How Ivanka Trump and Donald Trump, Jr., Avoided a Criminal Indictment – The New Yorker

This article is a collaboration between The New Yorker, ProPublica, and
WNYC.

In the spring of 2012, Donald Trump’s two eldest children, Ivanka Trump
and Donald Trump, Jr., found themselves in a precarious legal position.
For two years, prosecutors in the Manhattan District Attorney’s office
had been building a criminal case against them for misleading
prospective buyers of units in the Trump SoHo, a hotel and condo
development that was failing to sell. Despite the best efforts of the
siblings’ defense team, the case had not gone away. An indictment seemed
like a real possibility. The evidence included e-mails from the Trumps
making clear that they were aware they were using inflated figures about
how well the condos were selling to lure buyers.

In one e-mail, according to four people who have seen it, the Trumps
discussed how to coördinate false information they had given to
prospective buyers. In another, according to a person who read the
e-mails, they worried that a reporter might be on to them. In yet
another, Donald, Jr., spoke reassuringly to a broker who was concerned
about the false statements, saying that nobody would ever find out,
because only people on the e-mail chain or in the Trump Organization
knew about the deception, according to a person who saw the e-mail.
There was “no doubt” that the Trump children “approved, knew of, agreed
to, and intentionally inflated the numbers to make more sales,” one
person who saw the e-mails told us. “They knew it was wrong.”

In 2010, when the Major Economic Crimes Bureau of the D.A.’s office
opened an investigation of the siblings, the Trump Organization had
hired several top New York criminal-defense lawyers to represent Donald,
Jr., and Ivanka. These attorneys had met with prosecutors in the bureau
several times. They conceded that their clients had made exaggerated
claims, but argued that the overstatements didn’t amount to criminal
misconduct. Still, the case dragged on. In a meeting with the defense
team, Donald Trump, Sr., expressed frustration that the investigation
had not been closed. Soon after, his longtime personal lawyer, Marc
Kasowitz, entered the case.

Audio: Listen to WNYC’s story about how Ivanka and Donald Trump, Jr., came close to being charged with felony fraud.

Kasowitz, who by then had been the elder Donald Trump’s attorney for a
decade, is primarily a civil litigator, with little experience in
criminal matters. But, in 2012, Kasowitz donated twenty-five thousand
dollars to the reëlection campaign of the Manhattan District Attorney,
Cyrus Vance, Jr., making Kasowitz one of Vance’s largest donors.
Kasowitz decided to bypass the lower-level prosecutors and went directly
to Vance to ask that the investigation be dropped.

On May 16, 2012, Kasowitz visited Vance’s office at One Hogan Place, in
downtown Manhattan—a faded edifice made famous by the television show
“Law & Order.” Dan Alonso, the Chief Assistant District Attorney, and
Adam Kaufmann, the chief of the investigative division, were also at the
meeting, but no one from the Major Economic Crimes Bureau attended.
Kasowitz did not introduce any new arguments or facts during his
session. He simply repeated the arguments that the other defense lawyers
had been making for months.

Ultimately, Vance overruled his own prosecutors. Three months after the
meeting, he told them to drop the case. Kasowitz subsequently boasted to
colleagues about representing the Trump children, according to two
people. He said that the case was “really dangerous,” one person said,
and that it was “amazing I got them off.” (Kasowitz denied making such a
statement.)

Vance defended his decision. “I did not at the time believe beyond a
reasonable doubt that a crime had been committed,” he told us. “I had to
make a call and I made the call, and I think I made the right call.”

Just before the 2012 meeting, Vance’s campaign had returned Kasowitz’s
twenty-five-thousand-dollar contribution, in keeping with what Vance
describes as standard practice when a donor has a case before his
office. Kasowitz “had no influence, and his contributions had no
influence whatsoever on my decision-making in the case,” Vance said.

But, less than six months after the D.A.’s office dropped the case,
Kasowitz made an even larger donation to Vance’s campaign, and helped
raise more from others—eventually, a total of more than fifty thousand
dollars. After being asked about these donations as part of the
reporting for this article—more than four years after the fact—Vance
said he now plans to give back Kasowitz’s second contribution, too. “I
don’t want the money to be a millstone around anybody’s neck, including
the office’s,” he said.

Kasowitz told us that his donations to Vance were unrelated to the case. “I
donated to Cy Vance’s campaign because I was and remain extremely
impressed by him as a person of impeccable integrity, as a brilliant
lawyer and as a public servant with creative ideas and tremendous
ability,” Kasowitz wrote in an e-mailed statement. “I have never made a
contribution to anyone’s campaign, including Cy Vance’s, as a
‘quid-pro-quo’ for anything.”

