Dossier 1 KazBay B.V.

Investigations conducted by ZEMBLA show that Bayrock has formed a business construction in the Netherlands, which may have been used to siphon off one and a half million dollars. In this enterprise, Bayrock collaborated with Viktor Khrapunov, a fugitive ex-mayor and governor from Kazakhstan. The Kazakhstan government accuses Khrapunov of systematically looting hundreds of millions of public assets.

The network of companies works as follows: 
The hub of the enterprise is the Dutch letter box company KazBay B.V. In the act of incorporation it states that KazBay is owned by two companies: the Dutch firm Bayrock B.V. and the Swiss company Helvetic Capital S.A. This email explains that Trump’s business partner Bayrock Group L.L.C. is behind Bayrock BV, and that the actual owner of Helvetic Capital S.A. is none other than the wife of Viktor Khrapunov.

This mail clearly refers to the use of a Dutch go-between company. Its contents also reveal that the Dutch construction was formed by the law firm of Rudy Giuliani who, at the time, was a partner in Bracewell & Giuliani LLP, and is also a Trump confidante.

In this agreement  Bayrock and Khrapunov agree to deposit 1.48 million dollars in KazBay. On 25 September, Bayrock transfers its share of 740,000 dollars, evidence of which is recorded in the bank statements.

Bayrock informs an investor that the 1.48 million was invested in mining operations in Kazakhstan. According to this email the business partner asks to see records of the expenses. Bayrock, however, appears unable to account for the 1.5 million dollars. When ZEMBLA asks about the suspect investments, Bayrock declines to answer.

In a response  Bayrock told ZEMBLA that:

“Bayrock B.V. and KazBay B.V. were entities formed with the advice of outside legal counsel as part of the structuring of an investment by Bayrock. The investment was not successful and the structure subsequently was abandoned. We have vociferously denied the baseless allegations made in the Kriss lawsuit. We will not comment on matters that are subject to ongoing litigation.”

In the Kriss vs Bayrock lawsuit a former Bayrock employee accuses the company of perpetrating large-scale tax fraud and of running a criminal organisation. 

The Dutch intermediaries were directors of KazBay for eighteen months. During this time, various articles were published, exploring the murky past of Bayrock and Khrapunov.

Six months ago, the Financial Times wrote this article about Khrapunov and his business partner Bayrock, accusing KazBay of operating as a money laundering channel.

Dossier 2: Trump & Felix Sater

Donald Trump appeared entirely unconcerned by the criminal background of his then business partner Felix Sater. In an email to an investor, Saterobserves that Trump’s main consideration was to turn the situation to his own financial advantage. In the email, Sater refers to a meeting that took place on 23 January 2008.

According to internal documents belonging to Bayrock, the gathering was an important meeting which required the presence of all Trump SoHo business partners. Prior to the meeting, Sater appears to have been in contact with Trump. I

n an e-mail  Sater tells his colleagues: “Donald is happy with me”.

At the time of the meeting, Trump is fully aware of Sater’s past. A month earlier, on 17 December 2007, the New York Times published an article on Sater and his criminal deeds. On 19 December 2007, Donald Trump declares his intention to look into the matter.

Frederick Oberlander

Frederick Oberlander is a New York-based attorney specialised in tax law.

He took legal action as far as the United States Supreme Court calling for the public disclosure of the sealed legal dossier of Felix Sater. His attempts have proved largely successful. Previously, a variety of lower courts had ruled that Oberlander was enjoined from in any way revealing secret documents on Sater that he had obtained from a Bayrock employee, and instructed not to refer to the case at all.

'qui tam' case
Oberlander has been conducting legal proceedings against Bayrock for years. He instigated what’s known as a ‘qui tam’ case against the company in 2015. ‘qui tam’ is a specifically American law suit filed by a private individual, acting as prosecutor (a private Attorney General) to recover misappropriate government funds (in this case taxes).

