Special Counsel Mueller (ex-FBI head for over 10 years) is investigating Deutsche bank in Germany now in relation to Trump's finances. Deutsche Bank also has ties to Russian Oligarchs as well.
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During the presidential campaign, Donald J. Trump pointed to his relationship with Deutsche Bank to counter reports that big
banks were skeptical of doing business with him. After a string of
bankruptcies in his casino and hotel businesses in the 1990s, …
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During the presidential campaign, Donald J. Trump pointed to his relationship with Deutsche Bank to counter reports that big banks were skeptical of doing business with him.
After
a string of bankruptcies in his casino and hotel businesses in the
1990s, Mr. Trump became somewhat of an outsider on Wall Street, leaving
the giant German bank among the few major financial institutions willing
to lend him money.
Now that two-decades-long relationship is coming under scrutiny.
Banking
regulators are reviewing hundreds of millions of dollars in loans made
to Mr. Trump’s businesses through Deutsche Bank’s private wealth
management unit, which caters to an ultrarich clientele, according to
three people briefed on the review who were not authorized to speak
publicly. The regulators want to know if the loans might expose the bank
to heightened risks.
Separately,
Deutsche Bank has been in contact with federal investigators about the
Trump accounts, according to two people briefed on the matter. And the
bank is expecting to eventually have to provide information to Robert S.
Mueller III, the special counsel overseeing the federal investigation
into the Trump campaign’s ties to Russia.
Continue reading the main story
It
was not clear what information the bank might ultimately provide.
Generally, the bank is seen as central to understanding Mr. Trump’s
finances since it is the only major financial institution that continues
to conduct sizable business with him. Deutsche Bank has also lent money
to Jared Kushner, the president’s son-in-law and senior adviser, and to
his family real estate business.
Although
Deutsche Bank recently landed in legal trouble for laundering money for
Russian entities — paying more than $600 million in penalties to New
York and British regulators — there is no indication of a Russian
connection to Mr. Trump’s loans or accounts at Deutsche Bank, people
briefed on the matter said. The bank, which declined to comment,
scrutinizes its accounts for problematic ties as part of so-called “know
your customer” banking rules and other requirements.
And
with one of its most famous clients headed to the White House, the bank
designed a plan for overseeing the accounts of Mr. Trump and Mr.
Kushner and presented it to regulators at the New York State Department
of Financial Services early this year. The plan essentially called for
monitoring the accounts for red flags such as exceptionally favorable
loan terms or unusual partners.
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.
While
there is no formal investigation of the bank — and personal guarantees
are often required when people receive big loans from their wealth
managers — the New York regulators have questioned whether the guarantee
could create problems for Deutsche Bank should Mr. Trump fail to pay
his debts. To collect, the bank would either have to sue the president,
or risk being seen as cutting him a special deal.
It is not a hypothetical concern: Mr. Trump sued the bank in 2008 to delay paying back an earlier loan.
Mr.
Trump has had a complicated relationship with the bank over the past 20
years, which has included more than $4 billion in loan commitments and
potential bond offerings, a majority of which were completed, according
to a New York Times review of securities filings and interviews with
people with knowledge of the deals. Despite all the risk-taking — and a
brief loan default that spurred the 2008 litigation — Mr. Trump’s
business has made the bank money, the people said.
A spokesman for the New York regulators declined to comment, and the White House did not respond to requests for comment.
A
few years after Mr. Trump sued the bank in 2008, he moved his business
from the bank’s commercial real estate lending division to its private
wealth division, where executives were more willing to deal with him,
according to the people briefed on the matter.
In
the past six years, the private wealth unit helped finance three of Mr.
Trump’s properties, including a golf course near Miami and a hotel in
Washington, according to Mr. Trump’s most recent financial disclosures
and the people with knowledge of the loans.
The
size of the loans — totaling about $300 million — is somewhat unusual
by Wall Street standards, according to former and current Deutsche Bank
executives and wealth managers at other Wall Street firms.
While
it is not unheard-of for real estate developers to obtain large wealth
management loans for projects deemed too risky for an investment bank,
it differs from bank to bank, and those that do issue loans of that size
typically do so for top clients known to pay their bills.
Mr.
Trump’s wealth manager at Deutsche Bank, Rosemary Vrablic, has
specialized in real estate lending and is known for taking risks on
clients, two of the executives and wealth managers said. And her
relationship with Mr. Trump is close enough that Ms. Vrablic attended
Mr. Trump’s inauguration, according to a person who attended.
Mr.
