ILYA MARRITZ: Hello, it's Ilya Marritz. This is Trump, Inc., from ProPublica and WNYC. Later in this episode, we're re-sharing one of our favorite stories from 2019, about Trump and his biggest lender, Deutsche Bank. It is very relevant today.

First, something new. A story about a potential crisis in commercial real estate lending which is compounded by the actual crisis caused by the global coronavirus pandemic. And, of course, there's a Trump connection.

ERIK SCHATZKER: Tom, you say the commercial mortgage market is on the brink of collapse. Tell us: what exactly is happening?

TOM BARRACK: Well, I mean, the good news … [FADE UNDER]

MARRITZ: Right at the beginning of stay-at-home, a Trump ally named Tom Barrack did a bunch of TV interviews, like this one, with Bloomberg TV's Erik Schatzker. Barrack had a warning that some of the financial companies standing behind mortgages on malls and hotels and office buildings were facing disaster.

BARRACK: You have to keep people employed — keep people employed. You have to support the employer. The biggest part of employer expense is rent. When commerce stops and they can't pay rent and they can't pay the interest on the debt, and then the banks or the intermediaries can't pay the investors, it all collapses.

SCHATZKER: So, I mean, let’s talk about that collapse … [FADE UNDER]

MARRITZ: The financial product at the center of all this is something called a commercial mortgage-backed security — CMBS for short. They're the kind of thing that, once you start looking, you realize they're everywhere.

HEATHER VOGELL: I mean, your big malls — um, a lot of the strip malls you're going to pass, um, office towers, hotels, any really large property — there’s a decent chance that there's a CMBS that's behind it.

[BOUNCY DRIVING MUSIC PLAYS]

MARRITZ: This is ProPublica's Heather Vogell. She recently published a story that raises questions about the financial system that underpins a lot of commercial real estate in the United States, even before COVID sent consumers and office workers home. Here's the headline: "Whistleblower: Wall Street Has Engaged in Widespread Manipulation of Mortgage Funds." That whistleblower is a longtime real estate finance professional named John Flynn.

VOGELL: And he reached out to me because he had noticed something strange in the data that he was looking at for commercial mortgage-backed securities. 

MARRITZ: These are loans on properties like shopping centers and office parks. That's the commercial mortgage part. They get packaged into bonds that can be bought and sold among investors — hence, securities.

VOGELL: The essential idea is just that, uh, investors are basically your bank.

MARRITZ: So is it a little bit like the mortgage-backed securities that we heard so much about, about a dozen years ago when there was the — the 2008 financial crisis? And back then, if people recall, it was home mortgages that were being originated and then sliced and diced and put into these other securities that investors were buying.

VOGELL: Yes, exactly.

MARRITZ: Flynn examined new mortgages on properties that had already been mortgaged. And then he compared the historical revenues and expense numbers cited in the old and new loans. In many of the new loans, he discovered profits were reported as higher.

VOGELL: What he found was that the financial data that was reported under the old loan did not always match the financial data that was reported under the new loan, even when both of them were referring to the same years. So that's really the heart of it. You have now two different profit numbers for the same year.

MARRITZ: So, Heather, what Flynn is saying — and what your check of his research seems to suggest — is that banks are either inflating net operating income on these properties, and therefore asset values, or they're allowing asset values to be inflated and kind of looking the other way. What's the incentive to do that?

VOGELL: I mean, I think it's really simple. I mean, bigger loans, bigger fees.

MARRITZ: Simple as that? 

VOGELL: Yeah.

MARRITZ: And everybody's happy until somebody isn't happy. And so far everybody's happy.

VOGELL: Exactly. I mean, especially because most of this is being passed on to investors. The vast, vast majority of it that — so it’s — the banks aren't, you know — this isn't something that's on their balance sheet.

[MUSIC OUT]

MARRITZ: In 2019, Flynn filed a whistleblower complaint with the Securities and Exchange Commission. We don't know whether the SEC is looking into it.

And now we come to the part of this story that could connect to Trump.

[MEANDERING MUSIC PLAYS]

MARRITZ: In his complaint, John Flynn names 14 major lenders where this asset inflation appears to be happening. Two of them are lenders to Trump: Deutsche Bank and Ladder Capital. (By the way, Tom Barrack's Colony Capital is not involved.)

Deutsche Bank has made loans on Trump's DC and Chicago hotels, and Doral in Florida. Ladder Capital has made loans on Trump Tower, Trump Plaza, and 40 Wall Street.

VOGELL: So, you know, what I can tell you is that I did look into one of those properties. I looked into Trump Tower.

We can look old loan to new loan and sure enough, um, what we see is that in 2010 there was, um, a 21% discrepancy between the two reported, uh, profit numbers, meaning that the old loan was a 21% lower reported profit than what the new loan reported, uh, for the same year — for 2010. So it appears that this particular property is among those that have these questions about its net operating income that we've seen kind of across the CMBS market.

So, you know, certainly, Trump has done business with banks that were named in this complaint that I wrote about, and it appears at least one of his properties was involved.

MARRITZ: And it just underscores the point, I suppose, that, um, any action that the Trump administration might take around this could affect the Trump Organization. This is the conflict we've been looking at for several years now.

VOGELL: You know, obviously, anything that the government steps in and does for this industry potentially could have an effect on the Trump Organization very directly, um, because this is the type of lending that they depend on. This is a market they're very involved in and that the Fed has taken action around, um, and there may be further pieces of the bailout that touch it. So, um, you know, as we're sort of heading toward this crisis, I think it's worth keeping an eye out to understand what the implications are for the President's properties and company and his associates.

