Trump’s Business Venture in the Dominican Republic Could Become a Strangling Alliance

The US president’s business partners in the Caribbean nation are linked to a Venezuelan tycoon who is allegedly the target of a major US investigation

President Donald Trump is involved in a major real estate project in the Dominican Republic that also has drawn in a billionaire Venezuelan banker whose business dealings are allegedly the target of a Department of Justice investigation.

The banker, Victor Vargas, controls one of the largest banks in Venezuela and played a key role in the development of an expansive polo club complex that came online in late 2015 in the same real estate project — a mega-tourism development called Cap Cana — where Trump now owns investment property and is exploring further business opportunities, according to public records and Narco News sources.

Vargas’ fortunes were enhanced by alleged kickbacks from financing deals he orchestrated over the years for the Venezuelan government, which has close ties to the Kremlin and whose top officials have been linked to narco-trafficking activity. Vargas has built a financial empire that extends from Venezuela into the Dominican Republic (D.R.) as well as Panama and Antigua and Barbuda — nations known as money-laundering centers.

Trump still owns investment property in or near Cap Cana worth up to $5 million. That’s after selling some $2 million worth of his land holdings to an unknown buyer or buyers sometime between mid-2015 and mid-2016, according to public records. The lead developers in the Cap Cana project are the D.R.-based Hazoury brothers, whom Trump initially inked a development deal with some 10 years ago. In addition, according to news reports, Trump has actively marketed his holdings in the Cap Cana project to Russian buyers.

Regardless of the extent of Trump’s knowledge of or participation in the Hasoury brothers’ broader business activities in the D.R., including their business relationship with the Venezuelan banker Vargas, Trump could be at risk of extortion, blackmail or other illicit pressures — should Trump’s land sales or other investment activities in the D.R. be linked to criminal actors or activity, such as money laundering.

In addition, the fact that a Department of Justice investigation is allegedly underway targeting Vargas also creates a conflict of interest for Trump, since that investigation could arguably threaten the value of his business interests in Cap Cana.

Mark Zaid, a well-respected attorney specializing in national security and government-accountability cases, recently made the following observations on Twitter with respect to Trump’s foreign business ventures:

@realDonaldTrump @POTUS (5) If I had to bet, my odds are on undisclosed/unknown financial dealings w/Russians that our illustrious President doesn't want public.

@realDonaldTrump (6) Doesn't even have to be illegal Russian dealings, but pertains to investments & loans that would reveal him to have lied abt business.

@realDonaldTrump (7) There could also be evidence of bribes to foreign govts (which Trump actually alluded to at one point) that are illegal in US.

The Venture

Trump’s business dealings in the D.R. date back to 2007 when his company inked a branding deal with the developers of Cap Cana, a master-planned, $2 billion luxury resort and high-end residential development located on the eastern seaboard of the D.R.

Trump and the Hazoury brothers ended up in US federal court in 2012, when Trump accused the brothers of fraud because they had allegedly failed to pay some $6 million in licensing fees to Trump’s branding affiliate, Trump Marks Real Estate. Trump and the Hazoury brothers have since patched things up and are looking to rekindle their business partnership in Cap Cana, according to recent news reports.

Trump’s operating company for the Cap Cana venture with the Hazoury brothers settled the lawsuit out of court in 2013 for undisclosed terms. The settlement, according to Narco News sources in Latin America familiar with the Cap Cana project, allegedly involved the Hazoury brothers granting land rights to Trump in the Cap Cana development project.

Trump, in his financial disclosure forms filed with the US Office of Government Ethics, indicate that as of July 2015 his investment in the D.R., through various shell companies, was worth between $5 million and $25 million. A year later, in his May 2016 financial disclosure, the value of the investment was listed as being worth between $1 million to $5 million. The disclosure also noted that Trump had $2 million in income from land sales in the D.R. since his July 2015 filing. There is no mention of who bought the land, however.

Coincidently, the Hazoury brothers at the end of 2015 unveiled the multimillion-dollar polo club development called Los Establos that, when completed, will encompasses some 3 million square meters at Cap Cana and is being billed as an equestrian sports center that will feature hundreds of horse stables, animal training and care facilities, as well as polo and other equestrian-competition facilities. Partnering with the Hazoury brothers on that project is Vargas, who is the president and owner of the fourth largest private bank in Venezuela, Banco Occidental de Descuento, or BOD. It’s parent company, BOD Financial Group, also controlled by Vargas, has bank holdings across Latin America, including in the D.R.

In fact, Cap Cana’s relationship with Venezuelan players dates to the early 2000s, when, according to longtime CIA, FBI and DEA asset Baruch Vega, the Hazoury brothers approached legal advisors for Venezuelan President Hugo Chavez seeking capital for the resort-development project.

Vega was involved with a series of U.S. law enforcement operations carried out by the DEA and FBI in the late 1990s and early 2000s. Those operations, Vega claims, involved serving as an intermediary in brokering deals with narco-traffickers by offering them U.S.-government sanctioned sweetheart plea deals in return for their surrender or cooperation. Vega is identified as a foreign intelligence source for the CIA in court records.

