There are some people convinced that businessman Donald Trump must have violated the Foreign Corrupt Practices Act given his international real estate projects and other business ventures. In the past few years, I spoken to several journalists, both before November 2016 and after, about such issues but I have never been quoted in any of the articles because my legal analysis of the information provided did not fit the narrative the journalist was pursuing. (See here and here for example).
The latest FCPA article regarding Trump is here from Bloomberg and states:
“President Donald Trump’s company considered offering Russian President Vladimir Putin a $50 million penthouse in a planned skyscraper in Moscow to make the building more desirable to rich buyers, according to the Russian-born real estate developer who was broker on the project.
Felix Sater, a felon, ex-government informant and former Trump business associate, said Thursday he came up with the idea as a way to reap extra profit from Trump Tower Moscow, which he said would have brought in as much as $500 million if it had been built. Then-Trump lawyer Michael Cohen approved of the idea, Sater said, adding that it came to him while “spitballing” marketing schemes.
It wasn’t clear how seriously the idea was ever pursued, or whether Trump knew about it. Trump tweeted … that he “lightly looked at doing a building somewhere in Russia,” but “put up zero money, zero guarantees and didn’t do the project.”
The Moscow tower deal was scrapped in 2016, though the reasons remain unclear. The disclosure about the penthouse proposal was first reported by Buzzfeed News, which claimed the idea was pitched during the 2016 presidential campaign.
“I proposed giving Putin a $50 million penthouse because all of the oligarchs would kill to live in the building, and we could raise prices by an extra $250 million,” said Sater, who worked as an adviser to Trump’s company during the Moscow negotiations and had previously worked with Trump to develop to a building in Manhattan.
The Trump Organization didn’t immediately respond to a request for comment, nor did Cohen or two of his lawyers. The White House also did not immediately respond to a request for comment on Thursday night.
Trump’s business dealings in Moscow took center stage earlier Thursday when Cohen pleaded guilty to lying to Congress about the Trump tower Moscow project in an August 2017 statement to Congress. Cohen admitted he lied when he said that negotiations for the skyscraper ended in January 2016 when in fact they continued until June that year, after Trump cinched the Republican nomination.
Cohen said he made the false statements to minimize links between Trump and the Moscow project and to give the impression that the deal had fallen apart before the first primary, “in the hopes of limiting the ongoing Russia investigations,” according to court papers. He also acknowledged working with “Individual 2” — Sater, according to a person familiar with the matter — in trying to win Russian approval for the project, according to court papers.
Cohen has agreed to cooperate with Special Counsel Robert Mueller’s investigation into Russian interference in the 2016 election. As part of his plea deal, he admitted he talked to Trump about the Moscow deal more times than he had previously stated and also briefed Trump family members.
Sater said giving big-name celebrities free units in new buildings is “a standard marketing trick in real estate.” He said he tried a similar marketing trick in the mid-2000s, while working on a residential project in Montenegro, when Madonna was to perform at a concert.
He said he tried to give Madonna a free unit, thinking that if potential buyers heard Madonna may live there “everyone would want to live there.” It didn’t work, but he said he got a lot of publicity out of it.
In Moscow, “I decided to go after the biggest celebrity in Russia,” Sater said.”
Based on the rather limited information in the above-article, let’s analyze the FCPA issues.
Putin is clearly a foreign official and a $50 million penthouse is clearly something of value. That was easy.
However, for the FCPA’s anti-bribery provisions to be implicated there must be “an offer, payment, promise to pay, or authorization of the payment of any money, or offer, gift, promise to give, or authorization of the giving of anything of value” to a “foreign official” either directly or indirectly (more on that below).
Brainstorming or thinking about potential marketing plans in connection with a potential real estate project clearly does not fit the above description.
[According to Buzzfeed: “President Donald Trump’s company planned to give a $50 million penthouse at Trump Tower Moscow to Russian President Vladimir Putin as the company negotiated the luxury real estate development during the 2016 campaign, according to four people, one of them the originator of the plan. Two US law enforcement officials told BuzzFeed News that Michael Cohen, Trump’s personal lawyer at the time, discussed the idea with a representative of Dmitry Peskov, Putin’s press secretary.” It is unclear what “discussed the idea” actually means]
Moreover, even if it did, the “thing of value” offered, paid, promised, or authorized to the “foreign official” must be to:
“influenc[e] any act or decision of such foreign official in his official capacity, (ii) induc[e] such foreign official to do or omit to do any act in violation of the lawful duty of such official, or (iii) securing any improper advantage; or induc[e] such foreign official to use his influence with a foreign government or instrumentality thereof to affect or influence any act or decision of such government or instrumentality
“in order to assist [the business organization] in obtaining or retaining business for or with, or directing business to, any person.”
There is nothing in the Bloomberg article to suggest that the $50 million Moscow penthouse, even if actually offered or promised to Putin, was for such purposes.
Granted there is a massive difference between a $50 million penthouse and one-of-a-kind Nike shoes, but the above story-line seems in the same qualitative league as Nike gifting, on more than one occasion, President Obama one-of-kind shoes no doubt with a marketing objective in mind. (See here for instance).
Moreover, even if Satar, Cohen (or any third-party for that matter) did actually offer, promise or authorize the $50 million penthouse to Putin, and even if did meet the other statutory qualification described above, Trump would not automatically be liable for such conduct. Rather, the FCPA’s third-party payment provisions state that an individual such as Trump is liable only to the extent he has “knowledge” of the third-party’s conduct.
In this regard, the FCPA defines “knowing” as follows.
“(A) A person’s state of mind is “knowing” with respect to conduct, a circumstance, or a result if– (i) such person is aware that such person is engaging in such conduct, that such circumstance exists, or that such result is substantially certain to occur; or (ii) such person has a firm belief that such circumstance exists or that such result is substantially certain to occur. (B) When knowledge of the existence of a particular circumstance is required for an offense, such knowledge is established if a person is aware of a high probability of the existence of such circumstance, unless the person actually believes that such circumstance does not exist.”
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