[A MUSIC MOMENT]

MARRITZ: Heather heard back from the Trump Organization's chief legal officer, Alan Garten. Here's what he told her.

VOGELL: To quote them, “Not only were the numbers provided to the servicer accurate, but Trump Tower is considered one of the most under-leveraged commercial buildings around.”

MARRITZ: Ladder Capital said that it altered historical numbers for two loans Heather asked about, to remove expenses that were not recurring in the future. It said its actions were appropriate. Ladder did not respond to requests for comment about its loan for Trump Tower.

As for John Flynn's allegations about inflated CMBSes, several lenders told Heather they believe it's okay to make changes to historical profits. Others, including Deutsche Bank, did not comment. An industry group said they weren't aware of the practice. The SEC declined to comment.

[ANOTHER MUSIC MOMENT, MUSIC CHANGES TONE]

VOGELL: So, I mean, really, things are quite topsy-turvy right now and there's a lot of money at stake and there's a lot of really powerful and influential people who have a huge stake in what the government bailout looks like.

MARRITZ: And those people could include — probably do include — Donald Trump and the Trump family.

VOGELL: Yes, as well as the Kushner family.

MARRITZ: Heather Vogell is a reporter for ProPublica. To learn more, read her full story at the ProPublica website.

[A MUSIC MOMENT]

MARRITZ: And now, our story on one of the lenders Heather has been writing about, Deutsche Bank. Here we go. 

UWE HEUSER: Ladies and Gentlemen, very welcome. [FADES UNDER]

ANDREA BERNSTEIN: In January, the head of Deutsche Bank, Christian Sewing, did an interview with Uwe Hueser, the business editor at the German Newspaper Die Zeit. The two are speaking at a reception at the World Economic Forum, in Davos, Switzerland.

HEUSER: … you wanted to become a journalist, of all professions — [FADE UNDER]

BERNSTEIN: Here's Hueser, the newspaperman, asking the banker, “If you were a journalist, how would you report on Deutsche Bank today?”

HUESER: — in a nutshell, what would you write? [LAUGHTER, THEN THE AUDIO FADES UNDER AGAIN]

BERNSTEIN: The Deutsche CEO is taken aback. He fumbles for a moment.

CHRISTIAN SEWING: I would say Deutsche Bank is the most significant self-help story in the financial industry. [FADES UNDER]

BERNSTEIN: But the Die Zeit editor doesn't really want to talk about self help.

HEUSER: Sometimes with Deutsche Bank it's the case that, just when it seems to get better, there is another problem. [LAUGHTER FROM THE AUDIENCE] Like in November, when things really looked up, and then all a sudden state attorneys came and searched Deutsche Bank headquarters under the suspicion that Deutsche Bank was involved in money-laundering activities. What was your first thought?

[LAUGHTER]

SEWING: Well, uh …

HUESER: In a nutshell!

BERNSTEIN: A few months earlier, German police had raided the bank's Frankfurt headquarters. 

SEWING: Well, of course, at that point in time it — it's disappointing. Not disappointing, you know, personally, for me. [FADES UNDER]

[PLUCKY ELECTRIC GUITAR MUSIC PLAYS]

BERNSTEIN: Being subject to Investigations and regulatory actions has become the new normal for Deutsche Bank. In recent years the bank has been fined billions of dollars for lax controls on everything from laundering Russian money to violating sanctions against Iran, Libya, and Sudan.

HEUSER: Somehow your life is tainted by Deutsche Bank’s past. How do you live with the — the constant uncertainty that something else might pop up?

SEWING: [EXHALES] I think that makes life really interesting, right? I mean … [LAUGHTER ERUPTS, THEN APPLAUSE]

BERNSTEIN: By that standard, life has become very interesting for Deutsche Bank.

In a recent court filing, Congress revealed it has been asking for detailed records of Trump family business interactions with Deutsche Bank. In the filing, Congress said — straight out — it’s investigating the relationship for possible money laundering, illicit financial deals, fraud and foreign influence in the 2016 elections.

[A MOMENT]

BERNSTEIN: By its own admission, Deutsche Bank has a history of serious compliance deficiencies when it comes to global money laundering, in the very recent past.

Now comes a new revelation from The New York Times. Deutsche Bank's own anti-money laundering experts flagged multiple suspicious transactions. They were as recent as 2016 and 2017, and involved Trump's business and the one formerly run by his son-in-law, Jared Kushner. Among the transactions, one where money had moved from Kushner companies to Russian individuals.

The Times wrote that Deutsche Bank's money laundering experts were so concerned, they wanted to report these transactions to the U.S. Treasury. But supervisors refused to do so.

[MUSIC OUT]

BERNSTEIN: Kerrie McHugh, a Deutsche Bank spokeswoman, said in a statement, “Alert dispositions by investigators undergo a higher-level review by qualified staff. Transaction monitoring casts a wide net and not all alerts will result in escalation." She added, “We take our responsibility for compliance very seriously,” and that the Bank has "increased our anti-financial crime staff and enhanced its controls in recent years."

A spokesperson for the Trump Organization emailed a statement, "This story is absolute nonsense. We have no knowledge of any ‘flagged’ transactions with Deutsche Bank. In fact, we have no operating accounts with Deutsche Bank.”

[TRUMP, INC. THEME MUSIC PLAYS]

We sent questions to the Kushner Companies, the White House, Trump's private banker, and lawyers for the Trumps and the Jared Kushner. The White House did not have comment. The others didn't respond.

Meanwhile, the investigations pile up.

