Trump Deutsche Bank Loans Underwritten By Russian State-Owned Bank, Whistleblower Told FBI

January 3, 2020 8:44 pm By Scott Stedman, Eric Levai and Bobby DeNault

Deutsche Bank’s loans to Donald Trump were underwritten by Russian state-owned VTB Bank, according to the whistleblower whose collection of thousands of bank documents and internal communications have captured the recent attention of federal investigators.

Val Broeksmit acquired the emails and files of his late father, Deutsche Bank executive William S. Broeksmit, after Broeksmit tragically took his own life in 2014.

Val informed the FBI in late 2019 about his knowledge of VTB’s underwriting of Trump’s loans, information he attributed to a network of sources connected to the bank he cultivated over the past five-plus years.

Underwriting is the process where financial institutions assess the ability of potential customers to fulfill their obligations. Underwriters have access to “credit and financial information, as well as the state of the [property],according to US News, though underwriters can sometimes be unknown to the person seeking the loan.

Forensic News is not confirming the underlying claim that VTB underwrote Trump’s loans from Deutsche Bank.

Forensic News can, however, confirm that at least some of Trump’s loans were issued by a bank subsidiary with business ties to VTB. That subsidiary owed more than $48 million to VTB in 2013 and documents suggest the subsidiary continued doing business with VTB even after the bank was sanctioned in 2014.

One federal agent working on the Deutsche Bank investigation indicated that VTB is under scrutiny in the FBI criminal probe. “We know VTB very well,” the investigator said on background. That person did not comment directly on the Trump loans.

Val Broeksmit’s full statement is below:

The Russian state bank VTB underwrote loans to Donald Trump via Deutsche Bank. Over the course of Trump’s relationship with DB, an inordinate amount of questionable, mismanaged & risky loans approved by Deutsche Bank to Trump required his Personal Guarantee which, over time, also lost its value.

Trump’s team at DB sought out creative ways to circumvent the varied protections DB’s compliance team institutionally implemented, & whether by happenstance or by design Trump’s loans became underwritten by Russia’s own VTB.

I informed the FBI of this in 2019.

Val Broeksmit

For Val, much has changed over the past half-decade. As the frontman and founder in the indie band Bikini Robot Army, Val never imagined spending his days combing through highly complex financial records of one of the world’s largest banks. But after his father’s passing, Val’s life took a radical turn.

Val’s search for justice and answers, fueled by personal vengeance against the bank, motivated him to dig through a cache of over 21,500 emails and other documents from his father’s accounts.

Inside, Val found thousands of emails between his father, Chief Risk Optimization Officer of Deutsche Bank, and other executives, along with attachments containing sensitive documents about Deutsche Bank’s financial operations.

Now, Val has decided to go on the record with Forensic News to share exclusive details about what he told federal investigators.

He says that a recent New York Times profile, written by Times Editor David Enrich, “completely fucked me over.” Multiple characterizations of Val as a fame-seeking opioid-user who allegedly sought cash for the documents shocked and surprised him, given that he and Enrich collaborated for nearly five years deciphering Deutsche Bank’s web. “Shocked and surprised doesn’t even begin to describe it. It felt like the rug was pulled out from under you and you fall, and fall, and fall,” Val said.

Enrich stands by his reporting, saying, “I think the article portrayed Val accurately and fairly. I know and feel badly that he didn’t like it, and I hope that he has a more positive reaction to his and his father’s prominent roles in my forthcoming book.

An FBI source called that New York Times article “not totally accurate,” though the person declined to comment further.

Forensic News met with Val over a period of several months and obtained some of Val’s documents and testimony.

Background

Val first contacted the DOJ in Spring 2016, stating, “I’m writing in hopes of speaking to someone at the DOJ in reference to the evidence I have showing major fraud at one of the World’s largest banks.”

More than two years later, Val got a response from the FBI, who immediately flew agents from New York to meet Val in Los Angeles in order to discuss his Deutsche Bank knowledge.

FBI officials are conducting an ongoing money-laundering investigation into Deutsche Bank.

Original email from Val to the DOJ in 2016.


Val met with agents multiple times in 2019. After handing over crucial documents, the FBI helped Val’s French girlfriend and her seven-year-old son obtain visas to stay in the United States.

The New York Fed, an institution tasked with examining suspicious financial transactions, fined Deutsche Bank $41 million for anti-money laundering lapses weeks after Val provided some of his father’s documents to the law firm BakerHostestler, who in turn gave them to the Fed.


Val also transmitted documents to Italian prosecutors shortly before the convictions of ex-Deutsche Bank executives for their role in a scheme involving the largest Italian bank, Monte dei Paschi.

