaucratese, what it says is pretty remarkable: Rather than work with the president when it comes to Russia, Trump’s administration has simply decided to work around him.
Like a parent with a obstinate child, the Trump administration, with an assist from Congress, cut the president out of the decision-making loop on national security decisions involving Russia. The Times, then, was a convenient scapegoat for the president’s impotent fury at his own people.
It’s no secret that Trump has long refused to acknowledge even basic truths about the Russian threat, but the consequences to U.S. national security aren’t so well known.
This definitive report in The Washington Post — based on interviews with more than 50 (!) current and former U.S. officials — described how the intelligence community was structuring the president’s daily brief (PDB) to avoid upsetting Trump.
“If you talk about Russia, meddling, interference — that takes the PDB off the rails,” said a second former senior U.S. intelligence official….
Trump has never convened a Cabinet-level meeting on Russian interference or what to do about it, administration officials said. Although the issue has been discussed at lower levels at the National Security Council, one former high-ranking Trump administration official said there is an unspoken understanding within the NSC that to raise the matter is to acknowledge its validity, which the president would see as an affront.
“Doubting the intelligence, Trump pursues Putin and leaves a Russian threat unchecked,” Greg Miller, Greg Jaffe, Philip Rucker, Dec. 14, 2017.
For far too long, the response to ongoing Russian cyberattacks was a big fat ZERO. That only encouraged Russia and other countries to wreak havoc in cyberspace.
“The warning lights are blinking red again,” Dan Coats, Trump’s own director of national intelligence warned in July 2018. “Today, the digital infrastructure that serves this country is literally under attack.”
Then things started to change.
On August 13, 2018, Trump signed a defense bill that basically gave the U.S. military’s Cyber Command a green light to respond to Russia.
The aptly named John S. McCain National Defense Authorization Act authorized Cyber Command to take “appropriate and proportional” action aimed at disrupting, defeating, and deterring Russian cyberattacks, including those aimed at our democracy. The bill also allowed the defense secretary to authorize clandestine military activity in cyberspace without prior presidential approval.
The conference report on the bill was revealing:
The conferees have been disappointed with the past responses of the executive branch to adversary cyberattacks and urge the President to respond to the continuous aggression that we see, for example, in Russia’s information operations against the United States and European allies in an attempt to undermine democracy. The administration’s passivity in combatting this campaign, as documented repeatedly in hearings before the congressional defense committees in the past 2 years, in the judgment of numerous executive branch officials, will encourage rather than dissuade additional aggression. The Congress has worked diligently to ensure that the Department possesses the necessary capabilities and authorities to combat, in particular, these Russian information operations, and this authorization represents further progress toward that objective. The conferees strongly encourage the President to defend the American people and institutions of government from foreign intervention.
Read that again and take a moment to reflect on that remarkable passage.
Two days after signing the McCain defense bill, the president signed National Security Presidential Memorandum No. 13. This still-secret memorandum freed the military to conduct offensive cyber operations “without a lengthy approval process,” so long as they don’t cause “death, destruction or significant economic impact,” The Washington Post reported last year.
Apparently without realizing what he was doing, Trump had just given the go-ahead for the types of operations described in the Times article that left him so unhinged.
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Spearheading America’s aggressive response in cyberspace to Russia is General Paul Nakasone, the dual-hatted leader of the National Security Agency and U.S. Cyber Command.
Nakasone has pushed a strategy of “persistent engagement” with our Russian foes in cyberspace. In other words, we don’t sit back and wait for our enemies to attack; we take the fight to them.
Under Nakasone, U.S. Cyber Command has shifted from a response force to a proactive one that meets our adversaries in the foreign networks where they lurk. “If we find ourselves defending inside our own networks, we have lost the initiative and the advantage,” Nakasone told a professional military journal.
Securing the 2018 midterm elections was Cyber Command’s No. 1 priority, Nakasone told Congress, and it prompted him to create the “Russia Small Group.”
On Election Day last year, the Russia Small Group shut down the computer networks at the Internet Research Agency, the so-called St. Petersburg “troll factory” behind much of the social media manipulation during the 2016 election. The Russia Small Group also helped state election officials identify vulnerabilities and improve threat warning and it dispatched forces to beef up cyber defenses in Montenegro, North Macedonia and Ukraine.
Much of its work remains secret, but U.S. senators hinted earlier this year that it was no coincidence that the 2018 midterms were not impacted by Russia. Further proof of the group’s success is the fact that it’s now a permanent fixture at the NSA/Cyber Command, housed in a new, $500 million cyberwarfare bunker at Fort Meade, Maryland.
Few Americans realize that the United States is flexing its muscles in the cyber realm, but Russia is keenly aware of what’s going on. “Vitally important spheres of our economy have been targeted with cyberattacks from abroad,” Dmitry Peskov, the Kremlin spokesman, said in the wake of the Times report. An anonymous law enforcement source told RIA Novosti, a Kremlin-owned news outlet, that the Times story about U.S. incursions in the electrical grid is true, although the Russians say they’ve managed to stop the attacks so far. Last fall, Russian trolls and hackers received direct messages identifying them by their real names and warning them not to interfere in the affairs of other nations.
The only one who seems unsure of what’s happening is the president, who may have realized too late what he signed away when he gave his administration the authority to go on the offensive against Russia.
The implications of the decision to take decision-making authority out of the president’s hands are sobering. It was not a decision that was taken lightly.
It reflects a judgement on the part of Congress and the administration that when it comes to Russia, the 45th president poses a threat to the national security of the United States.
Walter Soriano: The Security Consultant for Russian Oligarchs, the CIA … and Diego Maradona?
Updated with additional details on USG, specifics of Soriano’s work for Deripaska and Abramovich, and links to the CIA.
Natasha Bertrand at Politico was out with a big story earlier this week about Walter Soriano, a mysterious Orthodox Jew who runs a security firm in London.
Bertrand reported that the Senate Intelligence Committee issued a subpoena to Soriano seeking his communications with Paul Manafort and Michael Flynn.
The subpoena, sent April 5, also seeks records of Soriano’s contacts with three Israeli private intelligence firms as well as any communications he may have had with Orbis Business Intelligence, a firm co-founded by the former British spy Christopher Steele.
The 51-year-old Soriano is unknown in the United States, but he’s a figure of intense speculation in Israel where his name surfaced more than a year ago in connection with a bribery investigation of Israeli Prime Minister Benjamin Netanyahu.
Israeli Kan TV news reported that Soriano was hired to dig up dirt on the investigators investigating Netanyahu. This work was given to subcontractors, some of whom worked for Israeli military intelligence:
This prompted Netanyahu to write a Facebook post insisting that he had not spoken to Soriano in eight years.
What intrigued me about Soriano was that Bertrand’s story linked him to Oleg Deripaska, whose connections to Paul Manafort were at the heart of Robert Mueller’s investigation into Russian interference in the 2016 election.
What hasn’t been reported in the United States is that Deripaska was a client of Soriano’s consultancy, USG Security Limited, according to a court filing by Israeli investigative journalist Raviv Drucker. (Soriano is suing Drucker in Israel for libel.) Drucker wrote that Soriano worked for Deripaska during his long-running legal feud in London with Michael Cherney, who has long faced allegations—which he has denied—that he and his brother, Lev, are connected to Russian organized crime.
Another oligarch, Roman Abramovich, also was a USG client, according to Drucker. USG helped Abramovich in his legal dispute in London with Boris Berezovsky, Drucker’s court filing states.
Drucker claims that USG’s subcontractors carried out “sophisticated surveillance, information gathering and data acquisition by various technological means, such as eavesdropping, hacking, and so on.”
On its website, USG says that its consultants are “all former members of the world’s elite intelligence units, military forces and security organizations, with vast knowledge and practical experience.”
This sounds very much like the work of the three private Israeli security firms who are mentioned in the subpoena: Psy Group, Wikistrat, and Black Cube. Founded by former Israeli military intelligence officers, Black Cube has used operatives with false identities to investigate journalists, victims of Harvey Weinstein, and former Obama staffer Ben Rhodes. Published reports claim Trump aides hired Black Cube for a “dirty ops” campaign to discredit Rhodes and other supporters of the Iran nuclear deal. (Black Cube denied working for Trump.)
Another Soriano client is Dmitry Rybolovlev, another Russian billionaire who purchased a Florida mansion from Trump in 2008 for $95 million. Trump had purchased the mansion for $41 million four years earlier.
Rybolovlev hired Soriano to spy on art dealer Yves Bouvier, according to Drucker and an investigation by Le Point, a French newsweekly. Le Point also obtained correspondence from Soriano to Rybolovlev suggesting he was also hired to deal with problems at the football club the oligarch owns, AS Monaco. (See “L’étrange M. Soriano,” Le Point, February 7 2019.)
The football connection is an interesting thread in this strange world because someone named Walter Soriano emerged in 2010 — the same year that USG Security Limited went into business — as the UK representative of former Argentinian superstar Diego Maradona.
“I think Diego would be very open to the idea of coming to England and managing Aston Villa,” a reporter for the Sunday Mercury quoted “Walter Soriano” as saying.
The real Walter Soriano was at one time a partner in a now defunct UK firm called Football Universe Limited. And like Maradona, Soriano is a native Argentinian, the tireless blogger Richard Silverstein reported. (An Israeli judge threw out Soriano’s lawsuit against Silverstein.)
An earlier version of USG’s website names Soriano as director of operations and Simon Bird simply as “UK operations.” The equally mysterious Mr. Bird, who is 76 and not to be confused with an English actor of the same name, gave an address of Ware House in Lyme Regis, a manor immortalized in the film The French Lieutenant’s Woman. Bird is described as a historian and a longtime partner of Winston Churchill’s granddaugher-in-law.
Both Bird and Soriano were directors of a now-defunct UK firm, Universe Security Group, whose board included Nahum Admoni, a former head of Mossad; Uri Sagi, former head of IDF intelligence; and Albert Raes, formerly Belgium’s top spy. (Issac Molho, a trusted advisor to Netanyahu caught up in the prime minister’s scandals, received about $200,000 in “finder’s fees” from the company.)
Update: A reader who asked not to be named pointed out that Molho did not just receive finder’s fees. He owned 10 percent of the company, according to a letter of intent he signed in 2003. Soriano was the majority shareholder.
In 2003, the Panama Maritime Authority, which manages the world’s largest ship register, selected Universe Security Group as one of three “recognized security organizations” to approve ship security plans. Soriano told Lloyd’s List that company operatives come mainly from the UK, Belgium, Israel, Central and South America, North Africa and the US.
A sharp-eyed Twitter user, @brazencapital, pointed out something I had read many years ago and since forgotten. One of Universe Security Group’s contacts was Kyle “Dusty” Foggo, formerly the No. 3 at the CIA who went to prison in the scandal surrounding Congressman Randy “Duke” Cunningham. (Foggo was one of the subjects in my first book, Feasting on the Spoils.)
Buried in Foggo’s sentencing memorandum from 2008 is a statement from a CIA contractor named Joel Combs:
Universe Security’s reputation suffered a fatal blow in 2009 when one of its customers was robbed, according to an administrator’s report. (The client was not identified in the report but Israeli media reports named Graff diamonds in London.) Admoni, Sagi and Raes all resigned from the company en masse. The company went into liquidation; its assets were acquired by Soriano and Bird’s newly-formed USG Security.
There’s more. Soriano’s USG Security also surfaced in a dispute between wealthy London property developers the Candy brothers and British businessman Mark Holyoake.
“I have reliable information that USG Security has been hired by [Ed Candy] for (sic) investigate and monitor my family, my colleagues and myself,” Holyoake told a London court. He described USG as a “military-based ‘security consultancy and security services provider.'” (See Holyoake v Candy, Queen’s Bench Division)
Holyoake declined to reveal who passed him this information saying it related to security arrangements for his family and “could have consequences for the safety of my source if revealed.” Candy’s representative denied hiring USG.
During trial, Holyoake’s wife testified that among the men in the Candys’ “extended circle who have died mysteriously” is Boris Berezovsky, the exiled Russian oligarch in London who became a fierce critic of Vladimir Putin.
Berezovsky lost his high stakes London court battle with Roman Abramovich in 2012 over control over a major Russian oil company. Seven months later, Berezovsky was found dead in his shower with a scarf around his neck. A coroner could not reach a verdict on the death.
The mysterious Mr. Soriano is much than he seems. Connected to the prime minister, deeply tied to the Israeli security establishment, he adds to the intrigue surrounding Trump and Russia.
A Russian Oligarch is Investing in U.S. Companies. Should We Be Worried?
Compared to his fellow Russian oligarchs, Vladimir Potanin is radically transparent when it comes to his investments in the United States.
But then again, how many people realized that a Russian oligarch was a major investor in a firm that hosted Maryland’s voting data? Even fewer know that Potanin has been linked in court documents to one of the world’s largest private equity funds.
Potanin, at 58, is one of the world’s richest men. The bulk of his $18.7 billion fortune derives from his large stake in Nornickel, the world’s largest refined nickel and palladium producer, which he has held since the 1990s. Potanin and his fellow metals tycoon, Oleg Deripaska, waged a bitter, multiyear battle for control of Nornickel.
Unlike Deripaska, Potanin has not been sanctioned the U.S. government although he appeared on the Kremlin list of billionaires and officials with ties to Russian President Vladimir Putin.
Potanin is well known in Russia. Less well known, is his role as the major investor in Altpoint Capital Partners LLC, a venture capital fund based in Greenwich, Connecticut with offices in New York and Los Angeles. AltPoint has more than $287 million in assets under management, according to its lastest SEC disclosure.
Potanin does disclose his interests in Altpoint, but there’s a bigger problem: private equity provides a convenient means of obscuring how he and other foreign billionaires invest in U.S. businesses.
“Washington knows shockingly little about foreign money flowing through the financial system, especially via private fund structures like hedge funds, venture capital and private equity, allowing foreign actors to make opaque investments that pose national security risks,” Joshua Kirschenbaum and David Murray observed in Bloomberg.
Altpoint, it turns out, was an early investor in Lyft, the ride-hailing app that recently had its initial public offering. It owns Ford Models, which repped Brooke Shields and Elle Macpherson. And Altpoint has backed a host of startup firms like Factual, a location data company. Altpoint also has founded a hedge fund dealing in cybercurrencies like Bitcoin.
“We are excited about the consumer internet, a new eCommerce approach, media, virtual and augmented reality, mobile solutions or the internet of things,” reads Altpoint’s profile on Cruchbase.
One company in Altpoint’s portfolio is ByteGrid, which set off alarms when in Maryland in July.
During “fact finding activities using open source methods,” the FBI found out that Bytegrid, which hosted the computer servers used to register Maryland voters and and provide unofficial election night results, was being financed by Potanin.
State officials swiftly called a press conference. “We felt it imperative that our constituents know that a Russian oligarch has purchased our election machinery,” said Maryland State Senate President Thomas V. Mike Miller.
Three years had passed before anybody noticed that the Russian oligarch had “purchased” Maryland’s “election machinery.” And nobody seems too bothered by the fact that the same company managed computer facilities for the U.S. Department of Defense.
This matters because Potanin is an oligarch. In fact, he’s one of Russia’s original oligarchs.
Born into the nomenklatura, the Soviet elite, Potanin used to connections to create a successful bank after the collapse of the Soviet Union in the 1990s. It was Potanin who masterminded the “loans-for-shares” program and he positioned himself to acquire the government’s position in Nornickel for a fraction of its value.
“Yes, it made me incredibly rich,” he told The Financial Times “Everybody knows I won control of 38 per cent of [Nornickel] in loans for shares, cheap.”
Out of the seven original oligarchs, Potanin is one of the only ones still welcome in Moscow. “Why did we survive, [Mikhail] Fridman and myself? Maybe because we never tried to dictate to the government, to the Kremlin,” he told the FT.
Potanin began quietly investing in the U.S. businesses in 2006 via Stone Tower Equity Partners LLC, a New York private equity fund.
Stone Tower acquired Ford Models in 2007, but it took three years before anyone noticed Potanin’s role. “A Russian oligarch has seized control of a coveted American asset: beautiful models,” The New York Post wrote.
It’s interesting to note that Stone Tower’s chairman and CEO, Michael Levitt, was nominated by Interros, Potanin’s holding company in 2008 to serve as an “independent” director at Nornickel. Levitt was elected, even after his connections to Potanin were revealed.
After the 2008 financial crisis, Guerman Aliev, a Russian who worked for Interros was dispatched in the United States to take over his boss’ investments in Stone Tower.
Aliev brought on a new team and renamed Stone Tower as Altpoint Capital. (He then renamed himself as Gerald T. Banks.)
“We buy and sell controlling and non-controlling positions in companies,” Aliev explained in a 2015 deposition. “Being a U.S. manager in the United States, we have investments in Texas, we have investments in just about every single state in the United States. We buy and sell these companies as we see fit.”
Peering deeply into Altpoint is a difficult task. Just ask Potanin’s ex-wife, Natalia, who tried to identify her husband’s far-flung assets after he filed for divorce in 2013. Mrs. Potanina hired the law firm of Alston & Bird (ring a bell?), and used U.S. courts in several states to force her husband’s U.S. companies to answer questions:
Altpoint is Potanin’s captive private equity fund, and he uses it to keep a significant portion of his wealth in the United States. Petitioner requested discovery from Altpoint and several of its employees to show Potanin’s ties to Altpoint in order to assist her in identifying it as one of Potanin’s assets. Debevoise & Plimpton (which represents Potanin’s interests in Russia) appeared on behalf of Altpoint and several other Potanin-affiliated respondents in multiple other U.S. judicial districts, and moved to quash this discovery. …
Letter to Judge November 18, 2015.
In one filing, attorneys for Natalia Potanina identified the following as Potanin’s U.S. companies:
- Altpoint Capital Partners LLC
- Amquip Crane Rental
- ANARAQ
- Bytegrid Holdings LLC
- Everquest Financial Ltd.
- Ford Models
- Globe Energy Services LLC
- IVESCO Holdings
- Pyote Water Solutions
- Resources Acquisition
- Sanchez Resources LLC
- SCA Sanchez Resources Holdings LLC
- TowerCo
- VAZATA
- Stone Tower Capital LLC
- Apollo Global Management LLC
- Norilsk Nickel USA
- Stillwater Mining Company
The most interesting company on this list is Apollo Global Management LLC, one of the world’s biggest private equity firms with connections to both Russia and the Trump administration.
Apollo loaned $187 million to Jared Kushner’s family real estate firm and one of its founders, Joshua Harris, advised the incoming Trump administration on infrastructure. Earlier, Apollo signed on to finance Trump’s aborted effort to build a tower in Moscow in 1996.
A spokesman for Apollo did not answer my questions about the company’s relationship with Russia.
In 2011, Apollo acquired Stone Tower Capital LLC and with it, Potanin’s old fund, Stone Tower Equity Ventures, for an undisclosed sum. Stone Tower Equity Ventures is now known as Apollo ST Capital LLC.
Another Apollo co-founder, Leon Black, also has links to Trump and Russia. He was named to the advisory board of the $10 billion Russian Direct Investment Fund in 2011. The RDIF was added to the sanctions list in 2015 by the U.S. Treasury Department. Presumably Black has resigned from the RDIF, although his spokesman didn’t respond to my questions.
Kirill Dmitriev, CEO of the RDIF, makes numerous appearances in the Mueller Report. After Trump’s election, it was Dmitriev who wrote, “Putin has won.”
As for links to Trump, here is Black (wearing sunglasses) seated next to Jared Kushner at the 2016 US Open in New York:
Altpoint began investing in ByteGrid, which is based in McLean, Virginia, in 2011. According to court documents, Altpoint purchased 3,925 of the total 4,000 Class A Units of ByteGrid and was granted the right to appoint four of the six members of the Board of ByteGrid.
Between 2011 and 2016, Altpoint financed Bytegrid’s acquisition of a half dozen data centers in Silver Spring, Maryland; Alpharetta, Georgia; Chicago, Illinois; Cleveland, Ohio; Lynnwood, Washington; and Annapolis, Maryland. Bytegrid’s investment decisions were controlled by Aliev and two others at Altpoint. (See Decision in Lynwood Tech Holdings LLC v NR Int. LLC, Circuit Court of Fairfax County, Virginia.)
Bytegrid acquired the Sidus Group, an Annapolis-based firm, in 2015. Sidus had an existing contract with the state Board of Elections for the MDVOTERS system.
In May 2016, the MDVOTERS system came under a “denial of service” computer attack and Sidus took the site down to stop the attack. According to the Maryland State Board of Elections, no users were impacted and the system was not compromised. It’s not clear where the attack originated, but in 2017, Maryland learned that it was one of 21 states targeted by Russian government operatives before the 2016 presidential election
After Potanin’s name was linked to the state’s election system, DHS conducted another investigation and found no evidence that Maryland’s systems had been compromised (The report’s detailed findings, however, were redacted). At the end of 2018, ByteGrid transferred ownership of its Annapolis data center to Intelishift, a privately owned, Virginia-based data center.
There’s nothing wrong with a Russian oligarch investing in U.S. business, but the problem, as Maryland learned the hard way, is one of transparency.
If we’ve learned anything about modern Russia, it’s that no oligarch survives in power as long as Potanin has in Russia without answering the Kremlin’s request for help when the call comes. This, I suspect, is what alarmed the FBI about ByteGrid.
Had Putin asked Potanin to throw a wrench into Maryland’s elections, he would not have been able to refuse.
The pee tape
Someday, we may find ourselves staring in amazement at our computer screens as a man who resembles the 45th president performs unspeakable acts with prostitutes in a Moscow hotel room.
But Michael Cohen, the president’s former lawyer and fixer, thinks that day will never come. And he’s in a good position to know one way or another.
The public first learned of the possible existence of what came to be known as the pee tape from the Steele dossier. Former British MI6 officer Christopher Steele reported that prostitutes had performed a “golden shower” urination show for Trump in the Moscow Ritz where he was staying during the 2013 Miss Universe pageant. This had been recorded by Russian intelligence for purposes of blackmailing Trump.
But this claim about a pee tape wasn’t news to Cohen. Thanks to a newly released transcript from the House intelligence committee, we now know that Cohen first heard about the pee tape shortly after Trump returned from Russia.
Trump denied it, but he asked Cohen to find out where the rumors were coming from.
Testifying under oath, Cohen says he spoke to many people about the tape, including one unnamed caller who demanded $20 million.
Another person who called Cohen about the tape was Harvey Levin of the gossip site TMZ, who also had heard about the existence of the tape. (TMZ did not immediately respond to a request for comment.)
In the end, Cohen concluded that the pee tape didn’t exist for a very practical reason. If prostitutes had urinated on the bed in the Moscow Ritz, where did Trump sleep that night?
The tape had acquired a life of its own, Cohen said, much like the claim that he had attended secret meetings with Russians in Prague, which also appeared in the dossier. Cohen said under oath that all the allegations concerning him in the dossier are false.
But, Cohen also relates an interesting anecdote about the dossier. After it was published January 10, 2017 by Buzzfeed, Trump called Cohen at home.
In other words, Trump seemed very concerned. He appeared unsure whether the allegations in the dossier regarding Cohen were true or not.
So let me make sure I got this right. This is the same dossier with the golden showers allegations that Trump scoffs at. If those claims, which appear in the very front of the dossier, were false, would he really need to see Cohen’s passport in the middle of the night?
In other words, if there’s a huge lie on page one of the dossier, you don’t need to scrutinize pages two, three, four, and five, especially not in the middle of the night. It can wait until morning.
Perhaps Trump was just panicking, but it seems quite possible that something in the dossier hit the mark to cause such panic for Cohen to go rushing back to Trump Tower waving his passport. Whether that’s the pee tape or not, we don’t know.
Steele, unlike Cohen and Levin, Steele, was passing along more than a rumor about the pee tape. He claimed to have confirmed the incident with three separate sources:
- “Source D,” described as having “been present.”
- “Source E,” a “senior/western member of the staff at the hotel,” who was aware of the golden showers incident at the time it occurred in 2013.
- “Source F,” a female staffer at the hotel who confirmed the story.
I remain unconvinced. It could be Steele was the victim of a Russian disinformation effort. As I wrote in Trump/Russia, this kind of tawdry material in reports compiled by former spooks was not out of the ordinary:
What people failed to realize was that sordid allegations like the one in Steele’s report were a dirty secret of the world of private investigations. Several people familiar with this world told me that reports by companies like Kroll, K2, Mintz Group, IGI, and others were often littered with tawdry allegations. “Yes, sex stuff comes up a lot and it’s often nonsense,” a DC attorney who often hires private investigators told me. One veteran opposition researcher told me he has seen the same thing so often that he has detected a pattern: when the subject of the investigation was connected to Latin America, drugs were involved; when the connection was Russia or Eastern Europe, then it was usually sex. “Every single one of their reports has something like that,” the opposition researcher said. “That’s what they pitch the client to keep them on the hook. They then spend months trying to confirm it.”
Then again, maybe Steele got it right and one day we may find ourselves staring in amazement at our computer screens as a man who resembles the 45th president performs unspeakable acts with prostitutes in a Moscow hotel room.
Who is Fima Shusterman?
“Due to ongoing threats against his family,” Michael Cohen announced yesterday that he was postponing his highly-anticipated congressional testimony.
The threats are coming from the White House where President Trump won’t stop talking about Michael Cohen’s father-in-law, a guy by the name of Fima Shusterman.
On a phone call January 12th with Fox News host Jeanine Pirro, the president of the United States launched into an extraordinary attack on Cohen’s father-in-law, a private citizen:
TRUMP: He should give information maybe on his father-in-law. Because that’s the one that people want to look. Because where does that money? That’s the money in the family. And I guess he didn’t want to talk about his father-in-law. Trying to get his sentence reduced. So it’s pretty sad. He is weak. And is very sad to watch a thing like that. I couldn’t care less.
PIRRO: What is his father-in-law’s name?
TRUMP: I don’t know but you’ll find out and you’ll look into it. Because nobody knows what’s going on other there.
The implication here is that Shusterman, a Ukrainian emigre, is some sort of Russian organized crime figure, although in typical Trump fashion he provides no evidence.
As readers of my book know, Trump knows that Shusterman is “the money” in the Cohen family because his business benefited from it.
Even with the spotlight the president has put on him, we still know very little about Michael Cohen’s father-in-law, Fima Shusterman. The only bit of insight comes from his 1993 testimony in federal court. So here goes.
Shusterman had pleaded guilty to the charge of conspiracy to defraud the United States. In exchange for leniency, he agreed to testify at the trial of Harold Wapnick, his accountant. Shusterman was sentenced to probation and fined $5,000.
On May 13, 1993, Shusterman took the witness stand in the court of Judge Carol Amon. Although he spoke some English, he had a translator present at his own request “because I do not understand English 100 percent.”
Q. Good morning, Mr. Shusterman.
A. Good morning.
Q. How old are you, sir?
A. 48.
Q. Are you married, Mr. Shusterman?
A. Yes, I am.
Q. And do you have any children, sir?
A. Yes, I have a daughter.
Q. Where were you born, Mr. Shusterman?
A. In the Soviet Union.
Q. When did you come to the United States, sir?
A. In May '75.
Q. And are you a citizen, Mr. Shusterman?
A. Yes, I am.
Q. Are you employed?
A. Yes.
Q. Where are you employed?
A. I'm employed as a manager with Future Knits.
Q. And are you a co-owner of of Future Knits, sir?
A. Yes, I am.
Q. Who are your partners?
A. My partners are Shalva Botier and Edward Zubok.
Q. What business is Future Knits in?
A. This is a knitting factory.
Q. When was Future Knits established, sir?
A. I'm not sure. I think it was established in '81.
Q. Future Knits, sir, when was Future Knits established?
A. In 1988.
Q. And prior to Future Knits, sir, how were you employed?
A. I was employed with S&Z Fashions and LVA Corp.
Q. Were you a co-owner of those corporations?
A. Yes, I was.
Q. And were your partners the same individuals as your partners
in Future Knits?
A. Yes, correct.
Q. Were S&Z Fashions and LVA also in the knitting business?
A. Yes.
Q. When did you join S&Z Fashions and LVA?
A. In July of '84.
Q. Between years 1985 to 1988, were you involved with any other corporations
other than S&Z and LVA and Future Knits?
A. No.
Q. Did you have an ownership or office position with any other corporation, sir?
A. Yes. I was secretary with Martha Cab Corporation, and Bar Trans Corporation.
Q. And, sir, is Barn Transportation with an "N" end, B-A-R-N?
A. Barn, B-A-R-N.
Q. Who is shareholder of Martha and Barn, sir?
A. My wife was.
Q. Are you an officer of those corporations?
A. Yes, I am.
Shusterman was also secretary of N.Y. Funky Taxi Corp. and New York Fulton Taxi Corp.
Today, the chief executive of N.Y. Funky Taxi, Martha Cab and Barn Trans is Michael Cohen, who married Mr. Shusterman’s daughter, Laura, a year following her father’s guilty plea and court appearance. Cohen owns and operates a fleet of cabs in New York and Chicago.
Note to my readers: This work costs me both time and money (in the case of this transcript quite a bit of money). I do this work for free in the hope that people will find it valuable. If you agree, the best way you can support this work is by purchasing my book, Trump/Russia, which has much more information on the president’s decades-long connection to Russian criminal money.
Click here to purchase Trump/Russia.
Q. Mr. Shusterman, have you been convicted of a crime?
A. Yes.
Q. What crime were you convicted of, sir?
A. Conspiracy.
Q. When were you convicted?
A. In March of this year, '93.
Q. How were you convicted, sir?
A. I pleaded guilty.
Q. And, Mr. Shusterman, in connection with your guilty plea,
did you enter into an agreement with the government?
A. Yes.
Q. Would you tell the ladies and gentlemen of the jury, Mr. Shusterman,
what your understanding is of that agreement?
A. My understanding is that I obligated myself to fully, 100 percent,
cooperate with the government.
Q. And did the government agree to do anything in return, sir?
A. Yes, they did.
Q. What did they agree to do, sir?
A. They would advise the judge about my full cooperation and
about my help rendered in their investigations.
Q. Mr. Shusterman, have you been sentenced yet?
A. No, not yet.
Q. Do you know what sentence you are facing, sir?
A. Yes.
Q. What is that, sir?
A. Five years in prison, and up to $250,000 in fines.
Q. Sir, have any promises been made to you regarding your sentence?
A. No.
Q. Do you know who will be sentencing you, Mr. Shusterman?
A. Yes, I do.
Q. And who is that, sir?
A. Judge Amon.
Q. Mr. Shusterman, you've testified that you pled guilty to
the crime of conspiracy. Could you tell the ladies and gentlemen
of the jury what is it that you did?
A. I concealed income from the state, and I cashed checks in the amounts
that exceeded $10,000.
Q. Mr. Shusterman, what did you need this cash for, sir?
A. To operate our business.
Shusterman goes on to say that from 1984 to 1988 he would regularly bring checks from his customers made out to S&Z Fashions, LVA, and Future Knits and leave them in Wapnick’s office.
A few days later, Shusterman would return and collect cash, always in amounts more than $10,000, in a paper bag or envelope. Wapnick would keep 3 percent for his services.
The total amount cashed with the Wapnicks was “somewhere between five and five and a half million dollars,” Shusterman testified.
Shusterman is then cross-examined by Harold Wapnick, who does a terrible job of representing himself with convoluted lines of questions.
However, he does stumble into a couple of things that are interesting in light of Trump’s claims that Shusterman is “the money in the family.”
Wapnick: Sir, you own a -- you own 40 percent of a
40-machine factory, sir?
A. No.
Q. What percentage do you own of a 40-machine factory, sir?
A. 15 percent as of today.
Q. 15 percent. Would you say that the 15 percent value is in excess
of a million dollars, sir?
A. If you pay me half a million I'll sell it to you gladly.
Q. Thank you. How about the -- do you own five -- 9 taxicab medallions?
And are they worth about two million dollars?
The Court: Wait a minute. I don't think he gave an answer.
Q. Are they worth about two million dollars, sir?
A. Did you say two million?
Q. Let's say $170,000 apiece, and we multiply it by nine, so, okay --
what's a half a million dollars among friends. Is it worth ---
The court: I take it you're withdrawing your last question.
