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….

Trump’s Latest Favor for Russia: A Pass on Election Interference

On his 600th day in office, following months of dire warnings from his own intelligence officials, President Trump finally did something to try and prevent Russian interference in the upcoming Midterm elections. But appearances can be deceiving, especially when it comes to Trump and Russia.

An executive order signed by Trump on September 12th declared a national emergency to deal with interference in U.S. elections, which it rightly describes as “an unusual and extraordinary threat to the national security and foreign policy of the United States.” But Trump’s executive order does little to stop it. It targets unspecified, large companies while giving the president full discretion to choose from a range of sanctions that have failed to deter Russian aggression in the past. Democrats in Congress blasted the order as toothless. Daleep Singh, a former assistant Treasury secretary in the Obama administration, testified before Congress that it represented more a press release than a change in policy.

The real purpose of the executive order, Trump’s critics maintain, isn’t to deter Russian election meddling. It’s to deter far tougher legislation in Congress. Two bipartisan bills pending before the Senate would inflict severe economic pain on Russia if it continues to meddle in American politics. One measure, dubbed the “sanctions bill from hell” by its co-sponsor, Senator Lindsey Graham, rattled nerves when it appeared in Moscow newspapers over the summer. Both Graham’s bill and the leading effort, introduced in January by Senators Chris Van Hollen and Marco Rubio, threaten to shut off the flow of U.S. dollars to the Kremlin.

[Read Van Hollen and Rubio’s DETER Act here. Graham’s “sanctions bill from hell” can be found here.]

It may come as a surprise to many Americans that some of the money paying for Russia’s bad behavior comes from the United States.  The Kremlin has borrowed billions of dollars from U.S. investors over the years through sales of Russian sovereign debt, which effectively are loans to Vladimir Putin’s government. Yes, you read that right: public pension funds from New York to California, along with asset managers, hedge funds, and U.S. banks are financing a regime that is deliberately trying to undermine American democracy and the U.S.-led Western alliance. A Moscow-based credit rating agency estimated last month that the United States holds 8 percent of Russia’s sovereign debt — or more than $12 billion, based on the latest figures from the Russian Central Bank.

Cutting off these financial flows is the kind of serious step missing from Trump’s executive order.  The administration’s reason for rejecting sanctions on Russian debt was outlined in a congressionally-mandated study by the Treasury Department earlier this year. The concern is over the “negative spillover effects” on global financial markets and businesses. In other words, the White House is worried that sanctioning Russian debt might do economic harm to America’s friends and allies — something that doesn’t seem to apply to the president’s trade war with Canada.  And Treasury’s warnings have proved overblown. Since April, when ruble debt was more popular outside Russia than ever before, foreign investors have been quietly dumping their holdings with none of the predicted upheaval.

The only economy that will be seriously harmed by sanctions on Russian bonds is Russia’s. It would put downward pressure on the ruble and drive up Russia’s borrowing costs, forcing Putin to scrap his ambitious spending plans for what is likely to be his last term in office. More importantly, it would put Russia in the same league as Iran and Venezuela, the only two other nations that have had their debt sanctioned by the United States, according to the Congressional Research Service.  Both Senate bills go a step further, and would also bar Americans from doing business with big Russian banks like Sberbank. Russian Prime Minister Dmitry Medvedev said such an action would be a declaration of “economic war” and promised to retaliate “economically, politically, or, if necessary, by other means.”

There’s no good reason for the White House to reject these penalties, serious as they are, or even tougher ones, because there’s an easy way for Russia to avoid them: Don’t interfere in U.S. elections.  Without a sure, strong response, the American electoral system remains as vulnerable as it was before Trump’s executive order. It’s clear that existing sanctions weren’t enough to stop Russia from wreaking havoc in the 2016 U.S. presidential election. Van Hollen and Rubio’s bill, the Defending Elections from Threats by Establishing Redlines, or Deter Act, would bring a cruise missile to the fight; the president is bringing a pop gun. “That’s why it is imperative that the Senate and House take action because, clearly, the administration abdicated its responsibility in this area,” Van Hollen told me. It remains to be seen whether Congress can do what the president cannot or whether Trump’s executive order will lay the matter to rest.

