Judicial Watch

The Preet Heat

President Trump sent another shock wave through the legal system Friday with an abrupt Justice Department demand that all forty-six U.S. Attorneys held over from the Obama Administration hand in their resignations immediately. The U.S. Attorney from the storied Southern District of New York, Preet Bharara, had good reason to think he might be exempt from this demand: in November, following a highly publicized meeting in Trump Tower, then-President-elect Trump asked Mr. Bharara to stay on.

What changed? Mr. Bharara simply may have been a victim of raw power politics—he is a former chief counsel to Senator Chuck Schumer and there is no love lost between the Senate minority leader and the president. But as I noted in November, the SDNY is no ordinary crime-fighting post. It’s been home to law-enforcement legends such as Henry Stimson, Thomas Dewey, Robert Morgenthau and Rudy Giuliani. It’s size, Manhattan location and jurisdiction over Wall Street make it an important player in the U.S. justice system, famously independent of Washington.

Mr. Bharara established himself as a respected non-partisan scourge of political corruption, sending to jail more than twenty-five corrupt New York political figures, including Speaker of the New York State Assembly Sheldon Silver, a Democrat, and the majority leader of the New York State Senate, Dean Skelos, a Republican. The SDNY is currently taking a close look at associates of New York City Mayor Bill DeBlasio and Governor Andrew Cuomo in separate corruption cases.

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Deconstructing The Russian Connection

President Trump threw gasoline on the bonfire of the Russian connection over the weekend, tweeting that “Obama had my ‘wires tapped’ in Trump Tower just before the victory.” In case anyone wasn’t getting the message, in another tweet he added, “This is Nixon/Watergate.” A spokesman for Mr. Obama swiftly rejected the charge. On Sunday, the White House demanded that Congress investigate President Trump’s charge of Mr. Obama’s abuse of power.

To Mr. Trump’s critics, these developments are the continuation of a pattern of outrageous statements designed to shift the focus away from his administration. To his supporters, the Russian connection is a baseless concoction whipped up by the media and political opponents—and driven by a steady flow of leaks from within the government—to delegitimize his presidency.

In November, the website Heat Street reported that the FBI obtained a warrant from the special Foreign Intelligence Surveillance Act court to examine activities by individuals related to the Trump campaign. Other similar reports followed. If they’re accurate—and color me a skeptic—President Trump can settle the wiretap issue quickly by declassifying and releasing any FISA warrants related to the campaign.

But whatever side you take in the Russian connection, it’s clear this scandal is not going away anytime soon. With that in mind, let’s briefly deconstruct what this mess is actually about.

The central issue of the Russian connection is Kremlin-linked hacking and related activities during the 2016 presidential campaign. Did Mr. Trump or his team have any knowledge of these activities, other than news reports? Did they in any way knowingly collude with agents of the Russian government?

Throughout the 2016 campaign, Mr. Trump repeatedly went to great lengths to defended Vladimir Putin’s kleptocratic regime. Suspicions grew that the Russians had something damaging on the candidate. That question now haunts his presidency.

The most consequential of the investigations into the Russian connection is led by the FBI. So once again, James Comey is in the hot seat. The House and Senate intelligence committees, judiciary committees, and the House oversight committee all are conducting probes as well. Media reporting and leaks continue to drive the story. Will there be a special select committee, a bi-partisan panel or a special prosecutor? Only if there are additional damaging revelations, and only after the congressional probes play out.

Beyond the 2016 election, two key areas link Mr. Trump to the Russians: his financial dealings in the early years of the new century with figures associated with Russian organized crime, and his history with Atlantic City casinos and customers.

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Who Is Felix Sater?

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.

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Trump & The Anti-Semites

After days of mounting criticism, President Trump yesterday forcefully denounced the rise in anti-Semitic incidents across the country. Last week, not so much denouncing anti-Semitism, plenty of denouncing the press. History shows a connection between the two.