[A MONTAGE OF CLIPS ABOUT THE DEUTSCHE BANK INVESTIGATIONS PLAYS]

REPORTER 1: Those subpoenas were sent to multiple financial institutions, including Deutsche Bank. The House Intelligence and Financial Services Committees are hoping to get information on loans the German bank gave to Trump and the Trump Organization.

ERIC TRUMP: This is presidential harassment. This is all these people do.

REPORTER 2: Eric Trump, today on Fox & Friends, calling it presidential harassment as Trump family and Organization sue Deutsche Bank and Capital One to block subpoenas.

POLITICIAN: So we've issued subpoenas to Deutsche Bank and we are collecting a lot of the documents we requested and we're reviewing them. I can only tell you that the investigation came about as a result of the testimony of Michael Cohen.

[MONTAGE ENDS]

BERNSTEIN: Hello, and welcome to Trump, Inc., a podcast from WNYC and ProPublica that digs deep into the secrets of the Trump family business. I'm Andrea Bernstein. Today on the show: Trump and his family's relationship with Deutsche Bank, a bank with a history of problems.

[THEME MUSIC OUT]

DAVID ENRICH: They were laundering money for wealthy Russians and people connected to Putin and the Kremlin in a variety of ways for almost the exact time period that they were doing business with Donald Trump.

BERNSTEIN: This is David Enrich, the finance editor of The New York Times.

ENRICH: And all of that money through Deutsche Bank was being channeled through the same exact legal entity in the U.S. that was handling the Donald Trump’s relationship in the U.S. And so there are a lot of coincidences here. There's a lot of smoke. I have not found any fire, but unfortunately I do not possess subpoena power.

[DRIVING GUITAR MUSIC PLAYS]

BERNSTEIN: We’re going to walk you through all that smoke. Trump, Inc. is an open investigation, so we're just going to say, right now, we're still not sure what all this adds up to. What we do know: Trump, right now, owes about $350 million to Deutsche Bank — more than he owes to any other financial institution.

And so much is happening regarding the Bank, so fast, we decided to lay out what we have learned by digging into Trump's financial deals with the bank, and why his recent loans raise so many questions: questions raised by Congress, the New York Attorney General, and the Bank's own employees.

[A MOMENT, MUSIC OUT]

BERNSTEIN: Let’s get to know Deutsche Bank. It likes to think of itself as a cousin of other global institutions, like JP Morgan Chase or Citigroup. But Deutsche's recent history sets it apart from its competitors.

[INTRIGUING PIANO MUSIC PLAYS]

BERNSTEIN: After the global financial crisis in 2008, Deutsche Bank, like all banks, was under financial pressure. At the same time, there was more and more wealth building in Russia — and Russians wanted to get it out of the country. Maybe they had earned it illegally. Maybe they were just scared that if they kept their money in Russia, Vladimir Putin would have it seized. Banks are supposed to run checks to make sure they're not helping criminals move dirty money. And New York State regulators found Deutsche didn't do that.

Between 2011 and 2015, the bank "improperly" and "covertly" helped usher $10 billion out of Russia and into London and New York. And it got caught. 

We spoke to the woman who did the catching.

MARIA VULLO: My name is Maria Vullo, and I was the Superintendent of Financial Services from early 2016 to February 1 of 2019.

[MUSIC OUT]

BERNSTEIN: She oversaw banking and insurance in New York State. Just after Trump was inaugurated, Vullo signed a consent order with Deutsche Bank. In it, Deutsche acknowledged it had allowed "bad actors" to achieve "improper ends."

VULLO: This consent order addresses … [FADE UNDER]

BERNSTEIN: The bank had "serious compliance deficiencies" that "spanned Deutsche Bank's global empire."

VULLO: These flaws allowed a corrupt group of bank traders and offshore entities to improperly and covertly transfer more than $10 billion out of Russia by conscripting Deutsche Bank operations in Moscow, London, and New York to their improper purpose.

BERNSTEIN: Deutsche Bank paid over $600 million in penalties — in New York and the UK — and said it would address its deficiencies.

[BASS-DRIVEN MUSIC PLAYS]

BERNSTEIN: Here’s how the corrupt scheme worked. It began in Moscow, with an order by a shell company to buy a specific amount of stock. But the buyer wouldn't ask for a particular company's stock, just the amount they wanted to spend. Investigators found some pretty specific emails. Like this one:

VULLO: [READING] “I have a billion rouble today” — misspelled, by the way, “rouble,” but — “will you be able to find a security for this size?”

BERNSTEIN: So then what would happen — the same day Deutsche Bank made a purchase in Moscow, it would make a sale in London of the same amount of the same stock. The trades “mirrored” each other. For that reason, they're called “mirror trades.”

Ten billion dollars were moved in this way. Rubles to pounds to dollars. Possibly-dirty money going in, clean money coming out. If you're a bank, you're supposed to have systems in place to prevent trades like this, because it makes it easy for criminals to wash their money through the financial system.

VULLO: So, yes, there was a supervisor on the Moscow desk which appeared to have been paid a bribe or some other undisclosed compensation to facilitate the schemes.

BERNSTEIN: Employees complained. They were pushed off. No one did anything. Even when another bank asked Deutsche Bank, “Is something going on here?”, Deutsche Bank responded, essentially, "No, no problems here." Instead, they should have elevated the concerns.

VULLO: Yes, and should have raised a red flag again. And we're looking at issues like Know Your Customer, looking at who these counter-parties are and who's behind the counter-parties, if one was going to actually do the proper KYC process.

