Audioburst Search

New Questions for Trumps Biggest Lenders

Automatic TRANSCRIPT

Hello it's Ilya Marritz and this is trump inc from propublica and WNYC later in this episode. Were re sharing one of our favorite stories from twenty nine nine about Donald trump and his biggest lender Deutsche Bank. It is very relevant today. I something new a story about a potential crisis in commercial real estate lending which is compounded by the actual crisis caused by the Global Corona virus pandemic and of course. There's a trump connection. Tom You see. The commercial mortgage market is on the brink of collapse. Tell us what exactly is happening now. The good news number one. It's a moment to be proud to be an American being right at the beginning of stay at home. Trump ally named Tom Barrack. Did a bunch of TV interviews like this one with Bloomberg. Tv's Eric Schatzer. Barrack had a warning that some of the financial companies standing behind mortgages on malls and hotels and office buildings. We're facing disaster. You have to keep people employed keep people employed had to support the employer. The biggest lawyer expenses ramp when connor stops in the can't pay rent in the Camp David interest on the debt and then the banks. The intermediaries can't pay the investors. It all collapses so so let's talk about that collapse. Financial Product at the center of all. This is something called a commercial mortgage backed security C. M. B. S. for short. They're the kind of thing that once you start looking. You realize they're everywhere. I mean your big malls a lot of the Strip malls you're gonNA pass Office towers hotels any really large property. There's a decent chance that there is a CS that spied it. This is propublica Heather Vogel. She recently published a story that raises questions about the financial system that means a lot of commercial real estate in the United States even before Kovic sent consumers and office workers home. Here's the headline whistle. Blower Wall Street has engaged in widespread manipulation of mortgage funds that whistleblower is a longtime real estate finance professional named John. Flynn and he reached out to me because he had noticed something. Strange in the data that he was looking at for commercial mortgage backed securities. These are loans on properties like shopping centers and office parks. That's the commercial mortgage part. They get packaged into bonds. That can be bought and sold among investors hence securities. This central idea is just investors are basically your bank. So is it a little bit like the mortgage backed securities that we heard so much about about a dozen years ago when there was the two thousand eight financial crisis and back then if people recall it was home mortgages that were being originated and then sliced and diced and put into these other securities that investors were buying yes exactly flynn examined new mortgages on properties that had already been mortgaged and then he compared the historical revenues and expense. Numbers cited in the old and new loans in many of the new loans. He discovered profits were reported as higher. What he found was that the financial data that was reported under the old loan did not always match the financial data that was reported under the new loan even when both of them were referring to the same years. So that's really the heart of it. You have now two different prophet numbers for the same year heather. So what food is saying. And what your check of. His research seems to suggest is that banks are either inflating net operating income on these properties and therefore the asset values or they're allowing asset values to be inflated and kind of looking the other way what's the incentive to do that. I mean I think it's really simple. I mean bigger loans. Bigger fees. Simple as that. And everybody's happy until somebody isn't happy in so far everybody's happy exactly. I mean especially because most of this is being passed on to investors the vast vast majority of it. So it's the banks. Are you know this isn't something? That's on their balance sheet in two thousand. Nineteen Flynn filed a whistleblower complaint with the Securities and Exchange Commission. We don't know whether the SEC is looking into it and now we come to the part of this story that could connect to trump in his complaint. John Flynn names. Fourteen major lenders were this asset. Inflation appears to be happening. Two of them are lenders. To trump Deutsche Bank and ladder capital. By the way Tom Barrack colony capital is not involved. Deutsche Bank has made loans on trump's DC in Chicago hotels enter Rowan Florida ladder. Capital has made loans on trump tower trump plaza. Forty Wall Street. So we can tell you is that I did look into one of those properties. I looked into trump tower. We can look old loan to new loan and sure enough. What we see. Is that in twenty ten. There was a twenty one percent discrepancy between the two reported. A profit numbers meaning that the old loan was Twenty one percent lower reported profit than what the new loan reported for the same year for twenty ten so it appears that this property is among those that have these questions about its net operating income that we've seen kind of across the NBA market. So you know. Certainly trump has done business with banks that were named in this complaint that I wrote about and it appears at least one of his property was involved and it just underscores the point. I suppose that any action that the trump administration might take around this could affect the trump organization. This