Trump Stories: Trump SoHo As a businessman, President Trump was known for his towering buildings. Today we tell the story of one of those skyscrapers and what it says about how and with whom Trump does business. Follow Kelly McEvers on Twitter @kellymcevers, Alina Selyukh @alinaselyukh, @JimZarroli, Chris Benderev @cbndrv, Tom Dreisbach @TomDreisbach, and the show @nprembedded. Email us at embedded@npr.org
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Trump Stories: Trump SoHo

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Trump Stories: Trump SoHo

Trump Stories: Trump SoHo

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KELLY MCEVERS, HOST:

I'm Kelly McEvers, and this is EMBEDDED. In 2006, a construction crew breaks ground in this parking lot in lower Manhattan. And for a few weeks, everything's moving along - big machineries, breaking up concrete, excavating dirt - and then they find something. Construction stops, and a guy named David Pultz is called to the site.

DAVID PULTZ: I see this big, open space at the corner of Spring and Varick Street. It's just a lot of dirt, some backhoes. And then I saw this long, white tent.

MCEVERS: Pultz says it was a sunny day outside, but then he walks into this dark tent.

PULTZ: It seemed like I had gone into this tent, and it was a different world.

MCEVERS: Workers everywhere, things poking out of the ground, bricks, Pultz says, and bones - human bones.

PULTZ: To one side, there was a whole skeletal remain sort of half-submerged in the dirt.

MCEVERS: And to the other side, piles of bones.

PULTZ: What they call disarticulated remains. They were just, you know, femurs and, you know, all kinds of things.

MCEVERS: An archaeologist walks up to Pultz.

PULTZ: And he showed me this oval-shaped piece of metal, and he said this is a coffin plate. And he tried to brush it off a little bit, and he says that's someone's name here and the date of the birth and death.

(SOUNDBITE OF MUSIC)

MCEVERS: Before this site was a parking lot, it was the Spring Street Presbyterian Church. It opened in the early 1800s. At the time of this excavation, David Pultz was an archivist for the church. And these bones were from the church's burial vaults. Spring Street was an abolitionist church, which meant African-Americans were allowed to attend and that some African-Americans might have been buried there.

(SOUNDBITE OF TICKING)

MCEVERS: Pultz says this made the developers of the new project nervous that construction would be delayed. The discovery of an African burial ground in Manhattan completely upended another project years before. So the developers tell the church they will release custody of the bones so the church can do DNA testing and that the developers will pay to rebury the bones somewhere else. But they don't actually make good on that promise for years. They delay and delay and delay.

PULTZ: And the only thing I can infer from that is they were trying to avoid any kind of information getting out that would cause a controversy or lawsuits or any kind of problems for them.

MCEVERS: The developers eventually do what they said they were going to do. For their part, they say, they did everything by the book.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED SINGER: (Singing) With the troubles...

MCEVERS: But it is not until 2014, seven years after these bones were discovered, that they are finally reburied in Green-Wood Cemetery in Brooklyn.

(SOUNDBITE OF ARCHIVED RECORDING)

UNIDENTIFIED SINGER: (Singing) With the troubles of this world...

MCEVERS: David Pultz gives the eulogy.

(SOUNDBITE OF ARCHIVED RECORDING)

PULTZ: Today, we gather to memorialize some 190 people.

UNIDENTIFIED WOMAN #1: Benjamin N. Abel (ph), Rudolphus Bogert (ph).

MCEVERS: He talks about how the church was targeted by pro-slavery rioters in 1834.

(SOUNDBITE OF ARCHIVED RECORDING)

PULTZ: The people of Spring Street helped fight the battle against injustice in their day. Now, they are rested where they rightly belong.

MCEVERS: So after years of wrangling, the people from the Spring Street Church burial vaults finally get the ceremony David Pultz says they deserve. And while all this was happening, the developers of that lot, they get what they wanted, too. They get a big, new, 46-story building, and they call it Trump SoHo.

(SOUNDBITE OF MUSIC)

MCEVERS: Trump SoHo is now this massive tower where the Spring Street Presbyterian Church once stood, and it has been in the news since almost its very beginning. And now, it is still very much in the news because, of course, the guy whose name is on the place is the president of the United States.

(SOUNDBITE OF MUSIC)

MCEVERS: So today, we're going to tell you some stories about Trump SoHo because it helps us understand how Donald Trump does business and who he does business with. There are a lot of twists and turns to this one, so grab your handrails and hang on. We've got angry neighbors, glitzy TV appearances, a broken margarita glass, mobsters, Stinger missiles, a Russia connection, investors from Iceland, denials, lawsuits and more lawsuits. And there is one more reason Trump SoHo is important. Robert Mueller, the U.S. special counsel who's investigating possible ties between Donald Trump's campaign and Russia during last year's election, he reportedly has his sights on Trump SoHo, too.

