How Donald Trump became Deutsche Bank’s biggest headache

 Since Trump’s election, Deutsche has fielded numerous calls from the media on a possible financial trail to Moscow. Photograph: Pool/Getty Images


Since Trump’s election, Deutsche has fielded numerous calls from the media on a possible financial trail to Moscow. Photograph: Pool/Getty Images

Donald Trump has become a big headache for Deutsche Bank. Here’s how.

The language was scathing, the tone sarcastic. “[Donald] Trump proclaims himself the archetypal businessman, a deal-maker without peer,” the memo said.

It mentioned Trump’s boast that he was worth “billions of dollars”. And it listed his interests in “numerous extraordinary properties” across the world, from New York to Panama, not to mention his latest golf course in Scotland.

Another document noted: “Trump is no stranger to overdue debt.”

The angry memos were written by lawyers acting on behalf of Deutsche Bank, Germany’s biggest lender, which was suing the billionaire.

It was November 2008. Three-and-a-half years earlier the bank had loaned Trump the cash to build one of his grandest projects yet: a hotel and mega-tower in Chicago.

Trump had given his personal guarantee he would repay the $640m. As per agreement, he was now due to hand over a large chunk, $40m.

There was only one problem: the future 45th president of the United States was refusing to pay up. Deutsche initiated legal action. Trump responded with a blistering, scarcely credible writ of his own, a 10-count complaint in New York’s supreme court, in the county of Queens.

In it, Trump adopted a highly unusual defence, known as “force majeure”. He claimed that the 2008 economic crisis was a “once-in-a-century credit tsunami”, an act of God that was equivalent to an earthquake.

Since it couldn’t have been anticipated, and it wasn’t his fault, he wasn’t obliged to pay Deutsche anything. It wouldn’t get the $40m or the outstanding $330m, his writ said.

He went further. Trump claimed Deutsche Bank had actually helped cause the crunch. Therefore it owed him. Trump demanded $3bn from Deutsche in compensation.

Its New York property division first loaned money to him in 1998 at a time when the bank was attempting to expand its commercial real estate portfolio. By that stage, other major banks were becoming cautious about Trump, in part, the Wall Street Journal has said, because of frustration with his business practices.

A decade later, Deutsche was to find out for itself quite how capricious and unpredictable he could be.

Then came Trump’s Scottish golf course venture.

It was what happened next that strikes many in the banking world as unusual – bizarre, even. In 2005 Trump had borrowed money from Deutsche’s commercial real estate division. In 2010 the parties settled their legal differences.

But rather than walking away, the bank’s private wealth division then resumed lending to Trump, the troublesome four-times bankrupt client who had defaulted on a major loan.

Why? It’s unclear what assurances Trump offered. He had given his word before, only to break it.

Deutsche has refused to discuss its lending arrangements to the first family. Its clients also include Trump’s daughter Ivanka, her husband, Jared Kushner, and Kushner’s mother, Seryl Stadtmauer.

Kushner is a senior White House adviser. Just before the US election Deutsche refinanced $370m he owes against commercial property in Manhattan belonging to Kushner’s company.

Sources inside Deutsche say the investment banking side of the business is entirely separate from the private bank that handles the Trumps. Personal relationships also play an important role in private banking.

Even so, banking experts have told the Guardian it is unusual for a private bank to take on such loans, and unbelievable that a bank would continue to deal with a man who had refused to pay his debt, and then countersued using force majeure.

One former Deutsche employee, based in New York, said: “Real estate refused to deal with him [Trump]. Only the private bank is willing to accept personal guarantees.”

Joe Crowley, chair of the House Democratic Caucus, said: “President Trump’s web of global financial entanglements are of serious concern. When a foreign-owned bank that is under investigation by the Department of Justice holds hundreds of millions in personally-guaranteed debt for the president, that is problematic for ethical, diplomatic, and judicial reasons. This is why we must know more about all of Donald Trump’s business ties.”

Crowley also said he wanted the president to release his elusive tax returns.

