Baltimore City Paper

Five times law enforcers could have arrested Donald Trump but didn’t

Photo illustration by Charlie Herrick

After President Donald Trump melted down on Twitter Saturday, it's safe to say that virtually no one in America doesn't know that he is under FBI investigation, again.

Although it's highly doubtful that former President Barack Obama ordered Trump Tower's phones tapped, the feds are reportedly looking into the Trump campaign's contacts with Russian government agents, trying to determine whether they colluded to illegally influence the election.


If he is confirmed, the longtime U.S. Attorney for Maryland, Rod Rosenstein, will oversee this investigation, since Attorney General Jeff Sessions has recused himself after being caught lying about his own contacts with the Russian ambassador. 

This is unprecedented stuff, from a Washington-politics perspective. But law enforcement investigations are nothing new to Trump. Herewith are five instances Trump is known or suspected to have been criminally complicit, but was not charged with any crime. These incidents raise two questions: How would the world be different today if prosecutors had decided differently? And why did the prosecutors decide to give Trump a pass?

1. The obstruction of justice, 1981. As Trump was trying to get into the Atlantic City casino boom, he blew the cover of a confidential FBI informant named Daniel Sullivan, a mob-connected "labor consultant" Trump had hired to liaison with construction unions. "New York was so totally corrupt and so controlled by the mob in the '80s that in order to be a successful businessman, you had to have some way to work that world," Walter Stowe, one of Sullivan's FBI handlers, told the Washington Post last year. 

Trump was trying to get his first casino license, and the New Jersey Gaming Commission was asking about Sullivan, so Trump told them he was FBI affiliated "to nip things in the bud," thus scuttling a planned FBI investigation into organized crime in his planned casino.
And there certainly was organized crime activity associated with Trump and his casino. Just a year before this, in 1980, Sullivan bought into a parcel of land with the representative of Nicky Scarfo, a Philadelphia mob boss. Trump immediately signed a 98-year lease on the property, promising the mobbed-up partners tens of millions in profit. He also promised to invest in Circle Industries, a drywall company controlled by the New York mafia, which was also under federal investigation. This was all before Trump knew Sullivan was an FBI informant.

After the Gaming Commission investigated Trump, Trump promised to cut his ties with Sullivan. He paid his mobbed-up partners $8 million to buy them out, and backed-out of the Circle Industries investment. This was fortuitous, as the company, along with 19 other mob-connected drywall contractors, was subjected to a grand jury probe the next year alleging racketeering and tax fraud. One of those indicted was union president, Theodore Maritas, who disappeared and was presumed murdered. Trump's attorney, Roy Cohn, also represented the leaders of that long-running scam. They were members of the Genovese crime family. 

This has all been reported in the New York Times, The Washington Post, and the book "The Making of Donald Trump,” by David Cay Johnston.

Why did the feds not move on Trump all those years ago for blowing their informant's cover? Why did they never put a case on him subsequently, even as he partnered with at least a half-dozen other mafia-connected men in various business arrangements? No one knows. Or if anyone does know, they aren't telling.

2. The Empty Box, 1986. In the 1980s it was a common practice to avoid state sales tax: You walk into the store and buy something expensive, like jewelry. To avoid the tax, in collusion with the merchant, you direct that an empty box be shipped to an out-of-state address. Many, many merchants engaged in this shabby scam, which gave them a competitive advantage over honest retailers; many were caught. Trump was a regular at Bulgari, a jewelry store on Fifth Avenue. Like other rich, famous people (Henry Kissinger, Mary Tyler Moore, Frank Sinatra), Trump partook of the empty box discount, skipping the state sales tax on some $65,000 worth of purchases. Once pinched, in 1986, he testified against the retailer, avoiding a prosecution that would have jeopardized his New Jersey casino license. 

Fascinatingly, infamous Saudi arms dealer and Iran-Contra figure Adnan Khashoggi was also one of the scammers. Khashoggi later sold his personal ocean liner to Trump for use as a private yacht.