Last year, the Timesreported the existence of the criminal investigation into the Trump SoHo project.
But the prosecutor’s focus on Ivanka and Donald, Jr., and the e-mail
evidence against them, as well as Kasowitz’s involvement, and Vance’s
decision to overrule his prosecutors, had not previously been made
public. This account is based on interviews with twenty sources familiar
with the investigation, court records, and other public documents. We
were not able to review copies of the e-mails that were the focal point
of the inquiry. We are relying on the accounts of multiple individuals
who have seen them.

Requests for interviews with Ivanka Trump and Donald Trump, Jr., were
referred to Alan Garten, the chief legal officer of the Trump
Organization. In an e-mailed response, Garten did not address a list of
questions about the criminal case. Instead, he quoted the company’s
filings in civil litigation relating to the Trump SoHo, which described
complaints as “a simple case of buyers’ remorse.”

But even a lawyer in the Trump camp acknowledged that the way the case
was resolved was unusual. “Dropping the case was reasonable,” Paul
Grand, a partner at Morvillo Abramowitz who was part of the Trump SoHo
defense team, said. “The manner in which it was accomplished is
curious.”

Grand, who was a partner of Vance’s when the District Attorney was in
private practice, said that he did not believe that the D.A.’s office had
evidence of criminal misconduct by the Trump children. But the meeting
between Vance and Kasowitz “didn’t have an air you’d like,” he said. “If
you and I were District Attorney and you knew that a subject of an
investigation was represented by two or three well-thought-of lawyers in
town, and all of a sudden someone who was a contributor to your campaign
showed up on your doorstep, and the regular lawyers are nowhere to be
seen, you’d think about how you’d want to proceed.”

In June, 2006, during the season finale of “The Apprentice,” Donald
Trump, Sr., unveiled the Trump SoHo as a visionary project. The luxury
development was intended to mark the ascension of Ivanka and Donald,
Jr.,—then twenty-four and twenty-eight years old, respectively—as full
players in the Trump empire. They signed the licensing deal alongside
their father, and photographs of Ivanka were featured in the Trump
SoHo’s advertising, under the tagline “Possess your own SoHo.”

Their partners on the project included two Soviet-born businessmen,
Felix Sater and Tevfik Arif, who ran the Bayrock Group, a real-estate-development firm. Sater had a history of running afoul of the law. In
1993, he was convicted of assault and spent about a year in prison for
attacking a man with the stem of a margarita glass in a bar fight. In
1998, he pleaded guilty to one count of racketeering for his role in a
forty-million-dollar securities-fraud scheme.

The Trump SoHo was beleaguered from the start: named for one of
Manhattan’s trendiest neighborhoods, the development wasn’t really in
SoHo but located just west of it, near the entrance ramp to the Holland
Tunnel. Zoning laws wouldn’t allow a residential tower at the location,
so the Trumps fell back on an alternative: a “condo-hotel,” in which
buyers got a hotel room rather than an apartment, and were legally
prohibited from staying there more than a hundred and twenty nights per
year. Worse, the high-priced condos hit the market in September, 2007,
just as the global economy began to crater in what became the largest
financial crisis since the Great Depression.

Business was slow, but the Trump family claimed the opposite. In April,
2008, they said that thirty-one per cent of the condos in the building
had been purchased. Donald, Jr., boasted to The Real Deal magazine that fifty-five per cent of the units had been bought. In June, 2008,
Donald, Jr., and Ivanka, alongside their brother Eric, gathered the
foreign press at Trump Tower in Manhattan, where Ivanka announced that
sixty per cent had been snapped up. “We’re in a very fortunate position
where we have enough sales, and now we are strategically targeting
certain buyers,” she said.

None of that was true. According to a sworn affidavit by a Trump partner
filed with the New York Attorney General’s office, by March of 2010,
almost two years after the press conference, only 15.8 per cent of units
had been sold.

This was more than a marketing problem. The deal hinged on selling at
least fifteen per cent of the units. By law, the sales couldn’t close
with anything less. The Trumps and their partners would have had to
return the buyers’ down payments.

Some buyers concluded that they’d been cheated. In August, 2010, some
sued the Trump Organization and others involved in the project in New
York federal court. “This action seeks to redress the substantial and
ongoing pattern of fraudulent misrepresentations and deceptive sales
practices” by the Trumps and the other defendants, the suit charged. The
plaintiffs argued that there’s a vast difference in value between a unit
in a building that is fifteen-per-cent sold and one that is
sixty-per-cent sold. Their complaint accused the sellers, including the
Trumps, of “a consistent and concerted pattern of outright lies.”

