MARCH 01, 2017
Felix Sater is back. The Donald Trump business associate last month splashed down in the middle of a New York Times story about a freelanced Ukraine “peace proposal” hand-delivered to the White House by Mr. Trump’s longtime lawyer, Michael Cohen. Mr. Cohen dropped the proposal off in a sealed envelope at the office of then-National Security Adviser Michael Flynn. The deal outlined “a way for President Trump to lift sanctions against Russia” in exchange for a withdrawal of Kremlin-aligned forces from eastern Ukraine and a long-term lease of Crimea to Moscow, the Times reported. The government of Ukraine was not pleased. A spokesman called the deal a “gross violation of the [Ukraine] Constitution” by forces “covertly representing Russian interests.”
A Russian-American businessman with a colorful criminal past, Mr. Sater was the middleman for the Ukraine deal. He connected a possibly corrupt Ukrainian politician, the putative author of the proposal, to Mr. Cohen, the Trump confidant. Mr. Sater’s history with Mr. Trump fills in a few blanks about the president’s Russia links prior to the 2016 presidential campaign. The Ukraine case puts him in the here-and-now, at the center of the Trump universe, drawing a line from Mr. Trump’s past activities to his inner circle today.
Every president has sketchy characters in his past. Barack Obama and Tony Rezko, George W. Bush and James Bath, Bill Clinton and Dan Lasater, and David Edwards, and James McDougal, and…don’t get me started. But these figures are usually pushed to the margins of the administration—or right out the door. Mr. Trump has had several opportunities over the years to show Mr. Sater the door, but Mr. Sater keeps appearing in the middle of Mr. Trump’s business.
Mr. Sater is a kind of template for the fight over the Russian connection. Is he a sinister figure advancing Russian interests? Or merely a happenstance Trumpian Zelig elevated by the media and the president’s opponents? Is the controversy over Russian influence in the 2016 election a scandal of Watergate proportions or ridiculously overblown?
The battle lines have grown clearer in recent weeks. The Washington investigative axis and many anti-Trumpers see a huge scandal forming—a threat to American democracy in the Russian hacks, the Trump circle’s alleged ties to Russian intelligence and maybe even to Russian organized crime. Skeptics, not limited to the president’s supporters, see the uproar over the Russian connection as an attempt to delegitimize the Trump presidency and a head fake by the liberal media and their partisan allies to divert attention away from damage done by Obama holdovers and Clinton partisans in leaking highly sensitive intelligence information.
The Wall Street Journal called it “troubling” that Michael Flynn, the ousted national security adviser “may have been targeted for political destruction by intelligence sources inside the government” and noted that “the existence of transcripts of Mr. Flynn talking with a foreign official suggests that he may have been the subject of a Foreign Intelligence Surveillance Court (FISA) warrant.” The Journal added that “the House and Senate intelligence committees ought to include any FISA warrants and leaks as part of their probe.”
That’s a good idea. A declassified report on the FISA warrants would presumably establish why wiretaps were ordered against members of Mr. Trump’s circle and who was behind them. But FISA warrants issued in 2016 likely won’t get to the heart of questions about Mr. Trump’s history with the Russians.
Mr. Sater connects some of those dots. He was born in Russia in 1966, moved to Israel and then moved on, arriving in the United States in the early 1970s. A document filed in one of the many court cases surrounding Mr. Sater cites an FBI claim that his father, Michael Sheferovsky, was a “syndicate boss” for the notorious Mogilevich organized crime family in Russia. In 2000, Mr. Sheferovsky pleaded guilty to two counts of extortion for shaking down businesses in Brooklyn.
In 1991, Mr. Sater stabbed a commodities trader in the face with a broken bar glass and was sent to prison. By 1993, he was out and working a pump-and-dump stock scheme in Brooklyn. The investigative economist James S. Henry has put together the most extensive record of Mr. Trump’s Russian connections. Writing in the American Interest, he called the Brooklyn scheme “an innovative joint venture among four New York crime families and the Russian mob aimed at bringing state-of-the-art financial fraud to Wall Street.”
In 1998, Mr. Sater was arrested in the $40 million swindle. Eighteen other U.S. and Russian mob-connected traders participated in the scheme, Mr. Henry reports. Mr. Sater pleaded guilty to racketeering and became an FBI informant, sending many of his co-conspirators to jail. Court documents and other records suggest that Mr. Sater was an active FBI informant from 1998 to 2001. Sometime in 2000, according to Mr. Henry, Mr. Sater got himself in more trouble when the NYPD “reportedly discovered that he had been running a money-laundering scheme and illicit gun sales out of a Manhattan storage locker.”
Mr. Sater fled to Russia. The attacks of September 11 brought another change to his fortunes. According to several published reports, Mr. Sater went to work for the FBI and CIA, buying up Stinger anti-aircraft missiles from sources in the Russian black market—getting the terrorist-friendly weapons off the black market was a top priority for Western intelligence. This service earned Mr. Sater a free pass back to the United States.
In 2002, back in New York, Mr. Sater joined the Bayrock Group, a real estate development firm based in Trump Tower. Bayrock was created by a former Soviet official and wealthy Kazakh investors and Mr. Trump was soon doing deals with them. Mr. Sater worked at Bayrock until 2008.
He appears to have been close to Mr. Trump. He escorted Ivanka Trump and Donald Jr. to Moscow in 2006 in pursuit of deals and flew to Colorado with Mr. Trump. By 2007, Mr. Henry reports, Bayrock and its associates had partnered with Mr. Trump to pursue “more than $2 billion in Trump-branded deals.” In 2008, Donald Trump Jr. told a real estate conference that “Russians make up a pretty disproportionate cross-section of a lot of our assets” and that “we see a lot of money pouring in from Russia.”
None of the Bayrock deals seem to have been successful. The most spectacular failure involving Mr. Sater, Mr. Trump and Bayrock was the Trump Soho hotel condominium in lower Manhattan, a marquee Trump effort launched in 2006 amid much spectacle. By 2010, a civil lawsuit alleging fraudulent enticement in sales of condos was gaining traction and the Manhattan district attorney had started exploring criminal charges. The New York Times has an excellent rundown of the complicated case here. Mr. Trump settled and the criminal case was closed. Meanwhile, another Sater project, Trump Tower in Fort Lauderdale, Florida, went broke.
Mr. Sater was eased out of Bayrock in 2008 following a Times article detailing his criminal past. In 2009, eleven years after pleading guilty in the $40 million Brooklyn stock swindle, he was sentenced by a federal judge. He received a $25,000 fine, no jail, no probation, and no restitution order. At the time, he was living the good life in Sands Point, on Long Island’s Gold Coast. Around 2010, Mr. Trump named him a “senior adviser” and gave him an office in Trump Tower. It’s unclear how long that arrangement lasted.
Mr. Trump distanced himself from Mr. Sater in a 2013 videotaped deposition. “I don’t know him very well,” he said. He added, “if he were sitting in the room right now, I really wouldn’t know what he looked like.” Mr. Sater says his relationship with the Trump Organization continued until as recently as the fall of 2015, when he had been working on a plan for a Trump Tower in Moscow. That deal, he told the Times, came to a halt because of Mr. Trump’s presidential campaign
Micah Morrison is chief investigative reporter for Judicial Watch. Follow him on Twitter @micah_morrison. Tips: firstname.lastname@example.org
Investigative Bulletin is published weekly by Judicial Watch. Reprints and media inquiries: email@example.com.