Wapnick: No I'm asking him is it worth a million and a half dollars, sir.
Shusterman: Only on paper.
A decade later, beginning in 2003, Shusterman made the first of three apartment purchases at Trump World Tower across from the United Nations building in Manhattan. By 2005, Shusterman had spent $7.6 million on Trump’s properties.
So where did this money come from and what did Trump know about it?
Trump/Russia Review in TLS
Andrew Sullivan has written a nice review of Trump/Russia: A Definitive History in the Times Literary Supplement of London, “the world’s leading journal for literature and ideas.”
Unless, that is, you see all of this as some grand plan hatched in the halls of the Kremlin to unsettle the post-Cold War order, break up the EU and NATO, and legitimize the authoritarian pseudo-democracy in Russia. Seth Hettena, an investigative journalist with the Associated Press, lays out the entire labyrinth of ties Trump has long had with the Russian mafia in New York, and with the Russian government itself. His essential insight is that there is no clear distinction between the two. Putin’s Russia is a mafia state; its oligarchs deep in financial crime and close to mobsters. And Trump was ensnared early on, as his Trump Tower and Taj Mahal casino in New Jersey attracted all manner of Russian hoodlums, tycoons and hit men. But it deepened as Trump became bankrupt, saved only by bankers who were acting to protect themselves, and sought new financing when America’s banks refused to loan to this shiftiest of failed businessmen. His son, Eric, blurted out the truth to a friend: “We have all the funding we need out of Russia. We go there all the time”.
Hettena writes that Trump Tower was one of only two buildings in Manhattan to allow buyers to conceal their true identities. Money-launderers flocked to it. Trump’s Taj Mahal casino in Atlantic City was found to have “willfully violated” anti-money laundering rules of the Bank Secrecy Act, was subject to four separate investigations by the Internal Revenue Service for “repeated and significant” deviations from money-laundering laws, and was forced to pay what was then the largest ever money-laundering fine filed against a casino. The Trump World Tower, by the UN headquarters in New York, had a large number of investors connected to Russia, Ukraine and Kazakhstan. Trump’s consigliere, Michael Cohen, was found by a Congressional Committee to have “had a lot of connections to the former Soviet Union and . . . seemed to have associations with Russian organized crime figures in New York and Florida”. His campaign manager for a while – Paul Manafort – made a fortune channelling Kremlin propaganda in Ukraine. Trump’s new towers in Southern Florida were also humming with Russian buyers. Over a third of all the apartments in the seven Trump towers were connected either directly to Russian passports or to companies designed to conceal the owners. Hettena finds a prosecutor who spelled it out: “his towers were built specifically for the Russian middle class criminal”.
Trump’s unique refusal as a modern candidate to release his tax returns suddenly doesn’t seem so strange. And it is no surprise whatsoever that when the Trump campaign was told that the Kremlin had hacked Hillary Clinton’s emails and offered them to the campaign – as “part of Russia and its government’s support for Mr Trump” – they took the bait instantly. “If it’s what you say, I love it”, Donald Trump Jr emailed back to the Russian intermediary, “especially later in the summer”, clear proof of a conspiracy with a foreign power to corrupt the US elections. This led to the infamous Trump Tower meeting between Trump campaign officials and an emissary from Putin. In the autumn, the Clinton emails were duly unleashed, via WikiLeaks, and constantly touted by Trump himself. At one point, he even went on national television and directly asked the Kremlin to release more of them. Trump, in other words, was openly asking a hostile foreign government to help take down his opponent. But by then, his hourly outrages had lost the power to shock. As strong evidence emerged of a Russian campaign to influence the election in the summer and autumn of 2016, Obama proposed that a bipartisan group of senators release the information to warn the public. The Senate Majority leader, the Republican Mitch McConnell, refused. Much of the Republican Party would rather have the election rigged by Russians than see a Democrat win.
The quid pro quo appears to have been a promise to undo sanctions when Trump came to power – something his first National Security Counsel head, Mike Flynn, immediately started work on after the election victory….
Yours Truly In The New York Times
In case you missed it, here’s my op-ed on Russian sanctions and Oleg Deripaska that ran in The New York Times.
Watergate’s John Dean on the Chennault Affair
My Rolling Stone Q&A with Watergate figure John Dean got a lot of people talking. Dean told me that Nixon might have survived if he had Fox News. He also said that he doesn’t expect Trump to resign and a whole lot more.
One thing that we didn’t have room for was a question I asked John Dean about the Chennault Affair, another Nixon scandal that involved collusion with a foreign power to win an election and allegations of treason.
The Problem with (Helsinki) Summit Notes
So my Rolling Stone piece is up about the dangers of a one-on-one meeting between President Trump and Russian President Vladimir Putin in Helsinki, Finland.
There’s an interesting bit of history I couldn’t fit into the story. It involves another Russian leader telling another U.S. president at a summit in Helsinki that he would help re-elect him.
And the fact that we know about this conversation is one more reason why Putin doesn’t want any notetakers around when he meets with Trump alone on July 16th. Continue reading
Mr. Johnson Goes to Moscow
“Our freedoms are slowly but surely being taken away from us,” Senator Ron Johnson of Wisconsin declared on the Fourth of July. “The world would be a far better places if it were more free.”
It was no small irony that while he served up platitudes of democracy and freedom to his constituents, Senator Johnson himself was a world away in Moscow, appeasing a regime that attacked American democracy and wreaks havoc around the world.
Hanging with Mr. D
Ever wonder what it’s like to hang out with a Russian oligarch?
The answer to that question is found in one of the interesting stories that that didn’t quite fit into my book: The trip to Oleg Deripaska’s chalet in Siberia.
Exclusive: Trump’s 1987 Moscow Casino Deal
I recently got an e-mail from a man who told me a story I’d never heard before: Donald Trump had tried to cheat him out of a deal involving a casino in Moscow in 1987.
Was I interested in talking? You bet I was.
Five Myths about the Trump-Russia Investigation
Hardly a day goes by without President Trump attacking Special Counsel Robert Mueller’s year-old investigation into contacts between his presidential campaign and Russia. The president has presented no explanation for why his campaign had so many contacts with Russian operatives. Instead, he appears to be betting his presidency on his ability to frame the entire investigation as a hoax and confuse us about the facts. Here’s a guide for the perplexed:
Who Is Ilya Medvedovsky?
In the latest round of sanctions aimed at Russian cyberattacks, the U.S. Treasury Department sanctioned five companies. Three are connected with one person, a Russian cybersecurity professional named Ilya Medvedovsky.
The Problem with Russian Backdoors
During one of my media appearances for the release of Trump/Russia: A Definitive History, someone asked me an interesting question: What’s wrong with a Russian backdoor?
A Mobster President?
Former FBI Director James B. Comey Jr. has been making the rounds with the stunning observation that President Donald J. Trump behaved much liked the mob bosses he put on trial in his days as a federal prosecutor in Manhattan.
During his time in the White House, Comey says he felt the president repeatedly trying to make him a member of his corrupted inner circle when he famously asked the FBI director for loyalty.
In his last conversation with Comey on April 11, Trump told him: “I have been very loyal to you, very loyal, we had that thing, you know.” We had that thing. That thing of ours. It’s literally a translation of La Cosa Nostra, which is how members of the American Mafia describe their organization.
Comey tells us a fundamental truth about the man we have elected to the most powerful office in the world: Donald Trump was a mob-friendly businessman.
Bit of Personal News
When I started this blog, I felt like nobody was paying attention to the Trump-Russia story and I felt the need to write something. I didn’t really know whether anybody was paying attention, but apparently people were.
I’ve just finished a history of Trump’s relationship with Russia that will be published later this year by Melville House Books in New York. I’ll have more details soon.
In the meantime, I’ll be back writing on this site, and there may be some other opportunities that open up as well. Thanks to everyone for reading.
The Steele Dossier Murder
My friend Amy Knight is out with an interesting piece in The Daily Beast about something I pointed out recently: Did the Steele Dossier lead to someone’s murder?
This was raised during the Senate testimony of Glenn Simpson of Fusion GPS, the ex-journalist who hired former British spy Christopher Steele. Simpson was being pressed about his sources when his lawyer, Josh Levy, blurted out, “Somebody’s already been killed as a result of the publication of this dossier and no harm should come to anybody related to this honest work.”
In his subsequent testimony to the House intelligence committee, Simpson denied knowing specific cases of people being killed because of the dossier, but he then noted that “people literally risked their lives to tell us some of this stuff.”
One who may have risked everything was FSB General Oleg Erovinkin. He was right-hand man to Igor Sechin, who was in turn Putin’s right-hand man. He was known as the “keeper of the Kremlin’s secrets. Erovinkin was found dead in his car in Central Moscow in December 2016.
Amy writes:
Erovinkin, as chief administrator at Rosneft, was Sechin’s right-hand man and must have known everything about Sechin’s contacts with Americans. Those included the former head of ExxonMobil, now Secretary of State Rex Tillerson. (Sechin once said he felt thwarted by U.S.-imposed sanctions that kept him from riding motorcycles in America with his friend Tillerson.)
More importantly, in terms of allegations made by the Steele dossier and currently the focus of multiple investigations in Washington, Erovinkin was in a position to keep track of contacts with Trump advisers in considerable detail.
Let me add that Amy is no slouch. She is considered one of the foremost experts on the KGB, speaks Russian, writes regularly for the New York Review of Books and authored numerous books, the most recent of which is an exploration of political murder by the Putin Regime called Orders to Kill. (I still would love to do a Q&A with you, Amy!)
Glad to see a Trump-Russia story written by someone who knows what she’s talking about.
Five surprises in Glenn Simpson’s testimony
Glenn Simpson
Well, it took a couple of days, but I finally managed to read through Fusion GPS co-founder Glenn Simpson’s 312-page testimony to the Senate Judiciary Committee.
Thank you to Sen. Dianne Feinstein for releasing this information last week over the objections of Republicans. Sen. Feinstein said the American public deserve to make up their own minds. Couldn’t agree more. You can find the testimony here.
So I thought I would pick things that jumped out at me from Simpson’s testimony:
1. An internal source in the Trump Organization was providing the FBI with information about Russian collusion.
Simpson learned this from Christopher Steele, the former British spy he had hired to investigate Trump’s links to Russia. Steele’s findings, including the scandalous scene in the Moscow Ritz, were so alarming that he took his findings to the FBI. The FBI told Steele, yes, we’ve heard something similar from our internal Trump source. Simpson refused to answer questions about who this source might have been, but this source was not one of Steele’s source. Huge bombshell. (p. 175)
2. Someone has been killed as a result of Steele’s reports.
Simpson’s lawyer, Josh Levy, drops this on p. 279. “Somebody’s already been killed as a result of the publication of this dossier and no harm should come to anybody related to this honest work,” he says. Curiously, nobody challenges this, which makes it seem an accepted fact. Maybe they were all just tired after 9 hours of questioning. The person is not named, but presumably it’s someone in Russia. Otherwise, it would be a bigger deal, right?
3. Felix Sater is connected to Russian organized crime kingpin Semion Mogilevich This connection has been alleged in a Supreme Court petition filed in 2012 by lawyers Fred Oberlander and Richard Lerner to unseal Sater’s criminal case. The Website Deep Capture made the same claim, but the sourcing wasn’t very strong, as did two New York attorneys in court filings. (Update: Sources I’ve spoken to led me to doubt this claim.) (p.69)
4. Chris Steele broke off talks with the FBI in part because of a story in The New York Times. This was the infamous Halloween 2016 story that reported that an FBI investigation of Trump found no ties to Russia. The Times story and FBI Director James Comey’s bizarre decision to reopen the investigation of Hillary Clinton’s email made Steele concerned that the FBI was being manipulated for political ends by Trump’s people. (p. 178).
5. Bill Browder’s comical efforts to hide from Fusion GPS and Glenn Simpson.
This isn’t a single event. It’s more like a pattern. Maybe Simpson is a liar as Browder says or maybe Browder doesn’t like anybody nosing around in his business practices in Russia. Read it for yourself and see what you think pp 40-48.
Devin Nunes v Fusion GPS
Devin Nunes
What are the limits of a congressional committee’s power?
That is the question posed by the actions of Rep. Devin Nunes who is using — abusing, some say — his power as chairman of the House intelligence committee to investigate Fusion GPS, the company that produce the Steele dossier.
In its purported investigation of Russian meddling in the 2016 election, the committee has issued a single subpoena for financial records. That subpoena went to Fusion GPS’ bank and is now the subject of a lawsuit in U.S. District Court in Washington D.C.
You’ll recall that Chairman Nunes worked on the Trump campaign and purportedly recused himself from his committee’s Russia investigation. But he is unable to restrain himself when it comes to Fusion GPS. The subpoena to the firm went out with his signature on it.
Fusion GPS says the subpoena, which demands years of records, is little more than a transparent effort by Chairman Nunes to expose its clients — even those that had nothing to do with Russia — and destroy the secretive company’s business model.
It’s worth noting that Deutsche Bank, which has all sorts of shady dealings with Russia and continued lending to Trump even after he sued them, got a pass from Chairman Nunes’ committee.
In a more recent court filing a few days ago, lawyers for Fusion GPS make the claim that Chairman Nunes is actively working to undermine his own committee’s investigation:
There is evidence that the Committee is coordinating with the President, his personal lawyers, and the Senate Judiciary Committee to misdirect attention to Fusion and its associates in an effort to punish and discredit Fusion, due to their perceived role in exposing the ties between the Trump campaign and the Russians. This coordinated effort includes the subpoena to Fusion’s bank and the apparent leaks from the Committee, and it has been amplified in recent days by attacks on the FBI and Justice Department by members of Congress, the President, and his lawyers.
In its pleadings to the court, Fusion GPS cites the Supreme Court ruling in Watkins v. United States. This case involved John Watkins, a labor organizer, who in 1954 was subpoenaed to testify before Sen. Joe McCarthy’s House Committee on Un-American Activities. Watkins answered questions about his own activities in the Communist Party but he refused to answer questions about other people. He was convicted of contempt of Congress, but appealed his conviction saying Congress had abused its powers.
The Supreme Court agreed, ruling 6-1, that Congress’ power to investigate was broad, but not unlimited. “No inquiry is an end in itself; it must be related to, and in furtherance of, a legitimate task of the Congress,” the court ruled. “Investigations conducted solely for the personal aggrandizement of the investigators or to ‘punish’ those investigated are indefensible.”
Indefensible seems an apt work to describe Chairman Nunes’ investigation of Fusion GPS.
Trump and the Russian Beauty Queen
Part I: The princess in the gilded cage
Oxana Fedorova was a tall, raven-haired beauty from Pskov, a old Russian city near Estonia. She was studying to be a police officer in St. Petersburg, Russia when she decided to try her luck in a local modeling contest. Fedorova entered the 1999 Miss St. Petersburg pageant and won. Two years later, the 23-year-old police lieutenant became Miss Russia, which awarded her a new Mercedes and a Cartier watch.
Vladimir Putin, newly installed as Russia’s president, was said to be a keen admirer of the reigning Miss Russia, a karate black belt and an excellent shot. A photo of Fedorova was on display near his office in the Kremlin. The Telegraph of London reported that the organizers of the Miss Russia pageant had crowned Fedorova “in a feudal display of loyalty to the head of state.” She was even rumored to be Putin’s secret lover. Not true, Fedorova said. “It’s just a coincidence that we are both from St. Petersburg, the work of fate. There are no links with the president.”
Vladimir Golubev
Fedorova’s real boyfriend wasn’t the president. He was a Russian mobster from St. Petersburg.
Vladimir Semenovich Golubev, aka “Barmeley,” got out of in prison and became a gangster in St. Petersburg in the 1990s. Golubev was a silent partner in Adamant Holding, a real estate company founded in 1992 that today controls 29 shopping malls in St. Petersburg. (See Russian Forbes.)
The Russian press reported that Golubev had links to the Tambov gang, a criminal syndicate that dominated St. Petersburg in the 1990s. Back then, the deputy mayor of St. Petersburg, a man named Vladimir Putin, was collaborating with the Tambov gang to launder money and gain control of the gambling business. (See Karen Dawisha’s excellent book Putin’s Kleptocracy.)
According to Russian press reports, Golubev had supported Fedorova since she she had won Miss St. Petersburg as a teenager. Fedorova reportedly traveled either in his company or with guards he sent to accompany her. Officials with Miss Universe noted that money never seemed to be a problem for the beauty queen. She was like a beautiful bird living in Golubev’s gilded cage.
Part II: Miss Universe
In 2002, Oxana Fedorova entered Miss Universe, the international beauty pageant then owned by Donald Trump.
The pageant was held in San Juan, Puerto Rico. Fedorova and other beauties from around the world competed for prizes that included a year’s salary and an apartment in one of Trump’s Manhattan buildings. (The apartment was more like a dormitory for Miss Universe shared it with Miss USA and Miss Teen USA.)
At the Coliseo Roberto Clemente in San Juan, Fedorova dominated the swimsuit competition and was crowned with the diamond-studded tiara.
Trump, who was in the audience watching, allegedly rigged the contest for Fedorova, according to Seth Abramson, an author and attorney. Abramson said he spoke to a source present that night in Puerto Rico who claimed that Trump told the celebrity judges — actors, fashion designers, and NFL star Marshall Faulk — whom to choose as winner.
Four months after she was crowned Miss Universe, Fedorova was fired. Federova had failed to show at numerous photo shoots and other high-profile functions, including a commitment to help crown Miss Teen USA. It was the first time that a winner had been forced to surrender her title.
Trump said the president of the Miss Universe organization, Paula Shugart, had asked Fedorova to resign. “When Oxana didn’t resign, Paula had no choice but to terminate her,” he said. Anonymous “insider” sources quoted by the New York Post went for Fedorova’s jugular. “An unbelievably spoiled bitch,” one called her. Another said she was overweight and pregnant, which Fedorova denied.
Over the years, Fedorova has given several reasons for her decision to give up the title of Miss Universe. She had to care for an ailing relative. She did not want to give up her studies. (She now holds a doctoral degree.) She was upset no one had warned her before her lewd interview with radio host Howard Stern.
Asked by Russian reporters whether pressure from her gangster boyfriend Golubev led her to abandon the Miss Universe crown, Fedorova replied, “This is my personal life, and I do not want to talk about it.”
The view from Russia was that Trump had been paid off to crown Fedorova. Nikolay Kostin, the organizer of the Miss Russia contest, suggested to a reporter for the respected Russian daily Kommersant that Trump had been bribed to hand the crown to Fedorova.
“Nikolay Kostin in response to such accusations only smiles and asks who then dared to offer a bribe to the owner of the Miss Universe contest Donald Trump, who presented the crown to Oxana Fedorova, and how much he was given.
Vitali Leiba, president of the model agency Red Stars, told the newspaper, “It is very difficult to determine the addressee of a possible bribe. We can say that Trump was given a bribe, or it is possible that the U.S., in the person of Trump, offered a bribe to Russia, encouraging her representative at the contest.”
Update: An astute reader points out that Vitali Leiba was a founding shareholder of Arigon Company Ltd., a Channel Islands company established in 1990 by the Brainy Don, Semion Mogilevich whose name keeps turning up in the Trump-Russia affair. An 1996 FBI report called Arigon “the center of the Mogilevich Organization’s financial operations.”
Part III: The Ugliness in Trump’s Beauty Contests
There is no proof that Trump was bribed or that he tipped the scale for Oxana Fedorova, but there were multiple claims that the pageants were rigged.
Michael Schwandt, a choreographer who worked on Miss Universe and Miss USA, told Guanabee.com that Trump would have all the contestants line up and he would walk past like a commander reviewing his troops with an assistant taking notes. “It’s just kind of common knowledge that he picks six of the top 15 single-handedly,” Schwandt said.
The choreographer said Trump told him he exercised the “Trump rule” so because some of the most beautiful women were not chosen as finalists in the past “and he was kind of upset by that.” Schwandt disavowed his comments but here is audio of Trump explaining the “Trump Rule” to Miss USA contestants.
A contestant in 2012 Miss USA told a judge that her contest had been rigged. Sheena Monnin wrote on her Facebook page that a fellow contestant had seen a sheet of paper listing the five finalists before the contest. (She reaffirmed the claim in her delcaration.)
…. I witnessed another contestant who said she saw the Top 5 BEFORE THE SHOW EVER STARTED proceed to call out in order who the Top 5 were before they were announced on stage. Apparently the morning on June 3rd she saw a folder lying open to a page that said ‘FINAL SHOW telecast, June 3, 2012’. After the Top 16 were called and we were standing backstage she hesitantly said to me and another contestant that she knew who the Top 5 were. I said ‘who do you think they will be? She said that she didn’t ‘think’ she ‘knew’ because she saw the list that morning. She relayed whose names were on the list. Then we agreed to wait and see if that was indeed the Top 5 called that night. ….
Trump was furious. He said Monnin had “loser’s remorse,” and said that if you “looked at her and compared her to the other people who were in the top 15, you would understand why she was not in the top 15.” His consigliere Michael Cohen called into TMZ Live and said that Monnin had 24 hours to retract her statement or that she could “bet [her] a** that [Miss Universe] will sue . . . seeking massive damages.” Consigliere Cohen was good to his word. Trump obtained a $5 million defamation award against Monnin in an uncontested arbitration proceeding, which was upheld by a federal judge.
A 2013 investigation by Jezebel found that a pageant recruiter in Trump’s Miss USA franchise allegedly demanded a blow job in exchange for magazine work that would allow a contestant to pay the $895 contest entrance fee.
Trump had acquired the Miss Universe franchise in 1996. He reportedly paid tens of millions of dollars (the exact figure was not disclosed) to buy it from ITT Corp., beating out beat two television networks and several South American media moguls. (The deal also included Miss USA and Miss Teen USA.) Trump ran Miss Universe as a 50-50 partnership with TV networks, first with CBS, and, after 2002, with NBC.
On the surface, it looked like a good business. It cost $20 million to bring the 2013 Miss Universe pageant to Moscow. Emin Agalarov whose family owns the arena that hosted the pageant broke down the costs for Russian Forbes. A third of that $20 million went to secure rights. Another third: organizational costs. And the final third goes to the production and broadcast costs. (Another report said overseas rights to Miss Universe were selling for $6 million in 2003.)
Very little of that money, however, was distributed to the general partners of Miss Universe. We know this because Trump had assigned his half of his interest in Miss Universe (25 percent of the company) to his publicly-traded corporation, Trump Entertainment Resorts, Inc. In 2002, the year Fedorova won in Puerto Rico, Trump Entertainment collected a mere $700,000 for it quarter share of the pageant. In 2003 and 2004, Trump Entertainment earned nothing from Miss Universe.
Where was all the money going?
Even if the business was a stinker, there was one attraction for Trump. It allowed him to indulge his Porky’s-style adolescent fantasy of seeing beautiful women naked when they were in no position to refuse.
“I’ll go backstage and everyone’s getting dressed, and everything else, and you know, no men are anywhere, and I’m allowed to go in because I’m the owner of the pageant and therefore I’m inspecting it,” Trump told Howard Stern in 2005.
Listen for yourself:
Asked whether he had ever slept with a contestant, Trump declined to say. “It could be a conflict of interest. … But, you know, it’s the kind of thing you worry about later, you tend to think about the conflict a little bit later on.”
Trump sold Miss Universe in 2015 to the talent agency WME | IMG for $28 million. The value of the franchise had been damaged by Trump’s description of Mexican immigrants as criminals and rapists, which led NBC and Univision to drop coverage of Miss USA.
Trump Ocean Club
My friend Ken Silverstein has a great new story out via Global Witness about Trump’s tower in Panama.
Put simply, it’s is the most revealing look we’ve had into how Russians were recruited for Trump’s towers.
Part of the business strategy at Trump Ocean Club was luring wealthy and “secretive” Russians — who didn’t want any questions asked about where their money came from.
The money quote in this story for me comes from a broker involved with the project named Alexandre Henrique Ventura Nogueira. Half of Nogueria’s customers were Russian.
“I had some customers with some, you know, questionable backgrounds.” He also said that he found out later that some customers were part of the Russian Mafia.
Another real estate broker who worked in Panama during the TOC pre-construction sales period told Global Witness that Eastern European and Russian investors at the TOC were “very secretive”, especially when setting up shell corporations, so you “don’t know their names” and “didn’t know where their money came from.”
Rich Russians – whom he called “the whales” – were prized clients because brokers could earn substantial commissions working with them. These were exactly the kind of purchasers needed by Trump and others to secure early sales, and therefore the financing through Bear Stearns to develop the project.
Ventura Nogueira was asked point blank about this: “Did the Trump Organization know there were some Russians there with strange backgrounds involved in buying? I don’t know.”
There are a lot of things to like about this story. (Story is the wrong word. It’s a 28-page report.) Not only does it reveal the corruption that built the Trump Ocean Club, but it goes a step further. Ken’s story offers solutions — a rarity in journalism — to eliminate the pervasive money laundering in real estate that built not only Trump’s tower in Panama, but his tower Manhattan’s Soho neighborhood, Azerbaijan, and other places.
The story calls the Trump Ocean Club one of Trump’s most lucrative deals. How lucrative? We don’t know.
But what was in it for Trump? There is little transparency around Trump’s financial agreement with Newland, a company that filed for bankruptcy in 2013. In fact, according to Univision News’ reporting of a New York court’s hearing on the bankruptcy, Newland refused to turn over the agreement with Trump to license his name. This prompted the judge to say to Newland’s attorney: “Go to Panama. If you want to do your deals in secret, go and do it in Panama. Don’t do it in my court.”
You should also check out Ken’s popular blog, Washington Babylon.
Exclusive: FBI’s Wiretap Application for Vyacheslav Ivankov
Vyacheslav Ivankov
I’m posting here for the first time the FBI’s 52-page application filed in 1995 for the interception of a cell phone belonging to Russian Mob boss Vyacheslav Ivankov.
Here is the link: Vyacheslav Ivankov Wiretap Affidavit
There’s background on Ivankov and his (somewhat tenuous) connection to Trump here and here.
Couple of notes:
- The document doesn’t mention Trump and does not involve him (as far as I can tell).
- Publishing the information in this document has gotten journalist Robert I. Friedman sued. (See Komarov v. Advance Magazine Publishers). Most of the salient material in this affidavit can be found in Friedman’s excellent book Red Mafiya.
- This is an ongoing experiment in collaboration. If you find this document helpful, useful, or interesting or you have information that adds to the picture, please click the black contact button at the top of the screen and drop me a note.
Who is Bill Browder? (Updated)
Bill Browder
This much is clear: Vladimir Putin hates Bill Browder.
Browder was once the largest foreign investor in Russia and, it needs to be said, a great admirer of the Russian president. Today, he is perhaps the Putin’s regime’s fiercest critic, and Browder must derive some satisfaction in the way he grates on the Kremlin.
Browder’s change of heart came well after he was kicked out of the country in 2005. It was the death of an accountant who worked for Browder named Sergei Magnitsky that did it. Magnitsky was thrown in prison, where he was beaten and left to die in 2009 from lack of medical treatment. His crime? Magnitsky had had the temerity to expose a massive $230 million tax fraud perpetrated by Russian officials.
In response, Browder lobbied Congress to draft legislation imposing sanctions on the Russian officials responsible for Magnitsky’s death. The Magnitsky Act was signed into law by President Obama in 2012. Browder has continued his campaign in Canada, the United States, and Europe — and it has driven Russian officials bat-shit insane.
Russian legislators responded to the Magnitsky Act by banning adoption of Russian children by Americans — harming their most vulnerable citizens for what, political retaliation? A year later, in a shameful display of injustice, a Moscow court convicted Magnitsky of tax evasion in a posthumous trial. (Browder was found guilty of fraud in absentia.) The Trump campaign was drawn into a June 2016 meeting with Russians on the Magnitsky Act when the future president’s son was promised dirt on Hillary Clinton.
In the latest hysterical response, now it’s Browder who is suspected of murdering Magnitsky. According to Russian prosecutors, Browder colluded with a British intelligence agent to convince Russian prison doctors to withhold care for Magnitsky. The evidence is comical: poorly written communications that were allegedly intercepted from Western spy agencies.
Russia managed to get Browder briefly banned from entry to the United States by putting him on an Interpol wanted list. His visa privileges were restored by the Trump administration on Monday after members of Congress and the press leaped to Browder’s defense.
The reason the Magnitsky Act drives the Kremlin nuts is that it hits the kleptocrats in their unprotected flank. Russian oligarchs and the kleptocrats who steal from the state store their assets in the West. And what is the point of stealing a fortune from the Russian people if you can’t buy condos in Miami or Manhattan or send your kids to exclusive British schools because of some lousy sanctions?
Browder has rightly been praised for his courage in standing up to the Putin regime. And his book, Red Notice, is an excellent read. However, the laudatory coverage Browder regularly receives from a press corps he has skillfully cultivated and his star treatment before a US Congress he lobbies require a selective reading of events.
The fact is that Browder was once one of Putin’s biggest cheerleaders, as he admitted during deposition:
Q: So in 2005, you were quite a supporter of Vladimir Putin’s, right?
A: Correct.
Most gallingly, he defended the 2003 arrest of Mikhail Khodorkovsky, the head of Yukos, one of the world’s biggest oil producers. Stalin would have approved of the way Khodorkovsky was convicted, imprisoned in a gulag at Russia’s border with China, and then put on trial and convicted again. His company was seized and acquired by the state.
It wasn’t exactly clear what Khodorovsky had done wrong except he had criticized Russia’s corruption during a televised meeting with President Putin a few months before his arrest and funded a movement promoting the rule of law and democratic values called Open Russia.
Khodorkovsky’s arrest and the seizure of Yukos wasn’t democracy; it was Mafia tactics. But Browder hailed Khodorkovsky’s arrest as progress toward Russia’s return to greatness:
Putin, was only doing “what any leader would do to further his nation’s interests,” Browder wrote. “While there may be some things about Putin that we disagree with, we should give him the benefit of the doubt in this area and fully support him in his task of taking back control of the country from the oligarchs.”
As for Khodorkovsky, Browder said he was hiding something. “Khodorkovsky collected an enormous pile of cheap assets from the government and minority shareholders, and then embarked on an impressive charm and lobbying offensive to legitimize himself and his wealth. He has been very successful in getting people to forget his not-so-distant past,” Browder wrote.
Now, it’s Browder who has been very successful in getting people to forget his not-so-distant past. Putin’s No. 1 enemy, as he describes himself, was once Putin’s No. 1 fan. (To his credit, he did expose corruption at the companies in which he invested such as the gas giant Gazprom, and this made powerful enemies.)
Here is part of a presentation by Browder in April 2005 titled Seven Big Myths About Russia
Consider how The Wall Street Journal described Browder in 2006 after he had been kicked out of Russia:
Browder has been one of the most outspoken supporters among foreign investors of Russian President Vladimir Putin. He argued tirelessly that the western media and critics of the Kremlin were misreading the situation and that Putin’s administration was good for investors. He was defending the Kremlin as recently as January, when Browder spoke at the World Economic Forum in Davos, Switzerland.
That’s right. Browder was still defending Putin even after he was denied entry to the country.
Why such love for Putin? In deposition, Browder says the two men never met. The answer: It was just business. Investing in Russia was very profitable. His fund, Hermitage Capital Management, recorded $1 billion in profits and Browder pocketed $130 million in 2006.
When Browder was denied entry to Russia, ostensibly as a threat to national security, his Hermitage Capital Management was the country’s largest foreign investor with $4 billion in Russian equities. Like Khodorkovsky before him, Browder appeared to have made the mistake of believing that he was untouchable. Who in their right mind would ban the man who brought billions into the Russian economy?
Browder’s lobbying of US politicians and courts would sit better with me had he not given up his U.S. citizenship. In 1998, Browder obtained a passport from the more Russophilic United Kingdom. Published reports say he did this for tax reasons but he gave a different explanation during deposition:
Q. So why did you give up your U.S. citizenship?
A. Personal reasons.
Q. And what are those personal reasons?
A. My family was persecuted during the McCarthy era….
Q. What kind of persecution did you face?
A. My grandmother was sick with cancer and the U.S. Government tried to deport her to Russia when she was dying. [Browder’s grandfather, Earl Browder, led the Communist Party in the United States.]