(SOUNDBITE OF MUSIC)

MCEVERS: All right, so the two NPR reporters who did this story are Alina Selyukh...

ALINA SELYUKH, BYLINE: Hello, hello, hello.

MCEVERS: ...And Jim Zarroli.

JIM ZARROLI, BYLINE: Hello, hello. So we're talking about...

MCEVERS: And Jim and I started with the neighborhood in New York City where Trump SoHo was built. Turns out, it's not actually in SoHo. It's in a neighborhood called Hudson Square.

ZARROLI: It's a small neighborhood. It's sort of to the west of SoHo, which everybody knows in New York. It was a kind of a warehouse industrial part of the city for a long time. In recent years, it's sort of been discovered by developers, as a lot of the parts of the city have been.

MCEVERS: Right. And we went there recently, right? We went there with a guy named...

ANDREW BERMAN: Testing, testing.

MCEVERS: Andrew Berman, is that right?

ZARROLI: Yes.

MCEVERS: And talk about him a little bit. Who's he?

ZARROLI: He's a preservationist. He's the executive director of the Greenwich Village Society for Historic Preservation. He's somebody who loves old buildings and trying to preserve parts of the city.

BERMAN: And you can really see the layers of history in the buildings. Some of these are houses that date to the early 19th century. And I think it's one of the areas of New York that kind of still - like, if you look down the street, what you see here is almost identical to what you would have seen 100 years ago on a sort of lower Manhattan immigrant neighborhood street.

MCEVERS: Right. Just these brick, you know, four-, five-story building with a fire escapes and the big, old windows...

ZARROLI: For a long time, Andrew Berman says, Hudson Square was one of those New York areas that really felt like a neighborhood.

(SOUNDBITE OF "THE APPRENTICE" TV SHOW)

ZARROLI: Then came 2006...

(SOUNDBITE OF TV SHOW, "THE APPRENTICE")

UNIDENTIFIED MAN #1: And now, America's boss, Donald Trump.

ZARROLI: ...And this announcement by Donald Trump on his reality TV show, "The Apprentice."

(SOUNDBITE OF TV SHOW, "THE APPRENTICE")

PRESIDENT DONALD TRUMP: The other project is in New York City's trendiest neighborhood - SoHo. Here it is.

Located in the center of Manhattan's chic artist enclave, the Trump International Hotel and Tower in SoHo is the site of my latest development. This 50-story building will be the first condominium hotel in the city with world-class accommodations.

ZARROLI: The problem Berman and the other preservationists had with the plans for Trump SoHo was that it was so tall.

BERMAN: You know, it's about 45 stories of gray glass, you know, a big sort of shard.

ZARROLI: And the preservationists were also opposed to something else. Here's our colleague, Alina Selyukh

SELYUKH: So there were few things that immediately jumped out at Berman, and one of them is this idea of a, quote, "condominium hotel," which, as you just heard Trump announcing this project, that's what they were calling it, condominium hotel.

ZARROLI: And what condominium hotel means is if you buy one of these units, you're basically buying a hotel room. You're not buying an apartment. And you can only stay there a total of four months a year a few weeks at a time. But it is technically still a residence.

SELYUKH: And this neighborhood is not zoned for any kind of residential construction.

(SOUNDBITE OF MUSIC)

MCEVERS: So Berman and other neighborhood groups try to block Trump SoHo from getting the permits it needs. But in the end, Trump SoHo manages to get the permits anyway.

ZARROLI: Remember, this was a time when there was a real estate boom in New York City, and the mayor at the time, Mike Bloomberg, was very pro-development.

(SOUNDBITE OF MUSIC)

SELYUKH: So I guess the final scene in this battle between the neighborhood and the Trump SoHo developers is 2007, and the building is not completely built, but it's sort of enough to have the ceremony. There's flavored vodka and models. It's a really glitzy affair.

ZARROLI: And Andrew Berman and about 200 other people who oppose Trump SoHo went there to protest.

BERMAN: We wanted to be across the street so at the very least the people incoming - who were coming and going could see us. The police came and said, unless you move a good block or so away out of the view of the people who are coming and going to Trump SoHo, we will arrest you, which they had no right to do, but it was very clear that they were going to do it. So quite begrudgingly, we did, in fact, move about a block or so away. So we were in no way visible to the people coming in. They couldn't see us. We couldn't see them.

