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Tuesday, September 18, 2018

Long before the American president’s disgraceful groveling before his Russian counterpart at the Helsinki summit, millions wondered: Just what does Vladimir Putin have on Donald Trump? Now author and journalist Craig Unger reveals decades of hidden history to answer that question in his new book House of Trump, House of Putin: The Untold Story of Donald Trump and the Russian Mafia — which examines Trump’s many connections to the Russian mob, and how those financial dealings resulted in an American presidency that is a Kremlin asset. Below we excerpt the book’s first chapter in full. 

 

CHAPTER ONE: (VIRTUAL) WORLD WAR III

At approximately 9:32 a.m. Moscow time on November 9, 2016, Deputy Vyacheslav Nikonov of the pro‐Putin United Russia Party stepped up to the microphone in the Russian State Duma, the Russian equivalent of the House of Representatives, to make a highly unusual announcement.

The grandson of Vyacheslav Molotov—the coolly ruthless Stalinist of Molotov cocktail fame—Nikonov had been involved in Soviet and Russian politics for roughly forty years, including serving a stint on Vladimir Putin’s staff. Now, he was about to make a rather simple, understated announcement, that in its way was as historic and incendiary as anything his grandfather had ever done.

“Dear friends, respected colleagues!” Nikonov said. “Three minutes ago Hillary Clinton admitted her defeat in US presidential elections and a second ago Trump started his speech as an elected president of the United States of America and I congratulate you on this.”

Even though Nikonov did not add what many in the Kremlin already knew, his brief statement was greeted by enthusiastic applause. Donald J. Trump had just become Vladimir Putin’s man in the White House.

This book tells the story of one of the greatest intelligence operations in history, an undertaking decades in the making, through which Russian Mafia and Russian intelligence operatives successfully targeted, compromised, and implanted either a willfully ignorant or an inexplicably unaware Russian asset in the White House as the most powerful man on earth. In doing so, without firing a shot, the Russians helped pu in power a man who would immediately begin to undermine the Western Alliance, which has been the foundation of American national security for more than seventy years; who would start massive trade wars with America’s longtime allies; fuel right‐wing anti‐immigrant popuism; and assault the rule of law in the United States.

In short, at a time at which the United States was confronted with a new form of warfare—hybrid war consisting of cyber warfare, hacking, disinformation, and the like—the United States would have at its helma man who would leave the country all but defenseless, and otherwise inadvertently do the bidding of the Kremlin.

It is a story that is difficult to tell even though, in many ways, Donald Trump’s ties to Russia over the last four decades have been an open secret, hiding in plain sight. One reason they went largely unnoticed for so long may be that aspects of them are so unsettling, so transgressive, that Americans are loath to acknowledge the dark realities staring them in the face.

As a result, the exact words for what happened often give way to fierce semantic disputes. Whatever Russia did with regard to the 2016 presidential campaign, was it an assault on America’s sovereignty, or merely meddling? Was it an act of war? Did Russian interference change the results of the 2016 presidential election? Was it treason? Is Donald Trump a traitor? A Russian agent? Or merely a so‐called useful idiotwho somehow, through willful blindness or colossal ignorance, does not even know how he has been compromised by Russia?

President Donald Trump, of course, has denied having anything to do with Russia, having tweeted, ten days before his inauguration, “Russia has never tried to use leverage over me. I HAVE NOTHING TO DO WITH RUSSIA ‐ NO DEALS, NO LOANS, NO NOTHING!”

But as this book will show, over the last four decades, President Donald Trump and his associates have had significant ties to at least 59 people who facilitated business between Trump and the Russians, including relationships with dozens who have alleged ties to the Russian Mafia.

It will show that President Trump has allowed Trump‐branded real estate to be used as a vehicle that likely served to launder enormous amounts of money—perhaps billions of dollars—for the Russian Mafia for more than three decades.

