Part V: Behind The Curtain

D. S. Mitchell

At the end of Part IV: Behind The Curtain, David Cay Johnston told the reading audience that he had never seen evidence that Donald Trump was now a billionaire, or ever has been a billionaire.   I have no idea, and actually I really could care less if Trump is a billionaire or just a multimillionaire. That shit’s all in his head, not mine. Kinda like the guy who buys the biggest most gaudy truck he can find, to make up for some secret deficiency.

What I do care about is the obvious, and quite serious conflict of interest issues.  Trump has provided no tax returns, he has not established a blind trust, or divested himself of his businesses.  There are many questions about his deals with Russian oligarchs and his ongoing effort during the 2016 campaign to build a Trump Tower in Moscow, working behind the scenes with his long time attorney, Michael Cohen.

One of the character flaws noted by personal friends of Trump and discussed earlier in this series, is Trump’s poor judgment when choosing partners and associates. I can’t help adding my opinion on this matter.  I think, in addition to poor judgment, Trump just does not give a damn, that’s right, I don’t think he cares. The president’s  choice of Jared Kushner to be his Senior Advisor is a perfect example.

Forget that Kushner is Trump’s son-in-law.  Nepotism has never worked well in the White House, but aside from that, Trump did not need to bring his son-in-law into the West Wing. In fact, he was warned by many to keep Kushner at arm’s length and definitely not involve him in any visible position in White House operations, but Trump did not listen. In fact, Kushner has become an appendage to the president, never seeming to be more than inches from the POTUS. That closeness has drawn serious attention and strong condemnation from Democrats and other political action groups.

In 2oo6 Kushner Co. made an offer to buy a 41 story Manhattan office building at 666 Fifth Ave and the sale was closed in January 2007. The address alone would have scared me off.  Against all common sense Kushner Co, a then 26-year-old Kushner, agreed to pay 1.8 billion for the building. That was a record price for a Manhattan building, in fact I think it was a U.S. record.  The purchase occurred at the height of a real estate boom, muchly inflated value crashed two years later with the Great Recession.

Kushner paid a staggering $1,200 per square foot.  Even at the time of the purchase, when there was nearly 100% occupancy, the building’s rental income only covered less than 3/4 of its annual debt payments. Things have gone from bad to worse for Kushner.  The company’s  flagship building has been described as outdated, with low ceilings, poor lighting and an unsatisfactory floor plan.

According to NY Times writer Charles Bagli, in an April 3rd, 2017 story, the building is at less than 70% occupancy with many leases expiring.  Bagli goes on to describe that the rents from the building have never generated enough money to pay its debts, forcing the owners to cover shortfalls of more than 10 million dollars annually, and that gap between what the building brings in and what it costs, keeps growing. The purchase was highly leveraged and 1.2 billion is still owed on a mortgage that will come due in January 2019.

Kushner Co, was started by Jared’s father, Charles Kushner in 1985.  The elder Kushner would later spend 14 months in Federal prison in Alabama for illegal campaign contributions, tax evasion and witness tampering. During his time in prison Jared visited his father every week-end.  They are apparently very close. My only reason for mentioning this information is that in my experience, people are often a reflection of what they learn at home.

In 2007, Kushner Co, was one of the largest landlords on the East Coast, specializing in developing suburban garden style apartments. To finance the purchase of 666 Fifth Ave. Kushner sold thousands of apartments as they extracted millions in cash, borrowed heavily on properties already in their control, such as the recently acquired former NY Times building. The 666 Fifth Avenue building is a highly visible status symbol, but has turned into a major financial and political headache.

Over the last ten years, to stave off foreclosure Kushner Co has sold off bits and pieces of their primary asset.  In 2010 they sold the retail space, the most valuable part of the building. Two years later they sold off a section of office space. Each sale bringing only temporary relief.

Laurent Morali, president of Kushner Co disputes the seriousness of the situation and states that there are potential investors investigating the options at this moment, however he would not disclose any  names.  Morali further contributed, “Reports that portray it as a distressed situation are just not accurate for the building or the company.”