Forbes plowed this ground again last year.

Why was Trump not charged? Again, know one knows, but it's fair to say that the customers of Bulgari and like-cheating retailers were customarily left alone, even when they were obvious sleaze-balls like Khashoggi, Trump, and Kissinger. That the late Mary Tyler Moore, America's Sweetheart, was also implicated explains this one well enough. Damn you, Mary Richards!

3. The briefcase full of cash, 1988. Donald Trump personally sold two units in Trump Tower to Robert Hopkins, the mob-connected head of New York's largest gambling ring. As the late Wayne Barrett of The Village Voice told the story, Hopkins, who had no verifiable legitimate income or assets, showed up at the closing with a briefcase full of $200,000, which he counted at the table. To complete the purchase, he got a loan from a New Jersey bank that did business with Trump's casino. Trump summoned a limousine to ferry the cash to that bank. 

"Tony Lombardi, the federal agent closest to then-U.S. Attorney [Rudy] Giuliani, opened a probe of Trump's role" in the transaction, Barrett reported in the 1993 Village Voice story he reprised last year for the New York Daily News. The feds subsequently made a case against Hopkins' mortgage broker, Frank LaMagra, who offered to give up Trump and even wear a wire. Lombardi's response? He went straight to Trump, who denied any wrongdoing, and that was that. Lombardi "closed the Trump investigation without even giving it a case number," according to Barrett. "That meant that New Jersey gaming authorities would never know it existed."

Shortly after Lombardi approached him, Trump announced that he'd raise $2 million "in half an hour" if Giulianni ran for mayor. He later channeled $41,000 into the future mayor's 1989 campaign.

"Lamagra got no deal and was convicted, as was his mob associate, Louis (Louie HaHa) Attanasio, who was later also nailed for seven underworld murders," Barrett wrote. "Hopkins was convicted of running his gambling operation partly out of the Trump Tower apartment, where he was arrested."

And Trump just kept on Trumpin'. Why didn't Lombardi go harder on Trump? He doesn't seem to have told anyone, and City Paper could not locate him for comment.

4. The consistent money laundering, 1998-2014, inclusive. In March of 2015 FINCen, the Treasury Department's The Financial Crimes Enforcement Network, fined Trump Taj Mahal $10 million for money laundering violations. It was the largest ever FINCen fine against a casino.

Trump Taj Mahal has a long history of prior, repeated BSA violations cited by examiners dating back to 1998, when FinCEN assessed a $477,700 civil money penalty against Trump Taj Mahal for currency transaction reporting violations. 

That Trump's casinos have routinely laundered money, both while directly managed by Trump and afterward, is settled fact. The typical prosecutorial concerns about criminal penalties putting a company out of business would seem to be moot: The Taj filed bankruptcy in 1991, shortly after it opened, filed two more times in the 2000s and went bankrupt again in 2014, shortly before this fine was levied. So why just a fine?  

A FinCEN spokesman sidestepped the question of whether the agency referred this case for criminal prosecution, referring the reporter to the U.S. Attorney's Office in New Jersey. "I'm also going to sidestep it," Will Skaggs, a spokesman for the U.S. Attorney says. "We don't confirm or deny the existence of any investigation."

The law indicates numerous criminal charges could have been brought. Trump's casinos were culpable in at least three of the four required "intents": concealment, structuring, and tax evasion. "Concealment" is simply hiding the source, as when a drug dealer or dirty cop takes his loot to the roulette table to convert it into "gambling winnings." "Structuring" just means not filling out the forms required of any currency transfer over $10,000. Trump's Taj Mahal engaged in these acts, and Trump very likely directed it. But the feds never touched him.

