How
Ivanka Trump and Donald Trump, Jr., Avoided a Criminal Indictment
By Andrea Bernstein, Jesse Eisinger, Justin Elliott,
and Ilya Marritz
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.
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 Times reported 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.