Vega says Chavez’s legal advisors ultimately declined the business offer from the Hazoury brothers, deeming the project too risky. Several years later, in 2007, the Hazoury brothers convinced Trump to partner with them on the estimated $2 billion development project.

The website for the 2016 Polo Challenge Dominican Republic, a major polo tournament held jointly at Cap Cana and the nearby resort Casa de Campo, where banker Vargas has played in and sponsored polo events for years, indicates that “renowned polo patron Victor Vargas” played a key role in creating the Polo Challenge tournament.

Narco News sources familiar with Vargas’ business dealings say he also was involved in designing and helping to finance the Cap Cana equestrian center, which will feature residential apartment and home sites available for sale and development. Again, it is not clear if the $2 million worth of land Trump sold at Cap Cana was acquired by buyers associated with the polo club project. In any event, the Los Establos project likely had the effect of increasing land values across Cap Cana.

Palm Beach Connection

Venezuelan banker Vargas was active in the same rich-and-famous social scene in Palm Beach, Florida, as Trump over the years. Vargas was a longtime patron and participant in polo competitions at the Palm Beach International Equestrian Center in Wellington, Florida, located just west of Trump’s Mara-a-Lago resort.

A report by Business Insider indicates that Trump has even tried to capitalize on the equestrian action in greater Palm Beach, which draws movie stars and billionaires from across the planet, by “in recent years” hosting “the Trump Invitational show-jumping event at Mar-a-Lago, his Palm Beach property located within a few miles of the Wellington community.”

In addition, as evidence of the Hazoury brothers relationship with Vargas, one of the Hazoury brothers, Abraham, a principal in the Cap Cana development project, is shown posing next to Vargas for a photo shoot at the 2016 Polo Challenge tournament held at Cap Cana and Casa de Campo. [See photo below; names L to R]

Vargas, according to a 2009 article in Time magazine, was fined $1.5 million by U.S. federal banking authorities in the early 1990s after regulators determined he had “lied about his knowledge of fraud that executives had committed at a bank he was in the process of acquiring.” Although Vargas didn’t admit any guilt as part of the settlement, according to the article, he was prohibited from investing in U.S. banks in the future absent permission from the US government.

In addition, a leaked State Department cable, dated July 28, 2008, alleges Vargas profited from his financing work for the Venezuelan government and described him as “a banker whose star has risen greatly during the [Hugo] Chavez presidency." Chavez was president of Venezuela from 1999 to 2013, when he died of cancer. Vargas and his supporters have long denied he received kickbacks from the Venezuelan government and contend he is simply a banker that Chavez advisors found trustworthy and competent at his job.

Still, Vargas is allegedly now the target of an investigation by the U.S. Department of Justice into his business dealings, according to sources familiar with the probe who declined to discuss details for fear of jeopardizing the investigation. They did, however, point out that Vargas this past spring sold his ocean-front mansion in the Palm Beach, located just south of Trump’s Mara-a-Lago resort, and his penthouse in New York City, located near Trump International tower, for a combined total exceeding $100 million, and he appears to have left the U.S. permanently.

In addition to the multi-million-dollar homes owned in Florida and New York until recently, Vargas also allegedly owns a palatial mansion in the D.R. as well a host of other fruits of his immense wealth. He told the Wall Street Journal the following in a 2008 interview:

People write stories about me saying I have a Ferrari, a plane, a yacht," he said during an interview at one of his homes, in the posh Country Club neighborhood of Caracas. "But it's not true. I've got three planes, two yachts, six houses. I've been rich all my life!"

The Kremlin Touch

The Dominican Republic is a major magnet for Russian tourists and the Russian mob, according to public reports and records. And it also appears Trump in the past has actively marketed his property holdings in the D.R. to Russian investors.

From a 2016 Washington Post story:

Valentina Aved, an Estonian-born real estate broker in Palm Beach, [Florida], said Trump’s branded properties have worked hard to market to Russians. … Aved said she also participated in a day-long sales event for a Trump-branded property in the Dominican Republic so that she could market specific properties there to Russians.

“Everything Trump does for the lifestyle, it matches the Russian lifestyle,” said Aved, a staunch supporter of Trump’s candidacy.

The D.R. is the one of the top three destinations worldwide for Russian tourists, with more than 136,000 Russian tourists visiting the country last year alone, according to media reports, and Dominican authorities have issued public warnings about the rise and strength of the Russian mafia on the island.

From a 2012 report by Fox News Latino:

The rise in drug consumption and trafficking in the Dominican Republic in recent years is due to the country's geographical location, the penetration of broad swaths of society by the illegal drug trade and the operations of Mexican drug cartels and the Russian mob, an adviser to the government on anti-drug policy, Marino Castillo, said.

More current news reports indicate the influence of the Russian mafia in the Caribbean in general has not abated.

From the Virgin Islands Free Press:

Russian organized crime groups, flush with billions of dollars looted from the former Soviet Union and profits from drug trafficking and other criminal activities, are using unregulated and secretive Caribbean banks to launder their illicit gains, according to U.S. and Caribbean law enforcement officials.