ZARROLI: It's no spoiler to say Trump SoHo was eventually completed. Andrew Berman and Kelly and I are standing on the street in front of it.

MCEVERS: And I feel like we're even further away from SoHo, like, at this point. Like, this is even less SoHo than where we were before.

BERMAN: It's one of the many interesting wrinkles of this. This is not SoHo. It never was SoHo. And, you know, like everything about the project and about a lot of Trump's development, it's really based on misrepresentation and, you know, hoodwinking the public.

(SOUNDBITE OF MUSIC)

MCEVERS: So Trump SoHo pretty easily wins the fight against the neighborhood groups. And there's another thing you should know about Trump SoHo. It was a kind of coming out for Donald Trump Jr. and Ivanka Trump, who were both in their 20s at the time. They had both just started appearing on "The Apprentice" when Trump SoHo was first launched. And they appeared in a lot of publicity for the project. Photos of Ivanka were featured in an ad for Trump SoHo that read possess your own SoHo. And there was this appearance...

(SOUNDBITE OF TV SHOW, "NIGHTLINE")

IVANKA TRUMP: Welcome to Trump SoHo.

UNIDENTIFIED REPORTER: Ivanka Trump has replaced her high heels with construction boots.

MCEVERS: ...On "Nightline."

(SOUNDBITE OF TV SHOW, "NIGHTLINE")

UNIDENTIFIED REPORTER: She's been able to practice those negotiating skills at the new Trump SoHo, a hotel condominium in downtown New York City.

I. TRUMP: It's got a very cool, young, downtown sensibility.

UNIDENTIFIED REPORTER: The project is her latest baby.

MCEVERS: But then, a few years into the development of Trump SoHo, there were problems. While the project was being developed, the financial crisis hit, and remember, these were these condo-hotel units. They were really expensive, and a lot of people from overseas were buying them as investment properties, and they got mad.

ADAM LEITMAN BAILEY: Hi. How are you?

MCEVERS: Hey, how are you?

SELYUKH: Right. So the next part of the story takes us to the office of this New York real estate lawyer Adam Bailey.

ZARROLI: He says he loves real estate. He knows everything about every building that's going up. This is his life.

MCEVERS: We should also say this guy is kind of a character.

ZARROLI: And he also says he really was a fan of Donald Trump. He said at a very young age, he read "The Art Of The Deal."

BAILEY: When I was 25 years old, one of the best books I ever read in real estate - and there are very few you could buy on real estate. In fact, I've written one because of that - National Association of Real Estate Editors First-Time Author Book of the Year, which I - I can give you a copy. There's very few books on real estate that explains New York City real estate. "The Art Of The Deal" by Donald Trump was one of them. It's a fantastic book.

ZARROLI: So around 2009 or so, Bailey says he starts getting a lot of calls and getting a lot of referrals of people who had bought into Trump SoHo and wanted their money back. They all wanted to get out of their contracts.

MCEVERS: So Bailey decides to take the case of this group of 17 unhappy Trump SoHo buyers.

BAILEY: They all had something in common. They were taken for a ride. They were going to use these as investment properties. And the value that they thought it would be, they no longer had that value. And I would tell them, oh, so you just want your money back? They said yes.

MCEVERS: And it wasn't just that these people thought their units in Trump SoHo had lost value after the financial crisis. It's also, Bailey says, that they had been told by Donald Trump Jr. and by Ivanka Trump and others that this building was nearly sold out. And that's why buyers should get in on it.

SELYUKH: In June 2008, Reuters published a story citing Ivanka Trump. And she said that 60 percent of units had already been sold. And this was kind of following up of other representations in public that this building was half sold. It was mostly sold.

ZARROLI: So Bailey and his team started investigating to see if this is true.

BAILEY: Somehow we got documents, documents that showed the total sold.

MCEVERS: And those documents show that only about 16 - that's 1-6 percent of the units had been sold. The Trump Organization did not comment on this or anything else in this story.

BAILEY: And then the people that did my research here - they came in and said, they committed fraud. And I'm, like, this is fraud - done.

MCEVERS: So Bailey files a civil lawsuit claiming fraud. The Trump Organization did not comment on this or anything else in this story.

ZARROLI: But when they looked at some of the evidence they said, they also believed that charges could be filed criminally, that there was a criminal case to be made that this was a misrepresentation.

SELYUKH: So Bailey sends everything he has to the district attorney of Manhattan.

BAILEY: They were very interested. They started working on it.

SELYUKH: But for months, Bailey says he does not hear back from the DA. And then his case does settle. In fact, Trump SoHo developers returned Bailey's clients' money 90 cents on the dollar plus legal fees, which is basically what they wanted.

