U.S. House confirms it is conducting “major” money laundering investigation involving President TrumpAugust 28, 2019 3:16 pm
An attorney representing the United States House of Representatives in a legal battle to obtain President Trump’s bank records from two financial institutions indicated Thursday that the Congressional chamber is conducting a money laundering investigation involving Mr. Trump and his family. The disclosure sheds light on House Democrats’ agenda for investigations into Mr. Trump and the future direction of potential impeachment proceedings.
Mr. Trump initiated the hearing at the United States Court of Appeals for the Second Circuit in an effort to overturn a lower court decision denying his request to block subpoenas from the House Financial Services and Intelligence Committees for his banking records and other financial information. The Justice Department filed a brief at the court in support of Mr. Trump, but does not represent him in his official capacity as President in this case. Mr. Trump was represented at the hearing by a private attorney, Patrick Strawbridge.
Douglas Letter, General Counsel for the United States House of Representatives, asserted more than ten times that Congress is conducting a wide-ranging money laundering investigation that involves Mr. Trump. After listening to Mr. Strawbridge argue that the subpoenas issued by the Committees were too broad, Mr. Letter responded that he “can only speculate that Mr. Strawbridge has not done a major financial fraud, money laundering investigation.”
Mr. Letter, who spent forty years in the Department of Justice before retiring last year, extensively described the contours of two separate Committee investigations, one by the House Financial Services Committee and the other by the House Intelligence Committee. He characterized the former as focused on “massive amounts of Russian money that is being laundered into the United States” through real estate deals and other transactions. He described the latter as an investigation into Mr. Trump and his family members.
“[This is] a major investigation by the Intelligence Committee about possible, highly dangerous foreign influence over the highest levels of the United States Government,”
Deutsche Bank and Capital One, the targets of the Congressional subpoenas, were described by Mr. Letter as financial institutions with histories of laundering Russian money. Mr. Letter noted each firm has faced significant fines for violating anti-money laundering statutes in the U.S. and in Europe. In particular, he zeroed in on Mr. Trump’s relationship to Deutsche Bank, which is Germany’s largest bank and has a long history of lending money to Mr. Trump. The bank recently admitted that its lapses allowed billions of dollars to be laundered from Russia into New York and the United Kingdom, and paid a $600 million fine.
“Remember, you have a situation where Mr. Trump is going to Deutsche Bank and asking for very large loans when no other bank apparently will touch him,” Mr. Letter argued. “For obvious reasons, both Committees here want to know ‘Why is it that Deutsche Bank would be willing to lend a large amount of money to somebody that no other bank would touch, way before he is President of the United States?'”
The House investigations into potential money laundering follows reporting by the New York Times and other media outlets that Deutsche Bank is facing criminal investigation for money laundering lapses. Extensive reporting by the Times suggests the F.B.I. is interviewing employees who alerted Deutsche Bank executives about money laundering concerns, but were silenced or dismissed. Among the concerns raised by some employees were transactions involving both Mr. Trump and his son-in-law, Jared Kushner. The House investigations were further prompted after the testimony of Special Counsel Robert S. Mueller III confirmed he did not investigate Mr. Trump for money laundering, bribery or other financial crimes, as he did not view them as within the scope of his mandate to investigate Russian election interference.
The Times has reported extensively on Deutsche Bank’s complex and convoluted relationship with Mr. Trump. The bank loaned Mr. Trump more than $2 billion over two decades during which he was seemingly blacklisted by other lenders. A number of money laundering schemes involve issuing loans, which extend access to legally-obtained money, which are then paid off with illegally-obtained money through complex transfers between shell companies and other financial institutions.
According to previous reporting, Mr. Trump defaulted on a number of the loans and Deutsche Bank was forced to pursue litigation to collect outstanding debt from Mr. Trump, who countersued the bank and several other financial institutions for $3 billion. The countersuit was dismissed. Despite the legal dispute, Deutsche Bank went on to lend Mr. Trump nearly $1 billion more for real estate projects. The Times reported that some of these loans may have been handled by Justin Kennedy, son of retired Supreme Court Justice Anthony Kennedy.