Q. What year was that?
A. In 1950 something.
Q. I see. And so 1998, this all came back as a rush of emotion and you decided to give up your U.S. citizenship?
A. No.
Interestingly, Britain, Browder’s new home, has been much slower to take up the Magnitsky cause. (A bill passed the House of Commons this year and is now being considered in the House of Lords.) The Brits have a conflicted relationship with Russian rubles: They have to come to depend on them. London is where Kremlin insiders like to stash their money. It’s where they buy homes through shell companies, go shopping and send their children to posh schools.
Billions of pounds have washed through Britain since the fall of the Soviet Union, (although nobody knows exactly how much). A group even offers kleptocracy tours of London. The imposition of sanctions by Great Britain against Mother Russia would drain that swamp but it might also drain the balance sheets of some powerful banks.
Browder has been demanding justice for Sergei Magnitsky — and rightfully so — but, at least in one instance, he literally ran away from an American court. Here is what happened when a process server tried to serve Browder with a subpoena in New York following his 2015 appearance on The Daily Show:
The case involved a Russian financier named Denis Katsyv. At the time, Katsyv was accused in federal court of laundering money that was part of the fraud that Sergei Magnitsky uncovered. The case that was based on information Browder provided to prosecutors in New York.¹ Browder eventually did have to testify and I’ve posted Browder’s Deposition.
Am I wrong in thinking that it’s grossly unfair and somewhat suspicious for Browder to demand justice for Magnitsky while fleeing a subpoena in the case he instigated? Shouldn’t he be proud to stand up for his late friend and colleague?
Please don’t mistake what I’m saying here. I’m no fan of Putin, but Browder is undermining his own cause when he selectively uses the law and the press to serve only his own interests.
1. Katsyv’s case, U.S. v Prevezon Holdings, was settled for $5.9 million before trial.
The Russian Gangster Who Loved Trump’s Taj Mahal
Vyacheslav Ivankov
Remember Vyacheslav Ivankov, the Russian gangster?
He was perhaps the most feared of the Vory vor v zakone, a member of the “thieves-in-law,” the highest criminal echelon in Russia.”Yaponchik” (Little Japanese), as he was known, came to New York in March 1992 to organize the Russian Mob.
Despite Ivankov’s flagrant, multinational criminal activities, during his first years in America, the FBI had a hard time even locating him.
They eventually found him in Trump Tower. A copy of Ivankov’s personal phone book, which was obtained by author Robert I. Friedman, included a working number for the Trump Organization’s Trump Tower Residence, and a Trump Organization office fax machine.
Ivankov vanished again and then turned up at the Taj Mahal in Atlantic City, the Trump-owned casino that Trump liked to call the “eighth wonder of the world.”
I’ve come across some FBI documents that add a bit more to this story:
And this:
The Taj Mahal had become the Russian mob’s favorite East Coast destination. As with other high rollers, scores of Russian hoodlums received “comps” for up to $100,000 a visit for free food, rooms, champagne, cartons of cigarettes, entertainment, and transportation in stretch limos and helicopters.
The Taj Mahal was just treating Ivankov as a good customer, right?
Who is Tevfik Arif, Part II
In June of 2005, Tevfik Arif celebrated his birthday at the grand opening of Turkey’s most luxurious hotel, the “seven-star” Rixos Premium Belek.
Guests came from all over the world: from America, from Latvia, from St. Petersburg, Israel, the Cote d’Azur, Ukraine and Samara. Attendees included retired NHL star Pavel Bure, Moscow restaurateurs, Russian businessmen, and billionaires who sailed in by yacht or flew in on private jets.
Donald Trump, who had partnered with Arif’s New York company Bayrock to build a tower in Ft. Lauderdale, Florida, could not make it, but he sent a message of congratulations: “Tevfik is my friend! Let’s drink to Tevfik!”
Recep Erdogan, the prime minister of Turkey and future president, stopped by to join the well-wishers, according to a gossipy report on the party in the Kremlin-friendly Russian newspaper Izvestia.
Turkey has been good to Arif. It became Arif’s home after he left Kazakhstan in 1994. Arif obtained a Turkish passport that same year and went into business with Fettah Tamince, the founder of the Rixos hotel chain. The two men partnered in 1999 to build a hotel Antalya. Then Arif expanded his business in New York.
Another guest at the Rixos Premium Belek was Tamir Sapir, the New York real estate tycoon and Soviet emigre who partnered with Trump and Arif to build Trump SoHo. Sapir arrived on his 160-foot yacht Mystere.
Alexander Mashkevitch
Also arriving for the party was Israeli-Kazakh billionaire Alexander Mashkevtich. , one of Bayrock’s strategic partners. Mashkevitch’s friendship with Arif will soon embroil him in a deeply embarrassing scandal — but I’m getting ahead of myself.
Mashkevitch and Arif had crossed paths in the post-Soviet metals industry in Kazakhstan. (See Part I) Mashkevitch, together with his partners Patokh Chodiev and Alijan Ibragimov, had joined up with Michael Cherney and Trans World Group to enter the metals business in post-Soviet Kazakhstan.
Back to Arif’s party. What a celebration! What a moment for a simple Soviet hotel bureaucrat!
Two years later, Arif will stand next to Donald Trump at another lavish party in lower Manhattan for the launch of Trump SoHo, the tower the two men are building together.
And that was the top of Arif’s roller coaster ride.
Shortly after the Trump SoHo launch one of his employees, Felix Sater, was exposed in The New York Times as a convicted felon who had swindled investors out of $40 million with the help of the Russian and American mafia. Trump SoHo opened on 2010 and began a multi-year slide to foreclosure.
And then, on the night of September 28th, 2010, Turkish police roped down from helicopters onto a yacht and bust up a prostitution ring with underage girls that prosecutors alleged was run and financed by Arif. Some 20 people are detained. Among them, according to the Israeli press, is the Kazakh billionaire Alexander Mashkevitch, who paid for the yacht.
Some of the “models” rounded up on the Savarona yacht (as photographed by Turkish media).
Arif’s friends, including Donald Trump, can’t get away from him fast enough. “I really don’t know him well, Mr. Arif,” Trump said in a 2011 deposition. “I’ve met him a couple of times.”
According to a copy of the bill of indictment, obtained by theblacksea.eu, the charges laid against Arif are: “Trade in human beings, involvement in, inducement or aiding and abetting to prostitution, traffic in juveniles under 18, creation of criminal organization with the purpose of commission of crime.”
Before I get a nasty letter from Arif’s lawyer, I should say that Arif was acquitted of all charges in 2011 and no underage girls were found on the yacht. It didn’t help the prosecution’s case that the ring instructed the girls not to testify. “Keep the girls as silent as the grave,” read one text.
But the indictment lists the details that Turkish police uncovered while listening in on the prostitution ring’s phone conversations for months. They recorded members of the group haggling over prices for underage girls and this exchange of text messages between a member of the prostitution ring and a woman named Olga.
Olga: “Do you want all models for sex? I should know it because many don’t agree for sex”,
The response: “Olga, client wants sex”
The indictment describes this harrowing discussion between Arif’s major domo, Gyundyuz Akdeniz, and one of his underlings:
Arif was usually more circumspect, possibly aware that people were listening. In this conversation in March 2010, Arif and Akdeniz discuss the arrival of five girls, (including two 16-year-olds) to meet “guests” (including Mashkevitch) at the Rixos Premium Belek.
Tevfik Arif: What is the matter, what is happening? Tell me.
Akdeniz: Do you mean the guests?
Arif: What is happening at all? I know nothing.
Akdeniz: The guests are arriving tomorrow evening. Mr. Mashkevitch will arrive.
Tevfik: When will the guests arrive?
Akdeniz: The plane will arrive in a little while, there must be four.
Arif: Umph, umph
Akdeniz: Oh, sorry, five must arrive now.
Arif: Who are they from?
Akdeniz: Two are from Sasha [provider of girls]
Arif: Umph, umph
Akdeniz: Three are from the new agency.
Arif: And those two from Sasha are the former ones, aren’t they?
Akdeniz: No, the former ones will arrive at 1 a.m.
Arif: I see, he sent the new ones.
Akdeniz: Yes, tomorrow two will arrive from Sasha.
Arif: Okey.
To be continued….
Who is Tevfik Arif? Part I
Tefvik Arif was the chairman of Bayrock Group, the murky company that partnered with Donald Trump to build Trump SoHo in lower Manhattan.
Figuring out who he is was not an easy task.
Tevfik Arif (Тевфик Ариф) was born Toifik Arifov (Тофик Арифов) on May 15, 1953 in the Soviet Socialist Republic of Kazakhstan. He was one of four brothers born to a Turkish family in the Jambyl Region in northern Kazakhstan.
That’s about the only thing we know about his early life with any certainty.
What he did for the next 38 years is unclear. The oft-repeated facts of his background come from a short profile on Arif published in Real Estate Weekly in 2007, just as Trump was preparing to kick off sales of Trump SoHo.
Real Estate Weekly reported that Arif had received a degree from Moscow Institute of Trade and Economics and then worked in the Soviet Ministry of Commerce and Trade in the former Soviet Union for 17 years, where he served as the chief economist and deputy director of the Ministry’s Department of Hotel Management.
Many journalists have repeated this story. It may be true, but no one seems to have bothered to check. It’s worth noting that this is the only reference to a Soviet Ministry of Commerce and Trade that I found on the Internet. There is a Russian ministry that has this name, but I could find nothing from the Soviet era. (Arif did not speak English very well, so it’s possible this is a mistranslation.)
There was, however, something called the USSR Chamber of Commerce and Industry, which was run by the KGB and spied on the West. A third of the chamber’s staff were KGB, according to a US State Department report that cited CIA information. And the USS Chamber of Commerce and Industry did have a hotel division, V/0 Sovintsentr, which ran a trade center and various Moscow hotels.
In the Russian press, Arif is affiliated with the Soviet Ministry of Foreign Trade (which did exist). Or maybe he was just a Soviet hotel bureaucrat, as he claims. Whatever Arif did for the first 40 odd years of his life, he hasn’t been very open about it.
Trans World Group
After the collapse of the Soviet Union in 1991, Arif left the government and made a career leap. A huge leap.
In a court proceeding in Turkey, the former Soviet hotel bureaucrat testified that he “worked in energy sector, chemical sector and metallurgy sector. I was producing coal in Russia and copper in Kazakhstan. Due to lack of coal, it was not possible to make production. I started to organize them.” He started a private company called the Speciality Chemicals Trading Co., trading in “chrome, rare metals and raw materials.”
And then he went to work for Trans World Group. TWG was a British company headed by two brothers, David and Simon Reuben. After the Soviet Union collapsed, the Reubens moved aggressively into metals production, buying up smelters and refineries.
As foreigners, however, the Reubens needed locals to build their business. Enter Arif. He became an “agent on the ground” — a fixer, in other words — for TWG in Kazakhstan, according to internal company documents reviewed by theblacksea.eu, an online investigative Website.
Arif apparently did his job well. Very well. In a few years, TWG’s holdings of steel, iron, chrome and alumina refineries in Kazakhstan generated one fifth of the entire country’s gross revenues.
Maybe Arif was just a Soviet hotel bureaucrat who seized a once-in-a-lifetime opportunity to get into the post-Soviet metals sector. But his hotel background would have been of little use to TWG. What TWG needed was someone with deep connections in the country’s political and business circles. The kind of people who had those connections in the Russia of the 1990s were either ex-KGB, or mobsters.
Michael Cherney
Consider another pair of fixers the Reubens brought into TWG in 1992. They were the Cherney brothers, Lev and Michael, and they formed a 50-50 partnership with TWG. It was a successful partnership. With the Cherneys help, TWG grew by leaps and bounds. The problem for the Reubens was that Michael Cherney’s name soon became publicly linked to Russian organized crime groups. The Reubens quickly bought out Cherney’s share of TWG for $410 million.
Vyacheslav Ivankov
Swiss authorities in 1996 accused Michael Cherney of “drug trafficking, money laundering, fraud and sponsoring murder” on behalf of a Russian organized crime group run by “V Ivankov.” This was the infamous Russian mob boss nicknamed “Yaponchik” who had settled in New York, where the FBI found him hiding out in Trump Tower and Trump’s New Jersey casino.
Michael Cherney has repeatedly denied these allegations, which he blames on his archenemy and former partner Oleg Deripaska, one of the wealthiest men in Russia. In 2008, the federal Swiss court exonerated him of the charges, but two years later, Spain issued an international arrest warrant for Michael Cherney’s arrest on money laundering charges.
Did Arif have links to the Russian Mafia? Felix Sater, who worked under Arif at Bayrock, seems to think so.
The Wall Street Journal reported that Sater and his attorney threatened to expose Arif’s past unless he paid Sater’s attorney fees. Sater warned of a possible lawsuit that would include details of Arif’s wrongdoing “in the post-Soviet metals business in Kazakhstan.”
In a personal memo, Sater was even more blunt: “The headlines will be, ‘The Kazakh Gangster and President Trump.'”
A High-Net Worth Individual
“The head of the family is my uncle Roustam Arif [sic],” Tevfik’s son Arif writes in 2013 in correspondence obtained by theblacksea.eu. “In our culture, the patriarch is usually the oldest member of the family. Roustam is my father’s oldest brother. Even though my father is a successful entrepreneur in his own right (hotels, construction and real estate), his younger brother Refik Arif is the principal figure in the main family business (commodities).”
In the mid-90s, Refik reportedly acquired control of the Aktyubinsk Chromium Chemicals Plant (ACCP) in Aktobe, in north-western Kazakhstan, near the border with Russia. Refik also established a highly profitable chemicals trading business. And this is an important piece of the story, because the money for Bayrock, at least part of it, came through Kazakhstan.
Consider that for a moment. The Arifs managed to pool enough capital and influence to buy what turned out to be a highly lucrative chemical plant. How was this possible? What really happened in Kazakhstan in 1990s?
Around 1999, Refik Arif’s chemical trading business was generating so much cash that the family retained Hamels, a UK tax consultancy, to help structure their investments. On its website, Hamels describes its typical clients as “high net worth individuals seeking to minimize their respective tax burdens on current income or investment streams…”
In a 2011 memo, Hamels partner Zig Wilamowski wrote, “Mr. Refik Arif is one of four brothers who have over many years built up a substantial and profitable international business from the sale of chrome-based chemicals.” Williamowski said he was in a position to verify the “good origin” of the Arif family’s wealth. You can read the document here.
With the help of Hamels, the Arifs set up a network of shell companies, many of which were established in the Caribbean tax haven of the British Virgin Islands. These companies included Bennington Trade Assets Ltd., which owns property in the center of London and Merlin Trading Assets Ltd., which owns an executive jet. There are too many companies to name them all. Many are found in the Panama Papers leak of offshore companies founded by the Panamanian law firm Mossack Fonseca.
The real moneymaker for the family was Castello Global Ltd., which handled the profits from the chrome trading business. Here is a breakdown of Castello Global’s profits:
So much money was pouring out of Kazakhstan that Tevfik Arif decided it was time to try something big. Really big.
He moved to New York and set out to do a real estate deal with the biggest and the best. So he set up offices of his new company Bayrock Group in Trump Tower, one floor below Trump’s own offices.
To be continued…
Facebook, Jared Kushner and Russia
Call me skeptical.
I don’t believe that Facebook won the election for Donald Trump. That’s the claim put forth in this hagiographic profile of Jared Kushner in Forbes and in many other media outlets.
The traditional campaign is dead, another victim of the unfiltered democracy of the Web–and Kushner, more than anyone not named Donald Trump, killed it.
We see these stories every time a new president is elected. A while back it was Obama’s “data crunchers.” This time, the key to Trump’s victory, Kushner would like us to believe, were computer algorithms that targeted potential Trump supporters with social media to stunning effect.
Kushner takes credit for hiring Cambridge Analytica, a company owned by Robert Mercer who also happens to be a Trump supporter, Breitbart investor, and a reclusive hedge fund billionaire.
The secret weapon was Cambridge Analytica’s computer algorithms that figure out who you are based and what motivates you based on all the times you click Like on Facebook, as Cambridge Analytica’s Jack Hansom explains in this video:
These algorithms turned up some surprising findings. Liking the New Orleans Saints mean you’re less likely to be “conscientious,” i.e. do the right thing. And liking the Energizer Bunny means you’re more likely to be neurotic.
So what? Well, one or two of these things don’t tell you much, but the average person has hundreds of Facebook Likes which allows Hansom and his colleagues to build a surprisingly accurate picture of your personality. You can test this on yourself here.
Facebook allows you to drill down to the kind of person in the kind of place you want. (You can even reach “Jew haters” in Idaho if you wish.) Here’s Cambridge Analytica’s CEO Alexander Nix showing how his company’s model could be used to drill down to find every “persuadable” gun rights advocate in Iowa:
It’s very impressive (and very creepy), and it makes for a good story, one that Silicon Valley loves in an everybody-is-stupid-except-for-me way.
But the problem with the claim that Kushner and his machine learning wizardry won the election for Trump is that everybody was doing it. Hillary Clinton had a team of mathematicians and analysts crunching data. Ted Cruz had hired Cambridge Analytica as well, but then he ran into the Trump train.
I may be wrong, but I’d wager the $1.8 billion worth of free airtime that TV networks gave Trump every time he opened his trap probably had a lot more to do with him winning the election than Cambridge Analytica.
Trump knows how to get on TV: He is a promotional genius. What will he say next? He’s a modern day PT Barnum and Jeff Zucker‘s CNN couldn’t get enough.
Setting that aside, the Facebook/Jared Kushner story is still pretty important. And what’s important about it is that Special Counsel Robert Mueller thinks it’s pretty important. Facebook may not have won Trump the election, but it may seriously damage his presidency.
CNN reported Sunday that Mueller, who’s investigating Trump’s links to Russia, had served Facebook with a search warrant. Mueller was interested in the $100,000 worth of ads purchased by bogus accounts that Facebook on Sept. 6 acknowledged had “likely operated out of Russia.”
Mueller’s search warrant for Facebook is a big deal, a former federal prosecutor explains:
Mueller would have had to show the judge that there was reason to believe that one or more foreign individuals committed a crime and the evidence of the crime could be found on Facebook’s servers.
The crime is that foreign nationals are prohibited from contributing money “or other thing of value” (like $100,000 worth of Facebook ads) in connection with an election. It’s also against the law to solicit, accept, or receive such a contribution. (Here is the statute.) And if someone on the Trump campaign knew about the Russian Facebook ads and did nothing to stop it, that is also a crime — aiding and abetting.
Did someone on the Trump campaign know about the Russian Facebook ads. We don’t know yet, but the answer lies in targeting. To put it in Watergate terms: Who targeted whom and when?
Were the Russian Facebook ads and the Trump campaign targeting the same people? And if so, how did a bunch of Russian trolls in St. Petersburg or Vladivostok or where ever know to target, say, black women in Milwaukee or rural voters in Michigan’s Upper Peninsula, for example?
I tried to ask Alex Stamos, Facebook’s chief security officer, but didn’t get a reply.
This question intrigues Sen. Mark Warner, the leading Democrat on the Senate intelligence committee, as he said on the Pod Save America podcast:
Warner: When you see some of the explanation and some of the fact that it appears that, for example, women and African Americans were targeted in places like Wisconsin and Michigan, where the Democrats were too brain dead to realize those states were even in play … It was interesting that those states seem to be targeted where the bots — where they could could create a lot of these fake Twitter and Facebook accounts, could in fact overwhelm the targeted search engines that would end up saying on your news feed, you suddenly got stuff that “Hillary Clinton’s sick” or “Hillary Clinton’s stealing money from the State Department.”
I get the fact that the Russian intel services could figure out how to manipulate and use the bots. Whether they could know how to target states and levels of voters that the Democrats weren’t even aware really raises some questions. I think that’s a worthwhile area of inquiry.
How did they know to go to that level of detail in those kinds of jurisdictions?
Vietor : I wonder if they just asked Jared [Kushner] like Trump does with all of his questions. We’ll find out.
Warner : We’ll find out. More to come on that.
Sen. Warner thinks it’s a worthwhile line of inquiry, and it’s a good bet Mueller does too. The information Facebook handed over to Mueller included the targeting criteria the bogus Russian accounts used, The Wall Street Journal reported.
An unnamed Trump campaign staffer told CNN that the key to the whole inquiry may be found on Facebook’s servers.
Only Facebook can answer three critical questions: were the same databases used by the Trump campaign and Russian operatives to coordinate targeting of voters; was money used to promote pro-Trump posts, and, if so, how much was spent and by whom; and will Facebook reveal if bots were successfully used to push fake news posts?
Hopefully, Robert Mueller knows the answers.
The Scorpion and The Frog
I just finished reading The Scorpion and the Frog, the book by Felix Sater’s Wall Street pal, Salvatore Lauria.
It’s an interesting read about Sater’s time on Wall Street and his dealings with Mobsters.
Even more interesting are the details about his cooperation with the CIA in Russia against al Qaida that helped keep him out of prison for racketeering.
A lot of these details were new to me, so I thought I would post a little summary of what’s in the book.
Sater’s lawyer, Robert S. Wolf, has called some of the CIA-related portions of the book “fabricated.” However, The Scorpion and the Frog was the subject of a 2002 legal proceeding in federal court in Los Angeles. Lauria sought to stop publication of his own book. Not because it was fiction, but because it told the truth.
According to Lauria, he had agreed to write the book on the condition that his real name not be used. His publisher, however, went ahead and used his real name, and Lauria was worried that he could be physically harmed by the people named in the book. A bench trial was held and in the end a federal judge cleared the way for the book’s publication.
With that said, here’s my abridged version of what the book says:
Felix Sater walked away from his Mob-linked Wall Street business in 1996 and headed for Russia. He would spend the next two years there before returning to the United States to surrender to the FBI in 1998 and plead guilty to racketeering.
Sater had two jobs in Russia. The first was a deal to bring AT&T bulk long distance service and pre-paid phone charge cards to the country. The second was to find a deal that could get him out of jail.
Sater began to develop contacts at secret Russian military installations known as closed cities, which held “some of the great secrets of the Soviet Union,” Lauria wrote.
The closed cities were opening up. Their representatives were contacting “various countries and rogue organizations interested in buying everything from missiles to assault rifles to millions of rounds of ammunition,” Lauria wrote. They also would make munitions and missiles “to order.”
“We ran into guys selling shiploads of arms to Arabs and other Muslims — Libya, Iraq — countries that were hostile to the United States,” Lauria wrote.
At some point, according to the book, Sater made an initial contact with “someone connected to the CIA.”
Sater gave this version of events to New York magazine.
One night, Sater told me, he went to dinner with a contact that he assumes was affiliated with the GRU, the Russian military-intelligence agency, where he was introduced to another American doing business in Moscow, Milton Blane. “There’s like eight people there,” Sater said, “and he’s sizing me up all dinner long. As I went to take a piss, he followed me into the bathroom and said, ‘Can I have your phone number? I’d like to get together and talk to you.’ ” Blane, who died last year, was an arms dealer. According to a government disclosure made 13 years ago in response to a Freedom of Information Act query, Blane had a contract with the Defense Department to procure “foreign military material for U.S. intelligence purposes.” Sater says the U.S. wanted “a peek” at a high-tech Soviet radar system. “Blane sat down with me and said, ‘The country needs you,’ ” Sater said.
Back to the book. Sater’s unofficial contact in the CIA came to see him and told him the agency wanted a radar tracking system that the Russians had developed before the fall of the Soviet Union. The radar tracking system had never been deployed, and the CIA worried that the system could fall into the hands of our enemies.
“We looked around through Lex’s contacts and found we could definitely get the radar system. For once, this was a deal we were doing with no interest in the money. We were doing it to enhance our own position regarding the legal charges, and also as something that might benefit the country. Money or profit was not an issue. We just wanted the credit for doing it. With a direct line to the radar system, we contacted our lawyer in New York, who went to Washington DC to talk to the CIA”
The CIA was interested. The agency sent a man to Russia, and Sater located the radar tracking system. (In other parts of the book, Lauria calls it a “missile guidance system.”)
With that success, Sater was approached about acquiring a dozen Stinger missiles. The Stinger was the portable, shoulder-fired missile that used a heat-seeking sensor to home in on an aircraft’s engine. They could be fired from as far away as 5 miles away and could easily bring down a passenger airliner.
The CIA was desperate to get hold of them. Lauria states that at least 12 Stinger missiles were obtained by Osama bin Laden.
As he had with the radar tracking/missile guidance system, Sater found that he could get the Stingers, albeit in a round-about way.
Sater could not buy the Stingers directly from al Qaida. “Instead, he used his contact with a KGB general who claimed he had strong ties with Ahmad Shah Massed, leader of the Northern Alliance,” Lauria wrote. Sater alaso used “connections he thought he had with both sides in the Afghan War.” This is interesting. Was Sater dealing with the Taliban?
According to Lauria, Sater obtained photographs of the Stinger missiles as well as the the serial numbers of three of them to verify their authenticity. Sater also obtained what he thought was an active cell phone number for bin Laden. His attorney supplied it all to the CIA.
The CIA offered to pay Sater $300,000 per missile. Lauria insists there was no profit built into the deal. However, one of their partners, Gennady “Gene” Klotsman went behind their backs and demanded $3 million per Stinger. The CIA was furious and called off the deal.
A few days after the attacks of Sept. 11, 2001, Lauria got a phone call from Sater. The information they had provided about Osama bin Laden was now being actively pursued.
“Our situation had improved,” Lauria wrote.
Felix Sater and Michael Cohen: Childhood Friends.
Somehow I missed this. Buried deep in this excellent New York magazine piece on Felix Sater is this tidbit:
Cohen, one of Trump’s personal attorneys, had known Sater since they were teenagers.
I’m curious how these two met. Sater was born in Russia and grew up in the Russian enclave of Brighton Beach as a Mobster’s son. Cohen grew up on Long Island as a doctor’s son. About the only thing the two seem to have in common is that they are both Jewish and roughly the same age.
Update: Sater told Talking Points Memo he knew Cohen through Cohen’s wife, Laura Shusterman:
Sater said he most clearly remembers the beginning of his relationship with Cohen from the time the former Trump Organization attorney began dating his now-wife, whom Sater describes as a girl from his neighborhood of Jewish Soviet expatriates. Cohen told TPM the pair had known each other before then, in their teenage years, and that he hadn’t yet begun dating his wife, reportedly a Ukrainian émigré, when he was in his teens.
Their friendship puts a different light of the chummy emails between the two men in 2015, after Trump announced he was running for president. In the emails, obtained by The New York Times, Sater promised to use his contacts in Russia to help Trump win.
“Our boy can become president of the USA and we can engineer it,” Sater wrote in an email. “I will get all of Putins team to buy in on this, I will manage this process.”
Cohen had been in negotiations with Sater and foreign investors to build a Trump Tower in Moscow from September 2015 through the end of January 2016. Trump announced he was running for president in June 2015.
In January 2016, when negotiations stalled, Cohen wrote to Putin’s spokesman, Dmitri S. asking for help. But Mr. Cohen did not appear to have Peskov’s direct email.
That’s really strange. Why would he do this? As an attorney, he knows how important records are. It’s almost as if Cohen didn’t really expect a reply, but wanted to leave a trail.
And the White House has been referring questions about this whole matter to Cohen’s attorney, suggesting that this was Cohen’s deal, not the Trump Organization’s.
Trump and the Yalta Yacht Club
The port of Yalta on the Black Sea has long been a source of controversy.
Churchill, Roosevelt and Stalin met there in 1945 to discuss what to do with Germany when World War II ended. The Big Three agreed to demand Germany’s unconventional surrender. They also left with a promise form Stalin to allow free elections in Poland and to grant Eastern Europe the right of political self-determination. Stalin, however, wasn’t a man of the word and the result was a divided Europe and decades of Cold War.
On the 50th anniversary of the Yalta Conference, Donald Trump was considering whether to put his mark on the the Black Sea port.
In September of 2005, a Ukrainian cabinet minister announced that Trump was considering a major investment in his country.
Evhen Chervonenko, Ukraine’s minister of transport, announced on Sept. 12th that Trump planned to put $500 million into construction of an exclusive yacht and hotel complex in the Black Sea resort of Yalta. In order to boost tourism, the Yalta yacht club would replace the unsightly Yalta freight port.
The plan called for what Chervonenko called for a “huge condominium” with restaurants and a hotel.
The Yalta deal never happened, but it’s a chapter of the Trump-Russia story that has not gotten the attention it deserves for it weaves together two critical parts of the saga: Felix Sater and Deutsche Bank.
For Chervonenko had not met with Trump, but rather with one of his representatives, Felix Sater.
h/t Susan Simpson
Sater was a violent twice-convicted felon who had gone to prison for stabbing a commodities trader in an ugly bar fight. Born in Russia and raised in the Russian enclave of Brighton Beach, Sater was the son of a Russian mobster convicted of extorting businesses in Brooklyn.
Despite his past, or perhaps because of it, Sater had gotten a job at Bayrock Group LLC, a New York development firm run by Tevfik Arif, a Kazah-born businessman. Bayrock joined forces with Trump to develop Trump SoHo, in lower Manhattan.
Construction on Trump SoHo had not yet begun when Trump granted Sater and Bayrock exclusive rights for one year to develop a Trump International Hotel and Tower in Kiev and Yalta and the rest of the Commonwealth of Independent States, which included Russia, and the former satellite republics in the Soviet Union. So this career criminal journeyed to Ukraine to negotiate a deal for Trump.
Yalta, although rich in history, is not the first place one thinks of for international tourism. Its location in the Russian-speaking Crimean Peninsula made it part of the ongoing tension between Russia and Ukraine that would culminate in Russia’s invasion of Crimea in 2014.
But Sater was obviously deeply connected in Crimea and the Ukraine. He arrived in the Ukraine in September 2005 bearing a letter from Trump that declared that Ukraine was developing rapidly, and was an ideal location for the signature development of Donald J. Trump. Somehow, Sater got Bayrock Group in a 2005 meeting of the executive council of investors of Crimea chaired by the Prime Minister of Crimea, Anatoliy Matviyenko, according to a Sept. 1 press government release.
Much later, Sater would use his Ukrainian connections to help a Ukrainian lawmaker Andrii V. Artemenko deliver a peace proposal for Russian and Ukraine to the White House in February 2017. Michael Cohen, Trump’s consigliere, had met with the two men in New York and delivered the proposal to the office of Michael Flynn, the National Security Adviser. (Interestingly, Cohen had his own business dealings in Ukraine around the time that Sater was pitching developments in Yalta.)
Several other multinational firms were considering massive investments in Ukraine along with the Trump Organization in 2005. These included the National Container Company of Russia, the Ofer Group of Israel, and the Toepfer Group of Germany. The Toepfer Group would later be caught paying millions of dollars in bribes to Ukrainian officials. Russia’s Sberbank and Vneshtorgbank (now VTB) were considering an additional $2 billion in Ukraine for “re-equipment of railways and ports.” Both of these banks were sanctioned by the United States in 2014 following Russia’s invasion of Crimea.
Trump, who called himself a billionaire and regularly inflated his estimates of his net worth (see TrumpNation by Timothy O’Brien), did not have $500 million to invest in Ukraine or anywhere else for that matter.
On Sept. 9th, three days before the announcement of Trump’s “investment” in Yalta, Ukrainian Transport Minister Chervonenko announced that Trump’s favorite lender, Deutsche Bank, had agreed to loan $2 billion to finance improvements to the country’s railways, postal service, and seaports.
Deutsche Bank’s London office is an attractive target for investigators looking into Trump ties to Russia because of the bank’s own sordid ties to Russia.
From 2011 to 2015, Deutsche Bank laundered rubles into dollars (without any reporting requirements) through a practice known as “mirror trades.” The bank allowed its Russian customers to buy Russian blue-chip stocks in Moscow and then quickly execute a sale of the same stocks in London. Deutsche Bank helped Russians transfer an estimated $10 billion out of the country via these mirror trades. US and UK regulators fined the bank a combined $629 million.
Trump’s business in the Ukraine was not yet finished. In February 2006, Donald Trump Jr. and Ivanka Trump paid a visit to the Ukraine. The Trump children met with Viktor Tkachuk, an adviser to the newly elected, West-leaning president of Ukraine, Viktor Yushchenko. They also met with Andrey Zaika head of a newly-formed Ukrainian construction consortium. The meeting with the Trump children, held in Kiev, was not reported in the Ukrainian press until after the Trumps had left the country.