Deutsche has not explained why it continued to bankroll Trump and his real estate deals. Even before the 2008 legal dispute, Trump’s chequered business record was infamous. Other financial houses in New York refused to give him credit, following a string of failed ventures including an airline and a casino empire in Atlantic City.

Bloomberg reported that Deutsche was now trying to restructure Trump’s $300m debt, which is guaranteed by four of his properties. The difficulty is obvious: conflict of interest. The president owes the bank money. At the same time the Trump administration and its Department of Justice is investigating Deutsche over its Russian money laundering scheme.

According to an analysis by Bloomberg, Trump now owes Deutsche around $300m. He has four large mortgages, all issued by Deutsche’s private bank. The loans are guaranteed against the president’s properties: a new deluxe hotel in Washington DC’s old Post Office building, just round the corner from the White House; his Chicago tower hotel; and the Trump National Doral Miami resort.

Trump and his businesses have a long history with the German bank, which this month posted its latest net loss, of €1.4bn. It has been the only financial institution willing to lend Trump significant sums. In the 1990s other Wall Street banks, which had previously extended him credit, turned off the tap after Trump’s businesses declared bankruptcy four times.

Trump remains the bank’s most high-profile client. He is also, increasingly, its biggest PR headache.

Read more on The Guardian newspaper here and here.

 

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The tale of a mysterious mound of Iraqi cash seized at the border, and the oddball cast that’s fighting for it

bank thief

At the busy Ambassador Bridge linking Detroit to Windsor, the continent’s most heavily travelled crossing, a Canadian border agent greeted three men in a GMC Yukon Denali with the usual recital of questions.

Did they have any firearms? Were they bringing in currency worth $10,000 or more?

“No, no, nothing like that,” the driver answered, according to notes made by members of the Canada Border Services Agency. Unconvinced, the agent told him to pull over for a search.

An inspection of the car would turn up two handguns and some ammunition, but when CBSA agent Celine El-Tayar opened the back door on the driver’s side of the SUV, she faced a wall of banker’s boxes. She tugged on one. It was unexpectedly heavy.

Lifting the lid, she saw wads of money.

Box after box — 24 in all — were similarly stuffed with bound wads of currency, each bill featuring the cursive swoops of Arabic lettering.

Over the next several hours, border agents and RCMP officers counted and photographed more than eight billion Iraqi dinars, at the time worth about $7.4 million.

The driver was asked whose money it was.

“It’s complicated,” he replied.

He was right about that. The border stop on Nov. 18, 2012 was just the beginning.

The RCMP seized the cash under the Proceeds of Crime and Terrorist Financing Act, triggering a fight with an oddball cast of characters over where it came from and who gets to keep it. The battle over the dinars involves a private investigator from California, a purported general from Hong Kong, a man who claims to be a judge but isn’t, a fringe religious group and a little-known American charity.

And along with those claims have come threats, suggestions of corruption and conspiracy and no small amount of buffoonery.

Read the full article on the Vancouver Sun web site here.

Joint Effort ebook now available

My latest ebook, Joint Effort, is now available on Smashwords in epub, mobi, and other formats.

Joint Effort, by Ted Summerfield
Joint Effort, by Ted Summerfield

It’s the 1960′s, and there is a demand for drugs in schools. This ebook tells the story from the inside, of how a group of high school kids expanded their operation, how they cleaned their cash, how they moved their product, and how they later built their underground bunkers for pot production and became one of the largest producers of pot in BC.

Joint Effort ebook by Ted Summerfield; Inside Cover.

 

 

 

 

 

 

 

 

 

You may download a free sample or purchase my ebook for $1.99 on Smashwords here.

“Joint Effort” ebook in the works.

I’ve been working on a new ebook, “Joint Effort”, for a while now and thought I’d post a picture and a blurb about it.

Joint Effort is about a group of high-school kids who go on to become one of the largest producers of pot in British Columbia. From the group forming at high school to how some of the money was laundered and the pot bunkers built, it is one story of the BC Bud industry. All fiction of course.

Joint Effort, by Ted Summerfield

Joint Effort, by Ted Summerfield