ProPublica report: Ivanka Trump and Don Jr. nearly indicted for real estate fraud.

The Time Ivanka Trump and Don Jr. Were Nearly Indicted for Real Estate Fraud

The Time Ivanka Trump and Don Jr. Were Nearly Indicted for Real Estate Fraud

The Slatest
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Oct. 4 2017 6:00 AM

The Time Ivanka Trump and Don Jr. Were Nearly Indicted for Real Estate Fraud

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Ivanka Trump and Donald Trump Jr. arrive on the West Front of the U.S. Capitol for the inauguration on Jan. 20.

Win McNamee/Getty Images

Over the past eight months, the Trump family’s frivolity with laws and ethics has, at the very least, raised questions about how the family conducted itself before coming to Washington. Bits and bobs and gossip from the real estate years have been floating around. Special counsel Robert Mueller is currently knee deep in the Trump empire. And on Wednesday, a collaboration between ProPublica, WNYC, and the New Yorker provided an illuminating look into how the Trumps conducted themselves when no one was watching with a deeply reported piece on how the Trump family attempted to sell condos in its pet real estate project, and how they got out of a criminal investigation.*

The Trump SoHo project was unveiled by Donald Trump himself in 2006 and was supposed to herald Ivanka Trump and Donald Trump Jr.’s arrival at the grown-ups table at the Trump Organization. The half-baked development project, however, faltered badly from the start and left the two Trump children scrambling to fill the building’s condos to make sure the deal didn’t go kaput. To save their first signature deal, the two then-twentysomethings engaged in sales behavior of such dubious legality that, in 2010, the Major Economic Crimes Bureau of the Manhattan District Attorney’s office opened an investigation into Ivanka and Don Jr. The DA’s case against the Trumps was built over the course of two years, to the point where indictments appeared imminent. But then, as ProPublica, WNYC, and the New Yorker report, Manhattan District Attorney Cyrus Vance Jr. closed the investigation for good shortly after meeting with Trump attorney and one of Vance’s largest campaign contributors, Marc Kasowitz.

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From the outset, the particulars of the project were sketchy. The building wasn’t actually in SoHo, just nearby. Zoning laws wouldn’t allow for the building to be a residential tower, so the Trumps sold the project as a “condo-hotel” where buyers essentially purchased a hotel room, which, by law, they were not able to occupy for more than 120 nights a year. The Trump kids partnered on the project with two Soviet-born businessmen, one of whom was Felix Sater, who previously pleaded guilty to racketeering and had spent time in prison for a bar fight where he attacked a man with the stem of a margarita glass. With the economy in a deep dive in 2007 as the world careened toward the Great Recession, sales of the units were slow. To try to juice sales, the Trump kids started fudging the numbers.

From Wednesday's report:

Business was slow, but the Trump family claimed the opposite. In April 2008, they said that 31 percent of the condos in the building had been purchased. Donald Jr. boasted to The Real Deal magazine that 55 percent of the units had been bought. In June 2008, Donald, Jr. and Ivanka, alongside their brother Eric, gathered the foreign press at Trump Tower in Manhattan, where Ivanka announced that 60 percent had been snapped up… None of that was true. According to a sworn affidavit by a Trump partner filed with the New York Attorney General’s office, by March of 2010, almost two years after the press conference, only 15.8 percent of units had been sold.
This was more than a marketing problem. The deal hinged on selling at least 15 percent of the units. By law, the sales couldn’t close with anything less. The Trumps and their partners would have had to return the buyers’ down payments.
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Sensing the fix was in, buyers in the Trump SoHo sued the Trump Organization. Shortly after, the DA’s office opened its inquiry. “[The DA] believed that Ivanka and Donald, Jr., might have violated the Martin Act, a New York statute that bans any false statement in conjunction with the sale of a security or real estate,” according to Wednesday's story. “Prosecutors also saw potential fraud and larceny charges, applying a legal theory that, by overstating the number of units sold, the Trump were falsely inflating their value and, in effect, cheating unsuspecting condo buyers.” For instance, according the story, “In one email, according to four people who have seen it, the Trumps discussed how to coordinate false information they had given to prospective buyers.” (The reporters on this story did not see the email.)

Eventually, the Trumps settled the civil suit with the buyers, agreeing to give back 90 percent of their deposits. But, as the story notes, the Trumps "extracted a rare concession in return: The plaintiffs agreed not to cooperate with prosecutors unless they were subpoenaed." Still, the criminal investigation did not go away, and eventually, in May of 2012, Trump lawyer Marc Kasowitz met directly with Manhattan District Attorney Cyrus Vance Jr. Kasowitz had already donated $25,000 to Vance’s re-election campaign, making him one of Vance’s biggest donors. Three months later, Vance ordered the case be dropped. His office returned the donation, but:

In September 2012, within weeks of the case being resolved, Kasowitz contacted Vance’s campaign about hosting a fundraiser, according to a spokesperson for the campaign. Kasowitz held the event that January. He personally donated almost $32,000 to Vance’s campaign, and 20 of his law firm’s partners and employees kicked in at least another $9,000. Then, in October 2013, as Election Day approached, he hosted a breakfast —“Republicans for Cy Vance” — which raised an additional $9,000.

In the end, the Trump SoHo "went into foreclosure in 2014 and was taken over by a creditor.Vance, who is still in office, told ProPublica, WNYC, and the New Yorker that he did the "right thing" by dropping the case, citing the civil settlement. He also said he plans to return Kasowitz's money.

*Update, Oct. 4, 2017: This post has been updated to reflect that three outlets collaborated on the story: ProPublica, WNYC, and the New Yorker.