is the conflict. We've been looking at first several years. Now you know obviously anything that the government steps in and does for this industry potentially could have an effect on the trump organization very directly Because this is the type of lending that they depend on so you know this is a market. They're very involved in and the Fed has taken action around And there may be further pieces of the bailout that touch it. So you know as we're heading toward this crisis I think it's worth keeping an eye out to understand what the implications are for the president's properties and company and his associates. Heather heard back from the trump organization's chief. Legal Officer Alan Garten. Here's what he told her to quote them. Not only with the numbers provided to the service are accurate but trump tower is considered one of the most under leveraged commercial buildings around ladder capital said it altered historical numbers for to loans that. Heather asked about to remove expenses that were not recurring in the future. It said it's actions. Were appropriate ladder. Did Not respond to requests for comment about its loan for trump tower as for John Flynn's allegations about inflated CNBC'S. Several lenders told Heather they believe it's okay to make changes to historical prophets others including Deutsche. Bank did not comment an industry. Group said they weren't aware of the practice the SEC declined to comment. So I mean really. Things are quite topsy-turvy right now. And there's a lot of money at stake and there's a lot of really powerful influential. People who have a huge stake in what the government bailout looks like and those people could include probably do include Donald Trump and the trump family. Yes as well as the Kushner Family Vogel is a reporter for Propublica to learn more. Read her full story at the PROPUBLICA website and now our story on one of those lenders heather has been writing about Deutsche Bank. Here it is ladies and gentleman very welcome in January the head of HR Bank Christian seven did an interview with you've accuser. The business editor at the German newspaper site the two were speaking at a reception at the World Economic Forum in Davos Switzerland. You wanted to become a journalist of all profusely. The newspaper man asking the banker if you were a journalist. How would you report onto a bank today so in a nutshell? What you write. The deutsches CEO is taken aback. He fumbles for a moment. I would say Deutsche. Bank is the most significant self-help story the financial industry. That's how did decide editor doesn't really WANNA talk about self help. Sometimes with documents the case just it seems to get better. There is another problem in November when things really looked up and then all of a sudden state attorneys came in search touchback headquarters under the suspicion that Dutch Beck was involved in money laundering activities. What was your first thought? A few months earlier the German please rated the bank's Frankfurt headquarters now of course at that point in time. It's it's disappointing. Not Disappointing personally for me but you have being subject to investigations and regulatory actions has become the new normal for Deutsche Bank in recent years. The bank has been fine billions of dollars for lax controls on everything from laundering Russian money to violating sanctions against Iran Libya and Sudan. So how you? Life is tainted by dodger. Ben's past how do you live with the constant uncertainty? That something else might pop up. You know I think that makes live really interesting. Standard life has become very interesting for deutchebanks in recent port. Filing Congress reveal that has been asking for detailed records of trump family. Business interactions with Deutsche Bank in the filing Congress said straight out it's investigating the relationship for possible money laundering illicit financial deals fraud and foreign influence in the two thousand sixteen elections by its own. Admission deutschebank has a history of serious compliance deficiencies when it comes to global money laundering in the very recent past now comes a new revelation from the New York. Times which banks own anti money. Laundering experts flagged multiple suspicious transactions. They were as recent as twenty sixteen and thousand seventeen and involved. Trump's business and the one formerly run by his son in law jared Kushner among the transactions. One where money had moved from. Kushner companies to Russian individuals. The Times wrote that deutchebanks money laundering. Experts were so concerned they wanted to report these transactions to the US Treasury but supervisors refused to do so carry mccue DEUTCHEBANKS spokeswoman said statement alert dispositions by investigators undergo a higher level review by qualified staff Transaction Monitoring Castle Wide Net. And not all alerts will result an escalation. She added would take our responsibility for compliance very seriously and that the bank has increased our anti financial crime staff and enhanced its controls in recent years a spokesperson for the trump organization. Email the statement. This story is absolute nonsense. We have no knowledge of any flagged transactions with Deutsche Bank. In fact we have no operating accounts with Deutsche Bank. We sent questions to the Kushner companies. The White House. Trump's private banker and lawyers for the trump suit jared Kushner. The White House did not have comment. The others didn't respond. Meanwhile the investigations pile up. Those subpoenas were sent a multiple financial institutions