After the civil suit was filed, the Manhattan District Attorney’s office
opened a criminal investigation. Prosecutors are often wary of getting
involved in a dispute between wealthy litigants. But, in this instance,
according to a person familiar with their thinking, the lawyers in the
Major Economic Crimes Bureau quickly concluded that there was enough to
warrant an investigation. They believed that Ivanka and Donald, Jr.,
might have violated the Martin Act, a New York statute that bans any
false statement in conjunction with the sale of a security or real
estate. Prosecutors also saw potential fraud and larceny charges,
applying a legal theory that, by overstating the number of units sold,
the Trumps were falsely inflating their value and, in effect, cheating
unsuspecting condo buyers.

Peirce Moser, an Assistant District Attorney known for his methodical,
comprehensive investigations, soon took over the case. “He is not a
cowboy,” Marc Scholl, who spent almost forty years as a prosecutor in
the District Attorney’s office, said. “He is certainly not out to make
headlines for himself or to advance himself.”

On the other side, the Trumps’ defense team included Gary Naftalis and
David Frankel, of the law firm Kramer Levin; Paul Grand represented one
of the real-estate brokers who had worked with the Trumps.

As the investigation progressed, Vance suffered an embarrassing setback
in one of his highest-profile cases. In the summer of 2011, his office
had abandoned a sexual-assault case against the former managing director
of the International Monetary Fund, Dominique Strauss-Kahn. Vance, who
was pummelled in the press afterward, denied in his interview with us
that the case made him reluctant to take on another prominent defendant.

A few months later, on January 11, 2012, Marc Kasowitz contributed
twenty-five thousand dollars to Vance’s campaign, unbeknownst to
prosecutors in the Major Economic Crimes Bureau, who continued their
work. Moser was particularly focussed on e-mail correspondence, according
to seven people familiar with the case.

Moser began considering impanelling a special grand jury, according to a
person familiar with the investigation. That would have represented a
significant escalation in the case, because it is often a prelude to
indictments. With a grand jury in place, defense lawyers knew the risk
of indictment was high.

The defense team offered a deal to stave off this possibility, floating
the possibility of a settlement of some kind, including a deferred
prosecution agreement, which would have meant the corporate equivalent
of probation for the Trump Organization. With the investigation
appearing to gather momentum, Naftalis and Grand, who had already met
with the prosecutors twice, began to step up their campaign against the
case. Grand calls this the “internal appellate process.” Particularly
when well-heeled or high-profile defendants are involved, there can be a
multi-month advocacy process that slowly makes its way up the hierarchy
inside the Manhattan D.A.’s office.

Grand and Naftalis decided that it would be unwise to go over the heads
of the staff prosecutors. Instead, on April 18, 2012, they sent a letter
to Adam Kaufmann, then the chief of the investigative division (he’s now
in private practice), outlining their arguments. The next day, the
defense lawyers met with Moser, Kaufmann, and others from the
prosecution team. The defense team acknowledged that the Trumps made
some exaggerated statements in order to sell the units. But this was
mere “puffery”—harmless exaggeration. Such language, they contended,
didn’t amount to criminal conduct. The Trumps weren’t selling useless
swampland in Florida. The condos existed. And the buyers’ money was in
escrow the entire time.

The defense lawyers argued that bringing such a case to trial would be
wasteful and that resources would be better spent on more serious
offenses. As Grand put it to us during our recent interview, “I guess in
a world that is completely pure and where there is no deviation between
propriety and the law, that kind of exaggeration and deliberately
concentrated exaggeration can be pursued. But is that the kind of
criminal-law enforcement the D.A. should be doing?”

Moser’s answer seemed to be yes, and he found support among his
supervisors. Moser had prepared an elaborate PowerPoint presentation,
featuring dozens of e-mails that prosecutors believed showed that Ivanka
and Donald, Jr., had repeatedly lied to buyers. “You couldn’t have had a
better e-mail trail,” a person familiar with the investigation told us.

At the meeting, Kaufmann peppered the defense team with questions, at
one point raising his voice, according to a person who was there. “I
believed in the case,” Kaufmann told us, though he declined to discuss
the evidence. “But believing in the case doesn’t mean we had reached the
point when [I had] settled on what should happen with the case.”

White-collar criminal cases are often challenging to bring because of
their complexity. And, by the time of the April meeting, prosecutors
knew that they faced another impediment, this one created by legal
maneuvers in the Trumps’ civil case. Five months earlier, the Trumps and
their partners had reached a settlement with the disgruntled buyers. The
defendants agreed to return ninety per cent of the buyers’ deposits, plus
their attorneys’ fees. But they extracted a rare concession in return:
the plaintiffs agreed not to coöperate with prosecutors unless they were
subpoenaed. (Garten, the Trump Organization’s chief legal officer, noted
that the settlement terms were confidential and declined to comment on
them.)