ZARROLI: But there's a catch. As part of that settlement, his clients have to agree not to cooperate with criminal prosecutors, which means the DA can't talk to them about the criminal case. And without any witnesses, the case is a lot weaker. The assistant DA who's been working the case calls Adam Bailey.

BAILEY: And he starts screaming at me at the top of his lungs. And I never got my hearing back. I'm kidding. I got - my hearing's fine. He could not believe that I would just drop it. I said you haven't been around for months. I'm not here to do justice. I'm here to support a client.

(SOUNDBITE OF MUSIC)

MCEVERS: The assistant DA declined to be interviewed.

ZARROLI: So one of the things about this project from the beginning was there were a lot of questions about who the developers were. And I talked to one building official who works for the city who said, we really looked forward to there being a criminal investigation. We looked forward to this going to the DA's office because the DA has the power to subpoena people, to force them to testify. He has the power to subpoena records. And then all of a sudden unexpectedly the case was dropped. And they didn't know why, but they were really disappointed because they knew they weren't going to find out the answers to their questions.

MCEVERS: We should say right here that WNYC, ProPublica and the New Yorker did manage to answer some questions about this criminal case. They found the DA's office did keep investigating it even after Bailey's case settled and his clients agreed not to talk to prosecutors. And they found, according to multiple people who saw emails between Donald Trump Jr. and Ivanka Trump, that the two knew they were misrepresenting how much of the building had been sold.

While this criminal case is being investigated, Donald Trump's personal lawyer contributes $2,500 to the DA. The Trump lawyer schedules a meeting with the DA. The DA gives the contribution back. The meeting goes forward. And then this criminal fraud case is dropped. The Trump lawyer donates more money to the DA. The DA later pledges to return those contributions, too. This lawyer, another lawyer for the Trump Organization, and the DA all have said the contributions had nothing to do with the case being dropped. Either way, this criminal case goes nowhere.

OK. So far, Trump SoHo is a story about defeating angry neighbors and fraud allegations that are eventually settled or dropped. But still, like that city official told Jim, there are a lot of questions about the developers of Trump SoHo. Knowing about one of these developers tells us a lot about how Trump does business and who he does business with. And it's where we get into Robert Mueller territory after the break.

(SOUNDBITE OF MUSIC)

MCEVERS: All right, so now we're going to talk about one of the developers of Trump SoHo And to know the story about this developer, you need to know the story of a guy named Felix Sater.

(SOUNDBITE OF MUSIC)

ZARROLI: Sater was from the former Soviet Union, came here as a child, living in the Brighton Beach section of Brooklyn, which is home to a lot of Russian immigrants.

MCEVERS: Felix Sater's father has a criminal history. He once pled guilty to extortion charges. And he wants his son to do better.

DAVID BARRY: He wanted Felix to be an above-board businessman. That was Felix's father's hope for his son.

ZARROLI: That's David Barry. He's a former AP reporter, and he's spent a lot of time covering organized crime. He covered the mob scene in Providence, R.I. He actually ended up writing a memoir with a guy named Sal Lauria, who is very good friends with Sater.

SELYUKH: And I should add here that we did try to talk to Felix Sater himself. Through his lawyer, he declined.

MCEVERS: So like David Berry just said, Felix Sater's father wants him to be an above-board businessman. He goes to a good high school. He takes some college classes but doesn't graduate. And then he becomes a stockbroker with his friend, Sal Lauria.

SELYUKH: And so Felix Sater and this guy Sal Lauria grew up to be these high-flying brokers on Wall Street. They got nice suits. They have nice watches. They're suave and dapper. And Felix Sater's trouble with the law starts at this party one night in 1991.

(SOUNDBITE OF MUSIC)

SELYUKH: Sal had just passed a broker's exam. It's very hard to pass. They're out celebrating.

BARRY: And it was a nice night of celebration at a nice restaurant that specialized in margaritas.

MCEVERS: There's this other broker who's there at the time. Somehow a fight breaks out over a woman.

BARRY: And Felix exploded and smashed this heavy margarita glass. You know, it was a goblet, not like a martini glass. And he just in half a second or more cut this guy's face open and kept swearing at him after knocking him down and leaving his face a bloody mass.

MCEVERS: The New York Times reported the man suffered nerve damage and later needed 110 stitches in his face.

(SOUNDBITE OF MUSIC)

SELYUKH: Felix Sater ends up going to prison, and he loses his broker's license.

BARRY: The really big thing for him was a felony conviction bars you from setting foot on a brokerage floor.

SELYUKH: Many years later, in 2016, Sater told a Russian news site that this drunken brawl, as he says, makes him a criminal. And he can't even get hired as a driver after this.