Bank executives were reportedly caught off guard to learn that ties to Mr. Trump went deeper than they were previously aware of, according to the Times. Rosemary Vrablic, an executive in Deutsche Bank’s private banking division who worked with Mr. Kushner and Mr. Trump, approved a $106 million loan to purchase the Trump Doral Resort in Florida despite an internal banking team estimating Mr. Trump was overvaluing his assets by as much as 70 percent. It was later revealed the bank also approved a separate loan for $19 million to fund the Doral transaction, even though the original loan was enough to cover the Doral’s price tag of $105 million. In another instance, Ms. Vrablic approved a $48 million loan to pay off a different loan from another division of Deutsche Bank, a move financial experts have described as strange and unprecedented.
Ms. Vrablic later attended Mr. Trump’s presidential inauguration. She reportedly was among only a few guests invited to stay in the Trump International Hotel in Washington D.C. with the Trump family. Mr. Trump purchased the hotel in 2013, primarily using a loan approved by Ms. Vrablic after his longtime friend, Tom Barrack, backed out of financing the venture. Mr. Barrack is currently under federal investigation for allegedly funneling illegal foreign contributions to Mr. Trump’s inauguration fund and separate potentially criminal foreign lobbying efforts.
Deutsche Bank employees have described the private banking division’s handling of Mr. Trump’s commercial real estate transactions as unusual, as that division does not typically focus on the acquisition of property. The Times alleged at least one high-ranking Deutsche Bank official was also surprised to discover Mr. Trump did not have much debt. In recent years, Mr. Trump reportedly worked exclusively with the private banking division, the source of numerous negative headlines for Deutsche Bank executives. The Times recently reported that between 2013 and 2019, the division also did business with Jeffrey Epstein, the disgraced pedophile and millionaire recently charged with sex trafficking who allegedly committed suicide a few weeks ago in a New York jail. Some of Mr. Epstein’s transactions were also reportedly flagged by Deutsche employees.
The Wall Street Journal has separately reported that during the 2016 Election, Deutsche Bank struggled to undo financial relationships with two Russian banks connected to Mr. Trump. Deutsche Bank allegedly raced to dump outstanding loans to VTB Bank by selling them to Alfa Bank after Citigroup refused to purchase the debt under favorable conditions. The New Yorker reported that a computer server connected to Alfa Bank had covert communications with a computer server owned and operated by the Trump Organization throughout the 2016 Election. And a guilty plea solicited by Mr. Mueller from Mr. Trump’s personal lawyer, Michael Cohen, indicated VTB Bank was the proposed lender for Trump Tower Moscow, a project negotiated during the 2016 Election. Mr. Cohen is currently serving a prison sentence for campaign finance violations and other financial fraud convictions. He also pled guilty to lying to Congress about the Trump Tower Moscow project.
Mr. Strawbridge, the attorney representing Mr. Trump at the hearing, was repeatedly questioned about money laundering by the three-judge panel during his argument. While he sought to tailor his remarks primarily on separation-of-powers concerns between the Legislative and Executive Branches, Mr. Strawbridge was forced to spend a significant amount of time discussing the scope and method of money laundering investigations.
Mr. Strawbridge argued that the documents requested by the House served no legitimate legislative purpose, the legal standard which justifies a typical Congressional request for information. Mr. Strawbridge reminded the court that House Financial Services Chairwoman, Rep. Maxine Waters, has “specifically said she is going to find out where the President’s money is coming from.” He pointed out that House Resolution 206, one of the documents relied upon in support of the Financial Services Committee subpoena, “specifically talks about the need to bring transparency, to enforce the laws, to prevent people from bypassing the laws.” He suggested that is the job of law enforcement agencies, not Congress.
“Why is that not a legitimate legislative purpose since Congress itself has to legislate against money laundering and a variety of transactions that the United States government, or We the People, have an interest in?” inquired Judge Peter Hall, an appointee of President George H.W. Bush.
