Donald Trump may not think of himself, or his family, as kleptocratic. But his business model – and his continued profiteering while in the White House – fit firmly within an international mold of kleptocracy, marrying anonymous shell companies, luxury real estate purchases, and unknown relationships that may well be driving policy outcomes.
The latest revelation on the financial murk surrounding the president came earlier this week, with a blistering report in USA Today revealing that over half of the 2017 real estate sales from Trump’s companies went to anonymous shell companies.
For the vast majority of these purchases, there’s little indication who’s fronting the cash – let alone who the ultimate beneficiary of the properties may be.
As the report found, the sales – totaling some $35 million – represent a stark shift from Trump’s pre-presidency days: “In the two years before the nomination, 4% of Trump buyers utilized [anonymous shell companies]. In the year after, the rate skyrocketed to about 70%.” The report added that “USA Today’s tracking of sales shows the trend held firm through Trump’s first year in office.” And for the vast majority of these purchases, there’s little indication who’s fronting the cash – let alone who the ultimate beneficiary of the properties may be.
None of this is, of course, necessarily illegal – and many of the associated shell companies purchasing Trump properties are themselves American. Indeed, over the past few years, the U.S. has transformed into one of the global bastions of financial secrecy, with anyone – arms dealers, war-lords, the autocrats Trump appears to admire so readily – able to set up limited liability companies (LLCs) for less than $200 in states like Delaware, Nevada, or Wyoming. As others have noted, in these states it’s often easier to obtain an anonymous shell company than it is to receive a library card. (Said one academic, when it comes to identifying those behind anonymous companies, “Somalia has slightly higher standards than Wyoming or Nevada.”)
This has allowed any number of despots and their children to stash their ill-gotten gains in high-rises in Manhattan, beach-fronts in Malibu, condos in Miami. From dictators’ families in Uzbekistan and Equatorial Guinea to weapons smugglers from Russia and politicians looting Ukraine, any number of sordid characters have turned to the U.S. for their shell company and luxury property needs, all in the pursuit of both protecting stolen assets and expanding money laundering operations.
And now, the U.S. has a president who profits personally, and handsomely, from these tactics.
Trump has bucked precedent by apparently maintaining access to the trust holding his pre-presidency assets – the same trust which profits from the aforementioned luxury property sales. As a recent piece from Washington Monthly noted, Trump’s trust “is not blind – Trump’s children have admitted to providing their father with regular business updates,” with the trust “allow[ing Trump] to withdraw profits and assets from the trust at any time. That means Trump has a direct and ongoing financial interest in any policy decision that could affect his businesses.”
All of this comes in addition to revelations late last year that Trump – and Ivanka – were tied directly to allegations of massive money laundering schemes from Latin American cartels in Panama, as well as those close to the Iranian Revolutionary Guard via Trump property in Azerbaijan. Or as former White House strategist and Breitbart executive chairman Steve Bannon recently said about the ongoing investigations into the Trump campaign’s relationship with Russia, “This is all about money laundering. … It’s as plain as the hair on your face.”
As such, there’s little surprise that the president appears far less keen than his predecessor on shining light on those picking up prime American real estate, without having to identify who they actually are. (Former President Barack Obama, via his administration’s final budget proposal, attempted to push identification of the beneficial owners of American shell companies, although such effort fell short.)
Trump and shock at Tillerson's gutted/headless State Department have quickly disappointed: Trump now viewed as a garden variety kleptocrat.
— Ben Judah (@b_judah) November 7, 2017
To be sure, those close to the president dispute any charges of malfeasance or conflicts of interest. Attorney Bobby Burchfield, Trump’s acting ethics advisor, told USA Today that property deals are only permitted if there’s no indication the deal would affect presidential decision-making. Given the nature of anonymous shell companies, though, attempting to confirm such a standard would appear to be next to impossible. Added USA Today, “Burchfield wouldn’t say if he declined to sign off on any Trump real estate deals in 2017.”
The revelations fit any number of prior precedents the president has set when it comes to financial obfuscation. Not only is he the first president in decades to refuse to release his tax returns, but the new revelations follow prior USA Today reports on the lack of transparency surrounding Trump real estate sales – including one finding that those purchasing or leasing Trump properties “include companies or individuals tracing to addresses in at least a dozen countries.”
Given the nature of the anonymous shell companies picking off Trump properties, the odds of identifying those beneficial owners helping funnel millions to the president’s company – via American shell companies and Trump’s American properties – remain minimal. So, too, are the odds that none of these purchases came without at least an attendant attempt at swaying some kind of executive decision-making.
After all, foreign delegations – from Kuwait, from Malaysia, from Saudi Arabia – have already appeared keen on patronizing Trump properties elsewhere as a means of ingratiating themselves with the president. Funneling millions in luxury property purchases to help the president’s profits, especially when done anonymously, in order to cozy up to the president would hardly be a stretch – and would be an opportunity few arms dealers, criminals, and foreign autocrats would be willing to turn down.