Trump’s Real Business Was Casino Money Laundering, Real Estate Was Just A Side Gig

Yesterday, the Senate Intelligence Committee delivered a subpoena to obtain documents about Trump’s casino empire from the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) whose job is to protect America’s financial system from crimes and police money laundering activity.

Only three key facts related to the FinCEN action lead to a startling, but factually grounded conclusion that Russia’s “kompromat” against Donald Trump is likely detailed evidence of his material participation in international money laundering rackets, through his old Trump casino businesses in Atlantic City, and then later in the Trump Soho Condo-Hotel project in New York City.

Firstly, in 2015 the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) levied what was then the largest ever Patriot Act violation penalty assessed against a casino to that date, at the Trump Taj Mahal Casino in Atlantic City.

The Trump casino empire wound up investigated by the IRS who determined that he casually ignored the Banking Secrecy Act’s requirements altogether and FinCEN levied a $10 million dollar fine based on their findings.

Alleged anti-money laundering violations happened all the way back in 2003 when Donald Trump was still the head of the Taj Mahal’s public parent company, Trump Entertainment Resorts.

Casinos can function just like banks — without any account names or numbers — tailor made for money launderers.

Secondly, Trump’s public gaming company consistently lost money, even when the gaming industry as a whole took off, but over a 20-year period.

Trump Entertainment Resorts improbably violated the principal rule of running a casino, the house always wins; yet, against all business logic, these casinos stayed open.

Paper losses can be used to hide real gains, or launder cash.

Thirdly, Donald Trump and the Trump Organization has been named as a witness in a federal civil racketeering trial in New York involving the Trump Soho and the Mafia-linked company Bayrock who is the defendant in the case.

When FinCEN issued its findings in 2015, they revealed that Trump’s Taj Mahal applied the same level of “extreme vetting” to prevent money laundering as his administration has applied to infamous figures like General Michael Flynn — which is to say literally none at all. This is beyond suspicious and could only continue for so long, while under IRS investigation, with official blessing from inside the federal government.

That is where the Sater relationship appears to have born fruit of a similar nature for Donald Trump — immunity from prosecution for committing illegal acts.

Trump’s Largest Casino Didn’t Even Have A Written Anti-Money Laundering Plan

This portion of the interview includes information on background from a Treasury department official who could not be named on the record, but explained the findings of FinCEN’s order against the Trump Taj Mahal in Atlantic City, New Jersey.

If losing casinos close, then why did the Trump Casinos remain a going concern for so long, aside from endlessly patient (or foolish or fooled) investors?

Because nothing in the world could provide an easier front for money laundering than a casino.

Especially a Trump casino.

At Trump’s Taj Mahal there wasn’t even a written plan for anti-money laundering enforcement when the feds landed in 2010 after seven long years of warnings.

Here’s a copy of the final order:

The simplest form of laundering that Trump’s casinos were cited for failing to report is “suspicious activity” involving $5000 or more. FinCEN’s enforcement judgment calls this minimal gaming activity, which means that a player buys chips with dirty cash, lingers in the casino, or makes a few insignificant bets as cover and then brings cash to the teller window and just walks away with a cashier’s check to take to the bank.

The Trump casino was cited for failing to maintain files on “rated players” i.e. a casino’s file on each player, which can be used as the basis for reporting or detecting illegal behavior. Ditto for maintaining any controls on the paper tickets for cash into and out of its slot machines.

Even more appalling, Trump’s casinos failed to report “cage markers” — short-term credit extended by the house to a gambler, or “front money” transactions, where a gambler deposits money with a casino in advance, seeking to play later.

This means that a known money launderer at the Trump Taj Majal only had to arrive and sign a marker to obtain cash with which to gamble.

The money launderer could then walk out of the money wth clean cash, deposit it into their bank with a check and later bring dirty cash to pay off the loan.

Since Trump wasn’t even bothering to keep player rating files, criminals had nothing to fear about their identity being discovered by law enforcement.

This is also unusual since it means that Trump was not tracking card sharks, high stakes players or really anyone, which all modern casinos have done for decades.

