What The CIA and FBI Knew About Trump Before 2016

Views

As you’ve likely inferred from my recent posts I’ve spent a lot of time in recent days and weeks piecing together different elements of the Trump/Russia story. I’ve brought other colleagues into the work and plan to expand that once we have people hired for the three new investigative positions I discussed last month. Today everyone is talking about the inexplicable news about Jeff Sessions. But there’s another dimension of the Trump/Russia story which has only become clear to me recently but which provides a critical backstory for understanding the background of this scandal and news story.

Let’s go back to the story of Felix Sater, the Russian-American immigrant, convicted felon and longtime Trump business associate we discussed last week.

Let me review two separate streams of information which are critical to understanding the story. First, here are some basic and well-attested facts about Felix Sater.

Sater began his professional life as a New York City stock broker; spent 15 months in prison for stabbing a man in the face with a broken wine glass in a bar fight; and then became involved in a pump and dump penny stock scheme in association with the Gambino and Genovese crime families. When he and his associates were arrested in the securities fraud scheme in 1998, Sater tried to make a deal to save himself.

According to reliable accounts, what Sater offered to do was work with the CIA to facilitate the purchase of Stinger missiles on the weapons black market in post-Soviet Central Asia. According to his accomplice and business partner, Salvatore Lauria, who wrote a book detailing the story, the CIA was more keen on working with Sater than was the FBI, which had recently been burned by its longstanding and close working relationship with Whitey Bulger. The plan eventually fell apart. It seemed like Sater and Lauria might end up doing hard time. They had defrauded investors over more than $40 million. Then 9/11 happened and everything changed. Suddenly the federal government was much more interested in Sater’s help.

Lauria later disowned the book which he had cowritten with an AP reporter, David Barry, claiming it was fiction. But Barry insists that he reported out everything contained in the book.

Sater’s attorney Robert Wolf made various seemingly hyperbolic claims about Sater’s cooperation for federal law enforcement and intelligence. He told The Washington Times in early 2015 that Sater worked on “the most serious matters of national security, battling our greatest enemies at tremendous risk to his own life and for the benefits of all citizens of our country … [saving] potentially tens of thousands, if not millions, of our citizens’ lives.”

Needless to say this all sounds wild and improbably novelistic. And you would expect Sater’s attorney to make extravagant claims about the value of his clients cooperation. Despite being well-attested, we don’t know directly from the US government that any of these wild claims are true. But the statements and actions of federal law enforcement strongly suggest that even if some of the details are off, Sater’s assistance was of an exceptional character.

The US government went and continues to go to extreme lengths to keep Sater’s cooperation and work for the government a secret. Until quite recently, it went to great lengths to keep Sater’s conviction itself, and all documents related to it, a secret. It took the extraordinarily rare step of managing the entire adjudication of Sater’s crimes in secret, with all documents kept secret. Federal judges even pursued what might reasonably be called a vendetta against two lawyers who used leaked information about Sater’s case in lawsuits growing out of a failed Trump building venture, Trump Fort Lauderdale, as well as lawsuits on behalf of victims in the original pump and dump scheme.

The federal government also kept Sater on as a cooperating witness for fully 11 years before finally sentencing him in 2009 for the plea deal in 1998. In a $42 million securities fraud case, Sater received no jail time, was not forced to pay restitution and was fined a mere $25,000. In other words, he walked away from the crime with close to no punishment. The controversy over the government’s secrecy in the Sater case, as well as his minimal punishment, got enough attention that it eventually bubbled up from the criminal courts to the governmental and political realm. During her 2015 confirmation hearings, Attorney General Loretta Lynch was asked about the propriety of the government’s cooperation with Sater, in part because she had been the US Attorney for the Eastern District of New York, where Sater’s case was adjudicated.