The Yalta deal fizzled, but it’s a remarkable moment in the Trump-Russia story.
Trump’s Russian Deposit Boxes
The Baltschug Hotel is one of Moscow’s most venerable hotels. Overlooking the Moskva River, across from the Kremlin, the Baltschug dates back to the reign of Czar Nicholas II. After the Russian Revolution, it became a dormitory, but the collapse of the Soviet Union saw the Baltschug restored to its former glory as a five-star hotel
And it was here on a Tuesday evening in September 2002, that Donald Trump arrived to sell apartments in New York to newly-wealthy Russians.
Trump wanted to make it easy for Russians to buy one of his New York apartments without even leaving the country. His real estate agent, Sotheby’s International Realty, had partnered with Kirsanova Realty to open an office in Moscow to sell his condos and apartments to Russians who were interested in buying abroad.
Trump is such a spectacle that we often forget to ask the interesting questions. What was interesting about the Baltschug event was not Trump himself. The interesting question to ask was who was buying. And the answer to that question is, well, we don’t know.
Guests at this event did not want to give their names, a reporter from the respected Russian business newspaper Vedemosti found:
However, potential customers present at yesterday’s presentation of New York real estate not only refused to reveal themselves, but also did not admit that they were interested in this real estate, insisting that they simply went in for “pies to eat”.
The Moscow Times, an English-language newspaper, also sent a reporter and noted the same thing:
When asked about the prospect of acquiring property through Sotheby’s and Kirsanova Realty, guests at Tuesday’s reception shied away from saying directly whether they were interested in the super expensive apartments. One guest said most were there to see “how the other side lives.”
Why would a Russian be embarrassed to admit they were interested in buying Trump property? That’s the interesting question.
The reason why the buyers at the event were embarrassed to give their names is because they didn’t want anybody doing exactly what these reporters from Vedemosti and The Moscow Times were doing: Asking questions.
Phllip Bogdanov of Kirsanova Realty said he didn’t consider his potential clients oligarchs, but rather owners of sustainable businesses. But that’s nonsense.
One of the few who wasn’t afraid to introduce himself to Vedemosti’s reporter was Pavel Syutkin, then the head of the investment department of the Presidential Administration of the Russian Federation. Today, Pavel Skyutkin is a food historian and author of an English-language cookbook about Russian cuisine.
The Russians who could afford a million-dollar apartment in New York were a special class of people who owed their wealth to their political connections, not their business skills. People get outrageously rich in Russia because the Kremlin allows it. The Kremlin lets them get rich; the Kremlin could take everything away. If you’re wealthy in Russia, your money is never secure. Your money was only safe if and when it moved out of the country, beyond the reach of the Kremlin.
Trump had spent a lot of time trying to put his name on something in Moscow in the 1990s. We’ve looked at his efforts to build a tower in Moscow and develop a pair of run-down Moscow hotels. At some point, Trump realized that building a tower in Moscow was the wrong way to go about it.
The Russians didn’t want to keep their money in Russia. The wealthiest of Russians weren’t interested in a Trump Tower in Moscow, but a tower in New York, now, that was something that interested them. Why not build luxury towers that served as deposit boxes for wealthy Russians and other foreigners who wanted to stash their money away? What if Trump could build right here in New York for Russian money?
This was Trump’s sales pitch. Come to New York. You can enjoy your money, no questions asked.
“Now, Russian connoisseurs of high-class housing will have the opportunity to become neighbors of well-known politicians, businessmen and Hollywood stars,” said SIR vice-president Mika Sakamoto.
Trump’s towers in New York were really safe deposit boxes for foreign money. Trump World Tower (pictured above), the 72-story skyscraper that opened in 2001, was a giant deposit box of Russian money.
Bloomberg found that Sam Kislin, a Ukrainian immigrant, issued mortgages to buyers of multimillion-dollar apartments in World Tower. An individual issuing mortgages for luxury homes is highly unusual.
One of the people Kislin provided mortgages to was Vasily Salygin, a future official of the Ukrainian Party of Regions. The Party of Regions is the Putin-linked party whose best known member is Viktor Yanykovych, the man who former Trump campaign manager Paul Manafort helped win the presidency of the Ukraine before he fled to Russia.
Kislin was business partners with Tamir Sapir, who would later partner with Trump to build the scandal-plagued Trump SoHo condo hotel.
Bloomberg also turned up another person who bought in Trump World Tower. It was Eduard Nektalov, an Uzbekistan-born diamond dealer, who purchased a $1.6 million apartment in July 2003. He was being investigated by federal agents for a money-laundering scheme. Nektalov sold his unit a month after he bought it for a $500,000 profit. He was gunned down on Manhattan’s Sixth Avenue in 2004.
Kellyanne Conway and Michael Cohen, Trump’s consigliere, bought units in Trump World Tower. Cohen also persuaded his Ukrainian in-laws and a business partner to buy in the tower as well. Cohen also helped Trump take back control of the tower’s board from a group of apartment owners upset over the way the building was being run.
What began in 2002 was the steady influx of Russian money into the Trump Organization. The same Russian money that kept him afloat during the financial crisis and the same money that is now the subject of an investigation by Special Counsel Robert Mueller.
NEW: Eric Trump: “a lot of Russians” buying Trump SoHo
Eric Trump told the Russian publication Home Overseas that the “bulk of buyers” in Trump SoHo were “foreigners, among whom there are a lot of Russians.”
He also added that the Trump Organization was expecting Russian buyers in its planned tower on Palm Jumeirah in Dubai. “We very much count on good demand from the Russians,” he said.
I haven’t seen these comments reported anywhere else before.
The comments from Eric Trump come in an article titled, “Luxury is Beyond Time,” on the website of the Russian publication. Although undated, it appears that he made the remarks around 2007-2008. Construction on the Dubai tower was halted at the end of 2008 as the financial crisis put the squeeze on the heavily-indebted Arab emirate.
Eric Trump’s comments in Home Overseas underscores what his brother Don Jr told eTurboNews in 2008: “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.”
Here is the full quote from Eric Trump:
In your projects, do you focus on domestic demand or are you looking for foreign investors?
It depends on the particular project. So, in the New York hotel-condominium Trump SoHo the bulk of buyers are foreigners, among whom there are a lot of Russians. The fact is that New York is one of the centers of international business and tourism, many foreigners often come here and want to have real estate. Quite a different situation in Chicago, where most buyers are from America.
Another example – a golf resort in Scotland is interesting both to local golf lovers, and to Americans who want to play in European fields. Also in the case of the Dubai project, our Palm Jumeirah tower will certainly attract not only investors from the Gulf countries, but also Europeans, Americans, and representatives of developed Asian states. We very much count on good demand from the Russians.
The Trump Organization’s connections with Russia in the scandal-plagued Trump SoHo project have been exhaustively covered.
I’ve written before about how Dubai was a favorite destination for Russian criminals and international money lauderers here.
The Useful Idiots of the Left
I’ve pointed out the useful idiots of the American right before like David Keene of The Washington Times and others. But Putin uses people who are useful to him, regardless of political ideology, and there are useful idiots on the American left as well.
Two that come to mind are Katrina vanden Heuvel, editor of The Nation magazine, and her husband, Stephen F. Cohen, a professor emeritus of Russian studies at Princeton and NYU and a contributing editor to the magazine his wife edits.
On Aug. 9, The Nation published a lengthy “expose” that concluded that the Democratic National Committee wasn’t hacked by Russia or anyone else, as our intelligence communities tell us. The article, titled “A New Report Raises Big Questions About Last Year’s DNC Hack,” is dense, impenetrable, and ill-informed. It takes author Patrick Lawrence 4,000 words to say that the DNC emails were downloaded at speeds faster than the internet could handle. Before that we are doused with Lawrence’s rhetorical sewage:
Lost in a year that often appeared to veer into our peculiarly American kind of hysteria is the absence of any credible evidence of what happened last year and who was responsible for it. It is tiresome to note, but none has been made available.
“Absence of any credible evidence” — File that one away for later.
This article was quickly debunked. And it was ridiculed by Sam Biddle of the Intercept who found something interesting in Lawrence’s Twitter timeline:
Editor Katrina vanden Heuvel ordered a review of this article, which is the latest in a string of Russia-related embarrassments for The Nation, a still highly-regarded left-leaning publication that is in danger of disappearing into the loony fringe. Things have gotten so bad that journalists at the magazine complained about the magazine’s Russia coverage in a letter to vanden Heuvel in June. Here’s an excerpt from a longer version quoted in this column in The Washington Post:
As longtime associates of The Nation, we are deeply concerned that by making these editorial emphases and by likening calls for investigations into the Russia connection to “red baiting,” the magazine is not only playing into the hands of the Trump administration, but doing a dishonor to its best traditions. We have noted, too, with dismay, that Tucker Carlson, Ann Coulter and other far-right adversaries have taken comfort in the writings of other Nation writers on the current crisis.
Ouch. The Nation being cited by Ann Coulter. Other Nation articles suggest that leaks pose a greater danger to U.S. national security than Trump himself. Odd choice for a magazine that exhorts its readers to the barricades with slogans like “Resist. Organize. Defend Freedom.”
[Update: Here is the Nation’s DNC article being used as Russian propaganda]
I don’t know how it happened but somewhere along the way Vandel Heuvel and her husband Stephen F. Cohen became Putin’s useful idiots. And I mean that in the same sense as Lenin did when he used it to describe liberals and Social Democrats who helped advance the Communist cause outside the Soviet Union.
Recall that “absence of any credible evidence” phrase in the article I noted above? It’s is a frequent refrain of Stephen F. Cohen, who uses it to shoot down all criticism of Putin.
The U.S. community’s findings that Russian President Vladimir Putin ordered an influence campaign into the 2016 election aimed at undermining Hillary Clinton and helping Trump’s chances of winning? No evidence.
Cohen called the declassified summary released by the U.S intelligence community on Jan. 6 “embarrassing” and “worse than amateurish” on a podcast five days after the report’s release. The report contains “zero” evidence and Cohen says not incorrectly that U.S. intelligence has been dead wrong before. A summary of his podcast describes the report as “utterly bogus.”
You probably won’t be surprised to learn that this mirrors the Kremlin’s response to the intelligence summary as well. Russian Foreign Ministry spokesman Maria Zakharova, said Jan. 12, “Accusations are usually based on facts, dates and figures. This report is based on claims. There is nothing new in it for anyone, nothing but yet another compilation of absurd stereotypes.”
Echoing Donald Trump, Cohen also says there’s no evidence that Putin is “a killer.” This ignores the chairman of a UK panel who concluded that Putin “probably” gave the order to kill Alexander Litvinenko, the former FSB agent poisoned with radioactive Polonium-210 in 2006 in a London hotel.
Similarly, Cohen argues there is no evidence that Putin kills journalists such as Anna Politkovskaya of Novaya Gazeta — gunned down on Putin’s birthday — or the 33 others killed since he took office in 2000. Once again, Donald Trump makes the same claim.
“Trump [like Cohen] is technically right but wrong in spirit,” says Mark Galeotti, a New York University professor who studies the Russian security state. “There is indeed no proof Putin has journalists killed. But he presides over a regime in which journalists are beaten, harassed and murdered, often with impunity.”
Cohen is arguing a legal technicality. Sure, there’s no evidence Putin ordered anyone’s death. But someone did order the murders Litvinenko, Politkovskaya, or Boris Nemtsov. Those killers aren’t punished in Putin’s Russia, even though Putin probably knows who they are.
Follow his line of thinking and one could make the logically-sound but completely absurd argument that there is no evidence that smoking causes lung cancer.
It goes like this: Not all smokers develop lung cancer, and not all lung cancer patients are smokers. And the link between cancer and smoking is purely statistical. No double-blind study has ever been conducted to prove that smoking and lung cancer. So, how do we know that smoking — and not, say, air pollution — causes lung cancer?
Silly, yes, but it’s the same argument employed used by tobacco makers in court. It’s also the logic of climate-change skeptics (“scientific consensus is not evidence”), and people who think the Earth is 5,000 years old (“Evolution is a theory, not proof.”)
No evidence. No proof.
It is the desperate logic of those unable to reevaluate a long held, but increasingly ridiculous position so as to avoid looking like a fool.
Mogilevich, Putin and Trump
Semion Mogilevich remains a subject of fascination in the Trump-Russia story.
I’ve written before about Mogilevich’s ties to Trump Tower and how the man called the most powerful Mobster in the world may be a subject of interest to Special Counsel Robert Mueller.
I thought it would be worthwhile to take a deeper dive into the world of Semion Mogilevich to understand who he is and what it means for Trump to be connected to him.
If you want cut to the chase, here you go: Having a relationship with Mogilevich was in some ways like having a relationship with Putin himself.
Semion Mogilevich and Donald Trump both were born in June of 1946, only two weeks apart, in vastly different circumstances. Trump, as we know, was the son of a wealthy New York developer. Mogilevich was born to a Jewish family in Kiev and before he began his life of crime he earned an economics degree.
Calling Mogilevich a Mobster is a bit misleading. He is a Mobster, but he’s much more than a Russian version of Tony Soprano.
Mogilevich is better described as a secret billionaire who made his fortune in the murky gas trade between Russia and Ukraine. US Attorney Michael Mukasey said in 2008 that Mogilevich “exerts influence over large portions of the natural gas industry in parts of what used to be the Soviet Union.”
The man called “the Brainy Don” also ran a publicly-traded company that defrauded investors in the United States and Canada out of $150 million. He sells weapons and drugs, arranges contract killings, runs prostitutes — all on an international scale. He has connections and influence at the very top of the Russian oligarchy. But the biggest sign of his power and influence is that he today lives free in Russia.
How is this possible? How can an international criminal live openly in Moscow?
To understand this, consider this secretly recorded conversation between then Ukrainian President Leonid Kuchma and Ihor Smeshko, who was then head of Ukraine’s military intelligence:
Smeshko: “So, this is why [the American FBI] thinks that Mogilevich’s organization, it is working completely under the cover of SBU [Ukraine’s secret service.] This is why there is this kind of cooperation there!”
Kuchma: “He [Mogilevich] has bought a dacha in Moscow, he keeps coming.
Smeshko: “He has received a passport already. By the way, the passport in Moscow is in a different name. And what is level in Moscow is … Korzhakov [the head of Boris Yeltsin’s personal security] sent two colonels to Mogilevich in Budapest in order to receive damaging information on a person … He himself did not meet them. His organization’s lieutenant, [Igor] Korol, met these colonels and gave them the documents relating to ‘Nordex’. Mogilevich has the most powerful analytical intelligence service. But Mogilevich himself is an extremely valuable agent of KGB, PGU … When they wanted to … Mogilevich … When the Soviet Union collapsed UKGB ‘K’ command did not exist yet. When one colonel wanted to he is retired, he lives there when he tried to arrest him, he got his pennyworth, they told him ‘Stop meddling! This is PGU [SVR, Russian foreign intelligence service] elite’. He has connections with [Russian businessman and former Deputy Prime Minister Anatoly] Chubais.”
This conversation, which was secretly recorded by a Kuchma bodyguard, is difficult to follow, but it gives you a sense of Mogilevich’s power and reach. First, he ran his own powerful intelligence service that was useful to a Russian president. He was an agent of the KGB in the days of the Soviet Union and remains a source to modern Russian intelligence. And he is protected by powerful interests in Russia.
These tapes were of great interest to Alexander Litvinenko, a former Russian FSB officer who was poisoned in a London hotel in 2006 with radioactive Polonium-210. Litvinenko, who hated Putin, had a role in transcribing them and publicizing them.
The British inquiry into his death went into considerable detail of the conversations on these tapes and his writings, which contain a few other fascinating bits of information on Mogilevich. In an email, Litvinenko revealed that Mogilevich had sold arms to al Qaida:
“I know beyond the doubt that Mogilevich is FSB’s long-standing agent and all his actions including the contact with al Qaida are controlled by FSB — the Russian special services. For this very reason, the FSB is hiding Mogilevich from the FBI.”
In Russia, criminals and intelligence services aren’t adversaries. They are birds of a feather. They share information. The Mob helps the state, and in return, Russian criminals like Mogilevich get to share in the riches and remain free.
As Mark Galeotti, an expert on Russian history and security issues, writes,
“The Russian state is highly criminalized, and the interpenetration of the criminal ‘underworld’ and the political ‘upperworld’ has led the regime to use criminals from time to time as instruments of its rule.”
Mogilevich’s ties to the Russian political “upperworld” go deep. Very deep.
In another secretly recorded conversation in 2000, Ukrainian PM Kuchma discusses Mogilevich with Leonid Derkach, the former head of the Ukrainian security services.
Kuchma: “Have you found Mogilevich?”
Derkach: “I found him.”
Kuchma: “So, are you two working now?”
Derkach: “We’re working. We have another meeting tomorrow. He arrives incognito.
Later in the discussion Derkach revealed a few details about Mogilevich.
Derkach: “He’s on good terms with Putin. He and Putin have been in contact since Putin was still in Leningrad.”
Kuchma: “I hope we won’t have any problems because of this.”
Derkach: “They have their own affairs”
According to Litvinenko, the poisoned ex-FSB agent, Putin was Mogilevich’s “krisha” or protector in Russian underworld slang.
And this was a relationship that dated back to the early 1990s when the future Russian president was a deputy mayor in St. Petersburg.
“Mogilevich have good relationship with Putin since 1994 or 1993,” Litvinenko says in broken English on a tape made before his death.
Back in 1993 and 1994, Putin was deputy mayor of St. Petersburg. He was known in St. Petersburg as the man who could get things done. His approach to the criminal world was a practical one, Karen Dawisha writes in Putin’s Kleptocracy.
The mafia and the KGB had always had points of intersection and conflict — the 1990s were no different, and the mafia had its uses. It was global, it could move money, it could hide money, and in any case, some of the money would come back to St. Petersburg for investment. So how did Putin operate? First and foremost, he made illegal activity legal.
Most countries, even corrupt ones, go after their biggest criminals. But in Russia, criminals have their uses.
One of these points where the interests of Mogilevich and Putin merge is in the natural gas trade. RosUkrEngero (RUE), a murky Swiss company that acts as an intermediary in gas sales between Russia and Ukraine is seen as a joint venture of sorts between the two men.
RUE is half owned by Gazprom, the Russian gas giant that is run by Putin’s cronies. The other half is nominally owned by two Ukrainian businessmen: Dmitry Firtash and a minority partner. But the U.S. government suspects that Mogilevich (see here) is the man behind the curtain at RUE.
The world was closely watching in 2008 when Russian police arrested Mogilevich on a tax evasion scheme. He posted bail and was released a year later. Charges were dropped in 2011.
Mogilevich is part of the story, the tragedy really, of modern Russia.
Russia is a country rich in natural resources. It has great wealth below the ground. Above ground the wealth is shared by a small number of individuals who were close to Russian President Vladimir Putin.
Putin allowed this select few to enrich themselves by siphoning billions out of the country’s natural gas and oil fields, its steel and nickel mills, its fertilizer plants, the state railroads, and many more industries. In return for unimaginable wealth, these oligarchs pledged absolute fealty to Putin.
This is an operation that Mogilevich knew very well. Enriching yourself and your friends in exchange for loyalty — that’s the job of a Mafia Don. Which is exactly what Putin is.
As Sen. John McCain told late night host Seth Meyers, Russia is a “a gas station run by a mafia that is masquerading as a country.”
Trump’s Dubai Dreams
As the cameras flashed, Donald Trump welcomed Demi Moore and Naomi Watts, Heidi Klum as they joined him at his party the Park Avenue Plaza in New York.
It was the summer of 2008 and Trump was launching his company’s newest hotel, The Trump International Hotel & Tower in Dubai.
This stunning 62-floor stainless steel and glass structure in the shape of a tulip would have sat in the center of Palm Jumeirah, Dubai’s iconic man-made archipelago in the shape of a palm.
I say would have because Trump’s Dubai tower was never built. It was a castle in the air, a fever dream built on the belief that good times would never stop rolling. Which they did not long after the New York party.
As Trump officially kicked off sales of apartments at his party in New York, the Dubai tower was attracting a lot of interest halfway around the world. Donald Trump Jr. famously said in September 2008, “In terms of high-end product influx into the US, 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. ” (emphasis added)
And these Russian buyers, whoever they were, were loaded. At the time of the New York party, pre-sales of the Dubai tower had fetched an average of $2,450 per square foot, with some units receiving bids as high as $3,270 per square foot.
After learning a little about Dubai, I’m not surprised that Russian money was attracted to Trump’s $1.1 billion project, his first venture in the Middle East.
Dubai is known for its sun-splashed towers and its man-made archipelagos but it also has a darker side. Sitting at the junction of Europe, Africa and Asia, Dubai was a crossroads for international criminals. When the emirate opened its property market to foreign buyers in 2002, Dubai quickly became a place where dirty money could be washed clean, particularly through property sales.
“During the boom, Dubai was a good place for money laundering, through property, land sales and the big projects,” Hamdan Abdullah al-Sayyah, a managing partner at Al Sayyah Advocates and Legal Consultants in Dubai, told The New York Times (for a 2010 story headlined “Dubai Labors Under Money-Laundering Image.”)
Dubai was and is a bright place for shady people. The emirate’s laissez-faire attitude allowed the vice president of Afghanistan to arrive in Dubai with $57 million in cash and continue on his way. The chairman of Kabul Bank owned 39 properties on Palm Jumeirah.
Russian criminals, too, could relax in Dubai. At least they could until 2006 when Zahar Kalashov, a top Russian Mafia boss, was arrested after leaving a party attended by members of the Georgian and Russia Mafia.
Another Russian criminal exposed in Dubai was Olga Stepanova, who, together with her now ex-husband, acquired three properties in Palm Jumeirah, the site of Trump’s tower, worth a combined $7 million. Quite a feat considering the couple reported an official joint income of $38,000.
The Stepanova villa in Dubai
It turns out Stepanova was a Russian tax official who had authorized $230 million in fraudulent tax rebates for organized crime groups. The scam was uncovered by Sergei Magnitsky, a lawyer working for financier turned human-rights campaigner Bill Browder.
Magnitsky was murdered in a Russian prison in 2009 and Browder has never forgotten him. The Magnitsky Act, signed into law by President Obama three years later, seeks to punish those responsible for his death. (For details and photos of the Dubai properties, see the Website Russian Untouchables.)
Russians were well known for buying luxury properties that then sat empty. “Russians are still coming with suitcases of cash to buy flats which they never live in,” a UK financier working in Dubai told The Guardian of London in 2010 . “It’s easy to get resident permits. These sort of stories are rife. Russia is the biggest source. A lot of it is mafia.” Today one in five Dubai luxury properties sits empty, with many owned by Russians.
Hamdan Abdullah al-Sayyah, the attorney quoted earlier by the Times, cited a case he dealt with, where a person claiming to be a businessman filtered $10 million from Russia into a Dubai land deal. “The money arrived in small transactions, so the bank wouldn’t be suspicious, and he had a sales contract to show the bank,” Mr. Sayyah said. “At that time, nobody was looking into it because the country needed investors to come in.”
Given this background, it’s not surprising then that Trump’s Dubai tower was getting a lot of interest from Russian buyers.
Trump’s partner in the deal was effectively Dubai itself. The developer on the project was Nakheel, a subsidiary of Dubai World, a giant conglomerate owned ultimately by Dubai’s ruler, Sheikh Mohammed bin Rashid Al Maktoum. The terms of the deal made it a partial licensing deal and a partial partnership, Trump said during a 2010 deposition.
Trump and Nakheel were riding high in the summer of 2008. There was another party for Trump’s Dubai tower. This time it was at an even more star-studded affair in Bel Air, California. Christina Aguilera sang for the crowd of 1,000 guests at Tar’s home, which is known as the Cheateau d’Or , which included Pete Wentz, Orlando Bloom, Omarosa, P. Diddy, Hilary Swank, and Aaron Eckhart. The event was held at the estate of Yousuf Tar, a Pakistani who owns Bernini clothing company.
“The battle of the towers” was underway between Trump’s Dubai tower and the Burj Dubai, the world’s tallest building, to see which one could sell the emirate’s most expensive apartment. (“Dubai high rises reach record prices as battle of the towers hots up,” Financial Trump was hoping to sell a penthouse in his tower for more than $30 million, which would smash the record.
No one seemed to notice danger signs. Nakheel itself had fueled its incredible expansion on debt and the credit markets were flashing red. Although sign that things were spinning out of control came in August 2008, just before the Bel Air gala, when two Nakheel executives, including the top sales manager, were arrested on suspicion of bribery. (Details on the case were not made public and Trump was never implicated.)
The end came quickly.
Within a few months of the Bel Air party, work on the project came to an abrupt halt, as Nakheel groaned under the weight of its massive debts. Trump’s Dubai tower, just one of the many mega-projects Nakheel had going. Planned and underway projects exceeded $310 billion (!) in 2008. All were predicated on the availability of cheap finance.
The collapse of Lehman Brothers and the ensuing credit crunch forced Dubai to face reality and its massive debts. Its parent company, Dubai World, in 2009 ceased payment on its $59 billion in debts and had to be bailed out by neighboring Abu Dhabi.
In 2011, Nakheel revealed what everyone already knew. Trump’s Dubai tower would not be built.
Trump Estates Park Residences in Dubai: The Dream Never Dies
But Trump’s Dubai dream never died.
Today in 2017, his company is selling the Trump Estates Park Residences in Dubai. He has a new partner, Hussain Sajwani of DAMAC Properties in Dubai, and a new site on the outskirts of the city.
The prices are lower: $800,000 will buy you a 4-bedroom villa with a complimentary 3-year family membership at Trump’s nearby golf course. DAMAC is also building a second Trump-branded golf course, designed by Tiger Woods, in Dubai.
I wonder who the buyers are.
Trump-Russia, 2008 edition
As my readers know, I see 2008 as the critical year when Trump found himself on the hook with Russia.
It was the year that the Russian fertilizer king Dmitry Rybolovlev paid $95 million for Trump’s Palm Beach mansion, netting Trump more than $50 million in a shady transaction that Special Counsel Robert Mueller is said to be investigating.
Donald Trump Jr. in Moscow in 2008
It was in 2008 that Donald Trump Jr. famously declared: “Russians make up a pretty disproportionate cross-section of a lot of our assets. Click here for the full quote from eTurbo News.
By his own account, Donald Jr. made “half a dozen trips to Russia” between January 2007 and June 2008.
It was in June 2008 that he appeared in Moscow as the keynote speaker for the “Real Estate in Russia” conference.
Don Jr. tantalized the crowd by telling them that a Russian was interested in buying his father’s Palm Beach mansion and announced plans to build elite housing and hotels in Moscow, St. Petersburg and Sochi and to license the Trump name.
The Russian projects never happened as developers balked at the costs of licensing the Trump name. Kommersant reported that, according to one Moscow developer, Trump was charging as much as a quarter of the project costs to put his name on the building.
But the money from Russia still poured into the Trump Organization. A man who claims to have sold Trump-branded properties in Russia at the time was a Belarusan American businessman named Sergei Millian.
“You could say I was their exclusive broker,” Millian told Russian state broadcaster RIA Novosti in April of last year. “Then, in 2007-2008, Russians bought dozens of apartments in Trump houses in the US. But I would not want to disclose specific amounts and names.”
Interestingly, Millian was also a source, apparently unwittingly, for former MI6 officer Christopher Steele’s Trump dossier. (The White House and Trump consigliere Michael Cohen have dismissed him as a publicity-seeking hanger-on.)
Roger Khafif also hosted sales meetings in Russia for Trump for a property in Panama. “Russians like brands,” he told The Washington Post, “and Trump was famous in Russia” during the early 2000s real estate boom. “These were good days for Trump. He was the only man in town for real estate.”
And 2008 was also the year Trump invited a correspondent for Chayka, a Russian magazine, to breakfast at Trump Tower. Here is the lead of that story (translated by Google Translate):
Donald Trump invited us to report on a new project, which is largely designed for Russians.
The project was Trump SoHo, arguably the shadiest of all Trump’s shady deals. This was the project that employed Felix Sater, a felon with ties to Russian and American organized crime. Sater worked for Bayrock, a firm backed by Russian money close to Putin, according to a lawsuit filed by a former employee. Later, Sater worked for Trump himself.
The story goes on to quote Trump:
I have very good business relations with the Russians. A Russian recently bought a house for me in Florida for $100 million. Some Russians buy houses at 50 million each. Great buyers! People with good taste and good money understand the value of the Trump brand. It is always a guarantee of quality and a win-win location. Investing in “Trump,” you invest for sure. By the way, I really like Vladimir Putin. I respect him. He does his job well. Much better than our Bush.
Trump goes on:
Russian buyers got to taste the building we built in Palm Beach, Florida.
Maybe this is a mistranslation, but it’s not clear which Florida project Trump is referring to here. Is he talking about Trump Towers in Sunny Isles Beach, Florida, a development known as “Little Moscow”? Is he talking about his planned tower in Palm Beach that was launched in 2007. Or is he talking about a sales event attended by potential Russian investors and celebrity guests like Regis Philbin at his Mar-a-Lago Club in Palm Beach in January 2008?
And 2008 was also the year when Trump assured the Scottish government that he had the funds to build the “greatest golf course in the world” on the northeast coast near Aberdeen, Scotland. “The money is there, ready to be wired at any time,” Trump attorney George Sorial said. “I am not discussing where it is, whether it is in a Scottish bank or what, but it is earmarked for this project. If we needed to put the development up tomorrow, we have the cash to do that. It is sitting there in the bank and is ready to go.”
But 2008 was also a very challenging year for Trump and this, more than anything, may explain his tilt toward Russia. The global financial crisis put the squeeze on his finances and pushed him to the wall. Within a year, Trump-branded projects in Tampa; Vancouver, Canada; Dubai; and Baja California went bust or were put on hold. Trump Entertainment Resorts, the operator of the Trump Taj Mahal, filed (again) for bankruptcy.
In December 2008 Trump made the fateful decision to sue his lender, Deutsche Bank, when he failed to make good on a $40 million guarantee on a loan for Trump International Hotel and Tower in Chicago. Amazingly, Deutsche Bank continued to lend to him. The bank now finds itself in the cross hairs of many Russia investigators.
Trump, of course, emerged from the wreckage of the financial crisis, and some think he did it with Russian money. As Sir Richard Dearlove, former head of MI6, told Prospect Magazine, “what lingers for Trump may be what deals – on what terms – he did after the financial crisis of 2008 to borrow Russian money” when other banks and lenders would not risk the money.
Something happened around 2008 that tied Trump’s future to Russia. Was Trump the subject of Russian kompromat or blackmail? Did he meet Putin, as he long claimed he did? Did Russia give him much-need capital when no other banks would in the midst of the financial crisis?
I don’t know the answer, but I hope that someday, we will find out.
Jared Kushner Timeline
Who is Lanny Wiles?
This is a guest post by Terry J. Clark, a frequent reader of this site who follows the Trump-Russia story.
Lanny Wiles
As we now know, on June 9th, 2016, Donald Trump Jr., the future president’s son, met with several Russian operatives at Trump Tower in New York City.
The meeting is the best evidence yet of collusion between the Trump campaign and Russia. Don Jr. had been lured to the meeting by a promise of dirt on Hillary Clinton from Russia.
One of the operatives at the June 9th meeting was a a former Soviet intelligence named Rinat Akhmetshin, who was working as a lobbyist in the United States. Akhmetshin, like everyone else who attended the meeting, has been the focus of intense scrutiny. A profile in The New York Times described him as a “master of the dark arts.”
A figure who has mostly escaped attention is a GOP operative working quietly behind the scenes with Akhmetshin. The operative is Lanny F. Wiles, a genial Southerner whose family is closely tied to Trump.
A week after the Trump Tower this meeting took place, Akhmetshin asked Wiles to hold a seat for someone at a June 14, 2016 hearing before the Foreign Affairs Committee on “U.S Policy Toward Putin’s Russia.”
The person whose seat Wiles was saving at the June 14 hearing turned out to be Natalia Veselnitskaya — the Russian attorney who lured Don Jr. to the Trump Tower by claiming that she had “dirt” on Hillary Clinton which she had obtained from the Russian government.