ZARROLI: And yet that really wasn't the end of Felix Sater's criminal career.

(SOUNDBITE OF MUSIC)

MCEVERS: After Felix Sater gets out of jail for the margarita glass incident, court documents show that he and Sal Lauria then started what's known as a pump-and-dump scheme.

ZARROLI: Sater and other people would buy up shares of stock through offshore accounts without telling investors about it. And by buying up a lot of shares, they would artificially inflate the price of the securities they were selling.

MCEVERS: Once the price was inflated, court documents say they would sell the stock to unknowing investors. At the time, the FBI said Felix Sater and Sal Lauria were part of an operation that made $40 million this way.

ZARROLI: And we should say here that Sater and Sal Lauria weren't operating by themselves. They had help from the Italian Mafia.

MCEVERS: Again, this is from the court documents.

BARRY: To run something like that on a large scale, you need muscle.

ZARROLI: I mean, you can't just, you know, politely ask the other brokers not to sell the stock that you're trying to inflate.

BARRY: But if you have two guys who are soldiered for the Gambino family and they show up at the brokerage, the brokers listen. They're not listening to Hutton at that point. They're listening to Dominic and Sonny.

MCEVERS: Sal Lauria and Felix Sater's operation is discovered by authorities. They're arrested and accused of conspiring with the Mafia to launder money and defraud investors. In 1998, Felix Sater pleads guilty to one count of racketeering as part of this $40 million scheme. And here is where things get even more interesting. Instead of being sentenced for his crime...

ZARROLI: The charges against him were sealed, and the case against him was basically frozen for years. And the reason was that he turned state's evidence. He started to become a cooperating witness for the government, and he became a really valuable witness over the next 10 years or so.

(SOUNDBITE OF MUSIC)

ZARROLI: There was an FBI agent who testified at his sentencing hearing years later who said, you know, the difference between us cracking a case and not cracking a case is very often just one good, cooperating witness. And Felix Sater was that witness for us.

(SOUNDBITE OF MUSIC)

MCEVERS: One thing Felix Sater reportedly helped the U.S. government do was to try to get Stinger missiles. These are these shoulder-fired, surface-to-air missiles that have been used in Afghanistan off the black market. We read this in that book by David Barry and Sal Lauria. It's called "The Scorpion And The Frog." In the '90s, Sater reportedly traveled to Russia - remember, he's from there - and located a dozen of these Stinger missiles on the black market. Sater offered to buy the weapons ostensibly to keep them away from terrorists. And in return, the CIA promised to keep Sater from going to prison. The deal ultimately fell through. But the contacts Sater were made were helpful to the CIA and the FBI after 9/11.

ZARROLI: We should say here that Sal Lauria disputed the accuracy of "The Scorpion And The Frog" right before it came out in an effort to stop it from being published in the early 2000s. But since then David Barry says Sal has told him the book is accurate after all. And Sal Lauria's name is still on the book.

SELYUKH: And this is where we now finally return to the story of Trump SoHo. Because what happens after this is Felix Sater has gone through a stint ifn jail and then turned as an informant in order to avoid his sentencing for the pump-and-dump scheme.

MCEVERS: But then that second part becomes a secret. Like, everything you just heard about Felix Sater's $40 million pump-and-dump scheme and his cooperation with the government goes into a vault. As Jim said, the file is sealed by the court for years. And Felix Sater reinvents himself.

SELYUKH: And the next thing that he moves onto is a new real estate investment company called the Bayrock Group.

(SOUNDBITE OF MUSIC)

MCEVERS: A new real estate company called the Bayrock Group - one of the developers who would later go on to build Trump SoHo. And the reason we're talking about Felix Sater and Bayrock is because there are two very important questions, one of them reportedly of interest to investigators working with special counsel Robert Mueller right now. Here's the possible motive question. Where did Bayrock get the money to help build Trump SoHo? And here's the other question. Did Donald Trump know about Felix Sater's past as a convicted felon? Because if he did, well, that could be a problem.

(SOUNDBITE OF MUSIC)

SELYUKH: So we've heard the story of Felix Sater. Now we're going to hear the story of this real estate company he joined, Bayrock. The company's founded in 2001. And in the next few years, they reportedly have their first meeting with Donald Trump. And they get an office at Trump Tower...

TIM O'BRIEN: ...Two floors beneath where the Trump family conducted their own business at the Trump Organization.

ZARROLI: That's Tim O'Brien. He's with Bloomberg. And he's been reporting on Donald Trump for decades. So at some point, Bayrock and the other developers come to Trump with this idea of building Trump SoHo.