[MUSIC CHANGES TONE]

BERNSTEIN: KYC. Know Your Customer. This is a key underpinning of the financial system — a way to keep money launderers, terrorists, and other crooks out.

VULLO: So, somebody comes to the bank. Who is this person? Deutsche Bank did not have a centralized Know Your Customer system.

BERNSTEIN: In its Moscow office, Deutsche Bank had one person as Head of Compliance, Head of Legal, and its Anti-Money Laundering — all at the same time.

VULLO: And you certainly need more than one person who is doing three jobs to actually have an effective compliance system. I mean, staffing for compliance is essential. And this was woefully inadequate.

BERNSTEIN: New York regulators weren't able to track down the actual people behind the $10 billion in suspicious transactions. And so a very big question remains —

VULLO: What was the reason behind it? Because money was exchanged. Why?

BERNSTEIN: We still don't know.

[A BREATH]

BERNSTEIN: There's no evidence that these mirror trade deals involved Trump. We're telling you about them because, in the words of New York regulators, "serious compliance deficiencies" at the Bank "spanned Deutsche Bank's global empire" during the same time period Donald Trump was borrowing hundreds of millions of dollars — and because Congress is taking a closer look.

According to a legal brief, it's investigating whether Deutsche Bank is doing enough to stop schemes like mirror trading. The brief says, "This is important in determining the volume of illicit funds that may have flowed through the bank, and whether any touched the accounts held there by Mr. Trump, his family, or business."

[A PAUSE FOR MUSIC]

BERNSTEIN: So, let's go back to the beginning of Trump's relationship with Deutsche Bank. It’s 1998. His life is like the Destiny's Child song.

[A MOMENT FROM DESTINY’S CHILD’S SONG “No, No, No” PLAYS]

BERNSTEIN: Trump's companies have declared four bankruptcies and he's stiffed so many lenders that the big banks, like Chase and Citibank, won't go near him.

ENRICH: Well, Trump was looking for a bank. Any bank would do.

BERNSTEIN: David Enrich of the Times has an upcoming book about Deutsche, Dark Towers: The Inside Story Of The World's Most Destructive Bank. He says when Deutsche Bank approached Trump in 1998, both Trump and the bank needed each other.

ENRICH: He was completely frozen out of the financial system because he kept defaulting on loans. And Deutsche Bank in the late 1990s was very eager to make a name for itself in the United States. So they really needed to go searching on the fringes to find clients that were — that had a bunch of money, but their reputations were sufficiently scuffed up, that they were not suitable clients for the big elite Wall Street investment banks. And Donald Trump fit that bill perfectly.

BERNSTEIN: So the bank lent him money for a downtown Manhattan skyscraper, and a building across from the U.N. And Trump's business came with perks. He would fly bankers to Atlantic City for boxing matches [BOXING MATCH SOUNDS, WITH A BELL RINGING AT THE START OF THE MATCH, PLAY] take them to the U.S. Open tennis tournament in Queens. [THE SOUNDS OF SHOES SQUEAKING ON TENNIS COURTS AS A BALL VOLLEYS BACK AND FORTH]

Then he asked the bank to sell high-risk bonds — junk bonds — to keep his casinos going. Enrich's reporting found Deutsche Bankers initially didn’t want to, but when Trump dangled a weekend at Mar-A-Lago, they sold $480 million in bonds.

ENRICH: Everyone is really pleased with the outcome until, a few months later, Donald Trump defaults on those junk bonds, which is just what everyone had feared would happen in the first place.

BERNSTEIN: So their, sort of, long term reputational [sic] risk of selling junk bonds that are going to default?

ENRICH: Irrelevant.

[A BEAT, THEN A TRANSITION TO A DIFFERENT CLIP]

DONALD TRUMP: Well, thank you, everybody. This is quite a crowd.

BERNSTEIN: Not too long after, Trump was once again bound up with Deutsche Bank. They lent $640 million for a Trump Tower Chicago. To help get the loan, he assured bankers that his daughter, Ivanka, then a recent college grad, would be in charge of the development. The family was in it for the long haul.

DONALD TRUMP: We're very, very happy with what's happened with respect to this building. [FADE UNDER]

BERNSTEIN: It's now September 2008.

DONALD TRUMP: It's virtually impossible — the banks are shut down — but we got this one built.

[BASS-DRIVEN MUSIC PLAYS AGAIN]

BERNSTEIN: Two months later, Trump defaulted. Then he did something unusual and audacious. After defaulting on the loan, Trump sued his lender, Deutsche Bank.

The lawsuit began like this, "This action arises out of defendant Deutsche Bank's attempt to derail the successful completion of one of the most acclaimed construction projects to be built in the United States in recent times.” It went downhill from there. Trump claimed that he couldn't pay back the loan because the financial crisis was a force majeure — an act of God — and that Deutsche Bank was responsible for the crisis, anyway. He asked for billions of dollars in damages. Deutsche Bank sued him back. The Trumps kept selling units in Chicago.

[INTENSE STRING MUSIC PLAYS]

IVANKA TRUMP: Hi, I'm Ivanka Trump. In the real estate business, the word “luxury” is terribly over-used. And like the word “beauty,” it's lost much of the impact that it once had. But I'm going to risk using both of those words … [FADES UNDER]

BERNSTEIN: Ivanka Trump has by now become a key marketer for Trump properties.

IVANKA TRUMP:  … to tell you about our incredibly beautiful, fabulously luxurious 92-story Trump International Hotel and Tower. It's already taking its place as one of the icons on Chicago's famous skyline.