including Georgia Bank. The House intelligence and Financial Services Committees are hoping to get information on loans. The German bank gave to the trump and trump organization presidential harassment. This is all these people do. Eric Trump earlier today and Fox and friends calling it harassment is the trump family and the organization sue Deutsche Bank and Capital. Wunder to block subpoenas issued subpoenas into tweet. Your Bank and we are collecting a lot of the documents that we had requested. And we are reviewing can only tell you that the investigation about as the result of the testimony of Michael going. Hello and welcome to trump INC podcast from WNYC and PROPUBLICA that digs deep into the secrets of the trump family business. I'm Andrea Bernstein. Today on the show trump and his family's relationship with Deutsche Bank a bank with a history of problems they were laundering. Money for wealthy Russians and people connected to Putin and the Kremlin in a variety of ways for almost exact time period that they were doing business with Donald Trump. This is David enrich the finance editor of the New York Times and all of that money through Deutsche Bank was being channeled through the same exact legal entity in the US that was handling the donald trump relationship in the US. And so there are a lot of coincidences here. There's a lot of smoke. I have not found any fire but unfortunately I do not possess subpoena power. And we're going to walk you through all that smoke. Trump INC is an open investigation. So we're just going to say right now. We're still not sure what this all adds up to what we do know trump right now owes fell three hundred fifty million dollars to Georgia Bank more than he owes to other financial institution and so much is happening regarding the bank so fast that we decided to lay out what we've learned by digging into trump's financial deals with the bank and why his recent loans raise so many questions questions raised by Congress the New York Attorney General and the bank's own employees. Let's get to know Deutsche Bank. It likes to think of itself as a cousin of other global institutions like J. P. Morgan Chase Citigroup but deutsches recent history sets it apart from its competitors after the global financial crisis in two thousand eight deutchebanks like all banks was under financial pressure at the same time there was more and more wealth building in Russia and Russians. Wanted to get it out of the country. Maybe earned it illegally. Maybe they were just scared that if they kept their money in Russia Vladimir Putin would have it seized banks supposed to run checks to make sure they're not helping criminals move dirty money and New York state regulators. Found Deutscher. Didn't do that. Between two thousand eleven and two thousand fifteen the bank improperly and covertly helped usher ten billion dollars out of Russia and into London and New York and it got caught. We spoke to the woman. Who did the catching my name is? Maria Vullo and I was the superintendent of Financial Services from early two thousand and sixteen through February one of two thousand nineteen she oversaw banking and insurance in New York state. Just after trump was inaugurated flow signed a consent order with Deutsche Bank in it Georgia acknowledged. It had allowed bad actors to achieve improper ends. This consent order addresses. The man had serious compliance deficiencies that spanned deutchebanks global empire. These flaws allowed a corrupt group of bank traders and offshore entities to improperly and covertly transfer more than ten billion dollars out of Russia by conscripting Deutsche Bank operations in Moscow London and New York to their improper purpose. Deutsche Bank paid over six hundred million dollars in penalties in New York and in the UK and said it would address its deficiencies. Here's how the corrupts game worked. It began in Moscow with an order by Shell Company to buy a specific amount of stock. But the buyer one asked for a particular company stock. Just the amount they wanted to spend. Investigators found some pretty specific emails. Like this one. I have a billion ruble today misspelled by the way ruble but Will you be able to find a security for this size? So then what would happen? The same day Deutsche Bank made a purchase in Moscow. It would make a sale in London of the same amount of stock. The trades mirrored each other. For that reason. They're called mirror trades. Ten billion dollars were moved in this way rubles to pound two dollars possibly dirty money going in clean money coming out. If you're a bank you're supposed to have systems in place to prevent trades like this because it makes it easy for criminals to wash their money through the financial system so yes there was a supervisor on the Moscow desk Which appeared to have been paid a bribe or some other undisclosed compensation to facilitate the schemes. Employees complained they were pushed off. No one did anything even when another bank asked which a bank is something going on here. Deutsche Bank responded essentially no no problems here instead they should have elevated the concerns yes and should have raised a red flag again. And we're looking at issues like know your customer looking at who these counterparties are and who's behind the counter if one was going to actually do the proper KYC process KYC. Mino- your customer. This is actually underpinning of the financial system. Keep the money launderers terrorists and other crooks out. Somebody comes to the bank. Who is this person? Deutsche Bank did not have a centralized