Top officials from Deutsche Bank and Monte dei Paschi colluded to cover up losses at the Italian bank. Between the years 2008-2012, the misconduct evolved into a criminal misrepresentation of the bank’s finances, part of which Val’s files suggested.

Many of the files that Val sent to Italian prosecutors from his father’s account included messages with Michele Faissola, a senior Deutsche Bank executive who recently received a prison sentence of four years and eight months for his role in the Monte dei Paschi scheme.

VTB Bank

The bank that allegedly underwrote Trump’s loans is one of the largest banks in Russia, and is majority owned by the Russian government. VTB (Vneshtorgbank) was placed on a sanctions list by the U.S. and the European Union in July 2014 as punishment for Russia’s invasion of Ukraine, ensuring anyone who continued doing business with the bank after that date could be subject to criminal liability.

VTB returned to headlines in 2018 when Donald Trump’s former personal attorney, Michael Cohen, admitted that both he and Trump were told in 2015 that VTB would be the funder of the now-infamous Trump Tower Moscow project. Trump associate Felix Sater reportedly arranged for VTB to fund the project and worked to approve passports for a planned trip to Russia. As the election heated up, the trip became politically unpalatable and never occurred.

The Mueller reported quoted a December 2015 email from Sater to Cohen, then the Vice President of the Trump Organization, detailing the VTB connection: “Invitations & Visas will be issued this week by VTB Bank to discuss financing for Trump Tower Moscow,” Sater wrote.

In a statement to Forensic News, however, Sater seemed to push back on the report issued by Mueller, saying, “The Moscow Tower project in 2015/16 had no contact with anyone at VTB who knew Trump Org. There is no connection that I know of. And any discussions where (sic) extremely preliminary as that deal did not move forward, and did not even have a pro forma to show a bank to gauge serious interest.”

US sanctions on VTB at the time of the negotiations would have made the proposed funding for Trump Tower Moscow potentially illegal under American law. Cohen later pleaded guilty to lying to Congress about the Trump Tower Moscow project. In the Mueller report (Vol I, p. 85), Cohen admits that he spoke directly to a Kremlin assistant about the project.

It has also been revealed that Trump signed a letter of intent for the project in October 2015, months after he officially started his presidential campaign.

Deutsche Bank

Val told FBI officials that an American subsidiary of Deutsche Bank, where his father worked as Chief Risk Officer and sat on the Board of Directors, had closer connections to VTB than previously understood.

The subsidiary, Deutsche Bank Trust Company Americas (DBTCA), is a New York bank whose clients include Trump and other high-profile individuals. Records show that as of 2014, DBTCA employed only 700 people, compared to Deutsche Bank’s 10,000 American employees, most of whom are also stationed in New York.

Documents provided by Val, including a 2013 DBTCA “breach report,” show that DBTCA owed VTB at least €35.8 million, or approximately $48.6 million. That liability has not been previously reported. Deutsche Bank had already provided a $1 billion structural loan to VTB in 2007, raising questions about why additional liabilities were being incurred to DBTCA by VTB in 2013.

Part of the Deutsche Bank breach report showing their liabilities to VTB Bank totaling more than 35.8 million euros.


Val also shared knowledge that Trump’s loans were issued by DBTCA, not the main bank, and underwritten by VTB, ensuring that the Russian-owned entity would take the financial hit if Trump defaulted.

Records show that DBTCA’s total assets are around $40 billion. At the time Trump took office, he owed DBTCA approximately $350 million – nearly 1% of DBTCA’s entire assets. Trump still owes $350 million to the bank, and his daughter Ivanka and son-in-law Jared Kushner owe the bank up to $50 million.



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Trump and Deutsche Bank

Trump’s relationship with Deutsche Bank goes back 30 years and includes successes, failures, and multiple lawsuits between the two. Trump received over $2 billion in loans from the bank, and used the money to build golf courses and high rises, selling a large portion of real estate to secretive LLC’s and Russian mobsters.

In 2008, Trump sued Deutsche Bank after he was unable to make a payment on a $640 million loan he had received for Trump Tower Chicago. His claim was that he should be absolved from payment because Deutsche Bank helped cause the 2008 financial crash. Trump ultimately lost the case, which was resolved by both parties agreeing to settle for an undisclosed sum Trump was required to pay. In order to do so, he turned to yet another division of Deutsche Bank–DBTCA–and asked for another loan to pay off the first loan, which he also owed to Deutsche Bank.

DBTCA agreed, an arrangement characterized as “unheard of” by financial experts, according to the Times. Senior bank officials were later surprised to learn of the depth of the Trump-Deutsche Bank relationship and were baffled that Trump was largely debt-free.