These authorities said that members of Russian crime organizations, including individuals who once worked for the KGB, the Soviet secret police, have met in the islands with Colombian and Italian organized crime figures. The meetings were an apparent bid by the Russians to tie into South American drug trafficking networks and establish routes for distribution of Colombian heroin, the officials said.

“It’s true that Russian tourism and the mafia are huge in the Dominican Republic,” Vega says. “The generals [the military and police] and the government in the Dominican Republic are extremely corrupt, so much so that cocaine form the Dominican Republic is cheaper than from any other place, including Colombia. …The Dominican Republic is essentially a free zone for banking [and money laundering] because of the government corruption.”

Another former U.S. federal agent who worked for years in Latin America, put it this way: “The Russian mob could own the Dominican Republic if they wanted. It would be easy. It’s a small country and big money goes a long way there. There’s no doubt.”

Foreign Affairs

Trump’s business venture at Cap Cana is now incorporated into a revocable trust being overseen by his sons Eric and Donald Jr. Recent litigation filed against Trump by the state of Maryland and the District of Columbia, however, alleges the trust is little more than a paper mirage and that Trump’s continuing international business activities, even under the trust structure he set up, violate the Foreign Emoluments Clause of the U.S Constitution.

“The defendant [Trump] continues to own and be well aware of the activities of the Trump Organization and other corporations, limited-liability companies, limited partnerships, and other entities in which he retains an ownership interest,” the pleadings allege. “Although he formed a trust to hold his business assets, he may obtain distributions from his trust at any time.”

So, it appears Trump’s Cap Cana business venture in the D.R. is playing out in an area that is steeped in Russian influence, money-laundering activity and narco-trafficking corruption at a time when his administration is being accused of unconstitutional foreign entanglements, including nefarious ties to the Kremlin. 

In addition, Trump has a business partnership with the Hazoury brothers, who have worked with the billionaire Vargas in the development of Los Establos at the Cap Cana luxury resort, the latter a real estate project in which Trump also has a business interest. Vargas’ bank is based in Venezuela, a nation hostile to U.S. interests and which, in part, because of US policy and past activities in Latin America, has cultivated friendly ties with Russian President Vladimir Putin and the Kremlin.

These business and political entanglements raise questions about the nature and sources of the financing for the Cap Cana project, or at least parts of it — both the debt financing and silent investments.

In fact, some investors last year filed litigation in the D.R. against the Hazoury brothers’ development company, raising allegations of fraud and money laundering, according to press reports in Latin America. The Hazoury brothers, however, attribute the financial woes the Cap Cana resort development has suffered in the past to the 2008 financial crisis and the subsequent efforts to get the project back on course.

From a January 2017 Washington Post report:

[Ricardo] Hazoury, 56, said some who lost money unfairly blamed the company instead of the financial crisis. “We continue to have an incredible business relationship with the Trumps,” he said in a statement, adding that he hoped to do additional deals with the family.

The resort has made a slow recovery. The PGA Champions tour no longer plays at the Jack Nicklaus-designed golf course, but other duffers do. A new polo grounds opened last year. Snoop Dogg performed there last month.

It now appears the relationship between Trump and the Hazoury brothers is about to open a new chapter. Eric Trump visited the D.R. this past February, where he reportedly met with two of the Hazoury brothers and toured the Cap Cana project.

From a February press release issued by Cap Cana in the wake of that visit:

“During his stay he [Eric Trump] was received by the principals’ executives of Cap Cana, Mr. Ricardo Hazoury and Mr. Fernando Hazoury, President and Vice President of Cap Cana’s Council, respectively.

They expressed their satisfaction with this visit, indicating that “it was excellent to receive Eric again in Cap Cana, Dominican Republic.”

Cap Cana formed a relationship with The Trump Organization in February 2007, exactly a decade ago. “This relationship remains incredibly strong, especially with Eric, who has led the project since its inception,” they added.

They added that “we are excited to be working with the Trump Organization in the future phases of the project.”

Former DEA agent Celerino Castillo, who spent years working dangerous assignments in Latin America penetrating criminal organizations, says it’s difficult to conduct business in many places in Latin America at the level Trump is involved without coming across corruption.

“It’s just a fact that many politicians [law enforcers and business people] in Latin America are heavily involved in the drug trade,” including in the Dominican Republic and Venezuela, Castillo says.

It’s not ideological, he adds. “It’s just a money thing.”

 

Prior Stories in the Series

Vice President Pence Has Cause to Support Trump’s Kremlin-Friendly Agenda

• Casino Owned by Presidential Candidate Donald Trump Violated US Anti-Money Laundering Laws Repeatedly 

• The Donald and the Snitch

Trump Campaign Is Still Playing Russian Roulette With Foreign Policy

• Lawsuit Threatens to Expose Trump Campaign’s White Supremacist Links

 Donald Trump’s Past Lobbying Exploits Paint a Picture of a Deft Washington Insider

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