know your customer system and its Moscow office. Deutsche Bank had one person as head of compliance head of legal and anti money laundering. All at the same time and you certainly need more than one person who is doing three jobs to actually have an effective compliance system. I mean staffing compliance is essential and this was woefully inadequate New York regulators. Were not able to track them. The actual people behind the ten billion dollars in suspicious transactions and so a very big question remains what was the reason behind the because money was exchanged why we still don't know there's no evidence these mirror trade deals involve trump. Were telling you about them. Because in the words of New York regulators serious compliance deficiencies at the bank spanned deutchebanks global empire during the same period. Donald trump was borrowing hundreds of millions of dollars and because Congress is taking a closer look according to a legal brief fits investigating whether Deutsche Bank is doing enough to stop schemes like mirror trading. The brief says this is important. In determining the volume of illicit funds that may have flowed through the bank and whether any touched the accounts held there by Mr Trump his family or business So let's go back to the beginning of trump's relationship with Deutsche Bank. It's one thousand nine hundred eighty eight. His life is like the destiny's child song trump's companies have declared four bankruptcies and he stiff so many lenders that the big banks like chase. Citibank won't go near him. Will trump was looking for a bank. Any Bank would do David enrich of the Times has upcoming book about Deutsche Dark Towers the inside story of the world's most destructive bank he says when Deutsche Bank I approached trump in one thousand nine hundred ninety eight. Both trump and the bank needed each other he was completely frozen out of the financial system. Bc kept defaulting on loans and Deutsche Bank in the late nineteen. Nineties was very eager to make a name for itself in the United States. So they really needed to go searching on the fringes to find clients. That were that had a bunch of money but that their reputations were sufficiently scuffed up that they were not suitable clients for the big elite Wall Street investment banks and DONALD TRUMP FIT. That bill perfectly said the bank lent him money for downtown Manhattan skyscraper and building across from the UN and trump's business came with perks he would fly bankers to Atlantic City for boxing matches. Take them to the US. Open tennis tournament in Queens. Then he asked the bank to sell high risk bonds junk bonds to keep casinos going and riches reporting found Deutsche bankers initially. Didn't want to. But trump dangle the weekend mar-a-lago they sold four hundred eighty million dollars in bonds. Everyone is really pleased with the outcome until a few months later. Donald trump default on those junk bonds which is Jesuit. Everyone had feared would happen in the first place. So there's sort of long-term reputational risk of selling junk bombs that are going to fault relevant. Thank you everybody this quite a crowd not too long. After trump was once again bound up with stories your bank. They lent six hundred and forty million dollars for trump tower Chicago to help get the loan. He assured bankers that his daughter Ivanka. Then a recent college Grad would be in charge of the development. The family was in it for the long haul. We're very very happy with what's happened with respect to this building. How fast now? September two thousand eight. It's virtually impossible the bag shut down but we got this one built at two months later. Trump defaulted then. He did something unusual and on day. She's after defaulting on the loan. Trump sued his lender Deutsche Bank. The lawsuit began like this. This action arises out of defendant deutchebanks attempt to derail the successful completion of one of the most acclaimed construction projects to be built in the United States. In recent times it went downhill from there. Trump claimed he couldn't pay back the loan because the financial crisis was a force measure. An Act of God. Deutchebanks was responsible for the crisis. Anyway he asked for billions of dollars in damages. Deutchebanks sued him back. The trump's kept sailing units Chicago. Hi I'm Yvonne could trump in the real estate business the word luxury terribly overused and like the word beauty. It's lost much of the impact that it once had but I'm going to risk Ivanka. Trump has by now become a key marketer for trump properties fabulously luxurious ninety two story trump international hotel and tower. It's already taking. Its place is one of the icons on Chicago's famous skyline. Finally after a few years the two sides settle trump is on the hook for forty million dollars which he personally guaranteed he needs to pay that back to Deutsche Bank. Where does he get the money? This is where they're already strange. Relationship gets way strain stranger out of the blue. The person who comes to his rescue is his new son-in-law Jared Kushner David Rich The New York Times and he had jared Kushner had struck up a relationship with a private banker at Deutsche. Bank named Rosen. Raver applic- do we know. How do they met? We don't that is one of the world's greatest mysteries if you occupy my brain. What I know is that in around the summer of two thousand eleven. Jared arrange a meeting for his father-in-law to go into Deutsche Bank and meet with Rosemary. Grab Lick who at the time was one of the the real shining stars in deutchebanks