Morali goes on to describe that the current plan is to demolish the existing building and  build an 80 story high-rise featuring luxury condos, an upscale hotel and a high-end retail mall.  Quite ambitious, considering the debt load and the low net income.

It is obvious that if Kushneer Co. is to bring this big idea to reality Kushner will need to find a deal, sooner than later, to bring a fresh infusion of cash; or a rich partner willing to pick up the bills.  Anyone that plans on coming on board will need to buy out the Vornado Realty Trust, a publicly traded company.

It will take more than $7 billion in financing to convert the existing building into the dream property Kushner Co. visualizes.  To put things into perspective, the General Motors building less than five blocks away, and considered the most valuable building in Manhattan has an established value of 3.4 billion.   The Kushner dream would cost twice that amount. Is that realistic?  Is that genius real estate entrepreneurs at work?

Jared Kushner has aggressively sought to assemble overseas investment in the proposed conversion of the building, and which until recently those efforts have been from  undisclosed sources.  Insiders are reporting that Kushner has negotiated with Israeli banks and insurance companies, Saudi developers, South Korea Sovereign Wealth Fund, a VEB Russian banker, a Qatar prince, a super rich French guy and a Chinese insurance conglomerate to refinance the building.

Kushner’s well-known financial situation has heightened speculation that Jared Kushner could use–or has already used his official position to prop up the family business. Kushner, a thirty something, who has had no life experience other than running a real estate development company has been made the unofficial prince of the realm.

Jared Kushner is the Secretary of State without the title.  Trump has delegated responsibilities to Kushner than would occupy half of the state department staff. Is it possible that Jared Kushner believes his NY real estate experience prepares him to negotiate a long-awaited  peace in the Middle East, solve the opioid crisis, and run a team of business advisors for the White House?

Is Kushner really an “I can do it all,” kind of guy.  I doubt it.  I mean I have read how ego driven Kushner is, but I seriously doubt that he actually believes he can do all the things that Trump has assigned to him. I read in a recent opinion piece where the writer postulated that Kushner considered it ” a once in a lifetime opportunity at branding the family name.”  After digesting it for a minute or two, I thought that answer was closer to  the truth than anything else I have heard. I thought it was brilliant, I just can’t remember where I read it or I would give the guy credit.

What is problematic about his “assignments” is that there will be potential conflicts of interest when Kushner is going to these same sources asking for money and then negotiating a treaty.  The situation is  becoming increasingly dangerous in the eyes of many ethics observers and the actions of his sister Nicole Kushner Meyer in May of 2017 made observers slap their foreheads in amazement.  Nicole was at a Beijing Ritz-Carlson event attempting to entice wealthy Chinese investment in One Journal Square, a two tower development, currently planned in New Jersey.

Repoters on hand for the Ritz-Carlton event were asked to leave and were sent packing. Any information on the meeting came from the 100 or so attendees who talked to reporters after the sales event. The Kushner group teased the audience with the EB-5 immigrant investment program. The very controversial program basically allows immigrants who invest $500,000 in distressed areas of the United States to become U.S. residents.  According to witnesses to the May 2017 event there were multiple pictures of Jared Kushner, and even President Donald Trump, displayed in the event hall.

In a slide show sales pitch Meyer identified Trump “as a key decision maker” in the EB-5 program.  Responsibility & Ethics in Washington, spokesman Noah Bookbinder told news sources that the sales pitch was “highly problematic and it could be interpreted as selling access to Jared Kushner.” Not a good look in the middle of multiple investigations. Meyer later apologized for displaying pictures of President Trump and Jared Kushner, calling it, “inappropriate.”

In an effort to tamper down protests from ethics watchdogs and Democrats.Kushner has “divested” his interest in Kushner Co to close relatives to conform with government ethics requirements. The Kushner lawyers have presented an outline of the plan by which Jared Kushner’s White House job would not overlap with his business interests.

It has become clear however, that Trump’s son-in-law is not divesting all parts of the family business. It is not clear at this time and the White House and Kushner spokesmen have declined to say what properties he is keeping and which ones he is giving up. Jared Kushner transferred his interest in the 666 Fifth Ave building in January 2017.  However, Kushner Co. is still a family business.

