Russian emigre in Trump saga still surrounded by fellow financial fraudsters

McClatchy Washington Bureau

PORT WASHINGTON, N.Y. – A cast of convicts and disgraced businessmen, including a Russian emigre central to the probes into possible Trump campaign collusion with Moscow, has reassembled in a nondescript office here across from a commuter train station.

The office is rented by the engaging but elusive emigre, Felix Sater. He’s been front-page news of late for emails, now in the hands of congressional and federal investigators, detailing how he and Trump Organization attorney Michael D. Cohen sought a real-estate deal in Moscow during the presidential campaign. Sater, who had been involved in previous ventures with Donald Trump’s company, wrote a 2015 email to Cohen saying, “Our boy can become president of the USA and we can engineer it.”

That bombshell late last month helped place Sater, who once described himself as “a very interesting guy,” at the heart of the ongoing Trump investigations.

And now a new McClatchy investigation reveals that Sater is again associated with some of the individuals with whom he was implicated in FBI probes of stock manipulation on Wall Street on behalf of Russian and Italian mobsters in the late 1990s. Several of the people who were convicted or faced regulatory sanctions in those probes have been working in the same suite as Sater on Haven Avenue in this affluent Long Island, N.Y., suburb.

The new information raises questions about Sater’s activities while he and Cohen were working on the potential Moscow deal, whom he was doing business with, and whether Cohen was aware of these connections.

The relationship between Cohen and Sater continued after the Moscow project: A year later, in January 2017, they drafted, with a Ukrainian politician, a Ukraine-Russia peace plan and delivered it to Trump’s then-National Security Adviser Michael Flynn.

The building directory lists two companies in Suite 205, Advance Capital, and Regency Capital Inc., which share a three-year lease that began in May 2016. The suite is upstairs from the greasy spoon Haven Diner, overlooking a Long Island Railroad station.

School kids attend language classes at the Japanese Culture Center, and an eyelash extension salon is located a few doors away. Suite 205 is the only unmarked one on the floor. There’s a video surveillance system out front and above the right side of the door is a mezuzah, a prayer symbol often affixed outside Jewish homes and businesses.

“They're in and out, they travel a lot,” said an employee of a neighboring business who requested anonymity in order to speak freely.

Old friends

Advance Capital’s chairman, Gary Levi, is described by several who know both men as a longtime Sater associate. The Securities and Exchange Commission charged Levi in 2003 with helping the publicly traded fashion company Candie’s, Inc., inflate its income statement to dupe investors. He consented to a cease-and-desist order and paid a $25,000 civil penalty.

The SEC said that Levi worked directly with Candie’s Chief Financial Officer Gary H. Klein, who a year later was barred by regulators from accounting work with publicly traded companies. (Klein was arrested in 2004 in West Harrison, N.Y., for sending explicit sadomasochistic AOL chat messages to what he thought was a 14-year-old girl. Florida lists him on its directory of registered sex offenders.)

Levi isn’t the only Advance Capital executive with a checkered past. The company’s vice president of business development is Salvatore Morreale, cousin of Sater’s co-conspirator in the stock fraud case, Salvatore Lauria.

Lauria and Sater were both arrested, their exploits chronicled in the 2003 book The Scorpion and the Frog.

In the book, Morreale is simply referred to a “Cousin Sal”; a family tree on Lauria’s wife’s Facebook page indicates they are indeed cousins. Morreale was indicted in November 1998 in a separate investigation that alleged he helped launder money through stock manipulation, working in tandem with White Rock Partners, an investment firm where the two men worked, and its successor company, State Street Securities.

Lauria, Sater and a Russian named Gennady “Gene” Klotsman were central figures in White Rock Partners. Klotsman reportedly is imprisoned in Russia for a spectacular diamond heist.

Morreale pleaded guilty in 1999 to multiple conspiracy charges, according to court documents and his records on Broker Check, run by the Financial Industry Regulation Authority, a self-regulating body for Wall Street.

Morreale and Levi did not respond to requests for comment.

Mystery deepens

Soon after McClatchy began asking questions about Advance Capital in late August, its website suddenly disappeared, replaced by a Go Daddy ad for domain names. Before it was taken down, the website boasted to potential customers that it offered “an alternative to conventional business loans.” It’s unclear whether the business is still operating.

Court documents in New York show the company made the equivalent of loans by taking small stakes in companies through cash advances, getting a percentage of a company’s credit-card daily billing revenues until reaching an agreed-upon payoff amount.

The company appears to operate in a lightly regulated space; it’s technically not considered a lender by the New York State Department of Financial Services.

Morreale’s presence at a Sater-linked company suggests that, at the very least, Sater continues to work in close proximity to his former circle. Persons familiar with operations say Sater keeps a desk at Advance Capital. A person familiar with the operation said the men sometimes met at Sater’s nearby home in Sands Point.