In response to questions from Sen. Orin Hatch, Lynch wrote (emphasis added):

The defendant in question, Felix Sater, provided valuable and sensitive information to the government during the course of his cooperation, which began in or about December 1998. For more than 10 years, he worked with prosecutors from my Office, the United States Attorney’s Office for the Southern District of New York and law enforcement agents from the Federal Bureau of Investigation and other law enforcement agencies, providing information crucial to national security and the conviction of over 20 individuals, including those responsible for committing massive financial fraud and members of La Cosa Nostra. For that reason, his case was initially sealed.

Lynch’s references to “national security” has been echoed by other judges involved in Sater’s case, ones who have gone to great length to prevent the release of documents tied to Sater’s case.

It is impossible to know precisely what Sater was doing during this decade. But statements from government officials, news reports and Lauria’s book make clear that it required him to have extensive associations with and knowledge of the mafia and touched not just on organized crime but specifically on critical matters of national security. Based on published reports and Lauria’s book, it seems extremely likely that it also required him to have extensive knowledge of and contacts in the criminal underworld in the former Soviet Union. Clearly the US government saw Sater’s cooperation as highly important. Otherwise it would not have gone to such lengths to get it, to keep it secret and to protect Sater after the fact. Lynch’s words to Hatch speak volumes.

Then there’s Mikhail Sater, aka Michael Sheferofsky, Felix Sater’s father.

In 2000, two years after Felix was arrested in the securities fraud scheme, Mikhail Sater was charged along with Ernest “Butch” Montevecchi, a soldier in the Genovese crime family, for running an extortion ring in Brighton Beach between 1990 and 1999. In a separate legal filing by the plaintiffs in the suit seeking restitution for Felix Sater’s stock fraud, petitioners claimed that Mikhail Sater was a boss in the Semion Mogilevich crime organization. Mogilevich is considered one of Russia’s most notorious organized crime figures and was until 2015 on the FBI’s most wanted list. Mikhail Sater also became a cooperating witness in the Eastern District and received three years probation.

There has been great deal of controversy over whether the federal government should have provided such protection for Felix Sater. For our present purposes, that’s beside the point. What is relevant is that he was highly connected in the criminal underworld and the federal government found his cooperation extremely valuable.

Now, I’ve covered a lot of ground here, albeit compressing as much as I’ve been able a highly complex and florid story. You will no doubt see that Donald Trump’s name does not come up in any of these crimes. My aim here is simply to demonstrate who Felix Sater is, his connections with a transnational criminal underworld stretching from New York’s Outer Boroughs to Central Asia and (quite likely but not totally proven) meeting up with the weapons market where organized crime touches on international terrorist networks.

We don’t just know this information about Sater. Just as importantly we know that the FBI, attorneys in the Eastern District of New York and almost certainly the CIA also knew about Sater’s connections with these worlds since they were enlisting his apparently extremely valuable cooperation to help conduct investigations and national security operations in those realms.

Here’s where I think this becomes significant to the present moment. If you line up Sater’s story and his time as a cooperating witness with his time as a top business associate and finally employee of Donald Trump, they overlap almost exactly.

Trump first met Sater and got into business with Bayrock Capital, where Sater was a cofounder, in 2003. In Bayrock, Sater partnered with Tevfik Arif, a former Soviet trade and commerce official from Kazakstan. Trump and Bayrock partnered together on numerous building projects and Sater was the point man on most of them. The most notable is Trump Soho, which was financed with money from Russia and Kazakstan. There was also Trump Fort Lauderdale, the Sater-managed project whose collapse first triggered the revelation of Sater’s 1998 securities fraud conviction. Trump’s work with Bayrock continued until 2010 when Sater went to work for the Trump Organization full time – again, putting together deals and financing for Trump-branded building projects.

Let’s put this together.