It’s important to remember what’s at stake.  Confidence in our elections, the foundation of American democracy, was dealt a serious blow in the 2016 presidential race. It was further weakened by Trump’s refusal to accept the findings of his own intelligence community on Russian interference.

Now, the president’s long-delayed response sends the signal that the United States can’t or won’t do what it takes to protect its sovereignty.  This abject failure of leadership raises troubling questions about where the president’s loyalties lie. It suggests once again that Trump is putting the interests of Russia above that of the country he was elected to lead.

Lanny Davis and Metabolife

My Rolling Stone piece on Michael Cohen’s attorney Lanny Davis, who also represents a high-level Russian Mafia associate, is up. You can read it here.

[Apologies for repeating this post a second time, but after I posted an earlier draft, I realized, as I often do, that this might be something worth publishing.]

I’ve been aware of Davis for a long time, ever since his days representing a sleazy San Diego firm called Metabolife.

Metabolife was founded in 1995 by a man named Michael Ellis, an ex-cop who had a felony record for a meth lab bust in the San Diego suburb of Rancho Santa Fe. While on probation, Ellis had a brilliant idea. He realized that, thanks to a loophole in the law, he could sell speed legally. Thus was born Metabolife.

Metabolife’s pills contained ephedra, the herbal form of the stimulant ephedrine, which is a key ingredient in methamphetamine. It was legal to sell ephedra at the time,  thanks to a law sponsored by Senator Orrin Hatch, the Utah Republican, who dabbled in the vitamin business as a young man.

Hatch’s law deregulated the dietary supplements industry. Dietary supplement makers no longer had to show their products were safe. Under the law, Metabolife had no duty to report even the deaths of its customers.

Sales took off. Revenues at privately-held Metabolife had soared to more than $360 million in four years, but the company had a problem: People who gobbled its pills sometimes wound up in the hospital — or worse. One user’s heart rate zoomed to 300 beats a minute. Some turned into psychotic speed freaks. A Government Accounting Office report found Metabolife’s pills caused 18 heart attacks, 26 strokes, 43 seizures and five deaths.

When Congress started to investigate whether Ellis“put sales above safety,”  Metabolife hired Lanny Davis, who was then with the DC powerhouse firm of Patton Boggs. (Interestingly, Cohen worked for the same firm, now known as Squire Patton Boggs, after Trump’s election.)

I wrote a story for The Associated Press in 2004 pointing all this out:

“Patton Boggs earned millions helping project reassurances to Congress and its customers that Metabolife products were safe,” I wrote. “In mid 2002, Patton Boggs lobbyist Lanny Davis wrote a senator whose subcommittee was investigating Metabolife that the company had received only 78 ‘unproven, anecdotal allegations’ of strokes, heart attacks, seizures and deaths.”

Prosecutors alleged company founder Michael Ellis lied about Metabolife’s safety record in a 1998 letter to the U.S. Food and Drug Administration, which Patton Boggs attorneys helped him draft. (One former and four current Patton Boggs attorneys were subpoenaed by a federal grand jury in San Diego. A judge ruled they had to testify.)

Here’s a snippet of the FDA letter:

Screen Shot 2018-08-23 at 5.18.49 PM

That wasn’t true. The FDA finally banned sales of ephedra in 2004, saying it was linked to 155 deaths, including 23-year-old Baltimore Orioles pitcher Steve Bechler. Ellis was eventually convicted of lying to the FDA; Metabolife pleaded guilty to tax evasion.

The conclusion is this: Davis and Patton Boggs helped Metabolife as it covered up a health crisis. Before I get a nasty letter from Mr. Davis, let me say that there’s no evidence that he did anything wrong or acted unprofessionally. But credibility matters, and after years of representing shady clients, Davis’ may find his credibility in short supply when he needs it most.

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.

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