It will show that President Trump provided an operational home for oligarchs close to the Kremlin and some of the most powerful figures in the Russian Mafia in Trump Tower—his personal and professional home, the crown jewel of his real estate empire—and other Trump buildings on and off for much of that period.

It will show that during this period the Russian Mafia has likely been a de facto state actor serving the Russian Federation in much the same way that American intelligence services serve the United States, and that many of the people connected to Trump had strong ties to the Russian FSB, the state security service that is the successor to the feared KGB.

It will show that President Trump has been a person of interest to Soviet and Russian intelligence for more than forty years and was likely the subject of one or more operations that produced kompromat (com‐ promising materials) on him regarding sexual activities.

It will show that for decades, Russian operatives, including key fig‐ ures in the Russian Mafia, studiously examined the weak spots in America’s pay‐for‐play political culture—from gasoline distribution to Wall Street, from campaign finance to how the K Street lobbyists of Washington ply their trade—and, having done so, hired powerful white‐shoe lawyers, lobbyists, accountants, and real estate developers by the score, in an effort to compromise America’s electoral system, legal process, and financial institutions.

It will show that President Trump, far from being the only potential “asset” targeted by the Russians, was one of dozens of politicians—most of them Republicans, but some Democrats as well—and businessmen who became indebted to Russia, and that millions of dollars have been flowing from individuals and companies from, or with ties to, Russia to GOP politicians, including Senate majority leader Mitch McConnell, for more than 20 years.

It will show that the most powerful figures in America’s national security—including two FBI directors, William Sessions and Louis Freeh, and special counsel to the CIA Mitchell Rogovin—ended up working with Russians who had been deemed serious threats to the United States.

It will show that President Trump was $4 billion in debt when Russian money came to his rescue and bailed him out, and, as a result, he was and remains deeply indebted to them for reviving his business career and launching his new life in politics.

It will show that President Trump partnered with a convicted felon named Felix Sater who allegedly had ties to the Russian mob, and that Trump did not disclose the fact Sater was a criminal and profited from that relationship.

And it will show that, now that he is commander in chief of the United States, President Trump, as former director of national intelligence James Clapper put it, is, in effect, an intelligence “asset” serving Russian president Vladimir Putin, or, even worse, as Glenn Carle, a former CIA national intelligence officer, told Newsweek, “My assessment is that Trump is actually working directly for the Russians.” Then again, maybe James Comey put it best. In January 2017, just a week after Donald Trump was inaugurated, the president invited then– director Comey to the White House for a private dinner. Characterizing Trump as “unethical, and untethered to truth,” likening his behavior to that of a Mafia boss, Comey writes in A Higher Loyalty thatTrump told him: “I need loyalty. I expect loyalty.”

The demand reminded Comey of a Cosa Nostra induction ceremony, with Trump in the role of the Mafia family boss. “The encounter left meshaken,” he writes. “I had never seen anything like it in the Oval Office. As I found myself thrust into the Trump orbit, I once again was having flashbacks to my earlier career as a prosecutor against the Mob. The silent circle of assent. The boss in complete control. The loyalty oaths. The us‐versus‐them worldview. The lying about all things, large and small, in service to some code of loyalty that put the organization above morality and above the truth.”

Comey writes as if the Mafia conceit is a metaphor. But in a way it is more than that. What follows is the story of Trump’s four‐decade‐long relationship with the Russian Mafia, and the Russian intelligence operation that helped put him into the White House.

On June 23, 2017, six months after his inauguration, President Donald Trump tweeted that his predecessor Barack Obama “knew far in advance” about Russia’s meddling in the American election. The tweet was unusual in that it represented a rare acknowledgment by the president that Russia may have interfered in the 2016 election, but it was accompanied by Trump’s denunciation of any investigation into the matter as a “witch hunt.”