The federal government knew who Sater was, his ties to the criminal underworld, business ties into that world in the former Soviet Union, etc. They also had to know of his deep and longstanding association with Donald Trump, his key role in numerous Trump projects during the first decade of this century and his role arranging financing for these projects. We don’t know if the federal government had specific knowledge of the details of these business transactions or whether or how deeply Donald Trump was reliant on capital from Russia and more generally the murky world of oligarchs and underworlds that Sater is clearly immersed in and from which he appeared to draw investment capital. But they likely would have suspected as much, at least that Trump had uncomfortably close ties to someone like Sater.

They wouldn’t have had to look far to confirm these assumptions. Take the Trump Soho project. In April 2016, The New York Times published a story on Trump Soho based on lawsuits which grew out of the project in 2011 and 2012. Consider this passage. And yes, Lauria is the same Lauria who was at the ’90s bar fight where Sater stabbed the man in the face. He was Sater’s accomplice in the 1998 pump and dump scheme and the author of the book that detailed Sater’s work for the FBI and the CIA …

Mr. Lauria brokered a $50 million investment in Trump SoHo and three other Bayrock projects by an Icelandic firm preferred by wealthy Russians “in favor with” President Vladimir V. Putin, according to a lawsuit against Bayrock by one of its former executives. The Icelandic company, FL Group, was identified in a Bayrock investor presentation as a “strategic partner,” along with Alexander Mashkevich, a billionaire once charged in a corruption case involving fees paid by a Belgian company seeking business in Kazakhstan; that case was settled with no admission of guilt.

Here’s another passage …

Mr. Kriss’s lawsuit was filled with unflattering details of how Bayrock operated, including allegations that it had occasionally received unexplained infusions of cash from accounts in Kazakhstan and Russia. Bayrock and Trump SoHo drew more negative headlines in October 2010, when news spread from Turkey that Mr. Arif had been aboard a luxury yacht raided by the police, who were investigating a suspected prostitution ring that catered to wealthy businessmen. He was charged but later acquitted.

Whatever US law enforcement and intelligence knew about the specifics of Trump’s relationship with and his dependence on investment capital out of Russia and the former Soviet Union, material like this in public court filings surely would have raised red flags about Trump’s businesses.

As long as Donald Trump was just a high-profile and frequently clownish real estate tycoon from New York and the star of The Apprentice, this probably didn’t matter very much. After all, as I’ve noted, there’s no specific evidence that Trump was involved in any of Sater’s criminal activity.

But at some point in 2014 or 2015, Donald Trump started moving toward having a credible shot at becoming the President of the United States. By early 2016 that became a real possibility.

(One notable, though perhaps distinct, detail is that we can be sure that the attorney general of the United States at the time, Loretta Lynch, knew a level of detail about Felix Sater and his father Mikhail that only would have been possible as the former US Attorney for the district in which Sater’s trial was adjudicated.)

It seems quite probable that as Trump moved closer to the presidency in the early months of 2016, alarm bells started to go off in the FBI and the CIA, as the relevance of business partnerships with Sater and reliance on capital out of the former Soviet Union suddenly became dramatically more relevant. Again, as I said, as long as Donald Trump was just Donald Trump this didn’t matter that much. There’s plenty of dirty money sloshing around the New York real estate world. But when it started to seem plausible that he might become the next President, this would start to be a matter of great concern.

This certainly also added to the concern when popped up in a meeting with Michael Cohen and a pro-Russian Ukrainian parliamentarian with a dossier he asked Cohen to hand deliver to Michael Flynn.

All of what I’ve said here would be an issue even if the Russian government had never inserted itself into the US election. It almost certainly predates any awareness within the US national security and law enforcement worlds that that was happening. But I suspect it is a critical backdrop for how this evidence was interpreted once it began to come to light. It quite possibly also informed and drove some of the scrutiny that was applied to Trump and his associates once it did.

[Did you enjoy reading this post? Considering supporting TPM by subscribing to Prime.]

ABOUT THE AUTHOR

Josh Marshall is editor and publisher of TalkingPointsMemo.com.
LIKE US ON FACEBOOK