It is public knowledge that two well-known customers of Deutsche Bank have deals considered sensitive to scrutiny. One is Donald Trump.
The other is—or was— Adnan Khashoggi.
The death of Saudi arms dealer and CIA fixer Adnan Khashoggi in London two weeks ago reminds the world again about Adnan Khashoggi’s rich history with fellow Palm Beach ‘homie’ Donald Trump.
Not just in yachts—as interminably reported in obituaries— but in banks.
Khashoggi spent 40 yearsin the intermittent glare of worldwide publicity, from the Lockheed bribery scandal in the 1970’s, Iran Contra in the 1980’s and BCCI, the Bank of Crooks & Criminals, in the early 90’s, to name just a few.
Had he lived a bit longer, he would likely become famous again, especially if Deutsche Bankcontinues to stonewall the Congressional probe into why the bank—alone among major banks worldwide—was willing to loan $300 million dollars to Donald Trump, a man who’d stiffed investors by declaring bankruptcy six times.
On the other hand, Adnan Khashoggi’s business dealings with Deutsche Bank—except in certain circles—are not.
But Adnan Khashoggi’s criminal collusion with Deutsche Bank offers clues to Trump’s own, and may provide evidence supporting prosecutorial use of the three words many defendants fear hearing: “Continuing criminal conspiracy.”
The urgency of such an investigation was made clear in today’s Washington Post report detailing how Deutsche Bank gifted Trumps son-in-law Jared Kushner with a $285 million loan just one month before Election Day.
It’s ironic that Khashoggi, a notorious fame whore, will not be around for the fun part just beginning; the part where, when actor Hal Holbrook in “All The President’s Men” stands half-hidden in shadows in the middle of the night in a parking garage in Washington D.C. and whispers to Robert Redford that he should “Follow the money.”
As a former American security official who knew him told me, “He didn’t get involved in all those scandals by singing too loud in church.”
How the financial press covered it:
“Deutsche Banksettled a lawsuit filed against it by to recover losses incurred as part of a massive securities fraud allegedly orchestrated by the German financial giant, a fugitive Saudi arms dealer and other individuals that bankrupted the Minneapolis-based securities firm.”
“A Minneapolis brokerage Stockwalk subsidiary called MJK Clearing became insolvent after losing more than $200 million in a series of risky deals that involved borrowing and lending securities. Regulators took over MJK Clearing and forced it into bankruptcy.”
Khashoggi, an acknowledged stock fraud master, ran an intricately planned andspectacularly-successful pump and dump scheme that, with assistance from the Russian Mob and the Mafia—two organizations who also partnered with Trump—stole more than $300 million in just a few years.
Stockwalk was called “the most massive stock fraud in American history,” and it became the largest liquidationof a securities firm in U.S. history.
It was basically an ingenious financial game of musical chairs, during which Deutsche earned sizable fees, passing around stock normally settled in boring brokerage back offices as a bookkeeping function.
Only this time, the brokerage left standing when the music stopped,Minneapolis’ Stockwalk Group, was left holding $200 million of worthless stock in a Khashoggi company called Genesis Intermedia, now worth just pennies.
Earlier Genesis stock had been pumped up as high as $26 dollars a share by Khashoggi’s cronies, before everyone in on the joke cashed out and went home.
When the scam collapsed in 2001, the poor Minneapolis brokerage filed for bankruptcy and went under. 200 employees lost their jobs. Khashoggi and his chief lieutenant, Ramy El Batrawi, went home at least $130 million dollars richer.
What Really Happened
Deutsche Bank’s little Khashoggi indiscretion cost the banka record $280 million dollar fine in the U.S. The bank settled shareholder lawsuits worldwide out of court, paying $350 million dollars in cash, while nonetheless denying responsibility.
U.S. officials scoffed at the bank’s claim of innocence.
“Full recoveries just don’t happen,” said Ken Caputo, senior associate general counsel for litigation at the The Securities Investor Protection Corporation (SIPC). “You’re hard pressed to find anybody with money to provide recompense. You might get judgments. But these guys paid in full.”
As for Khashoggi? “Well, no one knows just where he is, Caputo said. “He’s one of those elusive guys.”