Wiles told ABC News he has “absolute, zero connection” to any relations the Russian lawyer may have had to the Trump campaign. But Wilkes clearly had a connection to Russia: He was working for it.
Wiles was working with Akhmetshin to undo the Magnitsky Act, a law despised by the Kremlin that sanctioned Russian officials connected to Sergei Magnitsky’s 2009 death. Magnitsky was a Russian lawyer who had worked for American-born investor Bill Browder to uncover a $230 million Russian government corruption scheme
The night of the June 14 House hearing, Wiles organized a dinner at the Capitol Hill Club, a private social club for Republicans. The dinner guests included Akhmetshin and Veselnitskaya as well as Rep. Dana Rohrabacher, a member of the House Foreign Affairs Committee who is seen as Vladimir Putin’s staunchest ally in Congress, and Paul Behrends, the congressman’s staff director (who was recently fired over his Russia connections).
According to this excellent Politico story, Rohrabacher and Behrends had, with Akhmetshin’s help, planned the day’s hearing to be a show trial of investor Bill Browder, the man behind the Magnitsky Act. That plan was nixed by senior committee Republicans and replaced with a panel that included two former US ambassadors to Russia.
Rinat Akhmetshin
Akhmetshin had been hired by Denis Katsyv, the owner of the Cyprus-registered company Prevezon Holdings, Ltd., which was linked to the Magnitsky case. Some of the money stolen in the scam uncovered by Magnitsky turned up in US bank accounts controlled by Prevezon.
Together, Katsyv and Akhmetshin recruited Wiles to undermine the Magnitsky Act.
While Wiles was working on behalf of Russian interests, he did not register as a foreign agent as required by the US law. Wiles told Politico that Akhmetshin told Wiles he wouldn’t have to register because he would be working for the law firm BakerHostetler.
[Side note: Fusion GPS, the DC firm that commissioned former British MI6 officer Christopher Steele to produce what became known as the Trump dossier, was also hired by BakerHostetler to dig up dirt on Bill Browder. (See Browder’s letter.) The firm is the subject of a July 19 hearing before the US Senate Judiciary Committee, at which Don Jr. is also expected to affair.]
Why Wiles was brought in for this anti-Magnitsky work is unclear. He was a longtime DC lobbyist for the PGA Tour and a Florida utility. Clients have included a companies that produce anthrax vaccines. His areas of expertise, while wide-ranging, don’t involve foreign affairs.
What may have brought Wiles into the world of Russian lobbying is his friendship Rep. Rohrabacher. The two men have been friends since their days in the Reagan administration, according to Politico.
Wiles got his start working on Ronald Reagan’s failed 1976 run for the White House. When Reagan won four years later, Wiles became a Reagan advance man. In 1983, Wiles was taken hostage inside the pro shop at famed Augusta National while Reagan golfed. Wiles managed to talk his way out.
Wiles went on to work on many campaigns, including Sen. John McCain’s 2000 and 2008 failed presidential runs. (McCain is a strong supporter of the Magnitsky Act). Both Wiles and his wife worked on the campaign of Florida Gov. Rick Scott, who was asked about his former aide’s connections to Russia.
Wiles’ wife, Susie, is the former co-chair of the Trump presidential campaign in Florida. Trump credited Ms. Wiles with the crucial Florida victory.
Wiles’ daughter, Caroline, was named director of scheduling at the White House until February of this year when she was “escorted” out of the White House after failing an FBI background check.
Wiles heads Wiles Consulting LLC in Florida. He’s also listed as president and chief executive of TransEuro America, which he formed in 2015 after “seeing a need to assist US aerospace and defense companies to achieve greater market share in the dynamic Middle East and international business environment in the most efficient manner.”
Mueller Said to Be Looking into 2008 Palm Beach Mansion Sale
Bloomberg reports that Special Counsel Robert Mueller has decided that Trump’s sale of his Palm Beach mansion to a Russian billionaire is worth a deeper look.
As readers of this site know, Dmitry Rybolovlev, the Russian fertilizer king, bought the future president’s Palm Beach mansion in 2008 for $50 million more than Trump paid for it just a few years earlier. The mansion, called Maison de l’Aimitie (House of Friendship), was in such bad shape that Rybolovlev got permission to tear it down and sell off the land beneath it.
Dmitry Rybolovlev
I’ve written how this transaction has the marks of a bribery case I followed here in San Diego.
Not long after the mansion sold, Trump was approaching default on loan from Deutsche Bank. And the $50 million Trump pocketed on the mansion sale was enough to cover the $40 million he had personally guaranteed to the German lender.
Here’s a bit more detail: The Palm Beach mansion sold in July 2008. That fall, Trump was desperately trying to get Deutsche Bank to extend a senior construction loan for the 92-story Trump International Hotel and Tower in Chicago. The Chicago project was already facing weak sales before the 2008 financial meltdown hit.
Unlike many other Trump Organization projects, the Donald was personally on the hook in Chicago. He hadn’t licensed his name. He had no partners. He arranged all the financing himself: He put $77 million of his own equity into the tower and had given Deutsche Bank a $40 million personal guarantee. (See “In Chicago, Trump Hits Headwinds,” The Wall Street Journal, 29 Oct. 2008.)
Trump’s Deutsche Bank loan came due Nov. 7, 2008 with an outstanding principal balance of $334 million, plus $251 million in interest. Not only did Trump not pay, but with his usual bombast, he sued Deutsche Bank to force them to extend the loan. Deutsche Bank countersued, and demanded Trump cough up his $40 million guarantee. Deutsche Bank ultimately extended the loan for five years and eventually Trump paid it.
There are a lot of dogs sniffing around this tree. The personal guarantees Trump made for his Deutsche Bank loans are also of interest to New York State regulators looking at the president’s relationship with the German lender’s wealth management division: according to The New York Times:
Additionally, the New York regulators recently requested information related to the hundreds of millions in loans Deutsche Bank’s private wealth management division provided Mr. Trump, one of the people said, paying particular attention to personal guarantees he made to obtain the loans. Those guarantees have declined as the loans were paid down and the property values increased, but it remains a source of interest to the regulators.
For those who want even more detail, I’ve embedded Trump’s Deutsche Bank personal guarantee at the end of this post. If anyone with some expertise in these matters finds anything interesting in there, please let me know.
Mueller’s team are also said to be interested in dealings involving the Bank of Cyprus. Rybolovlev, the Russian oligarch who bought Trump’s Palm Beach mansion, became the bank’s largest shareholder in 2010 when he purchased a 9.7 percent stake through his British Virgin Islands holding firm, Odella Resources. (Wilbur Ross, Trump’s commerce secretary, invested in the bank in 2014.)
The shady mansion sale is just one of the things FBI investigators and others are examining:
- Russian purchases of apartments in Trump buildings
- Trump’s involvement in a controversial SoHo development in New York with Russian associates
- The 2013 Miss Universe pageant in Moscow
- Jared Kushner’s efforts to secure financing for some of his family’s real-estate properties.
It seems that Mueller’s team is looking for evidence of a payment disguised as a real estate transaction, fee or gift that would give Russians what the intelligence community likes to call “levers of pressure” that could be used against the US president.
Trump’s Personal Guarantee
Who Is Sam Clovis?
In September 2016, a longtime GOP operative launched a campaign to obtain Hillary Clinton’s emails from hackers.
The operative’s name was Peter W. Smith. According to a pair of blockbuster articles (here and here) by The Wall Street Journal, Smith “implied” that he had a connection to retired Gen. Michael Flynn, who served briefly as Trump’s national security advisor until he was ousted for lying about his contacts with Russian officials.
Flynn’s name is mentioned in a recruitment document Smith passed around last year:
Officials identified in the document include Steve Bannon, now chief strategist for President Donald Trump; Kellyanne Conway, former campaign manager and now White House counselor; Sam Clovis, a policy adviser to the Trump campaign and now a senior adviser at the Agriculture Department; and retired Lt. Gen. Mike Flynn, who was a campaign adviser and briefly was national security adviser in the Trump administration.
A name people might not recognize on this list is that of Sam Clovis, a porcine former college professor from Iowa better known as host of the radio talk show “Impact with Sam Clovis.” We don’t know how Clovis’ name wound up on the list but I have a feeling we may hearing more about Clovis in coming weeks or months.
Clovis was an early backer of Trump in Iowa, where Clovis is something of a conservative power broker. It earned him a spot in the campaign as senior policy adviser and co-chairman.
Trump finished second in Iowa, but he soon ran the table in ensuing primaries, and, as the Trump train gathered momentum, Clovis took leave from his position as a professor at Morningside College in Sioux City, Iowa to devote himself to the campaign. FEC records show he was paid more than $198,000 during the 16 months he worked on the Trump campaign.
The FEC filings say Clovis was paid for “communications consulting.” He described his role on the campaign to his hometown newspaper, the Sioux City Journal, as a “utility infielder.” His job was to appear on TV as a Trump surrogate, write talking points for speeches and “help find key people who can inform Trump’s developing policies on economics, immigration and foreign affairs”
Clovis told Bloomberg he led a two-person policy team that worked with campaign manager Corey Lewandowski to connect Trump to experts and former officials constantly.
In other words, Clovis was something of a gatekeeper for Trump. If you wanted to work on the campaign in a policy role or as a subject matter expert you went through Clovis.
“This whole notion that he is devoid of advisers is wrong. We have a lot of smart guys around us and a lot of smart people helping us,” Clovis said in January 2016.
One of the “smart people” whose name crossed Clovis’ desk was Carter Page, the head of an energy investment firm and a former banker with Merrill Lynch in Moscow. Clovis employed what The Washington Post described as the campaign’s “go-to vetting process” — a quick Google search — to check him out. Clovis gave Page his OK.
Page, we know now, was a disastrous choice. During his time as a Trump advisor, Page was the subject of a Foreign Intelligence Surveillance Act warrant, meaning that a US judge found probable cause to suspect that Page was acting as an agent of a foreign power. He reportedly was one of the Trump advisors Russian intelligence tried to use to infiltrate the Trump campaign.
Foreign diplomats trying to figure out Trump also realized that Clovis was the man to see. He was one of the few Trump campaign officials authorized to speak on behalf of his boss.
Joe Hockey, Australia’s ambassador to the United States, was one who called on Clovis. Hockey hosted Clovis and Stephen Miller, in March 2016 at his private residence. (See “Deep ties to keep relations on track,” The Australian, 11 Nov. 2016) It was the first of several meetings on defense, trade and immigration.
In April, German Foreign Minister Frank-Walter Steinmeier, who described Trump as a “hate preacher,” sent his state secretary, Markus Ederer, to meet with Clovis. The two men met discreetly at a cafe in Washington where Ederer struggled to understand what a Trump victory would mean for German-American relations. According to a report in Der Spiegel, “The Iowa Republican sought to ease the German’s concern about a possible Trump victory. But whenever Ederer probed deeper, Clovis was unable to provide satisfactory answers.” (See “Merkel Anticipates Frosty Relations with U.S.,” Spiegel, 4 January 2017) Clovis also met with Germany’s US ambassador, Peter Wittig, as did Jared Kushner.
It remains to be seen what meetings, if any, Clovis had with Russian diplomats.
Meanwhile, Clovis’ formerly hardline views on Russia were evolving. During his long career in the U.S. Air Force, Clovis had trained and planned for combat with the Soviet Union. In 2014, when Clovis ran unsuccessfully for the US Senate in Iowa, he advocated a “containment” policy against Russia. “I think we need to also make it very clear to Russia … that any incursions outside of Crimea, the Ukraine, would be met with great vigor,” Clovis told Radio Iowa.
Two years later during the Republican convention in Cleveland, however, Clovis angrily defended the campaign’s decision to remove language from the GOP platform that called for providing lethal defensive weaponry to Ukraine. It was too expensive, Clovis felt.
“It’s okay to go out here and load your mouth up and say stuff and say, ‘Yeah we are going to come to your aid, we’re going to provide you arms, we’re going to come out and do all these things. But nobody has taken the time to think this through to its logical conclusion,’” Clovis said. “What are the costs going to be to the United States, not just in Ukraine but also in NATO and also around the world?”
Although he doesn’t look the part, Samuel H. Clovis Jr. is a former fighter pilot. He grew up in rural Kansas and attended the U.S. Air Force Academy in Colorado. Clovis spent 25 years with the U.S. Air Force from 1971 to 1996.
His career included command of the 70th Fighter Squadron, at Moody Air Force Base in Valdosta, Georgia. In the mid 1980s, he served on the staff of the Pentagon’s Project CHECKMATE, where he assessed the performance of the Air Force in a hypothetical war with the Soviet Union. Clovis also served as chief of the office of military cooperation at the embassy in Bahrain. (He considers himself an expert on the Middle East.) He retired as the Inspector General of NORAD and the United States Space Command with the rank of colonel.
After leaving the military, Clovis worked at Logicon, an Alabama-based subsidiary of Northrop Grumman Corp. Then, he entered academia, which led him to Iowa and eventually to his position at Morningside College.
Today, Clovis is Trump’s nominee to be the US Department of Agriculture’s chief scientist. Clovis is not a scientist. What he is is a hardcore Trump loyalist. He once described Trump as “one of the greatest men to ever walk the face of this earth.”
But his feelings for Trump weren’t always so favorable. Before he joined forces with Trump in August 2015, Clovis had signed on as Iowa state chairman for former Texas Gov. Rick Perry. Emails leaked by the Perry campaign revealed Clovis as an opportunist who was scornful of Trump before switching sides. Trump’s remarks disparaging Sen. John McCain’s status as a war hero particularly galled Clovis, who served 25 years in the U.S. Air Force.
“I was offended by a man who sought and gained four student deferments to avoid the draft and who has never served this nation a day — not a day — in any fashion or way,” he wrote.
Jared Kushner’s Shady Real Estate Deal?
Readers of this site will recall that in 2008 Donald Trump sold a Palm Beach mansion to a Russian billionaire named Dmitry Rybolovlev for $95 million. As we now know, Rybolovlev grossly overpaid.
This sale is remarkably similar to a real estate deal at the heart of a bribery scandal involving Congressman Randy “Duke” Cunningham of California, who sold his home to a defense contractor for much more than it was worth. Cunningham pleaded guilty to accepting at least $2.4 million in bribes and in 2006 was sentenced to prison.
Well, there are two ways this bribery-scam-disguised-as-a-real-estate-transaction can work. You can overpay for an asset. Or you can sell an asset for much less than it’s worth.
Buried in The Washington Post’s recent story about Jared Kushner’s loans from Deutsche Bank, Trump’s favorite bank are interesting details about a real estate transaction that should invite scrutiny from Special Counsel Robert S. Mueller, who is said to be investigating Kushner’s finances.
Kushner, it turns out, purchased four floors of a New York City office building for $296 million in October 2015. Fast forward 12 months and — presto! — Kushner’s office space was appraised at $470 million.
That’s a 59 percent increase in a year. Not quite as impressive as Trump’s 231 percent markup on the Palm Beach mansion he sold to the Russian billionaire, but still. Not bad.
What was Kushner’s secret?
An executive at Kushner Cos. told The Washington Post that the company had a “vision for the property when we purchased it that no one else had, and are proud to say that we executed on it.”
Translation: Kushner Cos. leased the space. When the four floors in the former New York Times building near Times Square were purchased, the offices were only been 25 percent occupied.
A great business move. Or …
Is there another explanation? Indeed, there may be.
The firm that sold Kushner Cos. the space in The New York Times building was Africa Israel USA, part of the conglomerate owned by Israeli billionaire Lev Leviev.
Born in the former Soviet Union, Leviev keeps a framed photo of Vladimir Putin on a shelf in his office. In a 2007 profile in The New York Times, Leviev described Putin as a “true friend.”
Did Leviev give Kushner a — wink, wink — good deal as a favor from friends overseas?
Kushner isn’t Leviev’s only connection to Trump’s inner circle. He has tried to do business in Moscow with the man himself.
Trump and Leviev
AFI Development, another subsidiary of Leviev’s Israeli conglomerate, develops real estate in Russia. In May 2008, he invited Trump to his Madison Avenue store.
Leviev wanted to work with the Trump Organization on developing two hotels in Russia, according to Kommersant, the respected Russian business daily.
Astute readers of this site will recall that back in the 1990s, a corrupt Moscow city official named Vladimir Resin (aka The Russian with the Million-Dollar Watch) offered Trump the opportunity to develop a pair of decrepit hotels in Moscow, the Hotel Rossiya, just off Red Square, and the rundown Hotel Moskva.
During Trump’s meeting with Leviev, the Israeli billionaire offered Trump the chance to develop the very same hotels, the Rossiya and the Moskva, according to Kommersant.
The Rossiya
The Moskva was a small, venerable Moscow hotel that is now run by the Four Seasons. The Rossiya was a 3,000 room concrete box that was plagued with vermin and organized crime. The hotel’s general director was shot dead in a December 1997 contract killing. The hotel has been demolished.
(I’m beginning to wonder whether the Rossiya and Moskva are some sort of code words, given how often they come up in Trump’s life.)
Nothing came of this meeting with Leviev. In a statement, Leviev said that he and Trump “never had any business dealings with one another, contrary to speculation.” [Trump sold his Palm Beach mansion to the Russian billionaire in July, a few months later after meting Leviev.]
Another coincidence overlooked by reporters: Kasowitz Benson Torres LLP represented Leviev’s firm Africa-Israel USA in the sale of the former New York Times building. The lawyer representing Trump in the Russia probe is Marc E. Kasowitz, a name partner at the firm.
Rotem Rosen, described as Leviev’s “right-hand man” in this press release for a circumcision ceremony or bris is a former chief executive of Africa-Israel USA and CEO of the Sapir Organization. The Sapir Organization jointly developed the troubled Trump SoHo, a 46-story Manhattan luxury hotel-condominium completed in 2010.
Trump hosted Rosen’s wedding to Sapir’s daughter, Zina, at Mar-a-Lago in December 2007. Both Trump and Kushner attended the aforementioned 2008 bris.
It’s these interlocking links that must be driving Mueller’s office nuts. What is coincidence and what isn’t?
Maybe Kushner’s big gain on the old New York Times building is just savvy business. After all, when Leviev’s Africa-Israel Investments purchased the building in June 2007 for $530 million. Just three years earlier, the newspaper had sold the property for $175 million, prompting this observation from the Donald:
More on Robert Mueller and Mogilevich…
Special Counsel Robert Mueller, speaking in Budapest in 2005
Special Counsel Robert Mueller isn’t playing.
As I mentioned in my previous post, Mueller has brought on board attorney Lisa Caroline Page who worked on the FBI Task Force in Budapest that investigated Russian Mob kingpin Semion Mogilevich.
By adding Page, Mueller may be sending a signal that he’s going after links between Trump and Russian organized crime, and perhaps zeroing in on Mogilevich ties.
Catching Mogilevich was an important part of Mueller’s 12-year tenure as head of the bureau and big reason why the FBI put the Mob boss on its 10 Most Wanted List in 2009.
Here’s what Mueller himself had to say in 2005 during a visit to Budapest for the 10th anniversary of the International Law Enforcement Academy:
And the FBI/Hungarian National Police Organized Crime Task Force has been up and running for five years, working to dismantle organized crime groups. Just last month, we obtained approval to have FBI agents permanently stationed here in Budapest to work on the Task Force.
The Task Force has had a number of successes. Right here in Budapest , Ukranian-born Semion Mogilevich established the headquarters of his powerful organized crime enterprise. The group engaged in drug and weapons trafficking, prostitution, and money laundering, and organized stock fraud in the United States and Canada in which investors lost over $150 million.
As soon as the Task Force began investigating his activities, Mogilevich realized he could no longer use Budapest as his base of operations. He immediately fled the country, and is now hiding in Moscow. Working closely with Hungarian authorities, United States prosecutors obtained a 45-count indictment against Mogilevich and three other criminals, charging them with money laundering, securities fraud, and racketeering.
Mueller’s biographer, Garrett Graff, called the Budapest task force “perhaps the most unique FBI force in the world.” Hungary was the only country outside Afghanistan and Iraq where agents were permanently stationed.
The Budapest task force assembled a global picture of Mogilevich’s operation. According to a Dec. 22, 2006 report in The Wall Street Journal, FBI agents in Budapest got help from authorities in Israel, another of Mr. Mogilevich’s suspected bases of operations, and Cyprus, an offshore banking center used by many Russians.
So elusive was Mogilevich, however, that agents in Budapest were chasing smoke, sometimes even in their own backyard. Graff’s book, The Threat Matrix: Inside Robert Mueller’s FBI and the War on Global Terror, contains this tantalizing piece of information:
The full extent of Mogilevich’s US ties are still unknown. Although banned from entering the country because of his alleged criminal ties, Mogilevich has visited Boston, Philadelphia, and Miami under aliases to meet with U.S. associates, and the FBI photographed at least one of his aides attending a Republican Party fundraiser in Texas.
Mogilevich was arrested in Moscow in 2008 and then subsequently released him the following year. He lives more or less openly in Russia today. While US eventually caught up with Osama bin Laden, Mogilevich was the one who got away.
Mueller’s role as special counsel for Trump’s Russia links may be a second chance of sorts. By probing Trump’s links to Mogilevich, Mueller may be able to snare an even bigger fish.
No wonder he’s driving Trump crazy.
Is Robert Mueller Examining Trump’s Links to Mogilevich?
Former Ukrainian President Viktor Yanukovych (left) and Dmitry Firtash (right)
As we noted earlier here and here, among the many dictators, despots, and shady foreigners who called Trump Tower home were members of the Russian Mafia with connections to Semion Mogilevich, said to be the most dangerous Mobster in the world.
Robert Mueller, the special counsel appointed to investigate Trump’s links to Russia, may also be taking an interest in Trump’s ties to Mogilevich, a man the FBI says is involved in weapons trafficking, contract murders, extortion, drug trafficking, and prostitution on an international scale.
As described in Wired, among the prosecutors and investigators hired by Mueller, is one Lisa Page:
Also, while the Special Counsel’s office has yet to make any formal announcements about Mueller’s team, it appears he has recruited an experienced Justice Department trial attorney, Lisa Page, a little-known figure outside the halls of Main Justice but one whose résumé boasts intriguing hints about where Mueller’s Russia investigation might lead. Page has deep experience with money laundering and organized crime cases, including investigations where she’s partnered with an FBI task force in Budapest, Hungary, that focuses on eastern European organized crime. That Budapest task force helped put together the still-unfolding money laundering case against Ukrainian oligarch Dmitry Firtash…
The hiring of Page, which was confirmed by a Mueller spokesman in The New York Times, gives the special counsel a team member with knowledge of not only Dmitry Firtash, but of the man who is believed to stand behind him: Semion Mogilevich.
Full disclosure: Firtash hired the Washington law firm Akin Gump to clear him of links to Mogilevich. I profiled Akin Gump partner Mark MacDougall in this 2008 piece.
Firtash, pictured above, made his fortune in the 2000s in the natural gas sector. In 2004, Firtash and a minority partner emerged with 50 percent ownership of a murky Swiss company called RosUkrEnergo (RUE). RUE extracts gas from Central Asia and acts an intermediary between Russia and Ukraine for the delivery of gas. The other half of RUE is held by Gazprom, the gas giant controlled by the Russian government, which shows that Firtash has close ties with the Kremlin.
Billions of dollars flowed through RUE and some of that money was allegedly siphoned off by Semion Mogilevich, who U.S. government officials say (see here) is the man behind the curtain at the gas company. One of the few willing to say this publicly was Ukraine’s former prime minister, Yulia Tymoshenko, a political enemy of Firtash, who got thrown in jail for her troubles. Notably, Firtash’s stake in RUE remained a secret for two years.
Intelligence Online, a Paris-based news organization with deep sources in the spy world, published this handy chart of the Firtash/Mogilevich connections, under the headline “The Tip of the Mogilevich Iceberg:”
Firtash admitted to William Taylor, the US ambassador to the Ukraine, that he has had dealings with Mogilevich, according to a 2008 State Department cable leaked by Wikileaks:
(S) The Ambassador asked Firtash to address his alleged ties to Russian organized crime bosses like Semyon Mogilievich. Firtash answered that many Westerners do not understand what Ukraine was like after the break up of the Soviet Union, adding that when a government cannot rule effectively, the country is ruled by “the laws of the streets.” He noted that it was impossible to approach a government official for any reason without also meeting with an organized crime member at the same time. Firtash acknowledged that he needed, and received, permission from Mogilievich when he established various businesses, but he denied any close relationship to him.
And in this October 2009 press release, the FBI took note of Mogilevich’s control of natural gas supplies. “Through his extensive international criminal network, Mogilevich controls extensive natural gas pipelines in Eastern Europe,” the bureau wrote in a veiled reference to RUE.
The question is what is the nature of the relationship between Firtash and Mogilevich. Is it a thing of the past, as Firtash insists? Or is Firtash a front man for Mogilevich?
Presumably, the FBI — and, by extension, Lisa Page — knows the answer. The bureau has been investigating Firtash since 2006, according to The New York Times. A year before that, the FBI passed their counterparts in the Austrian police a confidential report naming Firtash as a “senior member” of the Semion Mogilevich Organization, according to a 2008 report by Roman Kupchinsky, an analyst with Radio Free Europe.
Page’s work in Budapest involved her deeply in the Firtash/Mogilevich world. The Wired article suggests she worked on the case that led to Firtash’s arrest in Vienna in 2014. Firtash was indicted by a federal grand jury in Chicago on charges of plotting a bribery scheme to set up a $500 million titanium business in India. He remains free after a Russian billionaire friend posted bail of $174 million but cannot leave Austria.
And Budapest is also a home of sorts for Mogilevich. He resided in Budapest when he ran a pump-and-dump scheme through a publicly traded front company called YBM Magnex Inc. Mogilevich was indicted in 2003 on charges of fraud, racketeering and money laundering in YBM Magnex.
So, what does this have to do with President Trump?
Firtash was a business partner of Trump’s former campaign manager, Paul Manafort, who was deeply involved in Ukrainian politics. Manafort advised Viktor Yanukovych on his successful 2010 campaign for the presidency of Ukraine. He resigned from the Trump campaign after The New York Times found a handwritten ledger showing that Yanukovych paid Manfort $12.7 million in cash.
While he was assisting Yanukovych, Manafort became business partners with Firtash. The two men explored developing a 65-floor tower on the site of the Drake Hotel in Midtown Manhattan.
A 2011 lawsuit filed in New York by Tymoshenko, the former Ukrainian prime minister, called this partnership between Firtash and Manafort a means of laundering the proceeds of gas deals between the Ukraine and Russia. Firtash says that the lawsuit was full of lies, but he confirmed to Bloomberg Businessweek that he did put $25 million in an escrow account for the developers of the Drake project that Manafort helped him set up. The deal collapsed and the tower was never built.
It’s a good bet to say that we only know a little of this story, which is buried in the files of the FBI and the US intelligence community. But Trump Tower’s role as a home away from home for Russian mobsters with Mogilevich and his unhinged, self-destructive reactions to anyone probing into Russia suggests that there is more, much more to come. Stay tuned.
Carter Page Mystery Solved?
Ed Cox
The Washington Post is reporting that Carter Page was introduced to the Trump campaign by Nixon’s son-in-law, NY GOP Chair Ed Cox.
This may be the answer to one of the ongoing mysteries of the Trump-Russia affair: How did Page wind up working for Trump?
Edward Finch Cox is a retired partner formerly with the firm of Patterson Belnkap Webb & Tyler, LLP. He is chairman of the New York Republican State Committee. Cox is married to Nixon’s daughter Trish. The two were married in a White House ceremony in 1971.
How did Cox meet Page?
Their paths may have intersected in a couple of ays: Cox’s has served as a director of Noble Energy, Inc. for more than two decades. Page, you’ll recall, was an energy industry analyst. In addition Cox has been a member of the Council on Foreign Relations since 1993. Page served a fellowship at the CFR.
One person tweeting about this is Roger Stone, a former Nixon aide and GOP political operative, who is himself under investigation for his links to Russia:
This is interesting. Cox and Stone both worked together in the Nixon administration (where Stone was involved in the dirty tricks operation), and it seems there’s no love lost between them:
Then again, as someone on Twitter pointed out, here’s Carter Page attending one of Stone’s speeches:
The Russian Mobster Who Hid out in Trump Tower and the Taj Mahal
Vyacheslav Ivankov
Vyacheslav Ivankov was a top Russian mob boss, wanted in Russia and in America.
He was a Vory v Zakone, a member of the “thieves-in-law,” the highest criminal echelon in the Soviet Union before the Communist government collapsed.
An infamous 1995 FBI affidavit describes Semion Mogilevich, considered by the bureau as the most dangerous Russian mobster in the world, as “one of IVANKOV’s closest associates.”
It was Mogilevich, according to Alan Block’s All Is Clouded by Desire, who paid a Russian judge to arrange for Ivankov’s early release in 1991 from a tough Siberian prison where he was being held for ‘robbery and torture.
After his release from prison, Ivankov was accused of murdering two Turkish nationals in a Moscow restaurant in January 1992. Later that year, he fled Russia for New York.
Journalist Robert I. Friedman tells the story of where the FBI found him in his book Red Mafiya (which you can read for free at this link).
Despite Ivankov’s flagrant, multinational criminal activities, during his first years in America, the FBI had a hard time even locating him. “At first all we had was a name,” says the FBI’s James Moody. “We were looking around, looking around, looking around, and had to go out and really beat the bushes. And then we found out that he was in a luxury condo in Trump Towers” in Manhattan.
[A copy of Ivankov’s personal phone book, which was obtained by the author, included a working number for the Trump Organization’s Trump Tower Residence, and a Trump Organization office fax machine.]
But almost as soon as they found him, he disappeared again leaving nothing but vapor trails for the FBI to follow. “Ivankov,” explained an FBI agent, “didn’t come from a walk-and-talk culture,” like Italian gangsters who take walks to discuss family business so they can’t be bugged or overheard by the bureau. “As soon as he’d sniff out the feds, he’d go into hiding for days at a time,” a trait that made him harder to keep tabs on than Italian mobsters. “He was like a ghost to the FBI,” says Gregory Stasiuk, the New York State Organized Crime Task Force special investigator.
Stasiuk picked up Ivankov’s trail at the Taj Mahal in Atlantic City, the Trump-owned casino that the real estate magnate boasted was the “eighth wonder of the world.” The Taj Mahal had become the Russian mob’s favorite East Coast destination. As with other high rollers, scores of Russian hoodlums received “comps” for up to $100,000 a visit for free food, rooms, champagne, cartons of cigarettes, entertainment, and transportation in stretch limos and helicopters. “As long as these guys attract a lot of money or spend a lot of money, the casinos don’t care,” a federal agent asserted. Russian mobsters like Ivankov proved a windfall for the casinos, since they often lost hundreds of thousands of dollars a night in the “High-Roller Pit,” sometimes betting more than $5,000 on a single hand of blackjack. “They’re degenerate gamblers,” says Stasiuk. Although the FBI still couldn’t find Ivankov, Stasiuk managed to tail him from the Taj Mahal to shipping mogul Leonard Lev’s sprawling home on a dead-end street in Far Rockaway, Queens, and on another occasion, from the Taj to the Paradise Club, a notorious Russian mob haunt in Sheepshead Bay, Brooklyn, then managed by godfather Marat Balagula’s youngest daughter, Aksana, the onetime aspiring optometrist.
The implication here is that Trump or his organization was welcoming these Russian mobsters because they were laundering huge sums through his casino. “The casinos don’t care” means Trump didn’t care either.
Friedman’s reporting is backed up in a report by the Tri-State Joint Soviet-Emigre Organized Crime Project, an effort by New York, New Jersey and Pennsylvania to come to grips with Russian mob influence:
Russian emigres have also been conducting various types of money laundering schemes in hotels and casinos in Atlantic City, N.J. Casino operators indicate that a significant number of Russian emigres frequent casinos. Many of them are “high- rollers” recognized as favored customers and, as such, have received such perks as limousine service, plush hotel suites, meal and alcohol allowances, and seating for prime events. One of the schemes observed by various law enforcement agencies, including the United States Secret Service and the New Jersey State Police, involves the use or attempted use of counterfeit currency and traveler’s checks. Russian-emigre criminals use the bogus currency, in amounts below the federal Currency Transaction Report threshold, to obtain cash and/or playing chips.
