Trump Wanted $20 Million for 2006 Moscow Deal, Developer Says




 

(Bloomberg) -- Donald Trump's dream of putting his name on a tower in Moscow came with a hefty price tag: $20 million.

Trump demanded that non-negotiable fee in 2006 from a Ukrainian-Russian named Pavel Fuks, who made his fortune in oil trading, banking and real estate development. Fuks, who says he's been barred from entering the U.S. and is embroiled in a dispute over money he spent to attend Trump inaugural events, spoke about the early Moscow negotiations in an interview with Bloomberg News in a Kiev office with a team of armed security guards stationed outside.

Fuks said he hosted Trump's children, Ivanka and Donald Trump Jr., in Moscow in 2006 to discuss the project after meeting with the elder Trump several times in the U.S. By his account, Fuks offered to pay Trump $10 million in installments, but Trump demanded $20 million up front for the right to use the Trump name on a Moscow development.

"He said $20 million is nothing," Fuks recalled. "I said, no, it's a lot of money. We couldn't agree."

A representative of Trump's company, the Trump Organization, didn't respond to emails and phone messages.

Moscow Skyline

Fuks, whose account couldn't be independently verified, provided an insider's view on Trump's three-decade quest to stamp the Moscow skyline with his famous name. His organization's aggressive and persistent efforts to do business there have taken on new significance as Special Counsel Robert Mueller investigates potential ties between the Trump campaign and Russian interference in the 2016 presidential election.

Fuks's description, which differs from some earlier reports on the effort, indicates a more extensive deal proposal than has been previously understood, pulling in Trump family members and one of their significant business partners in Trump SoHo. Fuks says he was introduced to Trump by the late Tamir Sapir, a Soviet-born American who shepherded Russians into the New York development around the same time.

Trump made other attempts at a Moscow tower, notably in 2015 and 2016 while he was running for president. In that deal, he was willing to accept a $4 million upfront branding fee and a cut of profits, according to the 2015 letter of intent signed with I.C. Expert Investment Co., a Russian development firm.

Michael Cohen, Trump's former lawyer, pleaded guilty in November to lying to Congress about the 2016 proposed Moscow venture. Cohen had told the Senate that the project was scrapped in January 2016 when negotiations had continued for months afterward, a false statement he said he made in order to be consistent with Trump's repeated disavowals of any Russian business ties.

Trump's first attempt at a Moscow development came in 1987, when he visited Moscow to scout sites for a luxury hotel, according to his book, "The Art of the Deal." "I was impressed with the ambition of Soviet officials to make a deal," he wrote. The project fizzled, as did a 1996 foray into Moscow. In 2013, Trump also discussed plans for a Moscow tower with Russian developer Aras Agalarov when he visited the Russian capital for a Miss Universe pageant.

Rekindled Connection

Fuks, who was born in the Ukrainian city of Kharkiv, built up a Moscow real-estate empire under Moscow's powerful post-Soviet mayor. He'd shed those assets and relocated to Ukraine by the time he attempted to rekindle his connections with Trump after the U.S. election.

He traveled to Washington to attend events around Trump's inauguration, looking to hobnob with power brokers. Fuks said he didn't get to meet Trump then or attend any official inauguration events. In fact, he says he failed to receive such invitations, though he'd paid $200,000 for them to a Ukrainian-American businessman, Yuri Vanetik. Fuks says he's hired lawyers to recover the money.

Vanetik, in a statement, said he'd referred Fuks to a public relations firm that would organize his visit. Fuks misunderstood what was being offered, Vanetik said, and "became confrontational" when he felt shortchanged.

More recently, Fuks has had trouble getting into the U.S. He says he was stopped and questioned by Russian-speaking federal agents about his business interests and his past when he tried to enter the country in December 2017. He was barred from entry, despite several visits earlier in the year, he said.

"They did not let me in and began to ask some nonsense questions like are you Russian military?" he said. He told them he was not and is now applying again for a U.S. visa.

Trump SoHo Links

Fuks said he was introduced to Trump in 2005 by Sapir, who struck it rich in New York real estate and had an apartment in Trump Tower. Fuks and Sapir knew each other from selling petroleum products from a Moscow refinery. Trump and Sapir were business partners in the SoHo project, a hotel-condominium development.

Fuks and Trump met several times in 2005, first at Trump Tower in New York and later at Mar-a-Lago, Trump's resort in Palm Beach, Florida, Fuks said. Trump tried to sell Fuks on the idea of a mixed-use tower in Moscow -- a hotel, offices and apartments managed by a single company. The Trump Organization pitched a similar model to developers around the world, including in Istanbul and Toronto.

Trump was late to a January 2006 meeting, and Fuks ended up drinking tea with a pregnant Melania Trump and her father, he recalled. When Trump finally arrived, they all had dinner and discussed the project at length, Fuks said.

Later that year, Ivanka and Don Jr. traveled to Moscow to inspect the site and listen to Fuks's presentation. They had lunch at a Ukrainian restaurant, Fuks recalled.

"I told them my conditions, and they said they would think about it,'' Fuks said. "I offered him $2 million up front and a million each month during the year."

Trump declined, Fuks said.

'Prefer Moscow'

Fuks's project appears to be one of several in Moscow the Trump organization was considering at the time. In a 2008 interview, Don Jr. said he'd traveled to Russia half a dozen times in the preceding 18 months to discuss unspecified deals.

"I really prefer Moscow over all cities in the world," Don Jr. said in the interview with eTurboNews. "Several buyers have been attracted to our projects there."

Based on Fuks' account, Don Jr. and Ivanka may have visited Moscow at least twice in 2006. Besides their visit with Fuks, they also traveled to Moscow on a trip arranged by Felix Sater, who worked with Trump and Sapir on the Trump SoHo project and who was negotiating to build a Trump Tower on the site of an old pencil factory on the Moscow River. Fuks said he didn't know Sater and that his proposed Trump project was on the other side of the river in Moscow City, then a new high-rise business district under development.

Fuks said the last time he saw Trump was 2009 or 2010 in Miami, where Fuks's first wife owns a home. He said he went to a big party Trump was hosting in Palm Beach, but they didn't discuss the Moscow project.

"At that point it was already the financial crisis and prices had fallen," he said. "It was no longer interesting."

Economic Sanctions

Fuks's relationship with Russia has soured, too. At the end of last year, Russia slapped economic sanctions on him and more than 300 other Ukrainians -- retribution for Western sanctions against Russia. Fuks said he'd given up his Russian passport and is now concentrating on his investments in Ukraine, where he said he owns energy and real estate assets.

Besides the sanctions, Fuks said he's facing legal problems in Russia, with authorities pursuing what he says are decade-old cases against him. "My lawyers are fighting them," he said.

--With assistance from Daryna Krasnolutska.

To contact the reporter on this story: Stephanie Baker in London at stebaker@bloomberg.net

To contact the editors responsible for this story: Jeffrey D Grocott at jgrocott2@bloomberg.net, Andrew Martin, David Joachim

For more articles like this, please visit us at bloomberg.com

©2019 Bloomberg L.P.

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