“No one doubts the Financial Services Committee has a legislative interest in ensuring that the banking laws are proper and updated as they need to be,” replied Mr. Strawbridge. “But it does not follow . . . that the requests here are pertinent to that purpose.”
“If you’re trying to find out money laundering, and corruption of the financial system by foreign affairs, wouldn’t you issue this subpoena too?” Judge Hall continued.
“No,” Mr. Strawbridge answered.
“Why not?” the judge pressed.
“This is not a request, for example, to Deutsche Bank of ‘Give me the following information about people people whose transactions reach this level,'” said Mr. Strawbridge. He then asserted the subpoenas were targeted at Mr. Trump and his family solely due to Mr. Trump’s occupation as President.
Another judge, Judge Debra Ann Livingston, also an appointee of President Bush, chimed in: “I’m not sure a similar argument would work with regard to the Intelligence Committee subpoenas. Those are subpoenas that are seeking information specifically about interference in elections and legislation that might prevent these harms.”
Mr. Strawbridge again argued the subpoenas were too broad for that purpose. The judges took that argument to mean Mr. Strawbridge was conceding narrower subpoenas may be regarded as proper, and that at least some of the information requested may be appropriate for scrutiny by House Committees.
The distinction between the investigations being conducted by separate House committees influenced the structure of the hearing. Mr. Letter argued that the House Financial Services committee is hoping to pursue more rigorous financial legislation and conduct an “industry-wide investigation because . . . Russian oligarchs and others’ money is pouring into the United States and being used in real estate deals and other types of transactions to launder this money.”
Moving on to subpoenas issued by the House Intelligence Committee, Mr. Letter argued that those subpoenas were designed to “determine if there is foreign influence over this Administration.” He minimized concerns about the House subpoenaing information from Trump family members, reminding the court that Mr. Trump has not separated himself from his businesses and that Mr. Trump’s sons “are doing business with and attempting to do business with Saudis, Russians, etc.”
The judges were unsure whether to entertain separation-of-powers concerns raised by the Justice Department and Mr. Trump, since Mr. Trump was being represented in his personal capacity in the case. Mr. Strawbridge argued that separation-of-powers concerns were implicated by the subpoenas.
“There is no doubt that this dispute comes to the court with the House of Representatives on one side and the President and his family members and related businesses on the other,” Mr. Strawbridge argued. Judges asked which separation-of-powers concerns were implicated when the President is proceeded against in his personal capacity. Mr. Strawbridge indicated that such proceedings encroach upon the President’s ability to complete the functions of the job.
Mr. Letter responded to the arguments about separation-of-powers concerns at length. He referred to President Trump as ‘Mr. Trump’ throughout the argument to reiterate the point that the President was not involved in the case in his official capacity. He also attacked the premise that the subpoenas encroach on Mr. Trump’s ability to serve as President, noting they are targeted toward financial institutions and do not require Mr. Trump to do anything in response.
In an effort to demonstrate that Mr. Trump’s arguments are inconsistent, Mr. Letter mentioned a parallel case in which the House is seeking Mr. Trump’s tax returns from his accounting firm, Mazars USA. Mr. Trump’s attorneys in that case argued that the subpoena for Mazars should have been directed at Mr. Trump instead of the firm. Mr. Letter asserted that Mr. Trump was trying to have his cake and eat it too: in one case he encouraged the House to subpoena him for his records, but in the other he asserted that any subpoena for information about his finances is an impermissible encroachment on his ability to serve as President.
Mr. Letter further pointed out that President Nixon was asked for tax returns in his capacity as a private individual. Acknowledging that Mr. Nixon voluntarily turned over some of his tax returns, he stressed that Congress asked for even more, as well as for the tax returns of his family members. “And those were turned over,” he said.
Judge Hall asked Mr. Letter toward the conclusion of his argument whether the Committees intended to make the documents public if they received them. Mr. Letter indicated each committee would have to follow its unique rules, but implied that the decision ultimately rests with the Committees themselves.
“This is the Congress of the United States,” he said.