The Taj Mahal repeatedly failed to properly report gamblers who cashed out $10,000 or more in a single day, according to a 1998 IRS settlement unearthed by CNN. The casino violated anti-money laundering rules 106 times in its first year and a half of operation in the early 1990s.
Ivanov’s stay at the Taj Mahal came to an end in April 1993 when Ivankov’s presence in the United States was reported by The Associated Press’ Charles Hanley.
Ivankov was arrested in 1995 and sent to prison for conspiring to extort $3.5 million from two Russian emigres who ran an investment advice company in lower Manhattan. He served nine years.
After his release he returned to Russia where he was assassinated.
Did Trump Really Have A £1 Billion Cash Stockpile During the Financial Crisis?
Trump on his golf course in northeast Scotland
NBC reported recently that a focus of the House intelligence committee’s investigation into Trump and Russia involves the president’s finances:
Among the House lines of inquiry, one official familiar with the investigation told NBC News, is to what extent Russian money bailed out Trump’s real estate empire after the 2008 real estate crash.
Richard Dearlove, the former head of Britain’s MI6 made the same point in an interview with Prospect magazine:
As for the president’s personal position, he said, “What lingers for Trump may be what deals—on what terms—he did after the financial crisis of 2008 to borrow Russian money when others in the west apparently would not lend to him.”
I’m wondering: Was Dearlove speaking from insider knowledge?
The Trump Organization did lay claim to having a substantial amount of cash ready to deploy in the 2008 financial crisis. And it planned to invest that money in Great Britain.
Was MI6 tracking the source of this funding?
In the fall of 2008, the Scottish government was considering whether to grant approval for Trump’s golf resort on the coast of northeast Scotland. Questions were mounting over whether the future US president had the £1 billion he had promised to spend to build “the greatest golf course in the world.” Lehman Brothers’ spectacular collapse had triggered a global financial crisis and lending on projects like Trump’s golf course had ground to a halt.
Throughout that fall, George Sorial, managing director of international development and assistant general counsel at the Trump Organization, insisted that Trump had a huge sum of cash at his disposal earmarked for what became Trump International Golf Links near Aberdeen, Scotland.
In November 2008, Sorial told The Scotsman of Edinburgh that Trump had the cash on hand to fund the Aberdeenshire course.
Mr Sorial said: “The money is there, ready to be wired at any time. I am not discussing where it is, whether it is in a Scottish bank or what, but it is earmarked for this project. If we needed to put the development up tomorrow, we have the cash to do that. It is sitting there in the bank and is ready to go.”
He added: “As we have said all along, Aberdeen is a project we have chosen to fund with cash. Mr Trump has recently increased his cash position and we have no need for a bank loan in respect of the Aberdeenshire project.”
This is most likely Trumpian bluster. Trump was claiming he would spend £1 billion on the project and never came close to that sum. He promised vacation homes that were never built, jobs that never materialized and a huge hotel that was never built.
While Sorial was boasting about money in the bank, his boss was suing a group of lenders led by Deutsche Bank to extend payment on a $640 million construction loan for a tower in Chicago. Deutsche Bank would use Sorial’s comments in court filing to argue that Trump had the funds to pay up.
It wasn’t Trump’s bluster, per se, it was Sorial speaking. And his refusal to discuss the source of the money — “whether it is in a Scottish bank or what” — and his assertion that Trump had “recently increased his cash position” is interesting, given the interest in Trump’s funding sources during the 2008 financial crisis.
Trump’s International Golf Links opened in 2012. The course is owned through Trump International Golf Club Scotland Ltd. (TIGCS), a British company registered in 2005. The company is controlled by Donald Trump, with Sorial serving as corporate secretary.
This Russian funding source, if it ever existed, flowed through Donald Trump. The 1,400-acre grounds were purchased with what Sorial described to Scottish Parliament in 2008 as “Mr Trump’s personal money, with no financing, and we have carried all the associated costs, again out of Mr Trump’s personal expenses.” In its latest corporate filing available here, TIGCS reported that Trump had loaned the company more than £39 million.
After Trump’s election, Sorial, a British citizen, was named chief compliance officer of the Trump Organization. He manages potential conflicts of interest that may emerge between the presidency and private business.
Before joining the Trump Organization in 2007, Sorial was a partner at Day Pitney and New Jersey’s DeCotiis, FitzPatrick, Cole & Wisler. His name turns up as co-owner of Interlink Sun Homes, which sold vacation homes in Bulgaria to UK citizens.
In September 2007, Sorial was named a “Global Scot,” a network of executives with strong ties to Scotland. Trump’s inclusion on that list was revoked after his harsh comments about Muslims during the 2016 election campaign.
James Dodson, author of several books on golfing, recounts an interesting exchange he had a few years back at one of Donald Trump’s golf courses with the president’s son, Eric. According to Eric, Trump had several Russian investors who were big on golf.
“So when I got in the cart with Eric,” Dodson says, “as we were setting off, I said, ‘Eric, who’s funding? I know no banks — because of the recession, the Great Recession — have touched a golf course. You know, no one’s funding any kind of golf construction. It’s dead in the water the last four or five years.’ And this is what he said. He said, ‘Well, we don’t rely on American banks. We have all the funding we need out of Russia.’ I said, ‘Really?’ And he said, ‘Oh, yeah. We’ve got some guys that really, really love golf, and they’re really invested in our programs. We just go there all the time.’ Now that was three years ago, so it was pretty interesting.”
The whole article posted on WBUR’s website is well worth reading, but the little snippet above is the one getting some attention on Twitter. This conversation allegedly took place in 2014 at the Trump National Golf Club Charlotte. The club is actually located in Mooresville, North Carolina about 30 miles outside Charlotte.
Eric Trump on Twitter called Dodson’s story made up.
Trump and the Sculptor: A Tale of Corruption, Organized Crime and Murder
Trump and the sculptor, Zurab Tsereteli
Not long after his 1996 visit to Moscow, Donald Trump was working the phones.
In a conversation captured by The New Yorker’s Mark Singer, Trump took a call from Michael Gordon, a reporter from The New York Times in Moscow. Gordon had just interviewed a Russian sculptor named Zurab Tsereteli. Was it true that Trump and Tsereteli had discussed erecting a 306-foot-tall statue of Christopher Columbus on the Hudson River?
“Yes, it’s already been made, from what I understand,” said Trump, who had met Tsereteli a couple of months earlier, in Moscow. “It’s got forty million dollars’ worth of bronze in it, and Zurab would like it to be at my West Side Yards development”—a seventy-five-acre tract called Riverside South—“and we are working toward that end.”
According to Trump, the head had arrived in America, the rest of the body was still in Moscow, and the whole thing was being donated by the Russian government. “The mayor of Moscow has written a letter to Rudy Giuliani stating that they would like to make a gift of this great work by Zurab. It would be my honor if we could work it out with the City of New York. I am absolutely favorably disposed toward it. Zurab is a very unusual guy. This man is major and legit.”
Trump hung up and said to me, “See what I do? All this bullshit. Know what? After shaking five thousand hands, I think I’ll go wash mine.”
Tsereteli had been trying to find a home in America for his unwanted, unloved statue. The Miami Herald art critic Helen Kohen called the 311-foot-tall statue “graceless as a herd of brontosaurs … [and] configured in the shape of an exploded hydra.” Miami, along with Baltimore, Columbus, Ohio, Cleveland Ft. Lauderdale, and Boston had all said nyet.
While President Trump is not known for his taste (gold-plated sinks, anyone?), it seems curious that Trump would go out of his way to help Tsereteli. Why do this in front of a reporter? Why help Tsereteli?
Yuri Luzhkov
The answer, I believe, has little to do with the sculptor or his work and more to do with his patron: Yuri Luzhkov, the powerful and notoriously corrupt mayor of Moscow from 1992 to 2010.
It was Luzhkov who gave Tesereteli important commissions such as reconstruction of the Cathedral of Christ the Savior. Under Luzhkov, Tesereteli’s statues popped up all over Moscow, including his much-reviled statue of Peter the Great that many see as a tasteless monument to Russia’s corruption. And thanks to his friend Luzhkov, Tsereteli lived in a Moscow mansion that once housed the German Embassy.
In 1996 and 1997, Trump was exploring the possibilities of developing a property in Moscow for his first overseas venture. And nothing happened in Moscow without approval from the all-powerful Mayor Luzhkov. President Yeltsin had given Luzhkov exclusive control over privatization of property and businesses within the city limits. So, by doing a favor for Tesereteli, Trump may have been trying to do a favor for Moscow’s infamous mayor.
Luzhkov, his family, friends, and his staff had made themselves into a wealthy man by skimming from development projects like Trump’s in one of Europe’s most lucrative real estate markets. It’s no coincidence that Luzhkov’s wife, Yelena Baturina, became Russia’s richest woman running a Russian construction company. (She has since fled the country.) His deputy wore a million-dollar watch.
A 2010 State Department cable released by Wikileaks quoted an investigative journalist who told an American diplomat that “Luzhkov used criminal money to support his rise to power and has been involved with bribes and deals regarding lucrative construction contracts throughout Moscow.” Corruption pervaded Moscow, the State Department concluded, “with Mayor Luzhkov at the top of the pyramid.”
Tsereteli may have been running his own schemes. In 1993, customs officers in St. Petersburg opened shipping crates carrying another (smaller) Tsereteli statue of Columbus as a gift to the city of Seville, Spain. Inside were thousands of copper ingots, too soft for use in sculpture but normally used for electronic circuitry. Investigators later revealed that Tsereteli’s holding company, Kolumb, had contracted privately to ship 85,000 tons of copper (ten percent of Russia’s then annual copper exports) out of the country. Tesereteli was never charged. (See New Moscow Monuments, or, States of Innocence, Bruce Grant, American Ethnologist, May, 2001.)
Vyacheslav Ivankov
According to sources quoted in the State Department cable, Luzhkov and his wife had links to organized crime in Moscow. One of Luzhkov’s friends was crime boss Vyacheslav Ivankov.
This is interesting because Ivankov became one of the most powerful Russian Mafia bosses in America, and, when the FBI went it went looking for Ivankov, agents tracked him down in a luxury apartment in Trump Tower, according to journalist Robert I. Friedman’s expose Red Mafiya. Invakov disappeared and then turned up again in Trump’s New Jersey casino, the Taj Mahal.
Organized crime also pervaded Moscow’s hotels, and Moscow city officials had offered Trump the chance to invest in a pair of hotels, which Luzhkov and his cronies controlled through the Moscow City Property Committee. In The New Yorker profile, Trump seemed excited about the prospect:
“We are actually looking at something in Moscow right now, and it would be skyscrapers and hotels, not casinos. Only quality stuff. But thank you for defending me. I’ll soon be going again to Moscow. We’re looking at the Moskva Hotel. We’re also looking at the Rossiya. That’s a very big project; I think it’s the largest hotel in the world. And we’re working with the local government, the mayor of Moscow and the mayor’s people. So far, they’ve been very responsive.”
The Rossiya, a 3,000 room concrete box, was Europe’s biggest hotel, and it was infested with rats and criminals. The hotel’s general director, Yevgeny Tsimbalistov, was shot dead in a December 1997 contract killing apparently, according to The Economist magazine, for trying to reorganize things in a way that upset the balance of power between the gangs. The Economist had called it “Russia’s hotel from hell.” Fortunately for Trump, nothing came of the Rossiya deal and the hotel was razed in 2006.
The Rossiya
And Tsimbalistov’s murder was one in a string of four murders of Moscow hotel executives in an 18-month period bracketing Trump’s visit to the city. An American hotelier, Paul Tatum, had been gunned down on Nov. 3, 1996 the center of Moscow. (Trump arrived in Moscow a little more than a week after Tatum’s murder.)
Tatum had been in a bitter fight with the city for control of his hotel, the Radisson. Just a few days before his death, Tatum had placed newspaper ads accusing Mr. Luzhkov of corruption. After Tatum’s death, Luzhkov’s office took over control of the Radisson.
Back to our sculptor. Before Trump made his calls about the statue, Tsereteli had been trying for years to bring his sculpture to America. One of his first attempts was Miami, where one of Trump’s friends, Bennett S. LeBow, had been trying trying to help Tsereteli bring his 500-ton Columbus sculpture to America — and perhaps to curry favor with Luzhkov at the same time.
LeBow took Tsereteli and his friend Luzhkov to Miami’s City Hall to offer the statue to the city, and in August of 1992, he set up the New World Foundation Inc. to raise the estimated $20 million it would cost to erect the sculpture in the sea off Miami Beach. The short-lived company was staffed his executives from his various companies.
LeBow had many business interests in Russia. His Brooke Group made and sold cigarettes in Russia through Liggett-Ducat, a Russian joint stock company. More importantly to this story, LeBow’s conglomerate, Brooke Group Ltd., owned real estate in downtown Moscow.
A Brooke Group subsidiary owned Ducat Place, which was prime office space in the middle of downtown Moscow. In late 1996, one office building had been completed in Ducat Place, construction on a second building was underway, and a third building was in the planning stages. Doing a favor for Luzkhov certainly was good for business.
LeBow had helped bring Trump to Moscow in 1996 and partnered with him on a deal to build or at least put his name another Trump Tower in Ducat Place. That deal went nowhere.
It seems possible that LeBow might have advised Trump to be nice to Tsereteli if he wanted to do a real estate deal in Moscow. We know what Trump wanted: a real estate deal in Russia. What we don’t know is what else, if anything, Trump was asked to give up in return.
Update: In 2008, Trump was still sucking up to Tsereteli, and, by extension, Luzhkov, while promoting his Trump-Soho project to Russians in Chayka magazine:
I’m always looking for good partners. In the Trump-Soho project, our partner is Alex Sapir, the son of my friend Timur Sapir. Now we are discussing construction projects in Moscow and St. Petersburg. We conduct negotiations there with potential partners. Apparently, we’ll order a few sculptures from Zurab Tsereteli, the closest to me in spirit, the best sculptor of Russia, the author of a grandiose creation – the statue of Peter the Great.
A final note: In 2016, Tsereteli’s unwanted, unloved Columbus statue was unveiled in its new home in Puerto Rico.
Before He Bought Trump’s Mansion, This Russian Billionaire Was Jailed for Murder
Dmitry Rybolovlev
It’s a bit suspect, to say the least, that Dmitry Rybolovlev, the Russian fertilizer king, bought the future president’s Palm Beach mansion for $50 million more than Trump paid for it just a few years earlier.
The mansion, called Maison de l’Aimitie was in such bad shape that Rybolovlev got permission to tear it down and sell off the land beneath it. I’ve written how this transaction has the marks of a bribery case I followed here in San Diego.
I decided to take a deeper look at Rybolovlev. Turns out, he’s got an interesting past: He spent nearly a year in jail on murder charges. Depending on whom you ask, Rybolovlev is a man who rubbed out a competitor or an innocent man framed for murder by corrupt Russian officials.
The evidence points to the latter. Rybolovlev, born in 1966, came from a family of doctors in Perm, an industrial city in the Ural Moutains. After graduating from the Perm Medical Institute in Russia in 1990 he joined the cardiology department of a local emergency room.
It was the dramatic upheaval after the fall of the Soviet Union that changed his life and the lives of his patients, who could not afford to pay him. Rybolovlev moved to Moscow and became one of the first licensed brokers in the country.
It was the right place at the right time. The Russian government, desperate to raise cash and stave off collapse, and being totally unacquainted with capitalism, began selling off its companies for mere fractions of their value. It was perhaps the single greatest investment opportunity in history.
In 1995, Rybolovlev started buying up shares of Uralkali, a fertilizer maker that was located back in his home region of Perm, the center of the country’s potash industry. He quickly amassed a controlling interest in the company and was named chairman of the board.
In 1996, Rybolovlev was arrested on a murder conpiracy charge. He would spend his 30th birthday and the next 11 months in jail.
[The definitive account of Rybolovlev’s time in jail comes from an interview he gave to the Russian edition of Forbes magazine about a decade ago.]
Rybolovlev was accused of ordering the 1995 murder of Evgeny Panteleymonov, the general director of Netfchimik, which produced industrial alcohol. Rybolovlev was chairman of Netfchimik and owned 40 percent of the company, according to Forbes.
Netfchimik generated high cash flows — and attracted attention from criminals. In the summer of 1995, Panteleymonov met with Rybolovlev and told him the criminals had to go. Rybolovlev had offered him bodyguards for his protection. Panteleymonov had refused.
Rybolovlev was not so cavalier. He had grown so worried for his family’s safety that he moved them to Florida and then to Switzerland. He hired bodyguards to protect his family, his parents and his business partners. “From time to time, I had to wear a bulletproof vest,” he told the Russian edition of Forbes.
Unprotected, Panteleymonov was gunned down by a mob-linked businessman named Oleg Lomakin (aka Prokop). Lomakin was arrested for Panteleymonov’s shooting, and, oin exchange for leniency, he accused Rybolovlev of ordering the murder.
It was enough to get Rybolovlev thrown in jail, where he languished. Authorities moved from from cell to cell in an effort, he suspects, to break him. Weeks dragged into months. Offered freedom if he sold his shares in Ukrakali, he refused. He told Forbes he was prepared to serve 10 years, if necessary.
Finally, the case against him began to fall apart. No other evidence linked Rybolovlev to the shooting, and eventually Prokop admitted that he had perjured himself. After nearly a year of incarceration, Rybolovlev was allowed to post bail of one billion rubles (about $200,000). In late 1997, he was acquitted of murder charges.
It turned out that Rybolovlev’s arrest was tied to the politics of the fertilizer industry. There was a familiar Soviet problem of overproduction, and to smooth things out the Rybolovlev’s company Uralkali and other fertilizer producers decided to collude. In 1993, they formed the International Potash Company to channel their exports.
Things were uneventful until 1996. On May 20th, Uralkali shareholders voted to end its relationship with the International Potash Company and export the company’s products through an American company, Transammonia. The next day, Rybolovlev was arrested.
“I definitely came out a different person,” Rybolovlev told Forbes. “I got an understanding of how the world actually works. ” In prison, the businessman realized that the state can ruin his business at any time. Political risks were too significant and could never be neglected.
Freed from jail, Rybolovlev resumed command of his business. In 2007, he listed Uralkali on the London stock exchange and overnight became one of Russia’s richest men. He sold most of his stake in the company in 2010 to three Russian tycoons. Forbes estimates his fortune today at $7.4 billion.
Another Useful Idiot
The Washington Post is out with a story about the American right’s ties to Russia and the article centers on the tale of accused Russian Mob boss and Russian Duma member Alexander Torshin and his red-headed friend, Maria Butina, which I’ve written about here.
In that post, I wrote that David Keene — opinion editor of The Washington Times editorial page and past NRA president — was a useful idiot who allowed a suspected Russian mobster to get close to the president.
Torshin is a member of the Russian Duma and, simultaneously, (while the Post story doesn’t mention it), he was accused by Spanish police of being a ranking member of the Moscow-based Taganskaya crime syndicate. He was slated to meet with President Trump at the National Prayer Breakfast until a White House national security aide noticed Torshin’s name and flagged him as a figure who had “baggage.”
The Post adds an important new detail: How Torshin met Keene.
At least one connection came about thanks to a conservative Nashville lawyer named G. Kline Preston IV, who had done business in Russia for years.
Preston said that in 2011 he introduced then-NRA President David Keene to a Russian senator, Alexander Torshin, a member of Putin’s party who later became a top official at the Russian central bank. Keene had been a stalwart on the right, a past chairman of the American Conservative Union who was NRA’s president from 2011 to 2013.
I never realized that Vladimir Putin had such open and effusive admirers in the United States like George Kline Preston.
Preston, born in 1966, is an expert on Russian law who displays a white porcelain bust of Putin in his office, according to the Post.
He believes that we have it backwards: Putin is the good guy in this story. He has told friends for years not to believe reports that Putin murdered journalists or political opponents. Here he is effusively praising Putin to his friend Torshin on Twitter.
Translation: “@torshin_ru Tomorrow is Presidents’ Day in the USA. I want to say that you are fortunate to have President Vladimir Putin.”
Preston’s relationship with Torshin goes back to at least 2009 when Preston briefed Russian legislators on the implementation of immunity agreements in Russia:
Mr. Torshin asked me to briefly describe the concept of a “deal with the investigation,” or, more precisely, the “plea bargaining”, as we used to call this term in the West. (source: archived web page of prestonkline.com)
Preston was an international observer during the 2011 Russian duma elections that led to mass street protests about election fraud. Preston said he concluded the Russian election system was “impressive” and “very well-organized,” but the Western view was overwhelmingly negative. The reason why, he said, lay in the fact the West does not like Vladimir Putin. Asked why, he speculated that “maybe because he’s a strong leader, maybe he’s done a pretty effective job:”
Interestingly, this video was posted to YouTube (and possibly made by) Johan Backman, a controversial Finnish academic. Backman is a Putin cheerleader and Kremlin propagandist (which is detailed in this lengthy expose). Preston was apparently didn’t know or didn’t mind that he was being used for propaganda purposes.
In 2012, Preston returned the favor and invited Torshin to be an election observer in Nashville. Both men appear in the picture below (Preston on the left, and Torshin in the middle). Torshin’s tweet below reads: “Standing in line at the polling place. As an ordinary American. 6:45 a.m.”
In contrast to his experience observing voting Russia, Preston said he saw violations of U.S. law during the presidential election: pro-Obama signs posted too close to a polling place.
Preston earned his bachelors degree in Russian language and literature at the University of Tennessee in 1989, the same year he studied in Leningrad via an Indiana University program at Leningrad State. He and earned his law degree at Nashville School of Law in 1994. For a time, Preston was involved in trading Russian/Ukrainian securities and importing Kievskaya Rus ultra premium vodka.
Preston’s law practice appears heavily focused on Russia. A version of his website archived in 2011 appears in both English and Cyrillic. On his office web page of is what appears to be a double-headed eagle, the symbol on the coat of arms of the Russian Federation.
A portion of the Preston’s practice involved assisting Americans in adopting children born in the Ukraine and the former Soviet Union. (Putin in 2012 signed into law a ban on adoptions of Russian children by Americans.) Preston also represented Bering Strait, a classically-trained Russian bluegrass and Russian scholar Mikhail Anikin, who claimed that author Dan Brown stole his idea for the “Da Vinci Code.”
On his Twitter feed, @gittinpaid, Preston often retweets Russian propaganda from RT, Pravda and other news outlets:
I’m not sure what happened to G. Kline Preston, but it’s hard to look at him and see a man who has turned himself, quite happily it seems, into another of Putin’s useful idiots.
Donald Trump and the Russian with the Million-Dollar Watch
Vladimir Resin and his million-dollar watch
Eight years ago, I came across an interesting item in the Russian publication Vedemosti. A reporter decided to take a close look at the ridiculously expensive watches worn by Russian government officials.
Vedomosti found the most expensive watch on the wrist of Vladimir Resin, the former deputy mayor of Moscow.
He was photographed wearing an extremely rare Swiss watch made of platinum called the La Pressy Grande Complication model, which retails for more than $1 million. (The original story is gone, but you see another version here.)
It was interesting to learn that Resin met with Donald Trump during early business forays into Russia in the 1990s. This was an interesting moment for two larger-than-life characters: The Russian city official with the million-dollar watch and the future American president looking to do his first overseas deal in Moscow.
Trump has insisted that he has no loans, no deals, and no business, but it’s not for want of trying. In the mid 1990s, Trump was trying to put his name something in Moscow. But no matter what he wanted to build, renovate or brand, Trump had to go through Resin, who for two decades oversaw construction in Russia’s capital city as deputy mayor.
Resin listed his work as his only hobby in his official biography, but it was a different kind of labor that earned him a $1 million watch. Moscow government officials welcomed foreign partners into their hotels — and demanded their own pound of flesh in return. “Corruption is a very, very big problem,” an anonymous Western hotel executive told Businessweek in a story about the Russian hotel wars during Resin’s time in office.
Trump had reportedly grown interested in the Moscow luxury apartment market after noticing how many Russians were buying space in Trump Palace, Trump Parc and Trump Plaza towers in New York.
In November 1996, Trump traveled to Russia to explore the possibility of replicating the success of Trump Tower in Moscow. In a news conference at Moscow’s Baltschug Hotel, Trump announced he planned to invest $250 million to build two “super-luxury” residential towers to be called Trump International and — surprise — Trump Tower, both of which he said “Moscow desperately wants and needs.”
“Moscow is going to be huge, take it from the Trumpster!” he told Playboy magazine.
Donald Trump in Moscow Nov. 5, 1996
It’s not clear whether Trump had the money to do deals in Moscow because 1996 was a difficult time for the future president. Although Trump claimed to be worth $2 billion, partial tax returns published by The New York Times revealed that Trump declared a loss of $916 million for the previous year. During his Moscow trip with then-wife Marla Maples, Trump had to suffer the indignity of flying commercial airlines. “We had to wait about an hour in London for a flight, right out there with all the other passengers,” Marla told Playboy. “Well, you can imagine how that went over with Donald.”
Trump met with Resin during his 1996 visit to Moscow. The Moscow Times quoted one of Trump’s partners in the deal, David Geovanis, as describing Resin as “one of the key people in charge of attracting foreign invest to the Moscow real estate market.” Geovanis added that the city was “very receptive” to Trump’s developments in Moscow.
Except they weren’t. Maybe the whole build-a-tower-in-Russia was just another in a long series of self-promotion. Or maybe Resin put his foot down. Resin said he wasn’t interested in having a glass-and-steel tower in the middle of Moscow. “We are not building any towers in the old part of the city,” he told the ITAR-Tass news agency. “We are not going to turn the ancient city into a Manhattan.”
Hotel Rossiya
Resin had other ideas for Trump. In December 1996, Resin offered him the chance to invest in a pair of decrepit Moscow hotels, the Hotel Rossiya, just off Red Square, and the rundown Hotel Moskva. The city controlled the hotels through a joint-stock company.
Back in New York, Trump seemed excited about the prospects of putting his imprint on the Moskva or the Rossiya when he met in with Alexsandr Lebed, who at the time was viewed as a potential successor to Russian president Boris Yeltsin. A profile in The New Yorker quoted Trump telling Lebed:
“We are actually looking at something in Moscow right now, and it would be skyscrapers and hotels, not casinos. Only quality stuff. But thank you for defending me. I’ll soon be going again to Moscow. We’re looking at the Moskva Hotel. We’re also looking at the Rossiya. That’s a very big project; I think it’s the largest hotel in the world. And we’re working with the local government, the mayor of Moscow and the mayor’s people. So far, they’ve been very responsive.”
The Moskva was a small, venerable Moscow hotel that is now run by the Four Seasons. The Rossiya was another matter.
The Rossiya, a 3,000 room concrete box and Europe’s biggest hotel, intrigued Trump, but it was a nightmare. The Economist magazine called it “Russia’s hotel from hell.” The city had tried without success to close it in 1994 because it was overrun by rats and cockroaches. Renovating it would cost a small fortune.
The Rossiya was also plagued by an even more dangerous problem: Organized crime. The hotel’s general director, Yevgeny Tsimbalistov, was shot dead in a December 1997 contract killing apparently, according to The Economist, for trying to reorganize things in a way that upset the balance of power between the gangs. And Tsimbalistov’s murder was one in a string of four murders of Moscow hotel executives in an 18-month period from 1996 to 1998.
Then there were the all-powerful city officials to deal with, like Resin.
Trump wisely passed on the fortresslike Rossiya, and the hotel was eventually razed in 2006 to make way for a new development.
Trump, however, did show some interest in the other Moscow hotel Resin offered him, the Moskva. Trump submitted a proposal for a $175 million renovation of the crumbling Moskva with the top floor converted into luxury apartments. Trump promised to turn the hotel around in 18 months.
In January of 1997, Resin told Interfax that an agreement with Trump’s representatives was “practically reached”. In the end, the Moskva deal fizzled out, too.
I should note that two of Trump’s friends longtime friends brought him to Moscow, Howard Lorber and Bennnett S. LeBow. Lorber’s New Valley LLC partnered with Trump on Moskva deal and LeBow’s Liggett-Ducat Ltd. subsidiary helped out on the would-be tower in Moscow. Today, Lorber is president and CEO and Bennett is chairman of the Vector Group, the parent company of both the Liggett tobacco firm and New York real estate giant Douglas Elliman. Both men are close friends and supporters of Trump.
By 2004, Resin had changed his mind about skyscrapers in Moscow. A $5 billion development plan called for 60 skyscrapers to be built, with the tallest reaching 116 floors. Resin flew to New York to to discuss the project with Trump’s representatives. As far we know, nothing came of that meeting.
Today, Resin serves in the lower house of Russia’s parliament, the Duma, as a member of Vladimir Putin’s United Russia party. In 2010, he was named acting mayor of Moscow when President Dimtry Medvedev fired his boss, Mayor Yuri Luzhkov. Resin resigned the following year.
The fact that nothing came of Trump’s meeting of the man with the million-dollar watch is somewhat reassuring, given the president’s questionable judgment as president in foreign affairs and his rumored ties to Moscow. No doubt Trump could have done a deal in Moscow had he wished. And he probably wanted to — “Moscow’s going to be huge” — and putting his name on one of the world’s biggest hotels might have been tempting. In the end, we hope, he found the cost or the risk of dealing with men like Resin, or both, too high.
RT — The Foreign Agent in Your TV Set
The motto of RT, the Kremlin-backed propaganda network, is “question more.” RT loves to pose questions about all manner of conspiracy theories, such as the Sept. 11 attacks were an inside job. However, one subject which RT dares not question is the nature of its own organization.
- What is RT America?
- Does the Kremlin pay its bills?
- Is RT a foreign agent?
What is RT America?
RT describes itself as a “publicly-funded, non-profit organization.” It is a brand of ANO TV-Novosti, an “autonomous non-profit organization”, established in Moscow 2005 by the now-defunct Russian news agency, RIA Novosti. In the United States, it operates through a US corporation that is RT in all but name.
When it first launched in 2005 the network called itself “Russia Today” but it rebranded itself in 2009 as the more ambiguous RT. “We removed ‘Russia Today’ from the logo after many colleagues, also from foreign media, told us that it was diminishing our potential audience,” said Margarita Simonyan, RT’s editor in chief told The Moscow Times. “Who is interested in watching news from Russia all day long?”
Fans of “alternative facts” love to tune in to RT, which bombards viewers in Europe, the UK (where RT’s bank accounts have been frozen) and America with all sorts of outlandish stories in English, Arabic, Spanish, and, of course, Russian.
The US intelligence community devoted a good deal of its report on Russia’s interference in the US elections to RT, saying it was part of “a Kremlin-directed campaign to undermine faith in the US Government and fuel political protest” and noting that RT’s editor in chief Margarita Simonyan was close to the Kremlin. Not to be outdone, Simonyan cleverly mocked the report in an open letter titled, “Dear CIA.”
RT editor Margarita Simonyan and Vladimir Putin
Does the Kremlin pays its bills?
RT’s budget of more than $300 million comes from the Federal Agency for Press and Mass Communications of the Russian Federation. (By comparison, the budget of the BBC, which is funded by the British government, is $375 million). In other words, yes, the Kremlin pays the bills.
Is RT a foreign agent?
The funny thing about RT is that the only place you will find it in the United States is on your TV set. RT has been very careful not to have any legal or physical presence in the United States.
The only legal paperwork I could find for RT was a 2009 US trademark application:
As you can see, RT’s own trademark states that it produces “ongoing news shows pertaining to current events in Russia.”
The trademark was obtained by RTTV America Inc., the commercial entity through which RT America operates in the United States.
RT’s editor Margarita Simonyan says that RT does not need to register under the Foreign Agents Registration Act. RT “simply transfers funds” to RTTV America.
However, this is a fig leaf. RT’s own trademark application, shows that RTTV America assigned its entire interest in the trademark to ANO TV-Novosti in Moscow.
The entire value of the RT brand in the United States belongs to a Russian corporation.
The Foreign Agents Registration Act of 1933 is designed to “insure that the US government and the people of the United States are informed of the source of information (propaganda) and the identity of persons attempting to influence US public opinion, policy, and laws.”