SELYUKH: And the pitch is this. Let's build this 46-story condo-hotel. You put your name on it, but you don't have to invest any of your money. We will raise the money. You'll get equity in the building, plus you'll be paid some management fees.

MCEVERS: It's called a licensing deal. Trump has done a lot of these kinds of deals over the years around the world. And here's why this deal made sense for Bayrock.

O'BRIEN: It's free publicity. The Trump name is known globally. For them, it amounted to hitching their wagon to a proven star, star of "The Apprentice," a well-known business name.

ZARROLI: And here's why that made sense for Trump. Remember, by this point, Trump's businesses have been through several bankruptcies. And Trump cannot get loans from major banks.

O'BRIEN: From Trump's perspective, anybody who walked into Trump Tower and put a bag of money on his desk could do business with him.

MCEVERS: This conclusion is based on what Tim O'Brien's sources have told him. So this licensing deal is clearly a win-win for Trump and Bayrock.

(APPLAUSE)

MCEVERS: Then comes that TV announcement.

(SOUNDBITE OF ARCHIVED RECORDING)

D. TRUMP: Located in the center of Manhattan's chic artist enclave, the Trump International...

MCEVERS: Now, we do not know everything about where Bayrock and the other developers of Trump SoHo got their money. But there is one guy who claims he has an inside view of Bayrock. He worked there. His name is Jody Kriss. And one of the few reporters who has interviewed Jody Kriss on the record is Tim O'Brien.

O'BRIEN: Well, Jody Kriss grew up in Miami. He was a very good student. He went to Wharton. He excelled in mathematics and finance.

ZARROLI: And he wanted to be a New York City real estate investor. So at one point, he meets Felix Sater.

O'BRIEN: And Felix called him up and said, you should come and join us at Bayrock. We've got a lot of money. We've got some big developments in the pipeline. And ultimately, they said you'll get a chance to work with Donald Trump.

ZARROLI: So Jody Kriss goes to work at Bayrock.

O'BRIEN: In a fairly short order, he starts to realize that he's in the middle of what he would describe as a car crash. It's poorly managed. There's a lot of money flowing through it, but he doesn't know where the money's coming from.

MCEVERS: Jody Kriss later filed a lawsuit against Bayrock, which lays out all these allegations.

ZARROLI: In the suit. Jody Kriss says every time Bayrock ran out of cash, money would just magically show up, sometimes from another Bayrock founder's brother who had access to cash from a chromium refinery in Kazakhstan.

SELYUKH: And then in 2007, this investment fund from Iceland called a FL group announces that it will invest $50 million in Bayrock. And Jody Kriss had never heard of it.

O'BRIEN: He inquired of his partners, well, who is the FL Group? And why are we doing business with them? And in fact, we have better offers or, at least, comparable offers from other investors. So why are we going with this bank? And Kriss was told, he says, that we have to go with the FL Group because it's closer to Putin.

MCEVERS: Vladimir Putin, the president of Russia. Jody Kriss told Tim O'Brien he thought it was a joke when they said Putin's name, that he didn't know how to make sense of it all. The Kremlin has denied any connection to the FL Group. And we should be clear here. Taking money from Russian people isn't a crime. But what Jody Kriss alleges in this lawsuit is that Bayrock was basically a money laundering operation.

In other words, his suit says it was taking dirty money from Kazakhstan and Iceland and hiding it in what looked like a legitimate business, Bayrock, which built Trump SoHo. In the lawsuit, Jody Kriss says there's no evidence that Donald Trump took any part in or knew of Bayrock's racketeering schemes. Either way, Bayrock has denied the allegation.

SELYUKH: So back to Jody Kriss and this $50 million investment from FL Group to Bayrock. Jody Kriss was frustrated. He was a partner, but he wasn't getting his share.

O'BRIEN: He went back to his partners and said, look; you owe me more money than you've paid out. The FL Group just put $50 million into our company. I think based on that deal and others I'm owed at least several million dollars.

MCEVERS: And this is where Jody Kriss says things get ugly.

O'BRIEN: And according to Kriss, they said not only are we not going to pay you that, but if you push the matter physical harm will come to you.

(SOUNDBITE OF MUSIC)

ZARROLI: Here's what the lawsuit actually says. Sater made him an offer he couldn't refuse - either take $500,000, keep quiet and leave all the rest of his money behind or make trouble and be killed.

(SOUNDBITE OF MUSIC)

MCEVERS: Jody Kriss would not talk to us on the record. Bayrock said it can't comment on ongoing litigation. And Felix Sater's lawyer told us Jody Kriss' lawsuit is extortionate litigation.