[INTENSE STRING MUSIC FADES OUT]

[ELECTRIC GUITAR FLOURISH PLAYS]

BERNSTEIN: Finally, after a few years, the two sides settle. Trump is on the hook for $40 million, which he personally guaranteed. He needs to pay that back to Deutsche Bank. Where does he get the money? This is where their already-strange relationship gets way stranger.

ENRICH: Out of the blue, the person who comes to his rescue is his new son-in-law, Jared Kushner.

BERNSTEIN: David Enrich of the New York Times.

ENRICH: And he had — Jared Kushner had struck up a relationship with a private banker at Deutsche Bank named Rosemary Vrablic.

BERNSTEIN: Do we know how — do we know how they met?

ENRICH: We don't. That is one of the world's greatest mysteries, if you occupy my brain. [BERNSTEIN LAUGHS] What I know is that, in private, around the summer of 2011, Jared arranged a meeting for his father-in-law to go in to Deutsche Bank and meet with Rosemary Vrablic, who, at the time, was one of the the real shining stars in Deutsche Bank's private banking business. And private banking is kind of a weird business that most people who do not obsess over this stuff have probably never heard of, and it's part of the bank that caters to the world's richest people.

BERNSTEIN: The job of a private banker is usually to help rich people protect their wealth and grow it even more; to keep tax authorities away from their investments and companies. Private bankers do not usually loan money for large, commercial real estate developments.

[STRING-DRIVEN MUSIC PLAYS]

BERNSTEIN: Vrablic did not respond to our questions for this story.

As before, Trump showers attention on all the right people. Vrablic comes to Trump Tower, gets treated like a friend. There's a favorable profile of her in one of  Jared Kushner's newspapers.

ENRICH: And so there’s — fairly quickly — a meeting of the minds between Rosemary Vrablic and Donald Trump that maybe this arm of Deutsche Bank — the private bank — can strike up a fresh relationship with Donald Trump and do what no other bank on Wall Street, at this point, is willing to do.

BERNSTEIN: What no other bank is willing to do is loan Trump $48 million dollars to pay off the Deutsche Bank Chicago loan, because Trump has defaulted on his loan and sued the bank for billions of dollars. But with the help of Rosemary Vrablic, he's getting money from Deutsche Bank to pay off Deutsche Bank.

ENRICH: No one has ever seen anything like this. In fact, a lot of the people I've talked to at the Bank, and previously at the Bank, had — they initially insisted this just hadn't even happened. It's not the way it worked at all. And it is the way it worked and is just so extraordinary and unusual that no one believed it to be possible.

BERNSTEIN: Deutsche Bankers have told Enrich their private wealth unit made money from Trump, because he opened personal accounts there, brought them business. And yet …

ENRICH: This is one of the clearest examples I've ever seen of a bank that is so dysfunctional and so careless about its risk management and so careless about the reputations of its clients and so loose with the protection of its own reputation that it would allow a guy who has repeatedly defaulted and burned the Bank and caused a huge public embarrassment to borrow tens of millions of dollars from another arm of the Bank to repay the part of the Bank that he is engaged in litigation with. It just — it’s really mind blowing.

[A STRING FLOURISH, THEN THE SOUND OF WALKING IN THE HALLWAY OF THE DORAL PLAYS]

BERNSTEIN: It's not just Chicago.

Around the time when Deutsche Bank is getting ready to pay off Deutsche Bank — in 2011, 2012 — Trump starts coveting a bankrupt golf course near Miami, Doral. It has a history of hosting major tournaments. But post-financial crisis, it's not in great shape, and it's in the flight path of the Miami airport.

[THE SOUND OF AN AIRPLANE FLYING OVERHEAD PLAYS]

HEATHER VOGELL: The property itself, I was told by people involved in the bankruptcy, was kind of a dog.

BERNSTEIN: This is Heather Vogell from ProPublica. She dug into the bankruptcy records and land deeds for Doral.

VOGELL: The sellers were going to go with Trump because he was willing to close quickly with no financing to pay cash, essentially.

BERNSTEIN: The bankruptcy filing showed that Trump agreed to pay $150 million for the whole business. Of that, $105 million of that is for the property and the buildings, the land records show.

VOGELL: And that's where it gets kind of interesting, I think, because he does not buy the property for all cash. He does need financing and, from what we can tell, he needs a lot of financing.

BERNSTEIN: And for that money, he again turns to Deutsche Bank.

Trump flies Rosemary Vrablic, the private banker, down to Florida, and she helps him again. Deutsche Bank loans him $106 million.

VOGELL: Reminder, the county records show Trump paid $105 million for the land and buildings portion of the sale. The sale and the loan are recorded the same week.

BERNSTEIN: So this loan he gets is for more money than he paid for the property.

VOGELL: And we also, after digging around, found out it wasn't actually the only loan that they gave on this property.

BERNSTEIN: There was another Deutsche Bank loan, also arranged by Rosemary Vrablic, this one for $19 million, is also backed at least in part by the Doral Golf Course.

VOGELL: So that means he's got $125 million in loans on a property that was sold for $105 million, which is certainly not the kind of thing that anybody who's bought a home would, uh, find believable. You can't just get a bank to give you all of the money for your house.

BERNSTEIN: There could be an explanation for this: an appraisal showing Doral was worth more, or additional collateral. What we do know: what's in the public records raises the question of whether the loan was unusually high for the property.

VOGELL: I think there's a larger context here that's interesting because of Deutsche Bank's involvement, which has been accused of not doing enough due diligence in order to spot money laundering and to stop it. You have Trump, who has also been repeatedly accused of not doing due diligence with his partners, has been involved with people who have criminal connections for years, people with connections to Russia and people with connection to illicit activity in Russia. You sort of have this nexus of all these different actors who have had problems in the past and you've got, at the core, what appears to be a business decision that doesn't make sense. Why would Deutsche Bank loan this much for this property at this point?