As the Atlantic noted, two Asian television networks and the distributors for two Chinese daily newspapers have registered under FARA. NHK, which rebroadcasts Japanese programming in the United States, is registered as a foreign agent.
The FARA statute exempts news organizations unless they are “owned, directed, supervised, controlled, subsidized or financed” by any organization registered outside the United States. It’s clear that RT is funded by the Russian government. So, yes, RT is a foreign agent.
Ilya Ponomarev, a leftist former member of the Russian Duma who now lives in exile in the United States, told Buzzfeed that RT is not a media outlet, and should register as a foreign agent.
“It’s a great mistake that the west is doing, that it’s acknowledging it as a media tool,” he said. “I think it’s a lobbying tool and it should be regulated as a lobbyist rather than media.”
“Russia Today is way more dangerous than ISIS. Way more dangerous,” he said. “Because ISIS may create physical danger with certain western individuals who are coming into direct contact with ISIS, but RT is very focused and committed in disputing the very core values of western society.”
The most difficult question to answer is whether RT deserves First Amendment protections. I’ll try to tackle that in a future post.
A Missing Piece of the Puzzle
The Guardian is out with a report that contacts between the Trump campaign and Russian intelligence occurred much earlier than previously reported:
GCHQ first became aware in late 2015 of suspicious “interactions” between figures connected to Trump and known or suspected Russian agents, a source close to UK intelligence said. This intelligence was passed to the US as part of a routine exchange of information, they added.
Looking at the Trump-Russian Timeline, this puts other events around that time into context. Beginning in late 2015, the following events occurred:
- December: Accounts associated with Russian propaganda “troll farm” called the Internet Research Agency begins supporting Donald Trump
- December 17: Vladimir Putin praises Donald Trump at his annual news conference. “He is a bright and talented person without any doubt. He is the absolute leader of the presidential race.”
- Feb. 2: Alexander Dugin, a conservative “philosopher” with close ties to the Kremlin, endorses Trump.
- March: Individuals linked to the Russian government begin openly supporting Donald Trump. Government-funded propaganda outlets RT and Sputnik cast Trump as the target of unfair coverage from mainstream media outlets.
- March: A hacking group known as “Fancy Bear” or “APT28” launches a spearfishing campaign targeting email addresses at hillaryclinton.com and dnc.org that gains them access to DNC network. The hacking group is run by the Russian foreign military intelligence service (GRU) and appears focused on a single target: the DNC’s opposition research files on Donald Trump.
What the publicly available information shows is a steady ramping up of Russian support for Trump.
Our man in Moscow
The GHCQ information fills in the missing piece. The contacts between the Trump campaign and Russian intelligence appear to be the catalyst for the covert and overt support from Moscow.
Michael Flynn’s December 10 trip to Moscow also emerges as a possible lynchpin in this story. Flynn, you will recall, attended RT’s 10th anniversary gala in Moscow, where was seated at the head table next to Vladimir Putin. It’s not clear what Flynn’s role in the campaign was in this time, if any. The two men first met in August; Flynn announced he was advising Trump in February 2016.
A website that tracked Trump’s evolving campaign team lists the following people as part of Trump’s inner circle in late 2015:
- Corey Lewandowski
- Michael Glassner
- Donald F. McGahn
- Michael Cohen
- Hope Hicks
- Roger Stone (resigned Aug. 8, 2015)
More TK.
Carter Page Timeline
Op-Ed: Trump’s $95 million home sale to Russian deserves scrutiny
Trump outside Maison de l’Aimitie, which he sold to a Russian billionaire.
Published online April 6, 2017 in The San Diego Union-Tribune
by Seth Hettena
When the FBI recently revealed that it was investigating the nature of any links between President Trump, his associates and the Russian government, I was reminded of another scandal involving disgraced San Diego County Congressman Randy “Duke” Cunningham.
The story, which began with a report published in the San Diego Union-Tribune, grew into one of the biggest political scandals in county history. In 2006, a federal judge sentenced Cunningham to 100 months in prison for accepting $2.4 million in bribes from defense contractors to whom he steered lucrative Pentagon contracts.
Duke Cunningham
While there are many differences between the two men — Cunningham, unlike Trump, served his country honorably during the Vietnam War and became a highly decorated Navy fighter pilot — there are similarities where their political careers are concerned.
Like Trump, Cunningham had a loose tongue that often got him in trouble. Like Trump, he mocked, taunted, bullied and insulted his political opponents. And like Trump, Cunningham was drawn into far-fetched conspiracies. Look in the Congressional Record, and you’ll find Cunningham denouncing President Bill Clinton as a traitor and a KGB dupe because of a visit to Moscow as a college-aged man.
At the center of Cunningham’s bribery scandal was a real estate deal. Cunningham sold his home in Del Mar to a defense contractor and campaign contributor named Mitchell Wade, one of the shady “friends” the congressman attracted. Wade paid $1.675 million for the congressman’s home in 2003, an eye-popping figure that attracted attention even in San Diego County’s red-hot housing market.
Wade bought the home without ever having set foot in it, and only later found out that it was in sorry shape, darkened by the bars Cunningham installed over every window and skylight to foil Del Mar’s burglars. Wade put the home up for sale a month later, but it languished for a year before he managed to unload it for a $700,000 loss. To prosecutors, it smelled like bribery. And it was.
President Trump also sold a home for more than it was worth — except the house itself and the sale price were both much, much bigger. The property was a sprawling, oceanfront mansion in Palm Beach, Florida that Trump sold for $95 million after purchasing it four years earlier for $41 million. At the time, it was the most expensive U.S. home sale ever.
Dmitry Rybolovlev
The buyer of the 6-acre property was a Russian fertilizer magnate named Dmitry Rybolovlev. The sale took place in July 2008, a time when the overheated U.S. real estate market was showing signs of distress and the supply of luxury homes exceeded demand.
Rybolovlev overpaid. Five years after the sale, Palm Beach County officials appraised the house at less than $60 million.
To be fair, no one has accused Trump or Rybolovlev of bribery, but the similarities between the sale of Cunningham’s property and Trump’s are striking. Not unlike the defense contractor who bought Cunningham’s Del Mar home, the Russian fertilizer king showed little interest in Trump’s mansion before or after he bought it. He never lived in it and is said to have visited it only once.
The home was plagued by mold, and, amazingly, a lawyer for Rybolovlev’s ex-wife told the Palm Beach Post he found no evidence that the Russian billionaire had hired anyone to inspect the property before he paid Trump a $50 million premium for it. In 2015, Rybolovlev got permission to demolish the 61,744-square-foot home, and is now selling off the land underneath it.
Other coincidences link Rybolovlev and Trump. Reporters have tracked the Russian billionaire’s private plane to cities where Trump was traveling during the 2016 presidential campaign and into his presidency. Both men say they have never met.
It could be that the sale of the Palm Beach mansion is an example of Trump’s ballyhooed deal-making skills. And it is also possible that it was something else: that the purchase of the mansion known as Maison de l’Aimitié (House of Friendship) was a covert form of payment from friends unknown in Russia or elsewhere.
The major difference between the two transactions is that at the time of the sale of the Palm Beach mansion, Trump was not a public official. But now that he occupies the most powerful office in the world, the FBI, Senate and House intelligence committees who are examining the president’s ties to Russia should learn the lessons of the Cunningham scandal and give the enormous premium paid for Trump’s moldering mansion — purchased sight unseen — the close scrutiny it deserves.
Hettena, a former military writer, is a freelance writer based in San Diego.
The Godfather Goes to Washington (Updated)
Reputed Russian mob “godfather” at the 2016 NRA convention in Louisville, Ky.
How did a suspected Russian mob “Godfather” (update: and Kremlin emissary) nearly make it to a private meeting in February with President Trump? With help from friends in the NRA.
Dramatis Personae
The “Godfather” Alexander Torshin
The Godfather: Spanish police investigating the Moscow-based Taganskaya crime syndicate laundering ill-gotten gains through banks and properties in Spain learn that Alexander Torshin, while serving as a deputy speaker of the upper house of parliament in Russia, instructed members how to launder criminal proceeds. Wiretaps recorded Torshin talking in 2012 and 2013 to the alleged Taganskaya leader in Spain, Alexander Romanov. An internal document from the Spanish Civil Guard Information Service, explains Torshin’s central role in the criminal plot.
“As a consequence of the phone tapping carried out in the aforementioned inquiries it has been ratified that, above Romanov, on a higher hierarchical level, is Alexander Torshin. In the numerous phone conversations and with different contact persons, Alexander Romanov himself recognized his subordination before someone who he describes as ‘the Godfather’ or ‘the boss’ … which in itself is telling when it comes to situating their relationship.”
Torshin also has longstanding ties to the FSB, successor agency to Russia’s KGB.
Maria Butina
The Honeypot: Maria Butina. In 2011, this tall redhead was involved in sales of appliances and furniture in the Altai region of Siberia, A year later, she was rubbing elbows with Torshin and putting together Право на Оружие (translated as “Right to Bear Arms”) in Moscow, an international gun rights organization.
David Keene
The Useful Idiot: David A. Keene is a political consultant, longtime director of the American Conservative Union, past president of the National Rifle Association, and currently the opinion editor of The Washington Times. Although not the power broker he once was, Keene still wields influence. He takes a liking to Torshin and Butina and opens doors for them in Washington and introduces them to influential people.
Our Story Begins
It’s election day in America, 2012. Barack Obama is running for a second term against Mitt Romney. Enter Torshin.
Nov. 6 2012: Torshin travels to Nashville, Tennessee where the NRA an American friend has granted him special status as an observer for the 2012 presidential election. Tweet below reads: “Standing in line at the polling place. As an ordinary American. 6:45 a.m.” At the time, Torshin is a senator in Putin’s United Russia in the upper house of Russia’s parliament.
Nov. 8, 2012: Torshin visits the Russian ambassador’s residence in Washington and NRA headquarters in Washington, DC.
May 2013: Torshin attends the NRA’s annual meeting in Houston, Texas.
Torshin photographed in 2013 with then NRA president David Keene at the NRA’s annual convention in Houston.
August 21, 2013: Torshin decides not to attend a birthday celebration for Taganskaya leader in Spain, Alexander Romanov, as planned. Spanish authorities believe he was warned by the Russian prosecutor that if he stepped onto Spanish soil he would be arrested.
November 2013: NRA president David Keene travels to Russia for a conference hosted by The Right to Bear Arms. Keene speaks at the conference, with Torshin in attendance.
David Keene and Maria Butina in Moscow. (Source: Facebook)
January 2, 2014: David Keene publishes an op-ed piece in the Washington Times by his friend, Alexander Torshin. “Last year, I had the pleasure of attending the National Rifle Association’s annual meeting in Houston,” he writes. Torshin says he has been a “life member” of the NRA for years.
April 2014: Torshin and Butina attend the NRA’s annual meeting in Indianapolis, where they are given the red carpet treatment. Butina attends the annual NRA Women’s Leadership Luncheon as a guest of former NRA President Sandy Froman and participates in general meetings over the weekend as a guest of former NRA President David Keene. She also presents the then-NRA president Jim Porter with a plaque. Butina is given the “rare privilege” of ringing a Liberty Bell replica.
May 5, 2014: Maria Butina visits NRA headquarters in Washington, DC. and meets with David Keene.
May 6, 2014: Butina and her organization are profiled by conservative website Townhall.
We are a young organization. We are three years old. And we invited David Keene. He made a speech at our annual meeting. And so it’s like an answer from one side. The next side is the life member of our organization. He is our Russian senator. His name is Senator Alexander Torshin. He is a life member of NRA too, and he’s usually a participant of such events, and every annual meeting of NRA. But now the situation between (our) two countries is very difficult. And we have to go here together with Senator Torshin. He is a great gun lover, he supports our organization and he’s a friend of the NRA.
September 3, 2014: Paul Erickson, NRA member, GOP operative, campaign manager for Pat Buchanan’s 1992 presidential run, attends an open forum in Moscow organized by Right to Bear Arms.
Butina and Erickson in Moscow
January, 20 2015: Torshin is named deputy governor of the Central Bank of Russia, responsible for liaison with the Federal Assembly chambers, and also federal and regional state executive bodies. Torshin selects Maria Butina as his special assistant.
April 2015: Torshin and Butina both attend NRA’s annual meeting in Nashville.
April 10, 2015: Butina, Torshin and Keene meet future Republican presidential candidate and Wisconsin governor Scott Walker during an event in Tennessee.
July 11, 2015: Maria Butina attends Trump Freedom Fest rally in Las Vegas and poses a question to the Republican candidate: “I’m from Russia. My question will be about foreign politics. If you will be elected as president, what will be your foreign politics, especially in the relationships with my country? Do you want to continue the policy of sanctions that are damaging both economies? Or [do you] have any other ideas?”
Trump replies: “I know Putin, and I’ll tell you what, we’ll get along with Putin. … I would get along very nicely with Putin, I mean, where we have the strength. I don’t think you’d need the sanctions. I think we would get along very, very well.”
July 13, 2015: Butina attends the official launch of Wisconsin Gov. Scott Walker’s run for governor.
December 2015: An NRA delegation travels to Moscow to meet with Dmitry Rogozin, the deputy prime minister in charge of Russia’s defense industry who is a subject of US sanctions. The delegation consists of David Keene, Paul Erickson, and Milwaukee County, Wisconsin sheriff David A. Clarke. Right to Bear Arms pays $6,000 for Clarke’s meals, hotel, transportation, and entertainment. (Daily Beast story)
Feb. 7, 2016: Torshin attends National Prayer Breakfast in Washington, D.C.
February 10, 2016: Paul Erickson forms a limited liability corporation with Maria Butina called Bridges, LLC., based in South Dakota. What this company does is a mystery.
May 2016: According to The New York Times, Torshin tries to meet with Trump during the NRA comeeting between Trump and Vladimir Putin. Torshin Rick Clay, an advocate for conservative Christian causes, to Rick Dearborn, a Trump campaign aide.
May 2016: Paul Erickson, Marina Butina’s friend and business partner, writes an email to a Trump campaign aide, The New York Times reports.
Subject: “Kremlin Connection.”
Russia, Erickson writes, was “quietly but actively seeking a dialogue with the U.S.” and would use the NRA’s annual convention in Louisville, Kentucky, to make “first contact.”
“Putin is deadly serious about building a good relationship with Mr. Trump,” Erickson writes to Trump aide Rick Dearborn. “He wants to extend an invitation to Mr. Trump to visit him in the Kremlin before the election. Let’s talk through what has transpired and Senator Sessions’s advice on how to proceed.” Sessions says he does not recall the outreach.
“The Kremlin believes that the only possibility of a true reset in this relationship would be with a new Republican White House,” Erickson writes. “Ever since Hillary compared Putin to Hitler, all senior Russian leaders consider her beyond redemption.”
By “happenstance” and the reach of the NRA, Erickson says he had been put in position to “slowly begin cultivating a back-channel to President Putin’s Kremlin” in recent years.
“Russia is quietly but actively seeking a dialogue with the U.S. that isn’t forthcoming under the current administration.”
May 20, 2016: Torshin attends NRA convention in Louisville, Kentucky. He shares a table with Donald Trump, Jr. at a private dinner. According to The New York Times, Torshin had tried and failed to meet with candidate Trump in Louisville to pitch a “backdoor meeting” with Putin. In the picture below, David Keene is in the background and Torshin is wearing a button that reads “I’m the NRA and I Voted.”
May 2016: Taganskaya mafia boss Alexander Romanov is sentenced to almost four years in a Spanish prison, after pleading guilty to illegal transactions totaling 1.65 million euros ($1.83 million) and $50,000.
August 8, 2016: Bloomberg reveals Torshin’s connections to organized crime.
Nov. 12, 2016: Butina celebrates her birthday with a costume party in Washington, DC. attended by several Trump’ campaign consultants.
January 15, 2017: Torshin tweets that he brought a gift for NRA President Allan D. Cors. President Cors loves tanks.
January 20, 2017: Maria Butina and Paul Erickson attended the invitation-only Freedom Ball to celebrate Donald Trump’s swearing in as President of the United States.
Feb. 2, 2017: Torshin and Butina are excited to meet newly-elected President Donald Trump at the National Prayer Breakfast. Their hopes are dashed at the last minute when a White House national security aide notices Torshin’s name and flags him as a figure who had “baggage,” a reference to his suspected ties to organized crime, according to Yahoo News.
Butina told Yahoo:
“Late the night before, we were told that all meet and greets were off,” Butina wrote in an email. “There were no specific questions or statements that Mr. Torshin had in mind during what we assumed to be a five-second handshake. We all hope for better relations between our two countries. I’m sure there will be other opportunities to express this hope.”
Fin.
Unwitting Agents, Useful Idiots, Donald Trump and other dupes
In his excellent testimony March 30 before the Senate intelligence committee, Thomas Rid, a professor in the Department of War Studies at King’s College London, explains how Russia has perfected the art of exploiting unwitting agents.
Unwitting agents are fools who are doing the bidding of another person or country without realizing it. Another term for them is “useful idiot,” a phrase supposedly used by Lenin to describe liberals and Social Democrats who helped advance the Communist cause outside the Soviet Union.
Rid said three different types of unwitting agents stand out from the chaos of the 2016 election:
Unwitting agent #1: Wikileaks.
The US intelligence community concluded with a high degree of confidence that Russia’s foreign military intelligence service, the GRU, was the source for the reams of stolen Clinton campaign emails published by Wikileaks.
Wikileaks has repeatedly denied that Russia was the source for the leaked DNC emails, which shows why an unwitting agent is so useful.
Wikileaks clings to the moral high ground because it believes it acted in the name of justice or goodness, not in the name of a Russian intelligence agency.
So when Wikileaks insists that the emails were leaked to them by an insider, it does so with considerable conviction that has taken others such as the influential Fox commentator Sean Hannity.
Unwitting Agent #2: Twitter
Twitter was hugely influential among opinion leaders in the 2016 election, foremost among them the Twitterer-in-chief, Donald Trump. But it’s very hard to tell what on Twitter is real and what is fake.
A recent study by computer scientists at Indiana University and USC tried to tackle the question of how many Twitter accounts are bots. These are automated and semi-automated software applications that mimic human behavior and can be used to drive grassroots political support, spread rumors, or bully opponents.
The researchers conclude that as many as 15 percent of all Twitter accounts are bots, and given the increasing sophistication of bots, this may be a conservative estimate. Twitter claims it has 313 million “active” monthly users. If the study is correct, 47 million Twitter users are not human.
Twitter for its part could easily inform the public how many of its accounts are bots, whether influential accounts during the 2016 election were human or not, or how many Twitter trends began overseas.
But it is not in the company’s interest to do so. The inflated numbers make it appear that Twitter has active users than its published numbers claim it has. Pulling back the curtain on bots would depress Twitter’s value as a publicly-traded company.
Unwitting Agent #3: Journalists
The Soviet Union excelled at planting stories. Operation INFEKTION planted the devastatingly rumor that AIDS had been created by US scientists seeking new and potent biological weapons that still echoes around the globe.
But planting these stories was hard work, as this CIA history shows. It took time to craft believable forgeries and build relationships with newspapers. A CIA study estimated that the Soviets spent $3 billion annually influencing world perceptions through its “active measures” campaigns.
That was then. Now, Rid says, it’s much easier:
Cold War disinformation was artisanal; today it is outsourced at least in part — outsourced to the victim itself. American journalists would dig deep into large dumps, sifting gems, mining news, boosting ops.
The hours and reams of newsprint that reporters devoted to hacked emails — with little thought to the who, what or why of their appearance — made American journalism an unwitting agent of Russian intelligence.
Unwitting Agent #4: Donald Trump
Trump is not part of Rid’s testimony, but I felt the need to add him. Donald Trump is the biggest unwitting agent of them all.
He has professed his love for Wikileaks and for Twitter, as well as for rumors that originate with Russia. He has allowed himself to used and manipulated by people with questionable motives.
In an op-ed in The New York Times, former acting CIA Director Michael Morrell summed it up this way:
President Vladimir V. Putin of Russia was a career intelligence officer, trained to identify vulnerabilities in an individual and to exploit them. That is exactly what he did early in the primaries. Mr. Putin played upon Mr. Trump’s vulnerabilities by complimenting him. He responded just as Mr. Putin had calculated.
Mr. Putin is a great leader, Mr. Trump says, ignoring that he has killed and jailed journalists and political opponents, has invaded two of his neighbors and is driving his economy to ruin. Mr. Trump has also taken policy positions consistent with Russian, not American, interests — endorsing Russian espionage against the United States, supporting Russia’s annexation of Crimea and giving a green light to a possible Russian invasion of the Baltic States.
In the intelligence business, we would say that Mr. Putin had recruited Mr. Trump as an unwitting agent of the Russian Federation.
Fake News as a Weapon: Trump, Russia and the World of Rumors
Have you heard the rumor that Donald Trump is mentally ill? Did you hear that President Obama wiretapped Trump Tower? With the help of British intelligence? Or that a child-sex ring connected to Democrats was being run out of a Washington, D.C. pizza restaurant?
via New England Historical Society
American society is being bombarded by rumors. Fake news websites push stories like the aforementioned “Pizzagate.” Russian has an army of Twitter trolls who blast out all sorts of wild rumors. Even Donald Trump’s own tweets deluge us with confusing and contradictory information.
It seems awful hard to know what’s true and what’s not these days. Where is the antidote for the epidemic of fake news? Many of us may feel like we can’t even trust our own judgment. And maybe, that’s the point.
The post-truth era, as it’s been called, might feel very familiar to American spies operating behind enemy lines in World War II. Back then, U.S. operatives were coming up with creative ways to damage morale and divide the leadership of Nazi Germany. One of their best weapons was the use of carefully crafted, well-timed rumors.
Rumors were a specialty of the Morale Operations Branch of the Office of Strategic Services (OSS), the predecessor of today’s CIA. One of the most famous of the OSS’ rumor campaigns was “Where Is Hitler?” The OSS would broadcast a fake report that Hitler was supposed to appear at an upcoming rally. When Hitler inevitably failed to show, the OSS would float rumors that Hitler was ill or suffering from a mental breakdown. These rumors spread so widely that they became the subject of articles in American newspapers, including The New York Times.
Creating a loss of confidence in leaders was just one was just one the tricks dreamed up by the OSS Morale Operations branch. Others are spelled out in a now declassified field manual, which is a guide on how to use rumors, forgeries, blackmail and bribery to destabilize a country. What the OSS called “subversive rumors” could be used to cause enemy populations to distrust their own news sources, create division among racial, political and religious lines, to create confusion and dismay with a welter of contradictory reports, and to tip the balance when public opinion was in a precarious state, among other things.
Viewed in this light, fake news seems less a nuisance and more like something that would trouble our intelligence community. And indeed, they do appear concerned. The U.S. intelligence community recently concluded that Russia mounted an “influence campaign” during the 2016 presidential election that blended covert intelligence operations with overt efforts by Russian Government agencies, state-funded media, third-party intermediaries, and paid social media users or “trolls.” Russia influence campaign sought to undermine faith in U.S. democracy and denigrate Hillary Clinton’s campaign.
In essence, Russia has created a modern version of the OSS Morale Operations branch. Social media gives the modern operative powers the likes of which his or her OSS forerunner could only have dreamed. Whereas the OSS had to send operatives into enemy territory to plant rumors, the modern influence campaign can without leaving home harness the power of social media sites. Facebook, Twitter and YouTube are machines for the rapid transmission of rumors.
While the technology behind rumor campaigns has evolved, the nature of rumor itself hasn’t changed much in the 74 years since the OSS wrote its field manual. The OSS defined a rumor as “an unauthenticated, unofficial story or report, represented and transmitted as fact.” This distinguishes it from propaganda, which stamps its authorship on its message. Anybody can start a rumor. Crafting a good one is an art form.
via New England Historical Society
The old OSS characteristics of what makes a good rumor still hold true: A good rumor still must be simple, consisting of a single idea. It must be plausible. It is tied to some known facts, yet is impossible to completely verify. It frequently appears as an “inside” story. The best rumors to spread are existing ones. “In many cases, the most effective rumor policy will be to spread further rumors that have arisen spontaneously in enemy territory,” the field manual advises.
A good rumor must also be vivid. Rumors with “strong emotional content” are extremely effective. (Case in point: the unforgettable, unverifiable story of Trump cavorting in a Moscow hotel room with prostitutes.) A suggestive rumor was well adapted to spreading fear and doubt, by doling out limited but tantalizing bits of information that allow the audience to formulate conclusions (“FBI Director James Comey made an unexpected trip to the White House.”)
Robert Knapp, who developed the section of the OSS’ Field Manual on rumors and wrote academic papers on the subject, likened a rumor to a torpedo. “Once launched, it travels of its own power,” he wrote. Knapp had an insight into what gave rumors their power: They expressed and gratified the emotional needs of the community, just as daydreams and fantasies expressed the needs of the individual. Rumors gave sense and direction to fears, resentments or hopes. ”No rumor will travel far unless there is already a disposition among those who hear it to lend it credence,” he wrote in a 1944 paper.
Among the many coincidences involving Russia and Donald Trump, one that goes unnoticed is their mutual grasp of the power of rumor. Trump used rumors to stunning effect in his campaign, beginning with the suggestion that President Obama was born in Kenya. This rumor tapped into deeply-held beliefs about President Obama that many people were not comfortable expressing publicly. Outright racism is unacceptable to most Americans. However, many found the disguised racism of a rumor about the African-American president’s birthplace more palatable. There is frequently a racist undertone to many of Trump’s rumors: Muslims celebrating Sept. 11 in New Jersey, illegal immigrants voting, terrorist incidents that didn’t happen, and so on.
Rumors may also help explain Trump’s appeal. In a recent interview, Time magazine’s Michael Scherer pressed Trump on his use of rumors. “What am I going to tell you? I tend to be right,” the president told him. “I’m an instinctual person, I happen to be a person that knows how life works.” In other words, Trump’s rumors feel true to him, even if they can’t be verified. Trump’s words also feel true to his supporters, almost like an article of faith. He is making a connection on a deep emotional level that, once established, is difficult to break.
However, Trump’s predilection for rumors over facts is dangerous, for it leaves him wide open to manipulation. Unwittingly or not, Trump has spread rumors that originated in Russia. The story spread by the White House that President Obama used British intelligence to spy on Trump and his associates started as a story on RT, the Kremlin-backed propaganda outlet. On the campaign trail, Trump quoted a report that appeared to originate on Sputnik, another Kremlin-backed media outlet. At a March 30 Senate intelligence committee hearing, Clint Watts, a former FBI agent and an expert on Russian disinformation, explained in striking terms the problem with having a rumor-monger for a president:
Rumors do work on the campaign trail, but they are toxic to the presidency. Credibility is one of the president’s strongest assets, never more so than in moments of crisis. Trump seems not to understand that, as president, he is the authority, and the White House is the place where rumors end, not where they begin. If President Trump truly wants to make America great again, he must stop spreading rumors.
If Trump won’t quash rumors, others must do it for him. Many news organizations are now regularly refuting the president’s rumors. This effort harkens back to World War II, when rumors were an even bigger problem then they are now. Robert Knapp, the OSS’ rumor expert, founded a “rumor clinic” in Boston that collected rumors and sought to put and end to them. A column first published in the Boston Herald in 1943 quoted the rumor in italics followed by the word FACT. Rumor clinics opened in many cities, but quickly faded following a clash with the Roosevelt administration’s Office of War Information. Government bureaucrats wanted to smother rumors with facts, rather than call attention to them by singling them out for disproof. (For more on this click here.)
Knapp proposed that rumors could serve as an “index of morale.” They may be a better gauge of the true state of public opinion than any poll or survey. Rumors allow expression of the deeply held beliefs and fears that won’t be repeated to a stranger. A look at the rumors prevalent in American society show we are a deeply divided along racial, political, and religious lines. Many Americans have little or no confidence in our elected leaders. We distrust our own news sources.
In sum, American morale has been deeply wounded. We are much weaker than we think we are.
Obama and GCHQ tale is Russian disinformation
Note: This piece has been updated.
It anyone surprised that the allegation that President Obama used Britain’s GCHQ intelligence agency to eavesdrop on Donald Trump was first broadcast on RT, the Kremlin’s international propaganda outlet?
This allegation has gone in a few days from being a crackpot theory on social media to an international dispute. Britain was furious when White House spokesman Sean Spicer cited the GHCQ story as part of his defense of Trump’s claim that he was “wire tapped” by President Obama. The GHCQ, Britain’s version of the National Security Agency, issued a rare denial.
That this GHCQ allegation was first given life by RT shows the influence of the Kremlin-backed network, which has found a sympathetic ear in the White House. According to the U.S. intelligence community that Trump so openly distrusts, RT has the goal of undermining its viewers’ trust in US democratic procedures.
On March 5, the day after Trump tweeted that “Obama had my ‘wires tapped’ in Trump Tower,” RT broadcast an interview with Larry C. Johnson, once an analyst with the CIA.
In the clip, linked above, Johnson said “very good friends” had told him that information gathered by GHCQ on Donald Trump was illegally disseminated within the US government in an effort to destroy his candidacy. Obama, Johnson said, “gave the green light” to distribute the information from GHCQ in an improper way.
On his blog, Johnson goes into more detail about his sourcing. (Update: Johnson’s blog was taken off line shortly after this piece was published).
No one involved with the Trump campaign reached out to me and asked me to get involved with this. I spoke three months ago with a source that, if the source’s name was revealed, would be known and recognized as a reliable source of information. Based on that contact I reached out to friends in the intel community and asked them about the possibility that a back channel was used to get the Brits to collect on Trump associates. My sources said, “absolutely.” I later confirmed this via a cut out with a person who is a Senior Intelligence Service executive in the CIA.
Assuming that’s true, why would Johnson, a former CIA analyst, would go on a Russian propaganda network that presents anti-American views? CNN’s Brian Stelter put that question to Johnson on his show, Reliable Sources.
STELTER: Why is it appropriate for any American to appear on a Kremlin propaganda network?
JOHNSON: Well, it’s not a Kremlin propaganda network. … What I found the difference with Russia Today is they don’t do pre-interviews. I’ve done pre-interviews with your people. I’ve done pre-interviews in the past when I appeared on other networks.
Just two days ago, I did a pre-interview with BBC. They were going to have me on air. But once they heard what I had to say, they came back and said, oh, no, we don’t need to use you now. So, I’m —
Johnson’s point is that RT doesn’t censor its guests. Stelter’s point, which he presses later in the interview, is that anyone can go on RT and say whatever they want without bothering about details like sourcing and verification.
Johnson theories about GHCQ are likely to prove false: officials in Britain and Washington have called it ridiculous. For RT’s purposes it doesn’t matter whether Johnson is telling the truth, only that his information serves its broader goals.
RT’s GHCQ story is the textbook definition of disinformation:
false information deliberately and often covertly spread (as by the planting of rumors) in order to influence public opinion or obscure the truth.
So back on March 5, while former Director of National Intelligence James Clapper was knocking down Trump’s claims on Meet the Press, RT was quickly building a counter-narrative that besmirched the United States with Johnson’s help.
An outfit like Meet the Press needs a big audience to deliver ad dollars; since it strives to be objective, it has to present credible sources. That means it has guests like Clapper who as insiders know whether Obama really “wire tapped” Trump or not. If Meet the Press had people like Larry Johnson or RT’s Illuminati correspondent sitting around talking about what their friends supposedly told them, the audience would find something better to do and the ad dollars would dry up pretty quickly.
RT, on the other hand, is funded by the Russian government. It doesn’t need a big audience. So it can quickly disseminate poorly sourced, unverified information that drives home the message that Russia is not the bad guy and America isn’t so great, anyway.
Johnson sought to minimize his role in the GHCQ affair by telling Stelter that nobody watched RT.
STELTER: You’re saying Russia today is not that influential?
JOHNSON: I’m telling you that’s the truth. I mean, who watches it? The fact that I spoke about it two weeks ago and it didn’t even surface — it wasn’t even a blip anywhere in the U.S. news media. And so, I guarantee, if people like yourself who were very informed, very up to speed on things, don’t pick up on something like that, you expect a coal miner in Pennsylvania, an auto worker in Michigan, that they’re going to be on top of Russia Today?