The only reason to do something like this is to make a completely anonymous casino aka the perfect bank to the mafia.

Trump’s casinos were so lax that a money launderer could easily drop off illicit cash as “front money” and then return days, weeks or months later to pick up a check and declare the cash “clean” with a bank deposit.

Another move available for high rollers at the Trump casino, a launderer might buy into the casino’s chips, gamble and then cash out ahead.

Once the funds are “won” then the money launderer simply declares those winnings, and the money is now “clean” without any further fuss, and he deposits it into his bank.

The casino would have to report the winnings on an IRS W2-G form, but without the anti-money laundering report, the gambler’s initial investment into chips gets washed without any records whatsoever.

The three reasons our government made money laundering illegal and enforces those laws vigorously are prevention of organized criminal behavior, terrorism prevention and tax avoidance.

The IRS has primer video (along with an easy to read transcript) on casino compliance with the Bank Secrecy Act.

If you’re not interested in the details of financial regulation, rest assured that their main advice calls to train all casino employees to prevent money laundering, and says that some casinos track anti-money laundering compliance all the way down to $500 bets.

America’s Bank Secrecy Act requires casinos to log all transactions of $10,000 and to report them. The Patriot Act in 2001 vastly strengthened and expanded the money laundering regulations across financial businesses.

If a casino owner simply refuses to track all of their transactions, then money launderers can use the facilities with impunity to exchange dirty cash for declared, clean money.

Sadly, the $10 million dollar fine against Trump Taj Mahal after a 12 year investigation will do little to discourage that kind of illicit behavior by casinos.

More importantly, there was no legitimate reason for the IRS to investigate for 12 years, when they knew about Trump’s bad behavior going back to the late 1990s.

However, it would make sense that Trump was allowed to pick winners and losers, in conjunction with a confidential FBI informant — like Felix Sater — working with prosecutors in New York’s Eastern District.

In 2009, Trump lost managing control of his casino empire after yet another bankruptcy. Without a source of income — like money laundering — the Trump Organization with Sater at the helm, moved further into brand licensing, but began an ambitious program of developments, which also lost money, but created victims.

They also purchased numerous golf courses with Russian money during the financial crash.

Trump Casinos Lost and Lost and Lost, With Mobsters Nearby

The owner of Trump’s failed Taj Mahal was then and is now Trump Entertainment Resorts, though the name of the public company vehicle and persons who hold the shares have changed over the years.

Donald Trump’s public casino company shareholders lost a fortune.

According to the New York Times an investor who bought 1995 IPO shares, then held them lost over 93% of the stock’s value in a twelve year period.

An investor who bought the Russell 3000 casino index in 1995 would’ve gotten a 250% return on investment over that same 12 year period. Keep in mind that the above chart reflects that America’s economy was in the midst of the Bush-era, Wall Street credit-fueled bubble in 2007.

Even a rising tide failed to lift the Trump Entertainment Resorts’ boat, and it appears just from the chart that Trump executed a classic pump and dump scheme with the IPO, because the share price peaked within the first two years, before its inexorable slide towards multiple bankruptcies and the closing of the Trump Taj Mahal, which is only recently starting the process of being renamed.

Regardless, the years of losses suddenly become easily explainable if you imagine that Trump was carefully doling out shareholder value along with laundered cash to the many players at his casino, which included known mobsters and which he has consistently lied about, even under oath.

Trump’s extensive mob ties have been chronicled going all the way back to the construction of Trump Tower.

The IPO deal to create Trump Entertainment Resorts bailed Trump out of a looming personal bankruptcy in 1995 and simultaneously delivered to him a $916,000,000 paper loss on his income taxes by utilizing a loophole that Congress made illegal in 2006.

That tax loophole let Donald Trump sell his failed businesses to investors, but claim the losses incurred by his bondholders as a profitable (and legal, though dubious) tax shelter.

Reports indicate that Trump’s casino IPO yielded back to the destitute real estate developer up to a $50 million dollar annual tax break for 15 years (and possibly three prior years if he paid taxes).