At the time, Russian president Vladimir Putin, who was en route to the Crimean peninsula, which Russia had annexed in 2014 from Ukraine, had reason to be grateful for any cover provided by his American friend. His stopover was not a popular one, rekindling as it did animosity in Ukraine, whose foreign ministry issued a statement saying that Kiev “consider[ed] this visit . . . to be a gross violation of the sovereignty of the State and the territorial integrity of Ukraine.” It was an issue that loomed large in the shadow play between the two men: Putin’s apparent support of Trump seemingly went hand in hand with the latter’s acquiescence on Russian aggression in Ukraine.

While Putin and Trump hogged the headlines, however, something took place in Devens, Massachusetts, that seemed light‐years removed from the Trump‐Russia scandal, but in fact was closely tied to its origins. John “Sonny” Franzese, the oldest federal prisoner in the United States, was discharged from the Federal Medical Center, after serving an eight‐year sentence for extortion.

Thanks to his age—Franzese had just celebrated his one-hundredth birthday—his release was duly noted all over the world, from Der Spiegel to the New York Post, which dutifully called forth Franzese’s glory days hanging out with Frank Sinatra and boxing champ Jake LaMotta at the Copacabana. An underboss in the feared Colombo crime family, Franzese had repeatedly dodged murder charges because he was likely so good at making bodies disappear. But after one acquittal he was caught on tape explaining how he’d disposed of the bodies of the dozens of people he had killed: “Dismember victim in kiddie pool. Cook body parts in microwave. Stuff parts in garbage disposal. Be patient.”

Franzese was old‐school Mafia, a relic from the mid‐20th century era of the Cosa Nostra’s Five Families, the same warring tribes depicted in The Godfather, and his return to Brooklyn evoked that powerful, mythic saga that has been so deeply imprinted in the American consciousness. Yet somehow the most enduring part of his legacy, one that will forever have its place in American history, is virtually unknown today. Through his son Michael, Sonny Franzese supervised a gasoline‐tax‐evasion scam that turned into a billion‐dollar enterprise lasting for six years, until the FBI broke it up in the mid-80s. The scandal also had far‐reaching geopolitical consequences in that it gave the newly arrived Russian Mafia its first major score in America and positioned it to play a vital role in Donald Trump’s rise to power, such a vital role that it is fair to say that without the Russian Mafia’s move into New York, Donald Trump would not have become president of the United States.

Born in Naples in 1917, Sonny Franzese had immigrated to the United States with his family as a child, and in his youth rode shotgun on hifather’s bakery truck in Brooklyn. As recounted in Michael Franzese’s Blood Covenant, he began his ascent back when Mafia nightlife meant dining at the Stork Club on West 58th Street in Manhattan, Sherman Billingsley’s swanky refuge for café society, where Sonny courted and married the coat‐check girl, and spent his evenings hanging out with the likes of Grace Kelly, Marilyn Monroe, Ernest Hemingway, Damon Runyon, and Walter Winchell. Before long, the Franzeses became an integral part of the storied Colombo crime family, the youngest and perhaps the most violent of the Five Families of organized crime, which were locked in an epic and ongoing internecine war.

When it came to bringing in revenue for the Colombo family, Sonny handled bookmaking, loan sharking, prostitution, shakedowns, and tax cheating. A thuggish, bull‐necked man known for his boxer’s flattened nose—he was said to resemble boxer Rocky Graziano—over time, he became a lean, meticulously groomed don sporting all the requisite sartorial flourishes of his profession—crisp fedora, diamond pinkie ring, pointed black shoes, bespoke suits, and a beautifully tailored overcoat. Meanwhile, he commanded half a dozen lieutenants, each of whom had as many as 30 soldiers in their organizations, and carved out a reputation as a ferocious enforcer. “He swam in the biggest ocean and was the biggest, meanest, most terrifying shark in that ocean,” said Phil Steinberg, a close friend of Sonny’s who was a major figure in the music industry. “He was an enforcer, and he did what he did better than anyone.” As his son Michael put it, Sonny “could paralyze the most fearless hit man with a stare.”