McClatchy reporters twice visited Sater’s Sands Point home last month and were directed to send questions to his lawyer Robert S. Wolf, who then declined comment. Both Sater and his lawyer were sent a long list of detailed question. Sater asked that questions be sent to Wolf, but added a jab.

“I can see from your questions that your story will be mostly wrong and completely off base,” he wrote. When pressed to help correct what might have been incorrect, neither Sater or Wolf initially responded.

On Thursday, Wolf confirmed a relationship between Sater’s businesses and a Port Washington-based attorney, Arnie Herz, who had filed trademark paperwork on behalf of Advance Capital in April 2016.

▪  Herz has registered numerous Sater-related businesses, including Regency Capital Associates LLC in 2016, the business in the same suite as Advance Capital.

▪  Moreover, Herz registered several businesses tied to the Khrapunovs, a family accused by the government in their home nation of Kazakhstan of theft and money laundering, including via Trump-themed properties, a focus of an earlier McClatchy investigation into Sater. McClatchy also found that Sater assisted in efforts to get work visas for at least one person at a U.S. company funded by the fugitive family.

Wolf declined to provide further comment.

Kalsom Kam is another link between Sater and Advance Capital.

Kam registered Advanced Capital Associates, LLC, in New York in February 2016 and was listed as vice president of underwriting at the company earlier this year. He is also the registered agent for Global Habitat Solutions, Inc., which lists Sater as its chief executive officer.

When McClatchy reached Kam on his cellphone he abruptly hung up and did not return subsequent voice messages requesting comment.

There’s yet another factor that links Sater to his former associates. This March — about a year after the Sater-Cohen efforts to build a tower in Moscow apparently fell apart — Lauria left a tribute to Alexander Oronov, another Russian emigre, on the website Legacy.com.

Ukrainian politician Andrii Artemenko said Oronov had been an intermediary, who connected Artemenko to Sater and Cohen ; the three in late January drafted a secret peace plan for Ukraine and neighboring Russia without input from the State Department, and Cohen delivered it to Lt. Gen. Michael Flynn shortly before Flynn was fired as national security adviser for not being truthful about his own Russia ties.

Oronov, who founded the Baryshevskaya Grain Company in Ukraine, died suddenly in early March. Artemenko took to Facebook to suggest Oronov died because he knew too much, though a business associate who knew Oronov well said he died of cancer, and his death was not a mystery.

“My best to the family. We will never forget Alex, never, never, never,” said the message left in Lauria’s name.

Oronov was also father-in-law to Cohen’s brother Bryan. Multiple news reports earlier this year said the Cohen brothers and Oronov had invested together in Delaware-registered International Ethanol of Ukraine.

Cohen declined to answer specific questions this week emailed by McClatchy.

Past, present

Although Sater’s stock manipulation crimes were committed in the late 1990s, he was not sentenced until 2009. Sater never set foot in jail for those misdeeds, getting off with the $25,000 fine. FBI handlers testified on his behalf that he was instrumental in helping get Russian-made weapons off the black market. His local rabbi, when honoring Sater as Man of the Year in 2014, described Sater’s informant work with intelligence agencies.

While he was working with the government, Sater also had co-founded Bayrock Group with a Kazakh Tevfik Arif. That company in 2006 landed the rights to develop the vaunted Trump Soho project in Manhattan, and Trump-themed projects in Arizona and South Florida. Sater was forced to abandon his role in the Trump Soho after the New York Times revealed his past as a two-time criminal convict. The revelations tarnished the Trump name on what was to be a swank hotel and condo development. The project later dissolved into financial chaos and litigation.

But the information about Sater’s current activities brings new questions about Sater’s links to those in Trump’s inner circle, and even Trump himself. They also underscore why both Cohen and Sater might be of interest to the congressional investigators and Special Counsel Robert Mueller who are looking at potential collusion between Russia and the Trump campaign in 2016, something Trump has blasted as a witch hunt.

Trump later testified under oath in 2013 that if the Russian émigré sat across the room from him, “I really would not know what he looked like.” Yet last month’s email revelations show Sater continued to seek business for the Trump Organization later than previously believed.

“I have known Mr. Sater for several decades,” Cohen confirmed in a two-page statement on Aug. 28, shortly after the Sater-Cohen emails became public.

Cohen did not answer McClatchy’s questions about whether Sater represented himself or his firm Regency Capital (he lists himself as an “adviser” there in federal campaign finance filings) in his pursuit of a Trump-themed project in Moscow. Sater also did not answer that question, sent to his personal email. The Trump Organization, through its chief lawyer Alan Garten, declined to answer questions about Sater and pointed to an earlier statement.

UPDATE: This story has been updated.

- Gabrielle Paluch is a special correspondent for McClatchy.

(c)2017 McClatchy Washington Bureau

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