Following a tour of the National Museum of African American History & Culture, President Trump declared that the institution was “a meaningful reminder of why we have to fight bigotry, intolerance and hatred in all of its very ugly forms. The anti-Semitic threats targeting our Jewish community and community centers are horrible and are painful and a very sad reminder of the work that still must be done to root out hate and prejudice and evil.”

At last week’s press conference, the president took it personally when a reporter asked him about bomb threats called in to Jewish community centers. “So here’s the story, folks,” he said. “Number One, I am the least anti-Semitic person that you’ve ever seen in your entire life. Number Two, the least racist.”

When Jake Tur, the yarmulke-clad reporter from the Hasidic weekly Ami Magazine, began to protest that he had not, in fact, said the president was anti-Semitic, Mr. Trump silenced him. “Quiet, quiet, quiet,” he said, then he claimed the reporter “lied” about the question (he didn’t) and then added, “welcome to the world of the media.”

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The Flynn Edge Of The Wedge

So National Security Adviser Michael Flynn has become the first casualty of the Russian connection. Not counting Paul Manafort and Carter Page, thrown off the Trump Train during the presidential campaign. Not counting two Russian intelligence agents arrested for treason, who may or may not have been involved in hacking the U.S. election, who may or may not have been assisting the CIA. Not counting Christopher Steele, the former MI-6 agent and author of the notorious Russian dossier, currently in hiding.

So call Mike Flynn the first high-level casualty of the Russian connection. He’s likely the thin edge of the wedge. His Monday night resignation—ostensibly for misleading the vice president about conversations he had with a Russian official before Mr. Trump took office—has revved up the investigative axis in Washington. What did Mr. Trump and his aides know and when did they know it? Did Mike Flynn just take a bullet for the president?

Before the circus moves on from the spectacle of Flynn fallen in the arena, it’s worth noting that he served his country with honor and distinction for thirty-three years in the United States Army, rising to the rank of lieutenant general. He led dangerous intelligence missions in Afghanistan and Iraq. Later, apparently the same qualities that made him a successful battlefield intelligence leader got him in trouble as head of the Defense Intelligence Agency.

In the wake of the Flynn resignation, Democrats are calling for an “independent investigation” of the Russian connection. What they mean by that is not entirely clear, probably a specially charted commission, a special select committee or a special prosecutor. In any case, none of that is going to happen, at least not anytime soon.

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Rex & The Resource Curse

The Trump Presidency has opened with a bang. Death to ObamaCare, a new SCOTUS nominee, a Muslim ban, a Mexican wall, various conspiracies—the Russians and the dossier, the electoral tally, the inauguration crowd size—attacks on the media, on Boeing, Lockheed Martin, General Motors, Toyota, Hollywood actors, John Lewis, John Brennan, alternative facts, the global gag rule, the death of the Trans-Pacific Partnership, the rebirth of the Keystone and Dakota Access pipelines. The president is tweeting. The president has kept his campaign promises. The president has lost his mind. The town is in tumult. The opposition is aghast. Critics have assigned the president his own Robespierre. Grievances mount. “I haven’t slept in a month,” Kellyanne Conway tells Fox News Sunday. “If you are part of Team Trump, you walk around with these gaping, seeping wounds every single day, and that’s fine.”

Thirteen days into the new administration, the spectacle continues, delicious and appalling and mesmerizing. But in Congress real business is starting to get done. Follow the money. Cui bono? Who benefits? The answers to that timeless investigative question will tell us a lot about Mr. Trump’s Washington.

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Rex & The Russian Swamp

micahs-mastheadAmid controversy over the extent of Kremlin penetration into the American electoral system (detailed last week in Investigative Bulletin), Donald Trump has doubled down on the Russian connection with his nomination of ExxonMobil CEO Rex Tillerson to become the next secretary of state.

Mr. Trump has been signaling a new Russia tilt for months and Mr. Tillerson seems an excellent candidate to carry it out. Whether this is sound policy or sheer folly remains to be seen, but from an anti-corruption perspective—taking Mr. Trump at his pledge to “drain the swamp”—the Tillerson nomination is strange indeed.