Adam Leitman Bailey, the attorney for the buyers, had been helping
prosecutors. Now he provided aid to the Trumps, writing a letter to the
District Attorney that stated, “We acknowledge that the Defendants have
not violated the criminal laws of the State of New York or the United
States.” In our interview with Vance, he said that he had never before seen a
letter where plaintiffs in a civil case asserted that no crime had been
committed. “I don’t think I’d ever received a letter like it,” Vance
said. He calls it a “significant and important” communication.

Certainly, prosecutors could subpoena the buyers of Trump condos. But
they feared the witnesses would undercut the criminal case by claiming
they weren’t victims of a fraud.

Still, Moser, backed by his supervisors, persisted. “Peirce believed in
his case,” Grand said. “We did not succeed in talking him out of it and
didn’t succeed in talking one or two levels above him into dropping the
case.”

Finally, in the spring of 2012, Kasowitz joined the case. His
involvement “came from out of the blue,” Grand told us. He and the other
lawyers assumed Kasowitz intervened at the request of Donald Trump, Sr.

In early May, 2012, Kasowitz asked to see the District Attorney. Vance
told us that such meetings aren’t unusual—but his investigations chief at the
time, Kaufmann, characterized Kasowitz’s request as “a little
premature.” The Trump lawyer was going over the heads of everyone who
had been working on the case. The gathering, on May 16th, lasted twenty to
thirty minutes, according to Vance. Kasowitz repeated the arguments the
defense team had made before.

Afterward, Kasowitz didn’t seem to think his clients were in the clear.
On August 1st, he suggested a settlement, proposing that the Trump
Organization would not admit to wrongdoing but would agree not to
mislead people in the future and would submit to outside monitoring. The
offer proved unnecessary. Two days later, on August 3, 2012, Moser
called the Trumps’ defense attorneys and told them that prosecutors were
dropping the investigation. (Moser, who still works for Vance, now as
senior investigative counsel, did not respond to requests for an
interview made over multiple months. Shortly before this article was
published, he sent an e-mail stating that Vance’s ultimate decision in
the case “was not unreasonable” and that, throughout the process, the
D.A. asked “smart questions” and expressed “reasonable skepticism.”)

In his interview, Vance defended his decision to drop the case with no
conditions, even after Kasowitz offered a deal. “This started as a civil
case,” Vance said. “It was settled as a civil case with a statement by
the purchasers of luxury properties that they weren’t victims. And, at
the end of the day, I felt if we were not going to charge criminally, we
should leave it as a civil case in the posture in which it came to us.”

In September, 2012, within weeks of the case being resolved, Kasowitz
contacted Vance’s campaign about hosting a fund-raiser, according to a
spokesperson for the campaign. Kasowitz held the event that January. He
personally donated almost thirty-two thousand dollars to Vance’s
campaign, and twenty of his law firm’s partners and employees kicked in
at least another nine thousand dollars. Then, in October, 2013, as
Election Day approached, he hosted a breakfast for Republicans for Cy
Vance, which raised an additional nine thousand dollars.

Vance defended his decision to accept the money Kasowitz sent his way.
“We did the right thing,” he said, referring to the decision to drop the
case. “Another five and a half months go by. Marc Kasowitz has no matter
pending before the office for the Trumps or anybody else. It’s 2013 and
it’s an election—and I welcome his support.” Vance noted that New York
law allowed him to accept such a contribution. Still, he now intends to
return the money to Kasowitz.

Ivanka Trump is now an adviser to the President, with an office in the
West Wing. Donald, Jr., is running much of the family empire while his
father is in the White House. Kasowitz attained national prominence when
he was retained to represent the President in the Russia investigation,
only to be supplanted as lead counsel. Vance is running unopposed for
reëlection in November. The Trump SoHo went into foreclosure in 2014 and
was taken over by a creditor. Only a hundred and twenty-eight of the
three hundred and ninety-one units in the building have sold. That comes
out to around thirty-three per cent.

Andrea Bernstein is the senior editor for politics and policy for WNYC.

Jesse Eisinger is a senior reporter and editor at ProPublica.

Justin Elliott is a reporter at ProPublica.

Ilya Marritz covers business for WNYC and was the host of “The Season.”

Derek Kravitz and Leora Smith of ProPublica contributed reporting to
this article, as did Keenan Chen, Alex Mierjeski, Inti Pacheco, and
Manuela Andreoni, of Columbia Journalism Investigations.

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