I bet you didn’t know you were contributing to Donald Trump. If you are a teacher in Texas, a police officer in New York, or one of the nearly 2 million participants in the California Public Employees’ Retirement System (CalPERS), your pension dollars help make Donald Trump richer and more powerful. They may also be supporting possibly shady business deals between Russians and the Trump Organization.
According to a report distributed by Reuters, public pension funds in at least seven states invest millions of dollars in the CIM Group that owns the Trump SoHo Hotel in New York City and pays a Trump company to operate it. CalPERS paid CIM $1,722,418 in management fees for the first three months of 2017.
Two public interest advocacy groups, Free Speech for People and the Courage Campaign, are organizing a campaign to get the pensions to divest from the Trump projects. They charge “The money used for this investment comes from mandatory deductions from the paychecks of public employees. These employees are thus forced to indirectly subsidize President Trump beyond the Constitution’s mandate of a fixed salary.” Constitutional lawyers questioned by Reuters expressed concern that the investments, which produce payments to the Trump organization and Donald Trump, violate Article II of the U.S. Constitution. Citizens for Responsibility and Ethics in Washington filed a federal lawsuit charging that Trump’s business holdings violate the Constitution’s “emoluments clause,” which makes it illegal for government officials to “accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.” The American Civil Liberties Union is considering a suit against Trump for using his position as President to attract business away from other hotels. A White House spokesperson dismissed all the accusations as “partisan politics.”
Robert Mueller, the special counsel investigating Trump ties to Russia that may have influenced the 2016 Presidential election, apparently has unearthed additional allegations involving Trump Soho. Russia-born businessman Felix Sater, an executive at the Bayrock Group, which was a Trump partner in the project, was accused of being a co-conspirator in a $40 million fraud and money-laundering scheme involving four organized crime families. A 2010 lawsuit brought against Sater alleged that “for most of its existence [Bayrock] was substantially and covertly mob-owned and operated.” In a 2007 court deposition, Sater claimed he met with Trump “on a constant basis.” Bayrock’s office was in Trump Tower and its corporate brochure described the Trump Organization a “strategic partner” and listed Donald Trump as a reference.
Trump, who was deposed in 2007 as part of an unsuccessful defamation lawsuit against reporter Timothy O’Brien, said he never would have partnered with Bayrock if had he known about Sater’s past. Trump also partnered with Bayrock on the Fort Lauderdale Trump Tower, the Trump Ocean Club in Fort Lauderdale, and a resort in Phoenix.
Craig Unger, in an article in the July 13 issue of the New Republic, charges, “Trump owes much of his business success, and by extension his presidency, to a flow of highly suspicious money from Russia. Over the past three decades, at least 13 people with known or alleged links to Russian mobsters or oligarchs have owned, lived in, and even run criminal activities out of Trump Tower and other Trump properties.” According to Unger, who is a contributing editor at Vanity Fair, Trump buildings and casinos were used to “launder untold millions in dirty money.” These same investors granted Trump “lucrative branding deals that required no investment on his part” and provided him with a “crucial infusion of financing that helped rescue his empire from ruin, burnish his image, and launch his career in television and politics.” Kenneth McCallion, a former assistant U.S. attorney in the Reagan administration investigated ties between organized crime and Trump’s developments in the 1980s. He is quoted in the Unger article saying, “They saved his bacon.” Unger’s article is well documented and should be read by federal investigators and the special counsel looking into Russian interference in the 2016 Presidential election.
In the 2007 deposition, Trump claimed, “It’s ridiculous that I wouldn’t be investing in Russia. Russia is one of the hottest places in the world for investment.” No wonder Trump is trying to limit the scope of the investigation being conducted by special counsel Robert Mueller and threatens that he will fire Mueller if he crosses some ill-defined “red line.”
Trump SoHo is in many ways a typical Trump luxury “product.” It is a 46-story, 391-unit hotel condominium, valued at $450 million, that opened in 2008. A one-bedroom suite starts at $387 a night plus taxes and fees. The penthouse costs over $2,000 a night.
Although Trump Soho carries the family name, it ain’t “owned” by Trump and was built without any of Trump’s money. His key role, other than branding, appears to be striking a deal with the Bloomberg administration to build the hotel in an area zoned for manufacturing that precludes permanent housing. Trump was also involved in marketing the project, unveiling plans on his television show, The Apprentice. His Season 5 winner became a partner developing the property.
Despite, or because of the Trump connection, Trump SoHo has had a series of major problems. The Wall Street Journal reported that Bank of America suffered losses when it dropped out of financing the project. Other investors were forced to restructure the debt. The management company had trouble selling the condominium units.
A federal lawsuit brought in 2011 by ten wealthy apartment hunters including French soccer star Olivier Dacourt was settled Trump-style, meaning out-of-court. The plaintiffs charged developers with fraud for providing them with “deceptive” sales figures.” They were told the building was “30, 40, 50, or 60 percent,” sold when 16% were under contract. Under terms of the agreement, they each received back 90% of the $3.16 million deposit they made on the $17 million units. The Trump spin on the settlement was typical. Steven Goldman, a lawyer for the defendants, said, “There was no admission of guilt or liability at all.” Ivanka Trump, who personally managed the hotel for the Trump Organization declared, “Business is so strong that we’re delighted to get the units back.”
A May 2017 story on radio station WNYC reported that Trump SoHo was having new financial trouble. Room prices were down, one of its five-star restaurants had closed, and staff was being laid-off. A Trump spokesperson responded to the station by email, “As is typical in the hospitality industry, hotel rates and occupancy fluctuate due to factors such as seasonality and macro-economic forces . . . The hotel continues to receive top accolades.”
Public pension funds have no busy investing in companies that do business with the Trump Organization. Click to sign the Free Speech for People petition calling on New York State Retirement Funds to divest from Trump SoHo.
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