Kushner has established his own relationship with the bank. He and his
mother have an unsecured line of credit from Deutsche Bank, valued at up
to $25 million, and the family business he ran until January, Kushner
Companies, received a $285 million loan from Deutsche Bank last year.
Mr.
Kushner’s dealings at the bank have included Ms. Vrablic. In 2013, he
ordered up a glowing profile of her in the real estate magazine he
owned, The Mortgage Observer, according to a person with knowledge of
the matter. The piece concluded with a disclaimer that her “past
clients” included Mr. Kushner.
In an interview with The Times last year, Mr. Trump suggested reporters speak with Ms. Vrablic about his banking relationships.
“Why don’t you call the head of Deutsche Bank? Her name is Rosemary Vrablic,” he said. “She is the boss.”
A Relationship Is Born
It
was 1998, and Mike Offit, fresh off the trading floor of Goldman Sachs
for a new job at Deutsche Bank, was hired to put Deutsche Bank’s real
estate lending business on the map. To do that, Mr. Offit knew he had to
snag big name developers.
That
moment arrived when Rob Horowitz, with the real estate firm
Cooper-Horowitz, approached him with an idea: Would he work with Mr.
Trump, who at the time had a tarnished reputation after several of his
casinos landed in bankruptcy?
“My reaction was, why wouldn’t I?” Mr. Offit recalled in a recent interview.
To
Mr. Offit, there was little downside to hearing Mr. Trump’s pitch. A
short time later, Mr. Trump came by Mr. Offit’s Midtown Manhattan office
to discuss a loan for renovations at his 40 Wall Street building.
Unlike other developers who arrived with their entourages, Mr. Trump
showed up alone, Mr. Offit said, and despite a reputation for bluster,
he knew the financials of the deal cold.
“There
was some resistance from management because of Donald’s reputation, but
I told them that our loan would be wildly overly collateralized even in
the worst-case scenario,” Mr. Offit said.
More
deals followed. Later in the year, Mr. Trump needed $300 million to
build Trump World Tower near the United Nations. But he required a
construction loan, which, at the time, Deutsche did not have the right
staff to manage. Determined to get the deal nonetheless, Mr. Offit found
another German bank to make the loan with the commitment that Deutsche
Bank would take possession once the building was constructed.
But
as the deal was being finalized, the other German bank had second
thoughts because of worries of a labor strike. Just as the deal seemed
to be falling apart, Mr. Trump produced a signed commitment from all the
major construction unions promising not to strike.
“We were all amazed he managed to get that,” said Mr. Offit, who retired from the bank in 1999.
In
the mid 2000s, Mr. Trump was in need of another construction loan. But
this time, the loan — up to $640 million to build Trump International
Hotel and Tower in Chicago — did not go as well.
A
few years after the project began, the 2008 financial crisis upended
the global economy and Mr. Trump fell behind on loan payments. According
to a person briefed on the deal, Deutsche Bank was discussing a
possible extension, when Mr. Trump sued it to avoid paying $40 million
that he had personally guaranteed.
His
argument, as detailed in a letter to the bank, was novel: “Deutsche
Bank is one of the banks primarily responsible for the economic
dysfunction we are currently facing,” Mr. Trump wrote.
With
the help of a lawyer — Steven Schlesinger of Garden City, N.Y. — Mr.
Trump argued that the financial crisis allowed him to invoke the
extraordinary event clause in his contract with the bank. Mr. Trump
argued Deutsche Bank should pay him $3 billion in damages.
The
bank filed its own action against Mr. Trump, demanding he make good on
the loan. In a legal filing, Deutsche Bank, which had distributed the
loan to a number of other banks, called the lawsuit “classic Trump.”
The standoff culminated with a meeting in Trump Tower, Mr. Schlesinger said.
At
the meeting, Mr. Trump threatened to remove his name from the building
if he did not get more time to pay. That move, Mr. Trump suggested,
would reduce the value of the building.
Ultimately,
the bank granted Mr. Trump additional time to repay. And when he did,
it was through the Wall Street equivalent of borrowing from one parent
to repay the other.
Mr.
Trump received a loan from Deutsche Bank’s wealth management unit to
pay off the debt he owed the bank’s real estate lending division,
according to two people briefed on the transaction. The wealth
management unit later issued another loan for the Chicago project that
is valued at $25 million to $50 million.
A Personal Banker
Ms.
Vrablic, who helped facilitate the wealth management unit’s loans to
Mr. Trump, has built a career lending to the rich and famous.