But information warfare, as Johnson surely knows, doesn’t need a big audience to work.
It has just to plant a false idea that contradicts the conventional narrative. Johnson made a big fuss about how it took so long for his story to spread, but that’s how rumors work. And that’s what makes them so effective. They are spread person-to-person by social media and word-of-mouth until they reach a critical mass. If you wanted to drive a wedge between allies, there’s no way to do it better. It’s cheap, bloodless, and stunningly effective.
Johnson’s unsupported allegation was rebroadcast on right-wing Internet on blogs and websites until March 14 when it jumped into mainstream media. Fox contributor Andrew Napolitano repeated the allegation on the talk show “Outnumbered” and then repeated it again on Fox News. Johnson told The New York Times he was one of Napolitano’s sources.
On Friday, Trump refused to back down from the allegation, telling reporters, “All we did was quote a very talented legal mind.”
Did the president realize he was also quoting Johnson via Russian media?
Johnson, who is almost always referred to as a former CIA analyst, worked for the spy agency in the 1980s. After four years in the State Department’s Office of Counterterrorism, Johnson left government service in 1993.
Since then, he gotten embroiled in controversy such as his claim that Republican operatives possessed a tape of Michelle Obama railing against “whitey.” (Johnson claims he was manipulated by Clinton confidant Sidney Blumenthal.) Or that Bush White House advisor Karl Rove had been indicted.
Johnson has been a member of Veteran Intelligence Professionals for Sanity (VIPS), a group of intelligence professionals formed in 2003 to protest the use of faulty intelligence that was used as a grounds for the invasion of Iraq.
VIPS and Johnson have been critical of the US intelligence community’s findings that Russia hacked the U.S. election. On Dec. 15, Johnson co-signed a VIPS letter that stated the hacking allegations “have no basis in fact” and suggested an “inside leak,” not hacking, was behind the release of DNC emails. Not surprisingly, RT publicized the letter.
It’s worth noting here that Ray McGovern, a former CIA analyst and founding member of Veteran Intelligence Professionals for Sanity attended the now infamous 2015 RT 10th anniversary dinner in Moscow, where he sat at the same head table with President Vladimir Putin and former Gen. Michael Flynn. (link) It seems McGovern makes an annual pilgrimage to Moscow where we find him pontificating in RT’s studios.
Napolitano for his part has also peddled Kremlin disinformation before. On May 6, 2016, he reported that “there’s a debate going on in the Kremlin between the Foreign Ministry and the Intelligence Services about whether or not they should release the twenty thousand of Mrs. Clinton’s emails that they have hacked into and received and stored.” (archived link)
Now, mind you, this was days before hacked emails from the Clinton campaign began appearing on the Internet.
According to Malcolm Nance’s informative book, The Plot to Hack America, Napolitano’s source this go-around appeared to be a conspiracy website called Whatdoesitmean.com.
It appears that the source of the story emanated from a mythical figure, a journalist named Sorcha Faal. Sorcha Faal is widely believed to be a pseudonym for David Booth. Booth hosts a wild-eyed conspiracy theory website called Whatdoesitmean.com. Usually websites like this and the more popular and crazier Infowars.com are easily dismissed as tinfoil hat crowds who see government conspiracy everywhere. Yet in this case “Sorcha Faal” appears to be so well wired into the Kremlin that “her” work at this website was often copied by mainstream Russian information propaganda like Russia Insider’s Svobodnaya Pressa (“ Free Press”). This site pushes wild conspiracy theories such as the proposition that the US trains and directs ISIS, and writes op-eds about the dangers of European multiculturalism. It is a core component of the Russian propaganda system, and such news organs as Ren TV (a large, private, pro-Putin Russian television channel) and Sputnik News (a multinational propaganda organ of the Russian government)
We might as well learn the Russian word for this, folks.
Dezinformatsiya.
The Yuge Trump-Russia Timeline
Here it is: All the publicly-available evidence that suggests collusion between Trump, his campaign, and Russia.
It stretches over three years and comprises the contacts, meetings, tweets and revelations involving Christopher Steele, Michael Flynn, Jeff Sessions, Roger Stone, Paul Manafort, Sergei Kislyak, and others.
I’ve been working on this timeline for weeks and will continue to update it as more information becomes available.
If you know of something that should be in here but isn’t drop me an email.
The link below is an embedded Google sheet with sources hyperlinked. If anyone has a better idea how to display this in a form that is more easily accessible please let me know. I am not very handy with Google scripts.
Sergey Kislyak Timeline
Sergey Kislyak
Sergey Kislyak, Russian ambassador to the United States, is emerging as a key point of contact for members for the Trump campaign and Russia, and a reminder of the president’s ties to Vladimir Putin.
CNN reports that Kislyak is known to US intelligence officials as a spy recruiter. And that’s why he’s a touchy subject for Trump’s people.
Here’s a timeline of what we know about contacts between the Trump campaign and Kislyak:
Russian Mafia in Trump Tower … and the Mogilevich connection
Since it opened in 1983, Trump Tower has been home to celebrities and billionaires, and the occasional Russian Mobster or those connected to them. And those Russian Mobsters were connected in some way to Semion Mogilevich, who is considered the most dangerous Mobster in the world.
Coincidence? Here’s a look:
Felix Sater
Felix Henry Sater: Born in the Soviet Union in 1966, Felix H. Sater immigrated with his family to the US at age of 7. Felix became a Wall Street stock broker. Convicted of assault in 1991 for stabbing another broker in the face with a broken piece of a margarita glass. Spent a year in prison. Pleaded guilty in 1998 for his role in a $40 million “pump and dump” penny stock fraud at a Mafia-linked brokerage firm. Avoided prison by becoming a government informer. Provided U.S. federal authorities with “information crucial to national security and the conviction of over 20 individuals, including those responsible for committing massive financial fraud and members of La Cosa Nostra,” former U.S. Attorney General Loretta Lynch wrote during her Senate confirmation hearing. Permanently barred from trading stocks, Sater went into real estate. Began working in Trump Tower around 2002 for Bayrock (exact date is unclear). Tried to develop deals for Trump in Russia, where he watched Trump’s children during a 2006 visit. Under oath, Trump said he didn’t believe Sater was in the Mob. Recently involved in a Ukrainian “peace plan” with the help Trump’s personal lawyer, Michael Cohen that was delivered to the White House.
… the Mogilevich connection: Sater’s father, Mikhail, is a convicted criminal and, according to US Supreme Court petition, a “Mogilevich crime syndicate boss.” (Update: After further reporting for my book, I no longer believe there is any credible evidence to support the claim that Sater is connected to Mogilevich.)
“Vor” Alimzhan Tokhtakhounov
Anatoly Golubchik and Vadim Trincher: Russians serving five years in prison for running an illegal sports betting ring in Trump Tower that catered primarily to Russian oligarchs. Trincher, a professional poker player, had a $5 million condo on the 63rd floor of Trump Tower. (A co-defendant of Golubchik and Trincher’s, Hillel (Helly) Nahmad, paid more than $21 million for the 51st floor of Trump Tower, where he ran a high stakes poker game that catered to millionaire and billionaire clients. Nahmad was sentenced to a year in prison.) According to an 84-page indictment, Trincher and Golubchik’s sports betting operated under the protection of “Vor” Alimzhan Tokhtakhounov, a Ukrainian-born Mafia Don who was a VIP guest at the 2013 Miss Universe pageant Trump hosted in Moscow. Tokhtakhounov,who lives in Russia, is also wanted for bribing Olympic officials in 2002 in Salt Lake City.
…the Mogilevich connection: Tokhatkhounov is described as close to Mogilevich by Interpol and other authorities.
Vyacheslav Ivankov
Vyacheslav Kirillovich Ivankov: Born in the Soviet Republic of Georgia, Ivankov was a top Russian mob boss who arrived in New York in 1992. According to the FBI, he became one of the most powerful Russian Mafia bosses in America. The FBI tracked him down in a luxury apartment in Trump Tower, according to journalist Robert I. Friedman’s expose Red Mafiya. Invakov disappeared and then turned up again in Trump’s New Jersey casino, the Taj Mahal. Ivankov’s phone book included a working number for the Trump Organization’s Trump Tower residence, and a Trump Organization fax machine, according to Friedman. Ivankov was arrested in 1995 and sent to prison for conspiring to extort $3.5 million from two Russian emigres who ran an investment advice company in lower Manhattan. After his release he returned to Russia where he was assassinated.
… the Mogilevich connection: Ivankov had a close relationship with Mogilevich, who paid a Russian judge for Ivankov’s early release from a Siberian prison where he was being held for robbery and torture, according to Alan A. Block’s study, All is Clouded by Desire.
David Bogatin: Russian native who was identified by law-enforcement officials as a member of Russian organized crime. In the early 1980s he ran a gasoline bootlegging scheme that was so lucrative that he spent nearly $6 million to buy five separate condos in Trump Tower. Trump personally sold him the condos, according to an investigation by journalist James S. Henry. Bogatin worked with members of the Colombo family, according to Senate testimony. Pleaded guilty to evading taxes on gasoline but jumped bail before he could be sentenced to prison. (Before he fled, he turned over the mortgages on his Trump Tower condos to a Genovese crime family associate, Friedman writes in Red Mafiya. The mortgages were liquidated and moved through a Mafia controlled bank in New York.) Bogatin surfaced in Poland as the owner of a bank and was extradited back to the United States. Sentenced to prison in 1992.
… the Mogilevich connection: the FBI considered Bogatin a key member of Mogilevich’s crime family.
Why Putin Hates America
The New Tsar: The Rise and Reign of Vladimir Putin by Steven Lee Myers
Russia, as a country, punches far above its weight.
Its economy — kleptocracy, really — is smaller than that Italy, Korea or Brazil. And it is mired in a recession, dragged down by rampant corruption, and the imposition of sanctions by the European Union and the United States. And yet, rather than focus inward, reassess or attempt to rebuild, Russia focuses outward at its many perceived enemies — foremost among them the United States.
As everyone but President Trump acknowledges, Russia launched an audacious campaign to influence the 2016 U.S. presidential election. According to U.S. intelligence, that campaign was ordered by none other than Russia’s president, Vladimir Putin. And it succeeded beautifully. Russia managed to undermine faith American democracy, denigrate Hillary Clinton and diminish her chances of winning, all for virtually no cost at all.
And now we learn that Russia, to help its preferred candidate, Donald Trump, provided assistance that may have been even more direct. Top Trump campaign aides were in constant and repeated contact with Russian intelligence officials. A leaked dossier compiled by a former British spy suggests that Moscow has scandalous and compromising material on Trump (kompromat) that make him susceptible to blackmail. Trump’s own behavior — his blasé attitude about Russia’s meddling, his nonstop praise for Putin — lend credence to these allegations.
Trump denies all. “It’s all fake news,” Trump cried in his press conference Feb. 16. But worries are mounting in Congress and in the US intelligence community, and the president knows it.
The concern of this website and many others that Trump is not acting in the best interests of America when he says he wants to strike some kind of grand bargain with Russia, as he has signaled he intends to do. “I would love to be able to get along with Russia,” Trump said in his Feb. 16 news conference. “Now, you’ve had a lot of presidents that haven’t taken that tack. Look where we are now. Look where we are now.”
So let’s take a look at where we are now and how we got here. What drove Putin to meddle in the U.S. election? Why does Putin hate Hillary Clinton so much that he would hack a US election? Is this the action of a rational man?
In The Last Tsar, an excellent political biography of Putin by Steven Lee Myers, a veteran Moscow correspondent for The New York Times, we get an answer of sorts: Russia sees itself as a nation under siege from the West. After a quarter-century of relative openness since the collapse of the Soviet Union, since 2014, most Russians have once again to come to view the outside world as “an enemy at the gates, to be feared and resisted.”
Russia’s bellicose foreign policy is a reflection of the autocratic Putin himself, who has been fighting his whole life. As a youth growing up in a rough section of Leningrad (today’s St. Petersburg), he became (and remains) an accomplished judo practitioner. He brawled in the streets. “I was a real thug,” he once said, and he was unable to back down from a challenge, even when he knew better or should have. While attending a prestigious KGB academy, Putin got into a fight with some hooligans on the Metro. He returned with a broken arm, and his KGB career suffered for it. Putin never got a glamorous foreign posting in the United States or Western Europe, serving instead in dreary East Germany.
On the ranch
It’s easy to see the Russia-United States relationship as just another fight Putin won’t back down from, but things weren’t always this bad between the two former Cold War adversaries. It was a different Putin who was the first foreign leader to telephone Bush after the attacks of Sept. 11, 2001 and offer any assistance. Bush invited Putin to spend three days at his ranch in Crawford. The U.S. president famously said he looked Putin in the eye and got a sense of his soul. He liked what he saw: a man deeply committed to his country.
The 2003 invasion of Iraq was a turning point. For Putin, the Iraq war revealed the true intentions of the United States: it wanted to impose “freedom” on the rest of the world, with force if necessary. By the end of his presidency, Bush realized he had misjudged the man. “Vladimir,” Bush told him, “you’re cold-blooded.”
It sure seems that way. His critics have been silenced with blackmail, arrests, beatings and murder. And not just bullet-in-the-head-drop-the-gun-at-the-scene assassinations, but grotesque, baroque murders that seem to almost gleefully make a public example of the victim’s suffering. Poisoning seems to Russia’s signature style.
Alexander Litvinenko, a former Russian secret service operative who became a outspoken Putin, was famously poisoned in 2006 with radioactive Polonium 210, shortly after he had publicly accused Putin of being a pedophile shortly before his death.
Litvinenko’s interest was piqued by a photo of Putin kissing a boy’s stomach and a long-rumored videotape of Putin himself in a sexual tryst, Myers notes. (Litvinenko wrote that the tape showed Putin having sex with young boys.) If Putin didn’t order the murder of Litvinenko and many others, he, at the very least, “created a climate that made political murder grimly ordinary,” Myers writes.
Putin formally broke with the United States in 2007 in a speech at the Conference on Security Policy in Munich, Germany. He said the world was being plunged into “an abyss of permanent conflicts” because of one nation’s “almost uncontained hyper use of force — military force.” And in case anybody didn’t get the message, Putin went on to call out the United States by name:
“We are seeing a greater and greater disdain for the basic principles of international law. And independent legal norms are, as a matter of fact, coming increasingly closer to one state’s legal system. One state and, of course, first and foremost the United States, has overstepped its national borders in every way. This is visible in the economic, political, cultural and educational policies it imposes on other nations. Well, who likes this? Who is happy about this?
Putin gave up the presidency in 2008 to his long-time factotum Dmitry Medvedev, and took the post of prime minister. It was during the Medvedev era that the United States attempted to “reset” relations with Russia. The United States saw in Medvedev, a liberal reformer, an opportunity to build bridges.
At his Feb. 16 press conference, Trump brushed off this effort as a joke
. “Hillary Clinton did a reset, remember? With the stupid plastic button that made us all look like a bunch of jerks. Here, take a look. He looked at her like, what the hell is she doing with that cheap plastic button?” Trump said.
But it wasn’t a joke. There was progress. Russia allowed U.S. forces to pass through Russian airspace on their way to Afghanistan and President Obama dropped plans to build a missile shield over Eastern Europe. In March 2010, the United States and Russia agreed to reduce their nuclear arsenals, which President Trump reportedly denounced as a bad deal during his phone conversation with Putin on January 28.
In 2011, the United States began pushing for a military intervention in Libya. Medvedev, at Secretary Clinton’s urging, agreed not to use Russia’s veto on the U.N. Security Council to thwart an intervention. Putin was furious. “The resolution is defective and flawed. It allows everything,” he said. “It resembles medieval calls for crusades.”
It was in 2012, when Putin returned to the presidency, that things really went downhill for the United States and Russia. He and Medvedev switched jobs in what became known as the rokirovka, the Russian word for castling in chess, where the castle and king exchange places to protect the king.
Mikhail Khodorkovsy, the former head of the Yukos oil company who had been thrown in jail and watched his company seized by the government, wrote in an open letter that Putin was dragging Russia down with him.
“[Putin] is incapable of tearing himself away from the already unliftable ‘oar’ of the monstrous ‘galley’ he himself has built. A galley that apathetically sails right over people’s destinies. A galley over which, more and more, the citizens of Russia seem to see a black pirate flag flying.”
Many Russians were furious over the rokirovka, which they saw as a cynical political manipulation. Thousands took the streets, chanting “Putin is a thief.” That the protests were peaceful made them even more terrifying to the Kremlin, Myers writes. Putin refused to see that protesters wanted a Russia without Putin; instead he blamed Secretary Clinton in language lifted out of the Cold War. “She set the tone for some actors in our country and gave them a signal,” Mr. Putin continued. “They heard the signal and with the support of the U.S. State Department began active work.” Putin cracked down hard on the opposition, and ramped up anti-American voices on state media. Any critic of Putin now risked being tarred as a US agent.
Things went from bad to worse later that year, when President Obama signed into law the Magnitsky Act, named for an auditor who was beaten to death in a Russian prison after investigating Russian tax officials. The law was intended to punish those responsible for Magnitsky’s death. The Russian Duma responded by, among other things, banning the adoption of Russian children by Americans, essentially punishing their own children out of spite.
Many in the US intelligence community saw it as no coincidence that Edward Snowden, the National Security Agency whistleblower, found refuge in Russia. Many in US intelligence are convinced that Snowden all along was a Russian spy. Putin called his arrival in the summer of 2013 a “Christmas present,” and he uses Snowden to mock and belittle the CIA.
In 2014, right after the Winter Olympics in Sochi, Russian forces invaded Ukraine and swiftly annexed Crimea. As Myers observes, the man who had once decried the United States’ “uncontained hyper use of force” now seemed to be saying, “Well, if you can do it, why can’t we?” The United States and the European Union responded by imposing ruinous economic sanctions on Russia. In response, Snowden was quickly granted him asylum, yet another act of Russian nose-thumbing.
And so, today, US-Russia relations have returned to their familiar Cold War roots, just as they were in Putin’s days as a young man in the KGB. Putin sees the influence of the United States everywhere — in Ukraine, in Georgia, in the Arab Spring, to name a few — and Russia sees NATO as an existential threat, just as it did in Soviet days. It’s siege mentality: enemies are closing in; we must fight back. And Russia has chosen to fight back, not with the awesome strength of the nuclear arsenal it possess, but in the more covert “active measures” it employed in Soviet days. Russia has cleverly exploited modern technology to use what are really old tricks of propaganda, subterfuge and funding of foreign pressure groups.
Domestically, Russia is a mess. The ruble has crashed. The price of oil, which accounts for nearly 70 percent of Russia’s exports, has fallen, which Putin blames on a conspiracy between Saudi Arabia and the United States. Russia plunged into an economic crisis. Despite all this, Putin remains enormously popular. His dark, paranoid vision of the world, thanks to his effective control of Russia media, has become his country’s vision of the outside world.
“When a Russian feels any foreign pressure, he will never give up his leader,” said Russia’s first deputy prime minister Igor Shuvalov. “Never. We will survive any hardship in the country — eat less food, use less electricity.”
Wrapping themselves in the flag may not be enough to keep Russians warm during this Cold War, however.
Unless Donald Trump has his way.
Trump Dossier Timeline
For sourcing click following link:
Jun 18, 2013: Donald Trump tweets: “Do you think Putin will be going to The Miss Universe Pageant in November in Moscow – if so, will he become my new best friend?”
Nov 9, 2013 Trump visits Moscow for Miss Universe pageant.
Nov. 9, 2013 Interviewed in Moscow, Trump is asked by MSNBC whether he has a relationship with Vladimir Putin. “I do have a relationship, and I can tell you that he’s very interested in what we’re doing here today.”
Nov. 9, 2013 Trump tells Tass news service that he plans to build a Trump Tower in Moscow and was in negotiations with billionaire Aras Agalarov’s Crocus Group. During his Moscow visit, Trump also meets with Herman Gref, CEO of state-controlled Sberbank PJSC, Russia’s biggest bank, which is under US sanctions. Sberbank and Crocus sponsor the beauty contest.
Nov 12, 2013 Trump tells Real Estate Weekly that the pageant was a good networking opportunity. “The Russian market is attracted to me. I have a great relationship with many Russians, and almost all of the oligarchs were in the room.”
May 27, 2014 At National Press Club lunch, Trump says, “I was in Moscow recently and I spoke, indirectly and directly, with President Putin, who could not have been nicer.”
June 2016: Fusion GPS, a Washington research firm run by former journalists, hires Christopher Steele, a respected former MI6 officer who once served in Moscow, to gather opposition material on Donald Trump’s ties to Russia. Steele reportedly paid 200,000 pounds for his work.
June 20, 2016: Steele reports that Russian intelligence has videotapes of “perverted conduct” of Trump and prostitutes recorded in a Moscow hotel suite in 2013 during Miss Universe pageant. Trump’s behavior in Russia has “compromised him sufficiently to blackmail him.” Steele reports that Russian authorities have been “cultivating, supporting and assisting” Trump for years and he has accepted a regular flow of intelligence on his Democratic rivals.
Early July 2016: Steele, the former MI6 officer, acting on his own initiative, sends material he has gathered on Trump to the FBI.
July 7, 2016: Trump campaign adviser Carter Page travels to Moscow to give speech critical of U.S. policy. According to Reuters, Page declines to say whether he was planning to meet anyone from the Kremlin, the Russian government or Foreign Ministry during his visit.
July 19, 2016: Steele reports that Carter Page had held a secret meeting with Igor Sechin, head of the Rosneft state-owned oil company who is considered Vladimir Putin’s “defacto deputy.” Sechin and Page discuss lifting US sanctions against Russia. Sechin offered Page the “brokerage” on a 19 percent stake in Rosneft if sanctions lifted. According to Steele, Page also met Igor Divyekin, an internal affairs official with a background in intelligence, who warns Page that Moscow had kompromat on Trump
August, 2016: FBI asks Christopher Steele, the former MI6 officer, for all information in his possession and asked him to explain how the material had been gathered and to identify his sources.
August, 2016: A retired spy tells the BBC’s Paul Wood that he had been informed of videotapes of compromising material on Trump by the head of an East European intelligence agency.
Aug. 5, 2016: Steele’s memo identifies Dmitry Peskov, Kremlin spokesman, as the “chief protagonist” in Russia’s campaign to aid Trump and harm Clinton. Chief of staff Sergei Ivanov, longtime friend and top Putin lieutenant, said to be angry that Peskov’s team had gone too far.
Sept. 25, 2016: Carter Page sends letter to FBI Director James Comey saying that he is subject of a “witch hunt” and has not met with any “sanctioned official” in Russia in the past year.
Oct. 30, 2016 Sen. Harry Reid reveals in public letter that FBI Director James Comey possesses “explosive information of close ties and coordination between Donald Trump, his top advisors and the Russian government” and urges him to share it with the American people.
Oct. 31, 2016: Mother Jones interviews Christopher Steele, and publishes article, without naming him, that reveals existence of Steele’s memos, reporting in vague terms that Russian intelligence had “compromised” Trump during his visits to Moscow and could “blackmail him.”
Nov. 4, 2016: Newsweek reports that the Kremlin has both video and audio recordings of Trump in a kompromat file.
Nov. 8, 2016: Donald Trump elected president
Nov. 18, 2016: Sir Andrew Wood, a British ambassador to Russia, speaks with Sen. John McCain at a conference in Halifax, Canada. Wood tells McCain “how Mr Trump may find himself in a position where there could be an attempt to blackmail him with Kompromat and claims that there were audio and video tapes in existence.”
Dec. 7, 2016: Rosneft sells 19.5 percent ($11B) stake to Glencore Plc and Singapore’s sovereign wealth fund
Dec. 8, 2016: Carter Page revisits Moscow
Dec. 9, 2016: Sen. John McCain, who had also acquired Steele’s memos, turns them over to FBI Director James Comey.
Dec. 26, 2016: Oleg Erovinkin, a former general in the KGB and its successor the FSB, described as a key aide to Igor Sechin, found dead in the back of his car in Moscow.
2017
Jan. 6, 2017: Heads of US intelligence agencies brief PEOTUS and POTUS and leaders of House and Senate intelligence committees on Steele’s kompromat material on Trump. Kompromat material not included in public portion of report.
Jan. 10, 2017: CNN reveals that PEOTUS and POTUS were briefed on kompromat material and were given a two-page summary of allegations.
Jan. 10, 2017: Buzzfeed.com publishes 35 pages of Steele’s dossier. Included are allegations that Trump had a golden shower party with prostitutes in the Ritz Carlton hotel in 2013. Steele’s sources also say that Russia has an alliance with Trump that goes back several years.
Jan. 10, 2017: Donald Trump derides kompromat dossier as “FAKE NEWS!”
Jan. 11, 2017: DNI James Clapper says the U.S. Intelligence Community “has not made any judgement that the information in the document is reliable, and we did not rely on it in any way for our conclusions. However, part of our obligation is to ensure that policymakers are provided with the fullest possible picture of any matters that might affect national security.”
Jan. 11, 2017: Trump tweets, “Intelligence agencies should never have allowed this fake news to ‘leak’ into the public. One last shot at me. Are we living in Nazi Germany?”
Jan. 11, 2017: Former MI6 agent Christopher Steele, author of the Trump kompromat memos, goes into hiding.
Jan. 12, 2017: Yedioth Ahranoth reports that at post-election meeting US intelligence officials warned Israeli counterparts that Russia had “levers of pressure” on Donald Trump and that information passed to the White House could be relayed to Russia and Iran.
Jan. 15, 2017: The Guardian reports that UK intelligence officials have sought assurances from the CIA that the identity of British agents in Russia will be protected because of the Trump team’s closeness to Russia.
Jan. 17, 2017: At news conference, Vladimir Putin says kompromat file was a fake used to smear Trump. “Why would he run to a hotel to meet up with our girls of limited social responsibility? Although they are, of course, the best in the world. But I doubt that Trump fell for it.”
Jan. 20, 2017: Trump inaugurated as 45th US president
Jan. 23, 2017: Steve Hall, retired CIA chief of Russia operations, tells NPR that there is a “live question” now at the CIA about what to do if President Trump asks for the source of information on something that puts Vladimir Putin in a bad light.
Jan. 24, 2017: The Wall Street Journal identifies Sergei Millian, a Trump associate and supporter, as an indirect source for Christopher Steele’s dossier, including existence of compromising videotapes
Feb. 10, 2017: CNN reports that, for the first time, US investigators say they have corroborated some of the communications detailed in Steele’s kompromat dossier. Confirmations were made with SIGINT (foreign intercepts) and relate to conversations with foreign nationals, not the the salacious “golden showers” allegations in the dossier. Confirmations give intelligence officials “greater confidence” in Steele dossier.
A Michael Flynn-Russia Timeline
Report: FSB Helped CIA Pinpoint Election Hacks
Two Russian FSB officers recently arrested on treason charges helped US intelligence agents pinpoint Russian hacking during the presidential election and spied for the CIA for seven years, according to a story on the Russian Rosbalt news agency.
Sergei Mikhailov, deputy director FSB’s Centre for Information Security (see my previous post), and Dmitri Dokuchayev, said to be an ex-hacker named “Forb” who joined the FSB under threat of prosecution, were paid to pass secret data, Rosbalt reported.
Ruslan Stoyanov (via Securelist.com)
The FSB officers relayed their secrets to Ruslan Stoyanov, a manager from the cybersecurity and anti-virus company Kaspersky Lab and an unnamed representative of another cybersecurity company. The information was then transferred to “acquaintances abroad who worked closely with foreign special service.”
“This is not a one-off story, this activity was carried out for a minimum of seven years and caused substantial harm to the interests of the Russian Federation,” the source told Rosbalt.
Rosbalt reportedly has good connections to Russian intelligence. Its editor in chief, Natalia Cherkesova, is the wife of Viktor Cherkesov, a former KGB operative who served under Vladimir Putin in the FSB. Sunday’s report in Rosbalt was picked up today by the reputable Times of London.
Stoyanov, Mikhailov, and Dokuchayev all face 20 year prison terms for treason.
The question of how this allegedly long-running spy operation was exposed remains unclear, and the timing of the arrests raises troubling questions given the Trump administration’s ties to Russia.
As noted in an earlier post, the U.S. Director of National Intelligence reported Jan. 6 that “further information has come to light since Election Day” that helped increase the U.S. intelligence community’s assessments of Russia’s motivations and goals in the election hacking.
One month later, Mikhailov was led out of an FSB with a bag over his head. Again we ask: Is there a mole in the White House?
Rosbalt also reported that in an unrelated case, Mikhailov also gave a representative of the foreign intelligence services “counterintelligence materials.”
Today in Trump-Russia
Sanctions
- The Treasury Department made some limited exceptions to sanctions imposed against Russia’s Federal Security Service (FSB) that affected the sale of cell phones and other electronics that use encryption.
- House Minority Leader Nancy Pelosi issued a statement calling the easing of sanctions a “thank you” from President Trump for Russia’s meddling in the 2016 election. “I have been asking the same question for a while: what do the Russians have on President Trump?” Pelosi stated.
- Russia’s state news agency TASS celebrated the easing of sanctions as a thaw in relations. Nikolai Kovalyov, a member of the Duma and a former director of the FSB, said the move paves the way for an anti-terrorism coalition.
- At the United Nations, US Representative Nikki Haley said sanctions will remain in place until Russia returns control over the Crimean Peninsula to Ukraine. Haley also condemned Russia for an upsurge of violence in Eastern Ukraine.
A New Investigation
- The US Senate Judiciary Subcommitee on Crime and Terrorism announced investigation of Russian efforts to influence democratic elections, both in the US and abroad. “Our efforts will be guided by the belief that we have an obligation to follow the facts wherever they may lead,” subcommittee chairman Lindsey Graham wrote in a statement. This is the third Congressional investigation into Russia’s election meddling.
War in the Ukraine
- During a press conference with the Hungarian prime minister, Vladimir Putin falsely accused the Ukrainian government of stoking violence the country’s east in a bid to win support from Donald Trump
“Certain oligarchs, certainly with the approval of the political leadership, funded this candidate, or female candidate, to be more precise. Now they need to improve relations with the current administration, and using a conflict to do so is always a better, easier way to draw the incumbent administration into addressing Ukrainian problems and thus establish a dialogue.”
What Is Russia’s Centre for Information Security?
The New York Times reports on a series of arrests involving Russia’s FSB, the successor agency to the KGB that may be connected to the hacking of the 2016 U.S. Election.
According to the Times, one of those arrested, Sergei Mikhailov, was serving as deputy director FSB’s Centre for Information Security. He was arrested on a charge of treason. Earlier in the month, the head of the Centre, Andrei Gerasimov, was dismissed.
What is the FSB’s Centre for Information Security?
Some answers come from Jeffrey Carr, a security consultant out of Seattle who runs the consulting firm TAIA Global and published Inside Cyber Warfare. Carr describes the FSB’s Centre for Information Security (also known as Military Unit 64829) as the organization in charge of protecting Russia’s Internet.
“In sum, any Internet operation originating in Russia are almost certainly monitored and probably overseen by the FSB ISC,” Carr wrote in this analysis. “Current Russian press covers Russian intentions to implement further restrictions on RuNet to counter foreign attempts to wage “information warfare” against Russian and ideologically subvert the Russian population. Whatever final form the new restrictions take, the FSB ISC will be heavily involved.”
I would be wary of any reports that claim the Centre hacked the U.S. election. Cyberwarfare like conventional warfare is a confusing picture, with many different groups carrying out different but overlapping missions.
Different FSB components are responsible for attacks outside Russia. One is the FSB’s 16th Center, also known by the Orwellian name of the FSB Center for Electronic Surveillance of Communications, according to TAIA Global Another is the FSB’s 18th Center. Another is the FSB’s Fifth Directorate. All three were blamed for cyberattacks and propaganda during the Russian invasion of the Crimean Peninsula.
And President Obama’s executive order imposing sanctions in response to the hacking of the 2016 U.S. Election names both the FSB and the GRU, the main intelligence directorate. It’s believed that the GRU hacks were passed along to Wikileaks and other media outlets during the election.
There’s no evidence yet that the Centre for Information Security had a hand in the 2016 U.S. election hacking, but with their complete command of the Russian Internet they almost certainly would have known about it.
Trump / Russia 