Sometimes he went significantly further than that. In 1974, a Colombo soldier who had been a bit too attentive to Sonny’s wife was found buried in a cellar with a garrote around his neck. According to Vanity Fair, the man’s genitals had been stuffed in his mouth, an act that authorities characterized as “an apparent signal of Sonny’s displeasure.”

As underboss, Sonny was in line to run the entire Colombo organization, and, with Michael under his tutelage, the Franzeses sought opportunities in new sectors of the burgeoning entertainment industry that were opening up to the mob. They financed Deep Throat, Linda Lovelace’s infamous porno film. They backed Phil Steinberg’s Kama Sutra/Buddah Records, which provided opportunities for money laundering and payola—not to mention hits by the Lovin’ Spoonful, the Shangri‐Las, and Gladys Knight and the Pips, among others.

Before long, Michael had become a Colombo caporegime like his father, the youngest person on Fortune magazine’s “50 Biggest Mafia Bosses” list, and one of the biggest earners in the Mafia since Al Capone. By the early 80s, however, organized crime in New York was undergoing a paradigmatic shift for a reason that was not yet widely known: The Russians were coming. In fact, Russians had begun collaborating with Italian mobsters as early as 1980, when the two crime organizations partnered in one of the most lucrative government rip‐offs in American history.

At the time, Michael Franzese, then in his early thirties, was already providing protection to a mobster named Lawrence Iorizzo, who owned or supplied 300 gas stations in and around Long Island and New Jersey, and was making a fortune by skimming tax revenue from gasoline sales. This scam was possible thanks to the sluggishness with which laggardly government officials collected gas taxes. Together, federal, state, and local authorities demanded on average 27 cents out of every gallon that was sold, but they took their time in collecting—sometimes as much as a year,

Having registered dozens of shell companies in Panama as owners of the gas stations, all Iorizzo had to do was to close down each of hisgas stations before the tax man came, and then reopen under new management with a different shell company. By the time the tax men came looking for their money, much of it was in Iorizzo’s pocket. When the FBI later investigated the scam, which had spread to six states, they called the investigation Operation Red Daisy.

Iorizzo’s scheme was going swimmingly except for one thing: A group of men—Michael Franzese described them as “small‐fry associates of another family”—were trying to muscle in on Iorizzo’s operation. According to Franzese, the six‐foot‐four, 450‐pound Iorizzo “ate pizzas the way most people eat Ritz crackers” and didn’t exactly look like he needed protection. Nevertheless, he had gone to Franzese for help with these small‐time hoods who were trying to shake him down and move in on his territory.

Without missing a beat, Franzese figured out a mutually acceptable solution, and a highly lucrative partnership was born. Soon, so muchmoney was pouring in that Franzese was promoted to caporegime in the Cosa Nostra. Then in 1984, three alleged Russian gangsters, David Bogatin, Michael Markowitz, and Lev Persits, approached him with a proposition that was very similar to Iorizzo’s. Like Iorizzo, they had their own gas tax scam going on, and like Iorizzo, they needed protection.

Franzese instantly saw the opportunity for another huge score, but he sized up the Russians with a mixture of respect and scorn. Bogatin, with his receding hairline and steel‐rimmed glasses, looked more like a white‐collar professional than a Russian mobster. His father had spent eighteen years in prison in Siberia because he had been “caught” hang‐ ing the key to the office door so that it accidentally covered a portrait of Joseph Stalin—thereby defacing the image of the Soviet dictator.23 In 1966, Bogatin joined the Soviet Army and served in a North Viet‐ namese antiaircraft unit, where he helped shoot down American pi‐ lots.24 Then, in the mid‐1970s, after leaving the army, he began working as a printer but was fired because he was printing outlawed material for Jewish dissidents.

After being blacklisted by the KGB, in 1977, Bogatin clawed his way out of Russia, came to New York, and worked in a factory. He bought a car, mastered English, and began to run a private cab service. That led to a gas station, then a fuel distributorship, all while he made acquaintances among the Russian diaspora.