private banking business and private banking is kind of a weird business that most people who do not obsess over the stuff probably never heard of an. It's part of the bank that caters to the world's richest people. The job of a private banker is usually to help. Rich people protect their wealth and growing even more to keep tax authorities away from their investments and companies. Private bankers do not usually known money for large commercial. Real estate developments. Rock did not respond to our questions for this story. As before trump showers attention on all the right people rabbit comes to trump. Tower gets treated like a friend. There's a favourable profile of her. In one of Jared. Kushner's newspapers so there's fairly quickly a meeting of the minds between Rosemary for applic- and Donald Trump that maybe this arm of Deutsche Bank Private Bank can strike up a fresh relationship with Donald Trump. And do what no other bank on Wall Street at this point is willing to do what no other bank is willing to do. Is Loan trump forty eight million dollars to pay off the DEUTCHEBANKS Chicago because trump has defaulted on his loan and sued the bank for billions of dollars but with the help of Rosemary Fabric? He's getting money from Deutsche Bank to pay off Deutsche Bank. No one has ever seen anything like this. In fact a lot of the people I've talked to at the bank and previously at the bank had initially insisted this just hadn't even happened is not the way it worked at all and it is the way it worked and is just so extraordinary and unusual that no one believed it to be possible. Do you bankers have told enrich their private wealth. Unit made money from trump because he opened personal accounts there brought them business and yet this is one of the clearest examples. I've ever seen of a bank. That is so dysfunctional in so careless about it's risk management and so careless about the reputations of its clients and so loose with the protection of its own reputation that it would allow a guy who has repeatedly defaulted and burned the bank Huge public embarrassment to borrow tens of millions of dollars from another arm of the bank to repay the part of the bank that he is engaged in litigation with It it's really mind blown. It's not just shocked around the time when you bank is getting ready to pay offshore bank in two thousand eleven two thousand. Twelve trump starts coveting bankrupt golf course near Miami derail. It has a history of hosting major tournaments but post financial crisis. It's not in great shape and it's in the flight path of the Miami airport. The property itself I was told by people involved in the bankruptcy was kind of a dog. This is Heather Vogel from PROPUBLICA. She dug into the bankruptcy records and land deeds for derail the sellers were going to go with trump because he was willing to close quickly with no financing pay cash essentially the bankruptcy filing showed that trump agrees to pay a hundred and fifty million dollars for the whole business of that one hundred and five million for the property and the buildings the land record show and that's where it gets interesting. I think because he does not buy the property for all cash he does need financing and from what we can tell he needs a lot of financing and for that money he again turns to. Deutsche Bank trump flies rosemary. Ravlic THE PRIVATE BANKER DOWN TO FLORIDA. And she helped him again. Deutsche Bank loans him a hundred and sixty million dollars remember the county records show. That trump paid one hundred five million for the land and buildings portion of the sale and the sale in the loan are recorded the same week so the learning gets is for more money than he pays for the property and we also after digging around found out. It wasn't actually only loan that they gave on this property. There's another Deutsche alone also arranged by Rosemary Arabic. This one for nine hundred million dollars is also backed at least in part by around golf course. So that means he's got one hundred and twenty five million dollars in loans on a property that was sold for one hundred five million which is certainly not the kind of thing that anybody who's a home would find believable. You can't just get a bank to give you all of the money for your house. There could be an explanation for this. An appraisal showing Durell was worth more or additional collateral. What we do know what's in the public records raises the question of whether the loan was unusually high for the property. I think that there's a larger context. Here that's interesting because of deutchebanks involvement which has been accused of not doing enough due diligence in order to spot money laundering and to stop it. You HAVE TRUMP. Who has also been repeatedly accused of not doing due diligence with his partners has been involved with people who have criminal connections for years people with connections to Russia and people with connection to illicit activity in Russia. You sort of have this nexus of all these different actors who have had problems in the past and you've got at the core. What appears to be a business decision? That doesn't make sense. Why would do which bank lend this much money for this property? At this point the trump's themselves spun out yet another story Forbes wrote about it how Yvonne could trump got the derail resort and the blue monster for a bargain basement price and had a baby at the same time. We Got Durell. Which is a great deal are so excited about twenty twelve. Ivanka trump released a video. Touting some recent accomplishments not only