Mr. Tillerson is up to his eyeballs in Russian oil deals with Vladimir Putin, whose kleptocratic regime makes the Washington swamp look like the pool at Mar-a-Lago. Last week, U.S. intelligence leaked a new estimate of Mr. Putin’s personal wealth: $85 billion.

His Kremlin salary: $144,444.

You lie down with dogs, you get up with fleas. Mr. Tillerson’s role in the Rosneft oil deal is a case in point. Rosneft is a Russian energy giant closely allied with Mr. Putin. Mr. Tillerson negotiated a deal with Rosneft giving ExxonMobil access to vast Russian oil reserves in the Arctic and Black Sea. ExxonMobil pledged millions to provide the technology and expertise for exploration and drilling. In return, it received a one-third stake in the venture. Successful exploitation of the oil fields could bring more than $100 billion into ExxonMobil coffers.

Rosneft was formerly known as the Yukos Oil Company, Russia’s largest energy enterprise. In 2003, Mr. Putin decided he wanted it.

Yukos’s founder, the oligarch Mikhail Khodorkovsky, was becoming a threat to Mr. Putin. He jailed Mr. Khodorkovsky on bogus fraud charges, seized Yukos assets and bankrupted the company. Mr. Khodorkovsky served ten years behind bars. Other Yukos officials were jailed or fled the country. American and Russian investors were robbed. The Permanent Court of Arbitration at The Hague awarded investors $50 billion in damages, but the decision was later overturned.

Some might say Mr. Khodorkovsky got off easy. Here’s a list of Putin critics who ended up dead.

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Swamp EB-5

micahs-masthead

We’re hearing a lot these days about “draining the swamp” of Washington corruption but as every serious student of crime and punishment knows, the swamp is not one, but many. The swamp contains multitudes. It is Washington. It is New York. It is San Bernardino County. It is the “high places before Jerusalem”—meaning the worship of idols, meaning corruption is not a place but a practice, the lesser angels of our nature brought low by vanity and ambition, greed and delusion. Today, we look at one corner of that vast ecosystem: the federal EB-5 program.

Congress will give EB-5 a new lease on life this week by slipping renewal of the controversial program into a continuing resolution. Administered by the Department of Homeland Security, it is formally known as the Employment-Based Fifth Preference Immigrant Investor Program. In plain language, it’s a green card fire sale for rich foreigners.

Under EB-5, a foreigner pays $500,000 and is granted a green card, placing the purchaser and immediate family on a road to permanent residency in the United States. Silken middlemen on two continents speed the process. The stated purpose of the EB-5 program is job creation. Each $500,000 fee is supposed to be directed to projects in economically distressed “targeted employment areas” in the U.S. to create ten full-time jobs.

Estimates of the funds generated by EB-5 in the last decade range from $15 billion to $21 billion. The cheap financing has attracted big time commercial developers and an industry to support them. But rather than flowing to hard-hit economic zones (Detroit, anyone?) EB-5 dollars have mostly gone to support glitzy projects in places such as Beverly Hills, Las Vegas, Miami, Manhattan, Atlantic Yards in Brooklyn and Nassau Coliseum on Long Island.

As the New York Times recently noted, EB-5 “is increasingly supporting large luxury real estate projects, not the development in the rural and downtrodden districts that some say were the original targets of the program.”

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Trump & Preet

micahs-mastheadPresident-elect Trump’s creative destruction of the established order in Washington continues to transfix the chattering classes and only a charlatan would claim to know where it all will end. Anti-corruption aficionados across the political spectrum are mesmerized by the spectacle of Mr. Trump’s vast business empire on a collision course with the presidency. In a series of dawn bulletins issued today via Twitter, Mr. Trump announced that “legal documents are being crafted which take me completely out of business operations.” Details to follow. How Mr. Trump resolves the issue will send up an important signal about the nature of the Trump Presidency. Another sign will come with his selection for the critical position of U.S. Attorney for the Southern District of New York.