She
got her start on Wall Street at Citibank’s private bank in the late
1980s and later worked at Bank of America before joining Deutsche Bank
in 2006.
Ms.
Vrablic, who declined to be interviewed for this article, has a
reputation for being an aggressive advocate for her clients, according
to two executives familiar with her work and profiles written in The
American Banker and The Mortgage Observer.
In
a 2013 Mortgage Observer article, one of her clients, Herbert Simon,
owner of the Indiana Pacers, remarked that “when she came into the
picture, it was a tough time to get money, and she was able to be very
creative and get us what we needed.”
In a 1999 American Banker article, Ms. Vrablic described her clients as having “many homes, ex-wives, and many children.”
Mr.
Trump fit that mold, but he was far from her only client in the
rarefied world of New York real estate. Others included Stephen Ross,
the chairman and founder of the Related Companies in New York.
Mr.
Ross extolled Ms. Vrablic’s ability to make deals happen. “She brings
knowledge — and the fact is that if she tells you something, you know
it’s going to get done,” he told The Mortgage Observer.
Ms. Vrablic was quoted in the same article as saying that real estate is her “deep dive.”
While
Mr. Kushner has never disclosed the exact nature of his business with
Ms. Vrablic, his financial disclosure shows a line of credit worth
between $5 million and $25 million. And according to securities filings,
Deutsche Bank provided a $285 million mortgage to Kushner Companies to
help it refinance the loan it used to purchase several floors of retail
space in the former New York Times building on 43rd Street in Manhattan.
Mr.
Kushner’s company bought the space from Africa Israel Investments, a
company owned by Lev Leviev, which has a sizable real estate portfolio
in Russia.
Deutsche
Bank, other securities filings show, is also involved in loans the
Kushner Companies received for the Puck Building in Manhattan’s SoHo
neighborhood and a property on Maiden Lane near Wall Street. The bank
was responsible for either pooling those loans into mortgage-backed
securities that were sold to investors, according to Trepp, a data and
analytics firm, or distributing payments to the investors.
In
the autumn of 2014, Ms. Vrablic and Mr. Kushner attended the Frick
Collection’s dinner, a black-tie event where patrons dined among famous
works of art by Manet, El Greco and Turner.
A picture of the pair appeared in the New York Social Diary. Mr. Kushner, dressed in a tuxedo, had his arm around Ms. Vrablic.
The Russia Question
There
is no indication that federal investigators suspect a Russian
connection to Mr. Trump’s dealings with Deutsche Bank, according to
people briefed on the matter.
Mr. Horowitz, of the real estate firm Cooper-Horowitz, also saw no Russian ties in his many years of working with Mr. Trump.
“I’ve
arranged financing for the majority of Mr. Trump’s transactions, and
I’ve never once seen any money coming to him from Russia,” he said. Mr.
Horowitz was not involved in any of the private wealth management loans
from Ms. Vrablic.
But separate from Mr. Trump, the German bank has a host of Russian connections.
Soon
after Mr. Trump took office, the bank settled allegations that it
helped Russian investors launder as much as $10 billion through its
branches in Moscow, London and New York. In May, the Federal Reserve
reached its own settlement with the bank over the money laundering
violations.
Deutsche
Bank also had a “cooperation agreement” with the Russian state-owned
development bank, Vnesheconombank, which has been swept up in the
investigation into Russian interference in the presidential election.
And it had ties to VTB Bank, a far larger Russian bank facing sanctions
in the United States and the European Union. The Russian firm’s
investment banking arm, VTB Capital, was created by hiring dozens of
bankers from Deutsche Bank’s Moscow office.
Some
ties are less direct. Josef Ackermann, Deutsche Bank’s former chief
executive, is now chairman of the board at the Bank of Cyprus. A large
shareholder of that bank was Dmitry Rybolovlev, the Russian oligarch who
purchased Mr. Trump’s estate in Florida.
And
in May, federal prosecutors settled a case with a Cyprus investment
vehicle owned by a Russian businessman with close family connections to
the Kremlin.
The
firm, Prevezon Holdings, was represented by Natalia Veselnitskaya, the
Russian lawyer who was among the people who met during the presidential
campaign with Donald Trump Jr. about Hillary Clinton.
Federal
prosecutors in the United States claimed Prevezon, which admitted no
wrongdoing, laundered the proceeds of an alleged Russian tax fraud
through real estate. Prevezon and its partner relied in part on $90
million in financing from a big European financial institution, court
records show.
It was Deutsche Bank.
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