is it. The third episode of Celebrity Apprentice in this season has been amazed. Trump organization was also tapped for another important deal for the family at a time when the trumps were buying golf courses and inking foreign licensing deals there was a development project they really wanted enemy additionally we were selected by the GSA effectively the government as the preferred developers for the old post office building in Washington DC incredibly excited. It's such too widespread criticism and alarm. Donald Trump's business gets a sixty year lease to run. What is now? The trump international hotel in Washington another bidder files a protest claiming. There's no way. Trump can live up his financial promises that is history of defaults and company. Bankruptcies should qualify him. Ivanka does the negotiating and trump's lineup an equity partner colony capital. If that name sounds familiar. It's the firm founded by trump's friend Tom Barrack. We recently did an episode on barrick trump's inaugural planner. And what we're doing is trying to oriented towards the greatest tribute to American barrick lends colonies name to trump's bid for the old post office but then colony drops out and trump needs a new financial partner. He gets another generous loan. This one hundred seventy five million dollars also through rosemary from Deutsche Bank. Ivanka trump says the family is in it for the long haul. She wants her daughter. Arah Bella to oversee the hotel someday. trump now owes Deutsche Bank. Nearly three hundred fifty million dollars for the Chicago debt to loans for Durell and one for the old post office. He even tried to get another one too by the buffalo bills but the deal never went through the New York attorney. General is looking at that one. Oh there was one more loan in May of Twenty Fifteen Ivanka. Trump's husband jared kushner's company buys the retail floors of the former New York Times building for just under three hundred million dollars then sixteen months later. The KUSHNER's go to your bank. The get an appraisal that says the property is worth two hundred million dollars more than they paid. The kushner companies have said the increased value was because they were going to get more lucrative tenants but anyway they get a big loan from metabank. It's for more than what they I paid for the building. They walk away with the seventy four million dollars in cash In a statement DEUTCHEBANKS spokeswoman says the bank remains committed to cooperating with authorized investigations view. Is that they really really screwed up. In the past several years continuing and deepening this relationship with Donald Trump David enrich product of very poor risk management very poor reputational management poor decisionmaking very short term focused on making as much money as possible. But that they don't think they did anything illegal and they don't think that kind of the sexiest storyline out. There is true and that sexy storyline is that somehow somewhere Russia or the Kremlin or stayed on banks in Russia were using which bank to funnel money directly to Donald Trump or his companies and to be clear they were in this very period a conduit for Russian money in the mirror trading scandal. It's it's quite a coincidence. that's exactly rid in two thousand sixteen. Someone deutchebanks finally decides to say no trump's running for president. He asked for money for renovations at yet. Another golf course. This one's in turnberry in Scotland. And this is the moment inside the bank where one senior executive after another realized just how deep and longstanding Donald Trump relationship was and people were done and they put a stop to the loan was initially rejected by a committee in the. Us that supposed to veterans actions with an eye toward protecting the bank's reputation and then rose ravlic team appealed that decision which is quite unusual and this went up to London and then Frankfurt where. There's a big fight at the top of the bank about whether or not to do this loan and it was eventually killed by the guy who is now the CEO of the bank Christian seven. He's the guy we heard being interviewed at the beginning of the story by the German journalist. Are you sometimes mad at your predecessors? No no no. I think also that you learned that in Sports. You never looked back. I mean this is setting at Davos again. He saying the bank is trying to turn a corner. Come clean make things right. You know what you just want to make this bank now again a bank which lives up to the standards and which has the reputation which is used to have and therefore. I'm not looking big. I'm not mad at Rita sisters. I just want to get my job ride in at the end. You know what we need to bring it back to check today. The bank faces an array of potential traps for instance if trump defaults on loans. They'd have choice. Seize the assets of the president of the United States or let alone. Slide and give an unimaginably large gift to a sitting president trump's relationship with rosemary for continues she was given VIP seats at the inaugural and this has not been previously reported. She was one of a select group of people who got to stay trump's hotel in the old post office in Washington during the inaugural according to a person familiar with the arrangements that weekend other guests the hotel included jared Kushner's family and key inaugural personnel the Durao loans come due in twenty twenty three the old post office and the Chicago loans in twenty twenty four all during the possible trump second term. We'll be right back. Subpoenas issued