5. The Trump University fraud, 2005-2010. Trump owned 93 percent of his real-estate scam school, which operated from 2005-2010 and fleeced customers of at least $25 million. It was not at all innovative, offering the usual free introductory seminar/sales pitch for the standard three-day paid class, which cost $1,500. He had more than 6,000 suckers for this, but, being Trump, he offered a high-price version for $35,000 and got more than 1,000 of those deluded souls to pony up for it. New York Attorney General Eric Schneiderman came after him but, as with the FinCEN case, only a civil case was filed. Trump settled all the civil cases for a grand total of $25 million after his election. 


(UPDATE: Yesterday lawyers for some of the plaintiffs in the Trump University suit asked Gonzalo Curiel, the California judge who oversaw the litigation, to reject the settlement unless former students are allowed to opt out and sue individually, the New York Times reported.)

Could Trump have been charged criminally? Yes. Schneiderman himself has brought numerous criminal fraud cases as A.G., charging doctors, nurses, contractors and developers with criminal acts. Of Trump University, he said, "This is straight-up fraud." 
In October 2014, a New York judge found Trump personally liable for operating the company without the required business license. That means that Trump had no "corporate veil" to hide behind. Any crimes were his.

But: no. A spokeswoman in Schneiderman's office said that when it comes to bringing criminal fraud cases, New York's Attorney General can't do it unless another agency refers the case to him. So it would have required a state police detective to take a victim's statement and build the initial case, or a state agency (like the New York State Education Department, which in fact did complain publicly about Trump's fraudulent use of the term "University" for four years), to ask the A.G. to take the reins. Apparently that did not happen.

Basically, Trump dodged this bullet in part because, by the 2000s, fraudulent house-flipping instruction had been normalized, with dodgy, unlicensed "real estate schools" sprouting in every city and proliferating online like mushrooms on horseshit. By 2006 there were at least three such schools based in Baltimore alone, not counting Trump U, which trolled for suckers in hotel ballrooms just out of town. So consumers could be forgiven for believing it was perfectly legal to dupe people out of $1,500 or $3,000 or $35,000 in exchange for unethical house-flipping advice they could find free on internet message boards. In paying the $25 million, President Trump admitted no wrongdoing, of course.

There were many other incidents: a 1987 "stock parking" scam involving Bally's Corp, a $3.5 million casino chip purchase by Trump's father in 1991 (money laundering, again), insider trading allegations and an apparent pump-and-dump stock scam in 2006, where Trump owned a Trump-themed (of course!) magazine that burned through $7 million of investors' money in a year; ripped-off investors in condo towers in Florida and Toronto in the late 2000s and since.

But most of these are close calls, or civil matters, on which law enforcement agencies had no direct eye (well, except: the central figure in one alleged $250 million Trump Tower-based scam/money-laundering case was an FBI informant whose pump-and-dump fraud conviction the feds kept secret for 10 years while using him to ensnare others. But let's take one scandal at a time).
The five incidents listed above are different because, either arguably or unquestionably, actual crimes were committed by Trump, and the FBI, or the Treasury Department, or state attorneys general knew about them—but declined to either investigate or, if they did investigate, to prosecute.
The stakes today are much higher, of course. Trump is suspected of colluding with a foreign adversary to subvert the United States' electoral process which brought him to power, and his ties to Russian operatives have appeared as brazen as the lies he's told about them.
For at least 10 years, Trump's business empire has been substantially fueled by Russian money, much of it tied to so-called "oligarchs" with close or cordial relationships to Russian dictator Vladimir Putin. And much of this money was channeled through banks and shell companies that bear the hallmarks of money laundering.
Barring the appointment of a special prosecutor, F.B.I. Director James Comey, whose career twice brought him into Trump's orbit before last year's presidential run, will have to decide what, exactly, to investigate and then whether the evidence discovered constitutes a crime. If a special prosecutor is appointed, he will advise Rosenstein, who is reputed to be utterly non-political, and Rosenstein will likely have to tell the American people what he decides to do.
It's a daunting task, and will undoubtedly be complicated further by political events to come. Investigators are sure to be wondering: How different would America be today if law enforcers had made different choices years ago?

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