Why does Donald Trump like Russians? Maybe because they love his condos
WASHINGTON — President-elect Donald Trump’s controversial soft spot for Russia is based on decades of courting wealthy Russians to buy condos in his luxury high-rises and invest in his other real estate ventures, a close look at his business dealings reveals.
Trump first traveled to Moscow in the 1980s, to discuss renovating hotels there. After several bankruptcies made it hard to raise money in the United States for his high-end hotel and condominium projects since the 1990s, Trump, and later his children, traveled to Moscow to talk deals and attract buyers, according to interviews with people who have worked with Trump over the years and news accounts. They show far greater commercial ties between Trump and Russia than generally known.
Real estate brokers in New York, Florida and Dubai told USA TODAY that Trump properties still attract high-end buyers from Russia, as well as from other countries.
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Dolly Lenz, a real estate broker in New York, said she sold about 65 units in Trump World Tower, a condominium tower at 845 U.N. Plaza in Manhattan, to Russian buyers looking for real estate investments in the late 1990s. “I had contacts in Moscow looking to invest in the United States,” Lenz said. “’What do you have to recommend?’ They all wanted to meet Donald. They became very friendly.”
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Ilya Reznik, who said he’s sold dozens of condominiums to Russians in Trump properties in south Florida, said his clients like Trump’s reputation for high quality luxury that’s priced right. “They’re businessmen, not too many politicians," Reznik said.
Gil Dezer, whose family built six Trump buildings with their own money in south Florida, said Russians buy Trump properties for the brand name. Dezer developed the property under Trump’s name, meaning Trump received a royalty fee at the time of the sale, “and the name stays on the building, subject to a list of requirements in the condo documents,” he said.
Back in 2008, Trump’s son Donald Trump Jr. told investors in Moscow that the Trump Organization had trademarked the Donald Trump name in Russia and planned to build housing and hotels in Moscow, St. Petersburg and Sochi, and to sell licenses to other developers, according to the Russian daily Kommersant.
“Russians make up a pretty disproportionate cross-section of a lot of our assets; say in Dubai, and certainly with our project in SoHo and anywhere in New York,” Trump Jr. said at the time. “We see a lot of money pouring in from Russia. There's indeed a lot of money coming for new-builds and resale reflecting a trend in the Russian economy and, of course, the weak dollar versus the ruble."
These business dealings explain Trump's comfort level with a country — and its authoritarian president, Vladimir Putin — at a time when President Obama and both parties in Congress are alarmed over a series of Russian actions, the most recent being CIA allegations that the Russian government interfered in the presidential election to help Trump defeat Hillary Clinton.
Trump this week named Rex Tillerson, the CEO and chairman of ExxonMobil as his nominee for secretary of State. The nomination of Tillerson, who received an excellence award from Putin in 2014 and has partnered with Putin's ally and Russian oil executive Igor Sechin, has alarmed Republican and Democratic members of Congress.
The Trump Organization did not respond to a request for comment. Company lawyer Michael Cohen told the Financial Times in October: “The Trump Organization does not have any properties in Russia and the press’ fascination with this narrative is both misleading and fabricated. Perpetuation of this false connection ... or any connection with Russia altogether — is yet another example of the press’s liberal bias towards Mr. Trump.”
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The Obama administration and Congress also have assailed Putin for seizing Crimea from Ukraine and for teaming up with Syrian President Bashar Assad in a brutal military campaign against rebels that has killed civilians estimated in the hundreds of thousands.
Trump, however, has ignored Putin's crackdown on individual freedoms and praised his strong leadership style, called the CIA allegations about election meddling "ridiculous," suggested during the campaign that he might be willing to let Russia keep Crimea and raised the prospect of working with Russia to end Syria's long civil war.
LASTING ACQUAINTANCE
Sergei Millian, president of the Russian-American Chamber of Commerce, told the Russian news agency RIA Novosti in April that he developed a lasting acquaintance with Trump while organizing the developer’s trip to Russia for the Millionaire Fair in 2007.
"That was when Trump invited me, as the head of the Russian American Chamber of Commerce, to the horse races at the Gulfstream racetrack in Miami,” Millian said. “Then later we met in his office in New York."
Millian said he and Trump signed a contract to develop real estate projects in Russia and former Soviet states.
Nothing ever got built in Russia, but around 2007 and 2008, Russians “would buy up dozens of apartments in Trump properties in the U.S.,” Millian said. “The level of business amounts to hundreds of millions of dollars — what he received as a result of interaction with Russian businessmen,” Millian told ABC News last summer.
