Shell Companies and All-Cash Purchases

News  |  Jun 19, 2018

American Bridge 21st Century, a left-leaning group, has compiled available data on all-cash purchases of Trump properties in South Florida and New York, and an analysis shows patterns and behaviors consistent with money laundering. 

McClatchy DC:

Buyers connected to Russia or former Soviet republics made 86 all-cash sales — totaling nearly $109 million — at 10 Trump-branded properties in South Florida and New York City, according to a new analysis shared with McClatchy. Many of them made purchases using shell companies designed to obscure their identities.

“The size and scope of these cash purchases are deeply troubling as they can often signal money laundering activity," said Rep. Adam Schiff of California, the top Democrat on the House Intelligence Committee and a former federal prosecutor. "There have long been credible allegations of money laundering by the Trump Organization which, if true, would pose a real threat to the United States in the event that Russia were able to leverage evidence of illicit financial transactions against the president."

There's nothing illegal about accepting cash for real estate. But transactions that do not involve mortgages — which account for one in four residential purchases in the country — raise red flags for law enforcement officials as it could be a way to commit fraud or launder money.

While Special Counsel Robert Mueller is not revealing details of his investigation into possible Trump campaign coordination with Russia during the 2016 election, he does appear to be examining The Trump Organization as part of his probe. 

"This is all about money laundering," former White House chief strategist Steve Bannon is quoted as saying about the Mueller inquiry in the book, Fire and Fury.

Glenn Simpson, co-founder of Fusion GPS, the firm behind a dossier alleging ties between Trump and Russians, told the House Intelligence Committee in November that his group uncovered "patterns of buying and selling that we thought were suggestive of money laundering" at Trump-branded properties around the globe. "Generally speaking, the patterns of activity that we thought might be suggestive of money laundering were ... fast-turnover deals, and deals where there seemed to have been efforts to disguise the identity of the buyer," he said.

There is nothing illegal about buying properties in cash, but other characteristics of the all-cash buys raise red flags. 

Some of the buyers appeared to spend above market value — one of the signs, along with a lack of information about where the money comes from and properties sitting empty — that raises suspicion, said Elise Bean, former staff director of a Senate subcommittee that investigated money laundering. 

In one case, a Florida-registered LLC, Unit 1101 Holdings, tied to Vadim Sachkov, paid $1.4 million for a unit in Trump Tower I in 2016 though the assessed market value was $1.2 million, according to the Miami-Dade Property Appraiser. In another case, Natalia Sivokozova spent $1.3 million for a unit in Trump Royale in 2016, though the assessed market value was $923,803, according to the Miami-Dade Property Appraiser. 

The group looked at the 69 buyers or shell companies who indicated they were from Russia or a former Soviet republic, previously lived or studied in Russia or a former Soviet republic; had done extensive business in Russia or a former Soviet republic; or purchased a unit using a shell company whose registered agent or officer was from Russia or a former Soviet republic.

Several had questionable backgrounds ... 

The president continues to make money off his real estate holdings even though he said he would step away from his business while in office. 

Thirty-six of the 86 sales were original purchases, earning Trump a licensing fee. But most of them continue to help the president's business. The Trump Organization promotes all the buildings — except for Trump Soho, which the company no longer manages as part of a licensing agreement — as it tries to sell its brand around the world. About five of the 83 units sold were in buildings the company developed, according to the analysis.

Trump ignored calls after he was elected president to fully separate from his business interests and placed his holdings in a trust designed to hold assets for his “exclusive benefit.” He can receive money at any time without the public’s knowledge and retains the authority to revoke the trust. Trump earned at least $453 million and had assets valued at least $1.4 billion, according to his most recent financial disclosure statement, which covered the 2017 calendar year. But his licensing and management deals are private, making it difficult to determine how how much he makes from individual projects.

Full story: Buyers tied to Russia, former Soviet republics paid $109 million cash for Trump properties