to Deutsche Bank J. P. Morgan Chase part of a widening investigation by House Democrats into President Trump's finances this winter democrats who control the House of Representatives decided. There was an awful lot to look into with regards to trump's relationship with Deutsche Bank and they went to Japan very early on and explained the situation and which a bank declared complete willingness to help and so behind the scenes. Even before subpoenas were issued earlier this month deutchebanks had been engaging in a amount of very detailed dialogue with congressional investigators about the types of materials at had what those materials showed how the bank handle those materials and even went so far as to help craft the language. That would be in the subpoenas. Does your reporting indicate that bank believes that these specific documents er that these are categories of documents tells a specific story because there some pretty specific language about what they think there might be? Let's right whatever it is. The trump's don't want us to know about Donald Ivanka. Don Jr. and Eric trump sued Deutsche Bank to prevent the bank from releasing the documents in their complaint. The trump said the subpoenas were issued to Harass President Donald J trump to rummage through every aspect of his personal finances his businesses and the private information of the president and his family and affair about for any material that might be used to cause him political damage. To Congressional committees responded. They filed a brief opposing the lawsuit in Federal Court in the Southern District of New York. It lays out unambiguously what congress is looking at quote serious and urgent questions. Concerning the safety of banking practices money laundering in the financial sector foreign influence in the political process and the threat of foreign financial leverage including over the president his family and Business Times David enrich had been enquiring about deutchebanks trump family business and questionable financial activity and then someone tipped him off to a woman named Tammy. Who'd been fired from deutchebanks Jacksonville Office? And I spent an enormous amount of time. Surgeon for Tammy's in the Jacksonville area and eventually found her. Tammy McFadden. Here's her story. In the summer of two thousand sixteen McFadden who'd been working for a decade as an anti money laundering specialist notice that deutchebanks computer system had been flagging transactions involving jared Kushner's family real estate business and she investigated this and what she found. Were that these to actions. The kushner companies appeared to be moving money to Russian individuals. Remember this was during the two thousand sixteen campaign and that struck her as a bright red flag waving interface on. She did what you do in that situation. Which is she typed up a suspicious activity report and then send it onto her managers for review. And that's when the problems started. It's not that uncommon for a bank computer to flag transaction and even for a specialist to write it up but then the report didn't go to financial crimes higher ups it went to the division where Rosemary Rabbit works. Private banking is very unusual. Normally you would keep this out of the hands of the business. Division where the clients at because that for. I think I'm obvious reasons. Which is that. You don't want the people making the decision of whether to file the SAR to have a powerful financial interest in preserving a relationship with a client. Private banking decided not to send the report to the. Us Treasury there might be all sorts of reasons for this but remember by this time. Deutsche Bank had already be examined its relationship with trump and was already on high alert police money laundering and financial crimes and so the notion that an employee would flag concerns about possible Russian improper activities with the company of the son-in-law and adviser to a leading candidate for president and they wouldn't actually air on the side of caution and just go ahead and maybe filed that report. It's remarkable I. Spent a lot of time investigating deutchebanks. And this is one of those moments where I was shocked to hear this. Although it's worth noting I can't believe him about to make this defense for the bank but the bank so disorganized and in such a kind of sense of crisis for its own special reasons that it's not impossible that the people making these decisions in Jacksonville and up in New York just didn't connect those dots in their brains in the bank. Statement the spokeswoman said we have policies processes and controls to address the potential for conflicts of interest including special measures with respect to clients that hold public office or perform public functions in the US not only did McFadden flag Kushner transactions a separate elite unit tried to flag suspicious transactions as late as twenty seventeen. Those two were not reported. These are not low level employee. Straight out of college or something. These are very experienced. Investigators a number of them with FBI military backgrounds who are highly trained and highly skilled at diggings transactions and figuring out which are really problematic in which are just innocent and circumstantial presumably after the New York financial consent. Order was in early. Two Thousand Seventeen so presumably twenty both on the Donald Trump side and on the Russian money laundering side. It was you know I. I don't even know like what color flag we're talking was so deep red. I hear you. I don't have a good