[A MOMENT FOR MUSIC]

BERNSTEIN: The Trumps themselves spun out yet another story. Forbes wrote about it. "How Ivanka Trump Got The Doral Resort (And The Blue Monster) For A Bargain Basement Price And Had A Baby At The Same Time."

IVANKA TRUMP: We got Doral, which is a great deal, and we’re so excited … [FADES UNDER]

BERNSTEIN: In 2012, Ivanka Trump released a video touting some recent accomplishments.

IVANKA TRUMP: Not only is it the third week of Celebrity Apprentice, and this season has been amazing, but … [FADES UNDER]

BERNSTEIN: The Trump Organization was also tapped for another important deal for the family. At a time when the Trumps were buying golf courses and inking foreign licensing deals, there was a development project they really wanted.

IVANKA TRUMP: Additionally, we were selected by the GSA — effectively the government — as the preferred developers for the Old Post Office building in Washington DC. Incredibly excited. [FADES UNDER]

BERNSTEIN: To widespread criticism and alarm, Donald Trump's family business gets a sixty-year lease to run what is now the Trump International Hotel in Washington. Another bidder files a protest, claiming there is no way that Trump can live up to his financial promises, that his history of defaults and company bankruptcies should disqualify him. Ivanka does the negotiating, and the Trumps line up an equity partner: Colony Capital. If that name sounds familiar, it's the firm founded by Trump's friend, Tom Barrack. We recently did an episode on Barrack. He was Trump's inaugural planner.

TOM BARRACK: … and what we're doing is trying to orient it towards the greatest tribute to America …

[INTENSE PIANO MUSIC PLAYS]

BERNSTEIN: Barrack lends Colony's name to Trump's bid for the Old Post Office — but then Colony drops out, and Trump needs a new partner.

He gets another generous loan, this one, $175 million, also through Rosemary Vrablic, from Deutsche Bank. Ivanka Trump says the family is in it for the long haul. She wants her daughter, Arabella, to oversee the hotel someday.

[PAUSE FOR MUSIC]

BERNSTEIN: Trump now owes Deutsche Bank nearly $350 million dollars for the Chicago debt, two loans for Doral, and one for the Old Post Office.

He even tried to get another one, to buy the Buffalo Bills, but the deal never went through. The New York Attorney General is looking at whether Trump at that one.

Oh. There was one more loan.

In May of 2015, Ivanka Trump's husband Jared Kushner's company bought the retail floors of the former New York Times building for just under $300 million. Then, sixteen months later, the Kushners go to Deutsche Bank. They get an appraisal that says the property is worth $200 million more than they paid. The Kushner companies have said the increased value was because they were going to get more lucrative tenants. But anyway, they get a big loan from Deutsche Bank. It's for more than what they first paid for the building. They walk away with $74 million in cash.

[A BREATH AS MUSIC FADES OUT]

BERNSTEIN: In a statement, Deutsche Bank's spokeswoman says the Bank remains committed to cooperating with authorized investigations.

ENRICH: I think their view is that they really, really screwed up in the past several years by continuing and deepening this relationship with Donald Trump —

BERNSTEIN: David Enrich.

ENRICH: — and that it was a product of just very poor risk management, very poor reputation management, poor decision-making, very short-term focus on making as much money as possible … but that they don't think they did anything illegal, and they don't think that kind of the sexiest storyline out there is true and that sexy storyline is that somehow, somewhere, Russia or the Kremlin or state-owned banks in Russia were using Deutsche Bank to funnel money directly to Donald Trump or his companies.

BERNSTEIN: And to be clear, they were, in this very period, a conduit for Russian money in the mirror trading scandal.

ENRICH: It’s, uh — it’s, uh, quite a coincidence. That's exactly right. 

BERNSTEIN: In 2016, someone at Deutsche Bank finally decides to say no. Trump's running for President. He asks for more money for renovations at yet another golf course. This one’s in Turnberry, in Scotland.

ENRICH: And this is the moment inside the Bank where one senior executive after another realized just how deep and long-standing the Donald Trump relationship was, and people were stunned, and they put a stop to it. The loan was initially rejected by a committee in the U.S. that's supposed to vet transactions with an eye toward protecting the Bank's reputation. And then Rosemary Vrablic's team appealed that decision, which is quite unusual. And this went up to London and then Frankfurt, where there's a big fight at the top of the bank about whether or not to do this loan, and it was eventually killed by the guy who is now the CEO of the Bank, Christian Sewing.

BERNSTEIN: He's the guy we heard being interviewed at the beginning of this story by the German journalist.

HEUSER: Are you sometimes mad at your predecessors? [LIGHT LAUGHTER FROM ONE PERSON IN THE AUDIENCE]

SEWING: No, no. You know, I think, also that — you learn that in sports: you never look back.

BERNSTEIN: This is Sewing at Davos again. He's saying the bank is trying to turn a corner, come clean, make things right.

SEVING: You know what? You just want to make this bank now again that lives up to the standards and which has the reputation which it used to have. And therefore I'm not looking back. I'm not mad at predecessors. I just want to get my job right. And, at the end, you know what? We need to bring pride back to Deutsche Bank.

[PIANO MUSIC PLAYS]

BERNSTEIN: Today, the bank faces an array of potential traps. For instance, if Trump defaults on his loans, they'd have a choice: seize the assets of the President of the United States, or let the loan slide, and give an unimaginably large gift to a sitting President.