The White House has just announced that a planned Presidential trip to China will no longer include Jared and Ivanka in the entourage.The rumor mill is reporting that their “presence” was now considered “inappropriate.” Hmmm. Does that mean Kelly put his foot down, or does it mean that Donald is moving to do what he was initially encouraged to do, keep Kushner at arm’s length?  Is the golden boy losing some of his charisma? Only time will tell.

The election of Donald Trump on November 8th, unearthed controversy after controversy.  Trump is a president who openly disdains American institutions.  He lacks political experience and has no clear core values other than promoting himself.  His refusal to divulge his taxes returns, his refusal to place his business in a blind trust are going to bring a tidal wave of lawsuits and headline news stories over the next 4 years, or longer.

Trump has in fact ignored all calls to put his country ahead of his business, and has refused.  So why would it surprise anyone to learn of his foreign bank loans, real estate deals with suspicious Russian oligarchs, and now Facebook is disclosing they had been manipulated by  Russian troll farms that planted false and inflammatory ads against Clinton.

Federal investigators are delving into Jared Kushner’s financial dealings along with other Trump associates as the investigation into the possible collusion between the Kremlin and the Trump campaign broadens. No matter how Jared Kushner or Donald Trump tries to make a display of separating themselves from their real estate empires, it is all a facade. Another smoke and mirrors act by the Trump-Kushner Co.

A March article in the Washington Post described a meeting between Kushner in December of 2016 with a Russian banker.  That meeting with the Russian money man included the now disgraced General Mike Flynn. Kushner and the White House have maintained the meeting with banker Sergey Gorkov was “a primary point of contact with foreign governments” insisting that there was no discussions related to personal business.  Interesting, since at the time, President Obama was our president and he was in charge of foreign policy.

However, when contacted, Russian banker Sergey Gorkov, a Putin appointee, insisted that his meeting with Jared Kushner was private and personal and Kushner was representing himself as the head of his family real estate business. In case you hadn’t noticed Gorkov contradicted Kushner, and the White House. What are we supposed to believe when everyone in the game is a known liar and cheater?

The size of the construction loan needed by Kushner is unprecedented and there is no American bank that is willing to take such a risk. The condo’s are projected to cost over $6,000 per square foot.  My math isn’t great, but it sounds like a 1000 square foot condo, would set a buyer back $6,000,000 bucks. Really?  With such stratospheric cost projections, financing from overseas will be a necessity. However, where Kushner may have initially thought his position as Senior Advisor would help him find a loan, may in fact, prove to be just the opposite. With so much noise surrounding Kushner and his father-in-law, and a myriad of ethics investigations taking place, foreign banks and financial groups may decide it best to stay away, or end up in years of legal wrangling and potential lawsuits.

As Kushner has come under increased scrutiny the White House has gone off the rails.  I’m sure besides testifying to congress, Mr. Kushner will soon be talking to the Mueller team about why  he failed to disclose that December meeting on his security clearance application along with millions of dollars in art and other equities. Mr. Kushner has declined to declare any potential ethical problems and as such those issues are growing in size and concern.

The Russian investigation is reaching out, following the tentacles of the Kremlin hacking, and looking at the role of Jared Kushner on both the Trump campaign and the transition team. Most importantly his campaign data analytics operation, his relationship with former National Security Advisor Mike Flynn, and his own questionable undisclosed contacts with various Russian officials and nationals.

Trump has his feet in the fire and all we can do is stand back and watch the fireworks as they unfold.  Join Calamity Politics as we try to demystify the financial entanglements of Trump and all those surrounding him. Please join me soon, for Part VI: Behind the Curtain.

Calamity Politics is a progressive political blog.  Our intention is to illuminate the activities of our federal government and present relevant and engaging commentary on issues of the day with a progressive agenda clearly spelled out.

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Dar

**Special thanks to all the fine reporting by Washington Post, Slate, NY Times, Vanity Fair, The Daily Beast which has given me the dates, and facts for this story.**