The SDNY appointment is off the radar but should be watched closely. The office is one of the most important crime-fighting posts in the country. It’s been home to such law-enforcement legends as the trust-busting Henry Stimson, Tammany Hall foe Thomas E. Dewey, the visionary Robert M. Morgenthau and Mafia antagonist Rudy Giuliani. Its size, Manhattan location, jurisdiction over Wall Street and distance from the capital’s intrigues makes the SDNY a critical player in the U.S. justice system.

Today the SDNY is led by the crusading Preet Bharara, scourge of political corruption in seemingly every corner of New York state. And make no mistake: New York is in the midst of a corruption epidemic. Over the past decade, more than thirty lawmakers have been convicted or charged with wrongdoing. You can view the wall of shame here, courtesy of the New York Times. According to a recent Quinnipiac University poll, 87 percent of New Yorkers say government corruption is a serious problem. 87 percent! Among those sent to jail by Mr. Bharara are the former Speaker of the New York State Assembly, Sheldon Silver, a Democrat, and the former majority leader of the New York State Senate, Dean Skelos, a Republican. Corruption in New York is a bipartisan affair.

Silver and Skelos were two of the infamous “three men in a room” that control Albany. The third man is the governor of the state, currently Andrew Cuomo. Mr. Cuomo has not been charged with any wrongdoing, but earlier this month Mr. Bharara indicted eight men, including two former top aides to Cuomo, in a sweeping bribery and fraud scheme. A third former Cuomo aide has pleaded guilty and is cooperating with the investigation.

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Drowning In The Swamp

micahs-mastheadThe Trump transition is picking up steam and it’s clear we’re in for some interesting times in Washington. This is not going to be business as usual. But already there are danger signals flashing for the president-elect.

Mr. Trump famously campaigned on “draining the swamp of corruption in Washington,” a call that resonated that across the country. “We must fix a rigged system in which political insiders can break the law without consequence and where government officials put special interests above the national interest,” he wrote in USA Today on the eve of the election that changed his world—and ours.

Mr. Trump now faces some painful choices. The multi-billion-dollar Trump Organization, his life’s work, threatens to throw a shadow of corruption over the Trump Presidency before it even gets started. “Life is unfair,” another president said. There might not be a shred of truth to corruption concerns about the Trump holdings, but perceptions matter. Political insiders, government officials and special interests all will be drawn into the Trump Organization scandal vortex unless the president-elect moves fast.

The Trump Organization is a sprawling enterprise with complex business dealings across the globe. According to a Washington Post analysis of Trump financial filings, more than one hundred Trump companies had done business in South America, Asia and the Middle East. The New York Times reported that Mr. Trump’s fortunes “depend deeply on a wide array of financial backers” and his companies “have at least $650 million in debt.” As president, the Times noted, Mr. Trump would have “substantial sway” over fiscal policy, appointments directly affecting his financial interests, legislative issues impacting his net worth, and official dealings in foreign countries where the Trump Organization does business.

Numerous examples of potential Trump conflicts have already surfaced:

In China, a frequent Trump target on the campaign trail, the government-controlled Bank of China is part of a group that loaned a Trump affiliated office building in Manhattan $950 million.

In India, Trump business partners are building luxury apartment complexes. Three Indian developers flew to New York last week and met with the president-elect.

In Argentina, news reports say President Mauricio Macri fielded a request from the president-elect for help with an office building project in Buenos Aires during a congratulatory phone call. Spokesman for both men denied the account. Mr. Trump’s daughter, Ivanka, joined the men for a portion of the call.

In Saudi Arabia, the Trump Organization is exploring hotel deals in the Red Sea port of Jeddah.

In Germany, troubled Deutsche Bank has been involved in $3.5 billion in loans to Trump entities since 1998. Loans of more than $350 million from the bank are tied to Trump properties in Miami, Chicago and Washington.

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