Trump's relationship with Rosemary Vrablic continues. She was given VIP seats at the inaugural. And — this has not been previously reported — she was one of a select group of people who got to stay at Trump's hotel in the Old Post Office in Washington during the inaugural, according to a person familiar with arrangements that weekend. Other guests at the hotel included Jared Kushner's family, and key inaugural personnel.

The Doral loans come due in 2023. The Old Post Office and the Chicago loans, in 2024. All during a possible Trump second term.

We'll be right back.

[MUSIC OUT, MIDROLL]

REPORTER: Subpoenas issued to Deutsche Bank and JP Morgan Chase, part of a widening investigation by House Democrats into President Trump's finances.

BERNSTEIN: This winter, Democrats who control the House of Representatives decided there was an awful lot to look into with regards to Trump's relationship with Deutsche Bank.

ENRICH: And they went to Deutsche Bank very early on and explained the situation. And Deutsche Bank declared complete willingness to help. And so, behind the scenes, even before subpoenas were issued earlier this month, Deutsche Bank had been engaging in a tremendous amount of very detailed dialogue with Congressional investigators about the types of materials it had, what those materials showed, how the bank had handled those materials, and even went so far as to help craft the language that would be in the subpoenas.

BERNSTEIN: Does your reporting indicate that Deutsche Bank believes that these specific documents, or that these sort of categories of documents, tells a specific story? Because there's some pretty specific language about what they think there might be.

ENRICH: Yep, that's right.

BERNSTEIN: Whatever it is, the Trumps don't want us to know about it. Donald, Ivanka, Don Jr., Eric Trump sued Deutsche Bank to prevent them from releasing the documents.

In their complaint, the Trumps said, "The subpoenas were issued to harass President Donald J. Trump, to rummage through every aspect of his personal finances, his businesses, and the private information of the President and his family, and to ferret about for any material that might be used to cause him political damage."

Two Congressional Committees responded. They filed a brief opposing the lawsuit in Federal Court in the Southern District of New York. It lays out, unambiguously, what Congress is looking at: quote, "Serious and urgent questions concerning the safety of banking practices, money laundering in the financial sector, foreign influence in the political process, and the threat of foreign financial leverage, including over the President, his family and business."

The Times's David Enrich had been inquiring about Deutsche Bank, the Trump family business, and questionable financial activity. And then someone tipped him off to a woman named Tammy, who had been fired from Deutsche Bank's Jacksonville office.

ENRICH: And I spent an enormous amount of time searching for Tammys in the Jacksonville area, and eventually found her.

[INTRIGUE MUSIC PLAYS]

BERNSTEIN: Tammy McFadden. Here's her story. In the summer of 2016, McFadden, who'd been working for a decade as an anti-money laundering specialist, noticed that Deutsche Bank's computer system had been flagging transactions involving Jared Kushner's family real estate business.

ENRICH: And she investigated this, and what she found were that these transactions the Kushner companies appeared to be moving money to Russian individuals. 

BERNSTEIN: Remember, this is during the 2016 campaign.

ENRICH: And that struck her as a bright red flag waving in her face, and she did what you do in that situation, which is she typed up a Suspicious Activity Report and then sent it on to her managers for review, and that's when the problem started.

BERNSTEIN: It's not that uncommon for a bank computer to flag a transaction, and even for a specialist to write it up. But then the report didn't go to Financial Crimes higher-ups. It went to the division where Rosemary Vrablic works, private banking.

ENRICH: Which is very unusual. Normally you would keep this out of the hands of the business division where the client sits because that — for, I think, kind of obvious reasons — which is that you don't want the people making the decision of whether to file the SAR to have a powerful financial interest in preserving a relationship with a client.

BERNSTEIN: Private banking decided not to send the report to the U.S. Treasury. There might be all sorts of reasons for this, but remember, by this time, Deutsche Bank had already re-examined its relationship with Trump, and was already on high alert to police money laundering and financial crimes.

ENRICH: And so the notion that an employee would flag concerns about possible Russian improper activities with the company of the son-in-law and adviser to a leading candidate for President and they wouldn't actually errr on the side of caution and just go ahead and maybe file that report is remarkable. I — I've spent a lot of time investigating Deutsche Bank and this is one of those moments where I was just shocked to hear this.

Although it's worth noting — and I can't believe I'm about to make this defense for the Bank — but the Bank was so disorganized, in such a kind of sense of crisis for its own special reasons, that it's not impossible that the people making these decisions in Jacksonville and up in New York just didn’t connect those dots in their brains.

[WHIMSICAL KEYBOARD MUSIC PLAYS]

BERNSTEIN: In the bank's statement, a spokeswoman said, "We have policies, processes and controls to address the potential for conflicts of interest, including special measures with respect to clients that hold public office or perform public functions in the U.S."

Not only did McFadden flag Kushner transactions — a separate elite unit tried to flag suspicious Trump transactions, as late as 2017. Those, too, were not reported.

[MUSIC BECOMES PIANO-DRIVEN]

ENRICH: These are not, like, low-level employees straight out of college or something. These are very experienced investigators, a number of them with FBI or military backgrounds, who are highly trained and highly skilled at digging into these transactions and figuring out which are really problematic and which are just kind of innocent and circumstantial.

BERNSTEIN: Presumably after the — you know, the New York Financial Consent Order was in early 2017 — so presumably by 2017, both on the Donald Trump side and on the Russian money-laundering side, it was, you know … I don't even know, like, what color flag we're talking about here. [LAUGHS] So deep red.