In the case against Bayrock, the public prosecutor of the State of New York has given Oberlander the go-ahead to represent a group of clients who are suing Bayrock ‘on behalf of themselves and the State of New York’.

According to Oberlander, Tevfik Arif, Felix Sater and Julius Schwartz are guilty of perpetrating various types of fraud, and have attempted to conceal their fraudulent activities.

Dossier 3: Bayrock’s deal with the FL Group

This presentation divulges that the Icelandic investment company FL Group is one of Bayrock’s strategic partners. In 2007, the two companies sign a million-dollar property development agreement. Donald Trump approves the agreement, and also adds his signature.

Court documents state that Russian investors, who are supporters of Vladimir Putin, are said to be behind the FL Group. The documents also refer to a covert plan concocted by FL and Bayrock. Together, the companies are purported to have been planning a tax fraud amounting to 250 million dollars. In their above-mentioned response, Bayrock let us know they have no intention of commenting on cases that are subject to ongoing litigation.

The FL Group (now known as Stodir after a restructuring in 2009) informed Zembla as follows:

- " FL Group’s total investment in the Bayrock project(s) was USD 80 million.

- After the restructuring, we had our advisors and lawyers review the project, with the aim to recover value or find out if Stodir had any rightful claims – but without any success and no value was recovered.

- we have no knowledge or information about most of your questions, apart from the ones that relate directly to FL Group.

- We see no evidence about Russian investors in FL Group, at least no Russian entity was ever registered on FL Group’s shareholders list.

- We see no evidence about FL Group investing in Kazakhstan."

Reactions to 'The dubious friends of Donald Trump: the Russians':

Felix Sater denies having threatened people with violence. In spite of repeated requests, Sater has not answered ZEMBLA’s questions. Donald Trump, Alexander Machkevich and Viktor Khrapunov have not responded either.

This is the statement of Bayrock and Tevfik Arif :

“Bayrock B.V. and KazBay B.V. were entities formed with the advice of outside legal counsel as part of the structuring of an investment by Bayrock.  The investment was not successful, and the structure subsequently was abandoned.  We have vociferously denied the baseless allegations made in the Kriss lawsuit.  We will not comment on matters that are subject to ongoing litigation.” 

FL Group (which is now called Stodir after going through a restructuring in 2009) lets ZEMBLA’s know:

- "FL Group´s total investment in the Bayrock project(s) was USD 80 million.

- After the restructuring, we had our advisors and lawyers review the project, with the aim to recover value or find out if Stodir had any rightful claims - but without any success and no value was recovered.

- We have no knowledge or information about most of your questions, apart from the ones that relate directly to FL Group.

- We see no evidence about Russian investors in FL Group, at least no Russian entity was ever registered on FL Group´s shareholders list.

- We see no evidence about FL Group investing in Kazakhstan."

 

Frederick Oberlander 
Frederick Oberlander is a New York-based attorney specialised in tax law. 

He took legal action as far as the United States Supreme Court calling for the public disclosure of the sealed legal dossier of Felix Sater. His attempts have proved largely successful. Previously, a variety of lower courts had ruled that Oberlander was enjoined from in any way revealing secret documents on Sater that he had obtained from a Bayrock employee, and instructed not to refer to the case at all. 

Oberlander has been conducting legal proceedings against Bayrock for years. He instigated what’s known as a ‘qui tam’ case against the company in 2015. ‘qui tam’ is a specifically American law suit filed by a private individual, acting as prosecutor (a private Attorney General) to recover misappropriate government funds (in this case taxes). 

In the case against Bayrock, the public prosecutor of the State of New York has given Oberlander the go-ahead to represent a group of clients who are suing Bayrock ‘on behalf of themselves and the State of New York’. 

According to Oberlander, TevfikArif, Felix Sater and Julius Schwartz are guilty perpetrating various types of fraud, and have attempted to conceal their fraudulent activities.