answer for you. Have you been able to help. Deutsche Bank has been in addition to obviously providing all these loans for trump and handling his money. Were they connecting him with business partners was Rosemary Rab Liquor and else. Introducing trump chew other potential business partners. Were they like assertive. Convener really good question and the answer is not to my knowledge. I say not to my knowledge. I should make even clearer than already have that. I don't know that's very different than me saying no because the information I have received is I've talked to dozens of people and I've spent more than a year investing this but people have very strong financial and legal interests to not tell the full story and as I said I unfortunately do not possess subpoena power so can't force anyone and so my information is only as good as the willingness of my sources to speak as you know and so we we. I'm sorry I just have to Caveat. I don't I hate. I don't WanNa be the guy who says there's nothing to see here because I think there probably is something to see here and I don't know what it is or what form it will take but limited this way. I am still investing an enormous amount of my own time and the New York Times time at digging into this trump deutchebanks nexus. Because there's a lot of smoke still and while we have not really found the fire yet. I wouldn't be surprised if we do in late. May in a Manhattan courtroom. There was a fight over whether Congress should get you see. Stacks and stacks of trump Deutsche Bank financial records. Heather Vogel and I went to the hearing. We're standing outside of the iconic Thurgood Marshall Courthouse in Lower Manhattan the one with all the columns and a judge has just ruled that the subpoenas issued by the House of Representatives to Deutsche Bank are valid. He just read a lengthy decision. Pretty much refuting point-by-point all of the arguments that the trump's had made for why don't you bank should not comply with subpoenas heather? What was the most significant point to you? I think what was most interesting to sort of see it all moving forward so quickly. One of the lawyers came and said to someone sitting next to us. Well I didn't expect that to happen when the judge said I'll be back with his ruling. Yes exactly so to see these arguments laid out there and the judge being very clear and coming back after a few minutes. He did concede the point that it may cause harm to the trump's to have their financial information public but he found that that harm does not outweigh the public interest in this case of that disclosure and its relevancy to legislative inquiries at. Congress's making things it was clear. Was that the trump lawyers argued that the subpoenas are outrageously broad and the judge said. Well they're broad but Congress has the right to do this and we did judicial branch. Do not have in any way the right to stop them. Another thing I found interesting. Was that the trump lawyers had made the argument that these requests are really exposure just for exposure sake that this was essentially a political move by Congress and that that is one of the reasons that it should not be allowed to go forward because it is so Invasive essentially will the judge dealt with that by talking about how it's not up to the courts to assess essentially what the motives of Congress are that. That's something that's really beyond the reach of the courts and so it's their job. Basically to see whether these committees have the power to request this type of information which is predicated basically on whether they can use it in a legitimate way which would be to inform legislation to inform the public understanding of a matter of national significance and the judge clearly found. That was the case. So as of now when we're standing here. The subpoenas aren't effect but if past is prologue the trump lawyers will be in pretty quickly to appeal this decision and to try to stay the judge's ruling Andrea Bernstein with Heather Vogel. Since that's the way I ran the supreme court heard oral arguments in trump. V Georgia Bank. Check out our last episode for analysis also since then David Enrich published his book. The title is Dark Towers Deutsche Bank Donald Trump and an epic trail of destruction. It is a great read with a lot of family drama and international intrigue lastly and rich and his colleagues at the New York Times recently reported that the trump organization is seeking relief on hotels and resorts from its lenders and creditors including Deutsche Bank. As you know we love tips so if he knows something about trump and his lenders or anything we ought to be covering send us a note tips at Trump Inc. podcast dot Ford. We are planning stories this summer on the COVID. The election and much more. Keep up with it all by subscribing to our newsletter on the trumping website. And while you're there find out how to securely share information and documents. My conversation at the start of the CEPA sewed with Heather Vogel was produced by Catherine Sullivan and engineered by Jared Paul or two thousand nineteen episode. Deutsche Bank was produced by May Kramer Catherine Sullivan and Alice Wilder. It was edited by Charlie. Herman Air Kamensky Nick. Varsha ver- and Robin Fields Bill. Moss was our technical director and we had original music by Hannah's Brown Matt Co at is the executive producer of trump inc. Emily Boutin is the vice president of on demand content for WNYC. And Steve Engelberg is the editor in chief of PROPUBLICA. High millionaire Sir. Thank you for listening

Coming up next