The Corner

Politics & Policy

Yet Another Trump Debacle

Three weeks ago I chronicled Trump’s many scandals and business failures — a 20-item list. Add to that this latest item, reported by Mike McIntire in the New York Times:

Buyers of units in Trump SoHo, a 46-story luxury condominium-hotel in Lower Manhattan, asserted that they had been defrauded by inflated claims made by Mr. Trump, his children and others of brisk sales in the struggling project. He and his co-defendants settled the case in November 2011, agreeing to refund 90 percent of $3.16 million in deposits, while admitting no wrongdoing.

It turns out that even before the construction of Trump SoHo, the hipsters and artists in downtown Manhattan weren’t keen on having a towering glass eyesore erected in their trendy neighborhood. It’s easy to imagine Trump overstating the potential success of this project. (“They’ll love this condo-hotel, believe me.”)

Along with the fraud accusations, a separate lawsuit “claimed that Trump SoHo was developed with undisclosed involvement of convicted felons and financing from questionable sources in Russia and Kasakhstan.”

The said sketchy sources were Felix H. Sater, a Russian immigrant, and Teyfik Arif, a former Soviet-era commerce official born in Kazakhstan. Arif founded Bayrock Group, a development company with offices in Trump Tower, and asked Sater to join Bayrock. Trump was fuzzy on the details, but he said Sater might have been the Bayrock associate who suggested Trump license his name to several projects, including Trump SoHo. Trump said he and Arif had pondered “numerous deals all over the world” and that Arif had introduced him to prospective Russian investors.

Trump sure can pick ’em: Sater was convicted for stabbing a man in the face with a broken margarita glass in 1993 and subsequently imprisoned. Later, the Times story continues, he was

implicated in a huge stock manipulation scheme involving Mafia figures and Russian criminals — and that he became a confidential F.B.I. informant. Recently unsealed federal court records show that Mr. Sater helped the government disrupt an organized crime ring on Wall Street and deal with an unexplained national security matter involving his foreign connections.

Bayrock also hosted a second F.B.I. informant, Salvatore Lauria, “who sometimes showed up to work wearing a court-ordered ankle monitor.” Lauria brokered a $50 million investment in Trump SoHo.

Before the settlement, the Manhattan district attorney was conducting a criminal investigation to uncover whether the alleged fraud broke any laws. The buyers who made the allegations had been assisting this investigation, now closed, until required by the settlement to stop.

Trump SoHo was marketed to potential overseas investors, but the project was poorly timed, completed as the real-estate bubble was bursting in 2007 and the economy was sinking into recession. At the beginning of 2009, only 15 to 30 percent of the units had been sold, despite Ivanka’s and Donald Jr.’s efforts to inflate the number in interviews.

Trump has tried to distance himself from Sater since the latter’s criminal background was reported by the Times in December of 2007.

Mafia ties, overseas investment, fraud, criminal investigation, national-security matters, spectacular financial loss, using his own children to improve publicity, an ugly building, and utter lack of business sense — this particular Trump incident has it all.

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