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DIRTY LAUNDRY

If Donald Trump has a dark Russian secret, DEUTSCHE BANK may know what it is
SPXCHROME/GETTY
DAVID HUME KENNERLY/GETTY

IT SOUNDED LIKE A PARENT SCOLDING A tantrum-prone toddler with a penchant for tossing toys from his stroller.

In November 2008, Steven Molo, an attorney for Deutsche Bank, wrote a letter to the Supreme Court of New York about one of the company’s most troublesome clients. At issue was $640 million that client had borrowed in 2005 to fund construction of a new hotel in Chicago. The client had personally guaranteed the loan, but a few years later, the Great Recession devastated the economy, and he defaulted on his payment, with $330 million outstanding. Deutsche was seeking an immediate $40 million from the client, plus interest, legal fees and costs.

The debtor in question: Donald Trump, the future president of the United States. Instead of paying up, the New York real estate mogul countersued, claiming the 2008 crash was a force majeure event—one that Deutsche had helped precipitate. Therefore, he argued, he wasn’t obliged to pay back the money. Instead, he claimed Deutsche owed him money—about $3 billion in damages.

In response, Molo drew up a withering document, contrasting Trump’s frivolous writ with his long career of boasting about how rich he was:

Trump proclaims himself “the archetypal businessman, a deal-maker without peer.” Trump has stated in court he is worth billions of dollars. In addition to substantial cash, personal investments and various other tangible assets, he maintains substantial interests in numerous extraordinary properties in New York and around the country.

Those assets included hotel projects in seven U.S. cities, as well as in Mexico, the Dominican Republic, Canada, Panama and Dubai, United Arab Emirates, the lawyer noted. There were also casinos and golf courses scattered all over the world.

The same day Trump argued that the Great Recession meant he didn’t need to pay back his debts, he gave an interview to The Scotsman newspaper. After a two-year fight, he had gotten approval from the Scottish government for a new resort near Balmedie in Aberdeenshire—and he was thrilled. “The world has changed financially, and the banks are all in such trouble,” he told the paper, “but the good news is that we are doing very well as a company, and we are in a very, very strong cash position.” Trump said he didn’t have any exposure to the stock market, had bought the Scottish land for cash and was now well placed to build “the world’s greatest golf course.” Two weeks later, George Sorial, a Trump Organization executive, assured The Scotsman that the tycoon had a billion dollars earmarked for the course.

ALL PORTRAIT PHOTO­ILLUSTRATIONS BY PICTUREBOX CREATIVE

TRUMP PAID BACK DEUTSCHE BANK WITH A MASSIVE LIFELINE— FROM DEUTSCHE BANK.

RUBLE ROUSER Years before Trump got a new loan from Deutsche, Jain, left, came up with a controversial strategy to tap into potentially huge Russian profits: forge relationships with state partners.
JASON ALDEN/BLOOMBERG/GETTY

If those statements weren’t damning enough, Molo’s affidavit cited the real estate tycoon’s literary works, which summarized his attitude toward paying back other people’s money. Trump, the attorney observed, provided extensive advice on how to do business in his half-dozen or so books. In How to Get Rich, Trump advises readers to use the courts to “be strategically dramatic.” In Think Big and Kick Ass in Business and in Life, he boasts of how he “love[s] to crush the other side and take the benefits.” Trump’s strategy—honed during his terrible financial struggles with lenders during the 1990s—“was to turn it back on the banks…. I figured it was the bank’s problem, not mine,” Molo quoted him as saying, in connection with unpaid debt.

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Dirty Laundry: If Donald Trump has a dark Russian secret, Deutsche Bank may know what it is.
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