Documents provided to Forensic News by Val confirm that Trump obtained at least some loans through DBTCA, not the main Deutsche Bank office. A bank spokesperson denied that Trump’s loans were connected to VTB, telling Forensic News that “more responsible news outlets have either investigated and avoided, or retracted, similar allegations as there is no truth to them.” They did not comment on possible sanctions violations or other Deutsche Bank connections to VTB.


The original documents for Trump’s Chicago loans are seen below. The Deutsche Bank signatories did not respond to questions for comment.

The relationship between Trump and the controversial German bank is also littered with unorthodox financial agreements. In 2010, Rosemary Vrablic, an executive in the DBTCA division of the bank who worked with Trump and Kushner, approved a $106 million loan to purchase the Trump Doral Resort in Florida despite an internal banking team’s estimation that Trump was overvaluing his assets by as much as 70 percent.

The bank approved a separate loan for $19 million to fund the Doral transaction even though the original loan was more than enough to cover the Doral’s price tag of $105 million. Trump also purchased a 60-year lease to develop the Washington D.C. Old Post Office into a hotel in 2013 primarily using a loan approved by Ms. Vrablic, despite the fact DBTCA did not usually finance real estate transactions.


At the same time that Deutsche Bank was lending large amounts of money to Trump, regulators were investigating the bank for allegedly laundering huge sums of illicit Russian cash. In 2017, DBTCA was fined $425 million by the New York State Department of Financial Services as part of a mirror trading scheme out of Moscow.  “The department said Deutsche was moving money out of Russia by using a stock “mirror trading” strategy, in which its London branch would sell a trade that the Moscow branch bought earlier in the day.”

The bank was identified in 2019 as a central part of another Russian money laundering scheme designed to benefit Russian oligarchs. The $20 billion scheme involved a series of fake loans in the UK from 2010-2014. “Deutsche Bank was used to launder the money via its corresponding banking network – effectively allowing illegal Russian payments to be funneled to the US, the European Union and Asia,” the Guardian reported.

VTB and DBTCA

Forensic News also obtained emails, documents, banking records, and other communications from Val and others showing a closer relationship between VTB and DBTCA than previously reported.

Additionally, a separate set of documents from companies with business in Russia indicates that DBTCA acted as a correspondent bank and intermediary bank for VTB 24 – a previous subsidiary of VTB – even after sanctions were implemented in 2014.

A correspondent bank is one established by a banking institution to receive deposits from or make payments on behalf of another, usually foreign, financial institution. DBTCA acting as a correspondent bank for a VTB subsidiary post-2014 may have been a violation of U.S. sanctions, according to experts.

One document, included in the recent 29leaks cache of files, shows a UK-based company stating that DBTCA was the correspondent bank for VTB 24. The leaked document is a letter from a principal (Ayub Khan) in the company, Quantum Business Partners Ltd, attempting to make payments totaling $73,000 to a Russian company account. “I understand that [the] VTB bank…funds are currently held in the correspondent bank account in New York” the man writes. The bank in question is DBTCA, as seen below:

Document showing Deutsche Bank (DBTCA) as correspondent bank for VTB 24. DBTCA has loaned Trump over $2 billion.
 

 


Though the letter is not dated, additional leaked emails from the same man, Ayub Khan, show him instructing a business formations company to “activate telephone and fax” for his business in early May 2015.

Additionally, metadata for the document shows that it was scanned on May 15, 2015, almost a year after the original sanctions on VTB:


There is no indication that Quantum Business Partners or Khan have done anything wrong. Their story simply presents evidence of a continued relationship between VTB 24 and DBTCA after sanctions were levied.

Two other documents, from two other companies with business in Russia list DBTCA as an intermediary bank for VTB. Intermediary banks usually help facilitate transactions. By definition, they are a middleman between the beneficiary bank and the issuing bank.

Trump Deutsche Bank. DBTCA as intermediary bank for VTB.

Document 1 showing DBTCA as an intermediary bank for VTB 24.

Trump Deutsche Bank. DBTCA as intermediary bank for VTB.

Document 2 showing DBTCA as an intermediary bank for VTB 24.


The Office of Foreign Assets Control (OFAC) did not respond to requests for comment on whether these documents suggest a sanctions violation. As a whole, the documents show a closer relationship between DBTCA and VTB than publicly known.

Conclusion

Val’s documents remain in the hands of federal investigators. Their contents have bolstered cases resulting in millions of dollars in fines and prison sentences for some Deutsche Bank executives overseas.

American law enforcement investigations into Deutsche Bank continue, while Val continues to search for answers about Deutsche Bank and his father’s passing.

The Trump Organization, VTB, and Rudolph Giuliani, the President’s personal attorney, did not respond to requests for comment.

Correction: January 5, 2020

An earlier version of this article incorrectly stated that President Trump purchased the Old Post Office and converted it into a hotel in 2013. President Trump purchased a lease to develop on the property, not the property itself.

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