Having grown up under communism, Bogatin took to capitalism like a duck to water—which won Franzese’s respect. The Russians had been among the pioneers of this spectacularly lucrative scam, and they had about 200 members working under them. They wanted “to flex their muscles,” Franzese said, in testimony before a Senate subcommittee in 1996, “and would not hesitate to resort to violence when they felt it was necessary to do so.”

Franzese had a harder time taking Bogatin’s partner seriously— thanks largely to his attire. Michael Markowitz wore gaudy jewelry, heavy gold chains, and showy wide‐collared shirts unbuttoned to the navel. As Franzese saw it, Markowitz aspired to be John Travolta in Saturday Night Fever, but instead called to mind the shimmying “wild and crazy guys” played by Steve Martin and Dan Aykroyd on Saturday Night Live in the 70s. The dapper Franzese couldn’t stop laughing at him. Markowitz “looked like a rug salesman who had just hit the lottery.”  Was this really his competition?

In the end, however, money trumped fashion, and so, on a Saturday morning in the fall of 1980, Michael Franzese sat down with Bogatin, Persits, and Markowitz at a gas station in Brooklyn. “These Russians were having trouble collecting money owed them,” Franzese recalled.“They were also having problems obtaining and holding on to the licenses they needed to keep the gas tax scam going.”

Franzese could help on both counts. One of his soldiers was a guy named Vinnie, and as Franzese put it, “Vinnie’s job was to say, ‘Pay the money, or I’ll break your legs.’”

Vinnie was persuasive—so persuasive that the Colombo family had  become famous for getting people to pay their debts. That wasn’t all. Franzese also had operatives inside the state government who could provide the Russians with the wholesale licenses they needed to defraud the government.

The Russians desperately needed Franzese, and he knew just how to play them. “We agreed to share the illegal proceeds, 75 percent my end, 25 percent their end,” he said. “The deal was put on record with all five crime families, and I took care of the Colombo family share of the illegal proceeds out of my end.”

Soon, the money came pouring in—$5 million to more than $8 million a week. As the operation expanded, profits soared to $100 million amonth, more than a billion a year. The Italians were the big winners, but Markowitz and Bogatin were well on their way to lucrative criminal careers.

Thus, in 1984, at the peak of his success, David Bogatin went shopping for apartments in New York City. Even though he was a juniorpartner with Franzese, after seven years in New York, Bogatin had stashed away enough money to buy real estate anywhere he wanted. For roughly a decade, thousands of Russian Jews like him had been pouring into Brighton Beach, Brooklyn. But Bogatin had his eyes on something more prestigious.

So instead of shopping for a home in Brighton Beach, Bogatin became fixated on a garish 58‐story edifice in midtown Manhattan, with mirrors and brass and gold‐plated fixtures everywhere. A monument to conspicuous consumption, it had an atrium covered with pink, white‐veined marble near the entrance and a 60‐foot waterfall overlooking a suspended walkway, luxury shops, and cafés. The AIA Guide to New York City described it as “fantasyland for the affluent shopper,” but hastened to add that the design was more like a generic “malt liquor” than posh champagne.

The New York Times architecture critic Ada Louise Huxtable called it “monumentally undistinguished,” while another Times writer dismissed it as “preposterously lavish” and “showy, even pretentious.”The developer’s love of excess was such that he purposely overstated the number of floors in the building. That way, he could say he lived on the sixty‐ eighth floor—even though it was a fifty‐eight‐story building. Its address was 721 Fifth Avenue, and it was known as Trump Tower.

Excerpted from the book House of Trump, House of Putin: The Untold Story of Donald Trump and the Russian Mafia by Craig Unger. Copyright © 2018 by Craig Unger. Reprinted with permission of Dutton, an imprint of Penguin Publishing Group, a division of Penguin Random House, LLC.