From the New York Times:
”El-Batrawi, Khashoggi and othersalso drove up the price of the stock by engaging in large numbers of buys and sells,” the S.E.C. said in the suit. ”The buys and sells were often done in small lots of 100 to 500 shares, amplifying the false appearance of general investor interest.”
“Lawyers for Mr. El-Batrawi and Mr. Khashoggi could not be immediately located for comment. An S.E.C. lawyer, Kara Brockmeyer, said the agency had not determined who their lawyers were. Mr. El- Batrawi has no listed telephone number in Los Angeles, and Mr. Khashoggi’s whereabouts is unknown.”
They became the object of what—with hindsight— was doubtlessly a half-hearted search. Even so, finding Khashoggi and his chief lieutenant proved elusive.
Later, a Palm Beach resident who’d clashed with Trump over Indian gaming (which Trump at the time was against) told me the rumor locally had been that Khashoggi, also wanted at the time in the collapse of a bank in Thailand, was hiding out in a bungalow at Mar-a-Lago.
Deutsche Bank-HSBC race to the bottom
Germany’s Deutsche Bank has been in a race with HSBC Bank in London for the title of World’s Biggest Criminal Bank, based on the size of fines each pays to host governments who—who knows?—may even be mildly chagrined at being unable to bring individual bankers to justice.
Deutsche Bank has paid more than nine billion dollars in fines and settlements since 2008. The bank paid up after getting caught conspiring: to manipulate the price of gold and silver; defraud mortgage companies; violating U.S. sanctions against illegal trading; more.
Deutsche Bank’s own staffblew the whistle in 2010, accusing the bank of masking twelve billion dollars’ worth of losses. One of the whistleblowers, a former risk analyst, told the Securities and Exchange Commission that if the bank’s true financial health had been known in 2008, it might have collapsed.
“There wascultural criminality,” the whistleblower told reporters. “Deutsche Bank was structurally designed by management to allow corrupt individuals to commit fraud.”
“Mirror, mirror, on the wall…
Just launder my money already”
In January, Deutsche Bank agreed to pay $630 million in fines over a sophisticated-yet-simple money laundering scheme called mirror trading, used to launder—just in recent years—more than $60 billion out of Russia.
Lawmakers are seeking information about Deutsche Bank’s latest scandal: a Russian “mirror trading” scheme that allowed $10 billion to flow out of Russia in sham trades. One Deutsche customer would buy Russian stocks for rubles, while selling an identical amount of stock to a related customer for dollars.
It was instant money laundering. No need to add water.
There’s an unexamined downside in demanding explanations from Deutsche Bank for its unexplained benevolence towards Donald Trump, the ominous prospect that during Trump’s however-brief time in office, the American people will endure a national embarrassment unequaled in history.
Because he was desperate for money, in his loan dealings with Deutsche Bank Trump broke one his own cardinal rules.
Gulp before you read this: he personally guaranteed the loans. Donald Trump is personally on the hook to Deutsche Bank for roughly $300 million. The debt—on a Florida golf resort, a Washington D.C. hotel and a Chicago tower—is currently being paid.
But if the loans default, the bank could go after Trump’s other assets. Americans may be witness to the horrible spectacle of watching a bank foreclose on a sitting President of the United States.
The White House, at least currently, appears to be safe.
Get aboard the Money Train
Deutsche Bank is desperately trying to keep the money train running from Moscow to New York (and perhaps to Donald Trump), in the face of demands by Democrats in Congress for Trump’s banking records.
Deutsche Bank politely demurred,claiming privacy laws prevent turning over records of loans made to Trump of reportedly $300 million, with loan guarantees in excess of $1 billion.
Lawmakers fired backthat Federal laws protecting banking customers’ confidentiality do not apply to requests from Congress, said a letter they sent to Deutsche. “Given President Trump’s repeated assertions that he does not have ties to Russia, such disclosure would be in his interest.”
Here’s an anecdote that may help explains the Trump-Russia investigation, and it’s not even about Trump.
It’s about the wife of Raul Salinas, the brother of Carlos Salinas, the wildly-corruptformer President of Mexico, who was arrested in Switzerland on November 15, 1995. She’d been trying to withdraw $84 million from a safe deposit box at a private bank in Geneva.
A Swiss police official asked why’d made herself conspicuous. Why was taking so much at once, he asked, instead of taking a little at a time?
Paulina Salinas replied, “But I was taking a little at a time!”