Amazingly, Trump laid the groundwork for his multi-billion dollar ‘loss-making for profit scheme’ by testifying to Congress that America was no different than the Soviet Union for businesspeople.

Apparently, using communism as the bogeyman was a more effective strategy then than now (see outcry when President Trump caused an uproar making similar remarks comparing America and Russia on Fox News) because Congress passed enhanced passive loss deductions for real estate professionals in 1993 and Trump drove a Mack Truck through the moneymaking tax preference.

All told, Trump could have used those unlimited losses to easily launder dirty cash, in addition to their usefulness in the real estate development world in avoiding the IRS’ onerous 263A rules that require taxes to be paid by builders based on the cost of the property being built during construction.

The Trump casinos lost a fortune, and paid $39 million dollars in management fees to Trump for the privilege.

Trump with Bayrock’s Tevfik Arif and Felix Sater

Trump’s SoHo Project Is The Subject Of A Racketeering Lawsuit and Tax Fraud Action

The Trump SoHo project in Manhattan collapsed into a furious pile of lawsuits, though the building is just fine and operated by the President’s family for his benefit today.

Felix Sater and mysterious Kazakstani investor Tevfik Arif who owns the Bayrock Company were behind this failed Trump project.

It all began when the Trump Soho condo-hotel project was financed with an Icelandic bank linked to Putin, and a byzantine legal structure best described as a plate of spaghetti made out of shell companies.

The American Interest made this map of Trump SoHo’s shell companies.

Trump tried to extinguish the fires started by this most troubled of New York real estate deals by paying over a $3 million dollar settlement with disgruntled buyers in 2011.

It didn’t work.

Disgruntled former employees have filed a federal racketeering lawsuit and said in court that this was no ordinary business dispute:

Bayrock leaders had planned and structured businesses from conception as criminal enterprises intended to defraud investors. Kriss also accused lawyers for Bayrock co-owner Felix Satter of trying to “gravely mislead” the court into looking at the underlying issues as a typical business dispute inappropriate for a RICO action. Kriss and Ejekam accused Satter, Arif and others connected to Bayrock and related entities of fraudulently inducing them into working for the company in exchange for ownership stakes and then engaging in a series of misdeeds and illegal payments.

As the presidential race heated up last year, the AP sued and won release of documents related to the SoHo case.

Trump SoHo is also in New York Attorney General Eric Schneiderman’s sights. Last summer, relators put out a press release unsealing a major tax fraud action called a Qui Tam lawsuit — after the AG gave them clearance to proceed — that names Sater as Bayrock’s silent partner and majority owner, and others as parties to a massive tax fraud.

A Manhattan judge has unsealed a civil tax fraud case brought in behalf of New York State against associates of Donald Trump. The suit accuses convicted racketeer and Felix Sater, Bayrock Group, and prominent law firms of conspiring to launder as much as $250 million dollars of profit on Trump projects Bayrock was co-developing out of the country in a scheme to evade $100 million dollars of state and federal income tax. It alleges that Bayrock — aided by law firms Kramer Levin, Roberts & Holland, and Duval & Stachenfeld — brought a foreign partner into the projects but then hid it behind a Delaware shell company and further disguised the transaction so wholesale transfers of profits corruptly headed overseas to that partner would falsely appear to be debt repayments to a U.S. lender. Defendant Nixon Peabody is charged with facilitating a separate multimillion withholding tax fraud by disguising Sater as a salaried employee to help hide the fact that he owned much of Bayrock. At this time Mr. Trump is a material witness. Initial investigation of the case uncovered no evidence that he was culpable, as the papers themselves, written some time ago, state. However, in the time since it was filed, especially as a result of media interest, new, relevant Trump and Bayrock information has surfaced, from sources including Mr. Trump himself, which may significantly change that calculus.

One of the plaintiffs lawyers in the tax case — which is being prosecuted with information from a separate whistleblower lawsuit — pointed out that Trump Soho was a lynchpin case in unraveling several realty scams perpetuated by Sater under the employ of the future president in the last decade: