A document obtained by CNN reveals the details of a 17-page letter of intent
The project for a Trump World Tower Moscow failed to get off the ground
Around the time presidential candidate Donald Trump was touting his real estate dealings at a Republican primary debate, a proposal was in the works to build a Trump Tower in Russia that would have given his company a $4 million upfront fee, no upfront costs, a percentage of the sales, and control over marketing and design. And that’s not all: the deal included the opportunity to name the hotel spa after his daughter Ivanka.
An internal Trump Organization document from October 2015, obtained by CNN on Thursday, reveals the details of a 17-page letter of intent that set the stage for Trump’s attorney to negotiate a promising branding venture for Trump condominiums, a hotel and commercial property in the heart of Moscow. Trump signed the document later that month, according to Michael Cohen, his corporate attorney at the time. The document CNN obtained does not have Trump’s signature because it is a copy of the deal that Cohen brought to Trump to sign.
Cohen pulled out of the arrangement three months later as the project failed to get off the ground.
Trump did not mention during the presidential campaign that his company explored the business deal in Russia. Instead, he insisted that he had “nothing to do with Russia.” Even when talking about his past dealings with Russians – like the Miss Universe pageant he held in Moscow in 2013 – Trump never referred to the prospective licensing deal that fell through a few weeks before the Iowa caucuses.
While the potential Russian deal was still on the table, Trump was speaking positively about working with Russian President Vladimir Putin and also minimized Russia’s aggressive military moves around the world. His willingness to accept narratives favored by the Kremlin contrasted with not only the Obama administration but also his Republican opponents.
At the debates, Trump went after those opponents – but not Putin. In a primary debate in September 2015, he said he “would get along with” Putin and articulated a more conciliatory posture toward the Kremlin. In October 2015, days before he signed the letter of intent, Trump tweeted a link to an article titled “Putin loves Donald Trump.”
Cohen has publicly acknowledged discussing the deal with Trump on three occasions. A source familiar with those conversations adds that they lasted less than four minutes combined.
Felix Sater, a Russian-born former Trump business associate and mob-linked felon who figured prominently in development of the Trump SoHo property in New York, served as an intermediary in the Moscow venture, shuttling documents between Cohen and the Russian development firm he was hoping to partner with.
In an email to Cohen, Sater wrote the project could “possibly fix relations between the countries by showing everyone that commerce and business are much better and more practical than politics.” He continued, “That should be Putin’s message as well, and we will help him agree on that message. Help world peace and make a lot of money, I would say that’s a great lifetime goal for us to go after.”
The preliminary agreement for the Moscow project was signed by Trump on or around October 28, 2015, according to a statement Cohen gave last week to Congressional committees investigating Russian meddling in the 2016 election. Also signing was Andrey Rozov, owner of I.C. Expert Investment Company, which would have been responsible for developing the property, which they hoped to build in the heart of Moscow.
The general outlines of the potential deal, and its collapse, came to light in Cohen’s statement last week. But the new details in the document obtained by CNN reveal a branding bonanza in which the Trump Organization would have had no responsibility for financing the project — the potential cost of which is not even mentioned — but have control over the property’s management and appearance.
This letter of intent was not a legally binding contract. But it was an agreement that the two parties would try to forge a more formal agreement down the road. It set the contours of the negotiations.
Both parties agreed the property would be named Trump World Tower Moscow. But when the letter was signed, the Russian company still hadn’t identified a plot of land where it could be built.
According to the document, Trump World Tower Moscow would have featured about 250 luxury condominium units, 15 floors of hotel rooms, as well as space for commercial properties and offices.
“All plans shall be subject to (the Trump Organization’s) prior review and approval…” the document says, giving Trump’s company broad oversight over the aesthetics. “Each architect, designer, engineer landscape designer and consultant retained by (I.C. Expert) in connection with the design construction and development of the Property shall be subject to (the Trump Organization’s) prior written approval.”
The preliminary deal indicated that Trump International Hotels Management LLC would manage the hotel portion of the tower, which was expected to feature a luxury fitness center and spa.
Trump’s company was explicitly given the option to “brand any or all portion of the spa or fitness facilities as ‘The Spa by Ivanka Trump’ or similar brand,” according to the document. And if they did name it after Trump’s daughter, then Ivanka or her designee would be given “sole and absolute discretion” to approve “all interior design elements of the spa or fitness facilities,” the document says.
Even though the deal was non-binding, it delved into specifics about payments and fees.
If the parties reached a formal licensing deal, the Trump Organization would have received $4 million in upfront payments, including $1 million right away, according to the document. Another $1 million was slated for when a building location was approved, and the remaining $2 million would’ve been paid out when construction began or two years after the contract was signed – whichever came first.
Trump’s company would have received a cut of the profits from sales of condominiums and commercial space. There was a decreasing scale for what percentage of the condo sales the company would receive, based on the price of the unit. The scale started with getting 5% of condos costing up to $100,000.
Trump’s company would also be paid a percentage of other sales affiliated with the property, including commercial and office space and even “concessions, activity fees, catering, conferences and banquet fees,” according to the document. Another 2% of the tower’s gross operating revenue would be set aside to use for “coordinated sales and marketing efforts among all ‘Trump’ branded hotels.”
But these revenue streams were aspirational without an actual licensing contract. Even though Trump and Rozov, of the Russian company, signed the document, it was preliminary and non-binding.
“The Parties agree that unless and until a License Agreement between the Parties has been executed and delivered, no party shall be under any legal obligation of any kind whatsoever to consummate a transaction hereby by virtue of the (letter of intent),” the document says.
The document goes on to say that, “This (letter of intent) shall not be construed to be a binding contract between the Parties,” except for three clauses, including a provision about brokers. Even though Sater acted as an intermediary between the Trump Organization and I.C. Expert, the Russian company affirmed in the document “that it has not dealt with any broker with respect to the transaction.”
There is nothing in the document about where the Russian company would get the money to finance the project, or which banks it would work with. Sater told the New York Times last month that he lined up financing from VTB Bank, which is partially owned by the Kremlin and is under US sanctions. In a statement provided to CNN, the bank denied playing any role in the Trump project, and called those claims “completely false.”
I.C. Expert Investment Company lists seven “banking partners” on its website, including VTB Bank. Three of the other banks are either partially or completely controlled by Russian government entities. The other three are private.
When contacted by CNN, Cohen said his dealings with a Russian company were simply part of his job responsibilities. “It was part of my job to prospect for business opportunities, domestic and foreign.”
“Mr. Cohen will cooperate with the committees, has turned over the appropriate documents that have been requested and will meet with them if requested,” his attorney Stephen Ryan told CNN.
In his statement to Congress, Cohen said that “the Trump Tower Moscow proposal was not related in any way to Mr. Trump’s presidential campaign” and that “the decision to pursue the proposal initially, and later to abandon it, was unrelated to the Donald J. Trump for President Campaign.”
But it was being negotiated during a critical time for Trump. Up in the polls, but with months to go before the first votes were cast in Iowa, Trump was trying to maintain the lead and knock out his GOP competition, and defy the widely-held conventional wisdom that he couldn’t actually win the nomination.
Trump allies, including those inside the Trump Organization, argue that he shouldn’t have been required to neglect or abandon his business while running for the presidency, which he could have lost.
The effort was never publicly disclosed by Trump during the campaign, though there wasn’t any requirement that he do so. But he insisted on several occasions that he had “nothing” to do with Russia, with a few exceptions – a mansion he sold to a Russian in 2008, and the Miss Universe pageant he held in Moscow in 2013. He never mentioned the potential Trump Tower deal as one of the exceptions.
“I have no deals that could happen in Russia, because we’ve stayed away,” Trump said in early January 2017 as President-elect. “We could make deals in Russia very easily if we wanted to, I just don’t want to because I think that would be a conflict. I have no loans, no dealings, and no current pending deals.”
Trump maintained that posture into his presidency, never once mentioning the failed effort to do business in Moscow, even as Special Counsel Robert Mueller and multiple Capitol Hill committees investigated his relationship with Russia.
“I have had dealings over the years where I sold a house to a very wealthy Russian many years ago. I had the Miss Universe pageant – which I owned for quite a while – I had it in Moscow a long time ago. But other than that, I have nothing to do with Russia,” Trump told NBC News in May.
Investigators working for the special counsel are looking at whether Trump had any business dealings that could have put him or his associates in a compromising position with Russia.
This story has been updated with the statement from VTB Bank.