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.
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
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.
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:
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?
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.
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.
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.”
I’ve uploaded a translated PDF copy of the indictment here.
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.
To be continued….
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.
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.
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…