SELYUKH: Either way, there's one more important thing to know about Jody Kriss' lawsuit against Bayrock. The legal proceedings start dredging up Felix Sater's criminal past, specifically the pump-and-dump scheme that was kept secret once he started cooperating with the feds.

MCEVERS: And this is something Jody Kriss, in his lawsuit, says was a very big concern inside Bayrock.

ZARROLI: He says the firm did what it could to sort of hide the fact from investors, from securities officials. And they were worried about it all the time.

MCEVERS: Which gets us to the final question - did Donald Trump know about Felix Sater's conviction in the pump-and-dump scheme and his connection with the mob in that case? Because if he did, at the least he did something unethical, and at the most it's possible he broke the law.

(SOUNDBITE OF MUSIC)

MCEVERS: OK. So first, here's why this could be a problem. Companies are required to tell investors if they have someone working for them who has a relevant felony conviction. Jody Kriss' lawsuit says Bayrock hid Felix Sater's conviction. Some lawyers we talked to said that if Trump worked closely with principal fundraisers at Bayrock who hid this connection, it could be considered part of a conspiracy.

Other lawyers say conspiracy would be a stretch, and they say there's no evidence that Trump was a principal fundraiser for Bayrock. That is what would require him to disclose Sater's conviction. At the very least, if Trump knew about Sater's felony conviction and didn't disclose it, most of the lawyers we talked to said it's unethical. And it shows the kind of person Trump is willing to deal with.

SELYUKH: So it is possible that from the time they met up until 2007, Donald Trump did not know about Felix Sater's financial crimes, that pump-and-dump scheme that he pled guilty to. Trump says his company does background checks as best it can.

MCEVERS: Either way, the whole story broke on December 17, 2007, when The New York Times published an article about Felix Sater. And it told the story of the margarita glass, the pump-and-dump conviction, the stinger missiles. As for what happened next, a lawyer named Richard Lerner picks up the story from there. He's been involved in lawsuits against Bayrock for years, and he has internal Bayrock emails from that time. They were filed as part of the Jody Kriss lawsuit.

RICHARD LERNER: The New York Times article was published on December 17, 2007. Two days later, in the case of Donald Trump against Tim O'Brien, he was deposed.

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ZARROLI: Yes, you heard that right, Donald Trump versus Tim O'Brien, the same Tim O'Brien from Bloomberg that you heard earlier. Like we said, he has reported on Trump for years. And Trump sued him for defamation.

MCEVERS: In a deposition from that lawsuit, Trump was asked whether he knew about Felix Sater's conviction in the pump-and-dump scheme. Trump says nobody knew anything about him. An attorney asks, have you severed your ties with the Bayrock Group as a result of this? Trump answers, well, I'm looking into it because I wasn't happy with the story. So I'm looking into it.

LERNER: Then, on January 21, 2008, just a few weeks later, there are internal emails at Bayrock, saying there's going to be a meeting. And Donald Jr., Ivanka, Eric and Donald Trump Sr. are coming. Julius Schwarz, the general counsel of Bayrock, is coming. Sater will be there.

MCEVERS: Now, we don't know what that meeting was about. But remember; just five weeks earlier, The New York Times had published that article about Felix Sater.

LERNER: So in that email chain of January 21, 2008, I believe the very final email of the day is...

MCEVERS: Quote, "Donald is happy with me," Felix Sater says. "I'll explain when I see you."

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MCEVERS: So in 2007, Donald Trump says, I'm looking into it. In 2008, Felix Sater writes, Donald is happy with me. And as recently as 2010, Felix Sater had a business card that said senior adviser to Donald Trump, The Trump Organization. And in that Russian interview he gave, Sater actually says for 10 years he reported everything to Trump, quote, "sometimes twice a day, sometimes twice a week, sometimes twice a month." Then in 2013, Trump does this interview with the BBC's John Sweeney.

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JOHN SWEENEY: Why didn't you go to Felix Sater and say, you're connected with the Mafia, you're fired?

D. TRUMP: Well, first of all, we were not the developer there. That was a licensing deal.

SWEENEY: But your name was on it.

D. TRUMP: A very simple licensing deal.

SWEENEY: But your name's on it, Mr. Trump.

D. TRUMP: Excuse me. But I don't know - you're telling me things that I don't even know about. I mean, you're telling me about Felix Sater. I know who he is. I know of him, and I know who he is.

SWEENEY: You stayed in bed, if I may say so, with Felix Sater. And he was connected with the Mafia.

D. TRUMP: Again, John, maybe you're thick, but when you have a signed contract, you can't in this country just break it. Sometimes we'll sign a deal and the partner isn't as good as we'd like, but that does happen.