Michael D’Antonio, who wrote the Trump biography The Truth About Donald Trump, said that when it comes to Russia, “I don’t think they (the Trumps) were considering investing money in Russia. I think they were trying to get money out of Russia.”
Trump’s efforts to do business in Russia look like a string of failed projects.
In 1987, he was invited by Yuri Dubinin, the Russian ambassador to the U.S., to discuss luxury hotel developments in Moscow and Leningrad. Earlier, Trump tried to convince the Reagan White House to let him handle nuclear disarmament talks with Moscow, according to news accounts at the time. He later told Playboy magazine that his plans to build hotels in Moscow failed because the country “was out of control and the leadership knows it.”
Around that time, Russians who had been authorized to buy state-owned enterprises in what was left of the Soviet Union were amassing fortunes and becoming the country’s first "oligarchs," said Thomas Pickering, the first U.S. ambassador to the new Russian Federation, which was created following the breakup of the Soviet Union on Christmas Day 1991.
“They got permission to take money out of the country,” Pickering said. “They were Russians, and they were traveling and they had money.”
Today, those oligarchs are close allies of Putin and appear to be under his close control.
For those who were looking for safe places to invest, Trump’s reputation for top quality and glitz and the stability of the New York market was a natural draw.
In 1996, while wrapping up a series of bankruptcies in New York, Trump talked of building a replica of his Trump Tower in Moscow. He also traveled to Moscow to discuss renovating the Moskva and Rossiya hotels, according to Bloomberg News.
NEW BUSINESS MODEL
Around that time, Trump changed his business model. Instead of building projects from the ground up, he signed licensing agreements that in some cases gave him an ownership stake in properties that bore his name without putting any money down himself. And the Trump Organization continued to seek investors in Russia.
During his 2008 Moscow visit, Trump Jr. said he traveled to Russia a half-dozen times in 18 months looking for deals.
"I really prefer Moscow over all cities in the world," he said, according to an account in eTurboNews, an online business publication. But, while investments were plenty, the business environment was dangerous and trustworthy partners hard to find, Trump Jr. said. “It really is a scary place.”
Trump’s real Russian business was with Russians investing their money abroad, Trump’s son said.
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Trump’s next big project, in 2010, was the Trump SoHo in New York. His main partner was the Bayrock Group, a real estate developer based in Trump Tower and founded by Tevfik Arif, a former Soviet official who employed Felix Sater, a Russian immigrant with a history of bar fights and mob connections, according to The New York Times.
Trump biographer D’Antonio said Trump turned to new sources of funding after his bankruptcies made him a toxic asset that U.S. banks and most investors shunned.
“He needed to find business partners and to sell units,” D’Antonio said. “Money began to accumulate among the oligarchs in Moscow, so anyone looking to capitalize on that would have found himself in Putin’s circle because all power revolves around him and most of the great fortunes that were accumulated after the fall of Communism went to people who count Putin as a friend. If you have all this cross-pollination, and if you’re Donald Trump, you will be led to the political elite and the Kremlin.”
PAGEANT COMES TO MOSCOW
Russian billionaire Aras Agalarov spent $20 million to hold the Miss Universe Pageant that Trump brought to Moscow in 2013. The venue was Agalarov’s Crocus City Hall on the outskirts of Moscow. During Trump’s stay in Moscow, the two became so close that Trump even took part in a music video with Agalarov’s son, Emin.
“Mr. Trump spent almost a week here with us,” Aras Agalarov told the Komsomolskaya Pravda newspaper in an interview on Nov. 9, the day after Trump won the election. “Emin had a request — if he could appear in his video. And Donald said: ‘Well, I’ll have 10 minutes, if you can do it in one take.’ And it was done in one take.”
The billionaire denied media reports that he was financing Trump, however: “I can’t finance myself, and I’m going to finance the president of the United States? We’re all in such a crisis that we don’t have time for the U.S. president. We’re thinking about how to get out of the economic situation we are in.”
Agalarov and his son told Russian media in 2013 that they were looking into other projects with Trump, potentially including a Trump Tower near Crocus City Hall, a project estimated as being worth up to $350 million. The project was put on hold when Trump ran for president.
“When Donald Trump was here in Moscow he said a lot of good things about our country, our culture, our people,” Agalarov told Komsomolskaya Pravda in 2015. “And in his interviews he says that if he becomes president of the United States he will certainly keep in mind that he has friends in Russia.”
Contributing: Anna Aruntunyun in Moscow