ENRICH: I — I hear you. I don't have a good answer for you.

[PAUSE]

BERNSTEIN: Have you been able to tell if Deutsche Bank has been — in addition to obviously providing all these loans for Trump and in handling his money — were they connecting him with business partners? Was Rosemary Vrablic or anybody else introducing Trump to other potential business partners? Were they, like, a sort of convener?

ENRICH: Yeah, that's a really good question, and the answer is, not to my knowledge. I say, “Not to my knowledge,” and I should make even clearer than I already have that I don't know, that's very different than me saying “No,” because the information I have received is, I've talked to dozens of people and I've spent, you know, more than a year investigating this. But people have very strong financial and legal interests to not tell the full story. And, as I said, I unfortunately do not possess subpoena power, so I can't force anyone. And so my information is only as good as the willingness of my sources to speak, you know? 

BERNSTEIN: [LAUGHING] Wait, wait —

ENRICH: And so — so — and I'm sorry, I just have to caveat that, because I don’t — I hate to be — I don't want to be the guy who says there's nothing to see here, because I think there probably is something to see here, and I don't know what it is or what form it will take. But let's put it this way — I am still investing an enormous amount of my own time and the New York Times' time at digging into this Trump-Deutsche Bank nexus because there's a lot of smoke still. And while we have not really found the fire yet, I wouldn't be at all surprised if we do.

BERNSTEIN: In late May, in a Manhattan courtroom, there was a fight over whether Congress should get to see stacks and stacks of Trump Deutsche Bank financial records. Heather Vogell and I went to the hearing.

[MUSIC OUT]

BERNSTEIN: We're standing outside of the iconic Thurgood Marshall courthouse in lower Manhattan, the one with all the columns, and a judge has just ruled that the subpoenas issued from the House of Representatives to Deutsche Bank is — are valid. He just read a lengthy decision, pretty much refuting, point by point, all of the arguments that the Trumps had made for why Deutsche Bank should not comply with the subpoenas. Heather, what was the most significant point to you?

VOGELL: I think what was most interesting was to sort of see it all moving forward so quickly.

BERNSTEIN: One of the lawyers came and said to someone sitting next to us, “Well, I didn't expect that to happen,” when the judge said, “I'll be back with his ruling.”

VOGELL: Yes, exactly. Exactly. So, to see these arguments laid out there and the judge being very clear and coming back after a few minutes — he did concede the point that it may cause harm to the Trumps to have their financial information made public, but he found that that harm does not outweigh the public interest in this case of that disclosure, and its relevancy to the legislative inquiry that Congress is making. 

BERNSTEIN: One of the things that was clear was that the Trump lawyers argued that the subpoenas are outrageously broad. And the judge said, “Well, they're broad, but Congress has the right to do this and we, the judicial branch, do not have — in any way — the right to stop them.”

VOGELL: And another thing I found interesting was that the Trump lawyers had made the argument that these requests are really exposure just for exposure’s sake, that this was essentially a political move by Congress and that is one of the reasons that it should not be allowed to go forward because it is so, um, invasive, essentially. Well, the judge dealt with that by talking about how it's not up to the courts to assess, essentially, what the motives of Congress are. That that's something that's really beyond the reach of the courts. And so it's their job, basically, to see whether these committees have the power to request this type of information. Which is predicated basically on whether they can use it in a legitimate way, which would be to inform legislation, to inform the public understanding of a matter of, uh, you know, national significance — and the judge clearly found that that was the case.

BERNSTEIN: So, as of now, when we're standing here, the subpoenas are in effect. But if past is prologue, the Trump lawyers will be in pretty quickly to appeal this decision and to try to stay this judge's ruling.

[CREDITS MUSIC PLAYS]

MARRITZ: Andrea Bernstein, with Heather Vogell.

Since that story first ran, the Supreme Court heard oral arguments in Trump v. Deutsche Bank. Check our last episode for analysis.

Also since then, David Enrich published his book. The title is Dark Towers: Deutsche Bank, Donald Trump, and an Epic Trail of Destruction. It is a great read with a lot of family drama and international intrigue.

Lastly, Enrich and his colleagues at The New York Times recently reported that the Trump Organization is seeking relief on hotels and resorts from its lenders and creditors, including Deutsche Bank.

[A MOMENT OF MUSIC BEFORE THE CREDITS]

MARRITZ: As you know, we love tips. If you know something about Trump and his lenders, or anything else we ought to be covering, send us a note, tips@TrumpIncPodcast.org.

We are planning stories this summer on the COVID bailout, the election, and much more. Keep up with it all by subscribing to our newsletter on the Trump, Inc. website, and while you're there, find out how to securely share information and documents.

My conversation at the start of this episode with Heather Vogell was produced by Katherine Sullivan and engineered by Jared Paul. Our 2019 episode on Deutsche Bank was produced by Meg Cramer, Katherine Sullivan, and Alice Wilder. It was edited by Charlie Herman, Eric Umansky, Nick Varchavar, and Robin Fields. Bill Moss was our technical director and we had original music by Hannis Brown.

Matt Collette is the Executive Producer of Trump, Inc., Emily Botein is the Vice President of On-Demand Content for WNYC, and Steve Engelberg is the Editor-in-Chief of ProPublica.

I'm Ilya Marritz. Thanks for listening.

 

Copyright © 2020 ProPublica and New York Public Radio. All rights reserved. Visit our website terms of use at www.wnyc.org for further information.

New York Public Radio transcripts are created on a rush deadline, often by contractors. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of New York Public Radio’s programming is the audio record.