ZARROLI: We should say contracts can be broken or renegotiated. And then Trump just ends the interview.

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D. TRUMP: And by the way, John, I hate to do this, but I do have that big group of people waiting. So I have to leave.

SWEENEY: OK. No, hold on. One last question please, sir.

D. TRUMP: I have to leave. Thank you.

SWEENEY: OK. All right then. Sir, let me shake your hand.

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MCEVERS: The same year of this BBC interview, in 2013, Trump is asked again about Felix Sater in another deposition, this one related to a Bayrock property in Florida.

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UNIDENTIFIED WOMAN #2: So he'll be back?

D. TRUMP: I do.

MCEVERS: Here's a recording of some of that.

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D. TRUMP: I don't think he was connected to the Mafia. He got into a barroom fight. And in fact, he was supposedly very close to the government of the United States as a witness or something. He got into trouble because he got into a barroom fight, which a lot of people do. I don't because I don't drink. But, you know, again, I don't know him very well, but I don't think he was connected to the Mafia.

UNIDENTIFIED MAN #2: About how many times have you conversed with Mr. Sater in...

D. TRUMP: Over the years?

UNIDENTIFIED MAN #2: Over the years, if you could estimate.

D. TRUMP: Not many.

UNIDENTIFIED MAN #2: Not many?

D. TRUMP: If he were sitting in the room right now, I really wouldn't know what he looked like.

UNIDENTIFIED MAN #2: OK. So when you say not many, I mean, is that - can you count that on one hand?

D. TRUMP: No. I wouldn't know what to say about that because I don't know - he would call - I think he dealt mostly with my company, not with me.

MCEVERS: This is how licensing deals work, right? I just had my name on the thing. I wasn't involved in the day-to-day. Jody Kriss told Tim O'Brien Trump was involved in the day-to-day, that even if Donald Jr. shook your hand on a deal, he might come back downstairs to renegotiate if his father told him to.

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MCEVERS: OK. So how does any of this relate to Robert Mueller and the special investigation into whether the Trump campaign colluded with Russia? We know from recent reports the investigation is broadening to include the financial dealings of Trump and his associates. We know the team will be looking at contacts made during the development of Trump SoHo between Trump and his associates and any Russians who could later have been trying to influence the election.

We know that Felix Sater has contacts in Russia. That's where his family's from. He helped the U.S. government there. And he's testified he traveled there with Donald Jr. and Ivanka Trump to try to drum up support for a Trump hotel in Moscow. That hotel never happened. And now we know that Felix Sater in 2015 sent this email first reported by The New York Times to Donald Trump's lawyer, quote, "our boy can become president of the USA, and we can engineer it." He goes on, "I will get all of Putin's team to buy in on this. I will manage this process." The White House says that email is a non-story.

Oh, and as for Bayrock and Trump SoHo? Bayrock has basically been dormant for several years. It hasn't done business in a while. Jody Kriss is in settlement talks with the company. After the financial crisis, Trump SoHo was sold in a foreclosure auction to another real estate company which now runs it mostly as a hotel. The Trump Organization still gets management fees. Since Donald Trump became president, the restaurant in Trump SoHo closed and sports teams have refused to stay there. A new restaurant is about to open. And of the nearly 400 units in the building, about a third of them have been sold.

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MCEVERS: This episode was reported by Alina Selyukh and Jim Zarroli and produced by Chris Benderev and Tom Dreisbach. It was edited by Neal Carruth and Marilyn Geewax, with help from Megan Cain (ph), Mark Memmott and Brett Bachman. Huge thanks to Barbara Van Woerkom on our investigations team and Mollie Simon on our business desk. Fact-checking was by Greta Pittenger and Tom Dreisbach. Our technical director is Andy Huether. Our lawyer is Ashley Messenger. Our theme song is by Colin Wambsgans. Other original music in this episode is by Jonathan Hirsch and Ramtin Arablouei. Digital help is from Alexander McCall. EMBEDDED is executive produced by me, Chris Turpin and Anya Grundmann.

You can find a lot of the legal documents we reference in the story at npr.org. Also, be sure to check out the excellent reporting on that criminal fraud case that was eventually dropped by the Manhattan DA. It's by Andrea Bernstein and Ilya Marritz of WNYC and Jesse Eisinger and Justin Elliott of ProPublica. It was published by WNYC and The New Yorker. There's a link to it on our Twitter feed, @NPREmbedded. You can hear more NPR on your local public radio station on another show I host called All Things Considered. That is it for this round of Trump stories for now. Thanks for listening.

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