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Why is Deutsche Bank so Important to Mueller’s Investigation? Why is Deutsche Bank so Important to Mueller’s Investigation?

Why is Deutsche Bank so Important to Mueller’s Investigation?

by Emily Krempholtz Dec 7, 2017

This week, we learned that the special counsel investigation led by Robert Mueller issued a subpoena to the financial institution Deutsche Bank, the largest bank in Germany and the current biggest lender to President Donald Trump. The subpoena is said to be looking into matters of money and credit, which likely refers to the possible transfer of funds between Trump and Russian parties. If the special counsel uncovers any evidence that Deutsche Bank facilitated funding between Russia and Trump (or his family members), it could prove collusion between the President and the Kremlin during the 2016 presidential election.

A History of Debt

During the late 1980s and early 1990s, Donald Trump – then on the rise as a real estate developer and entrepreneur – owed a collective total of more than $4 billion to 72 financial institutions. Representatives of these banks met to restructure Mr. Trump’s massive debt, but even after several deals and the sale of many of Mr. Trump’s properties, they never recovered the full amount owed. Many of the banks – including big names like Chase and Citibank – have refused to lend to Trump ever since.

Deutsche Bank, on the other hand, has since become a staple for Mr. Trump, lending him millions of dollars for some of his hotel and real estate investments, including a Florida golf course, his Chicago hotel, and the development of the Old Post Office in downtown Washington DC. Records show that at one time Trump owed as much as $340 million to Deutsche Bank, and when the President disclosed his finances in June 2017, he reported a debt of $130 million to the bank.

Deutsche Bank and Russia

This investigation is not the first time that Deutsche Bank has found itself in hot water. The German bank is already under investigation by several countries for its involvement in a Russian money laundering scandal. In January 2017, Deutsche Bank was fined over $600 million for failure to prevent more than $10 billion of Russian money laundering through its institution. The bank has also faced fines and legal troubles in the past for breaking sanctions between the US, Iran, and Syria, as well as for manipulating LIBOR rates.

The subpoena issued by the Mueller Investigation will inspect certain money and credit transactions to look into whether there is a connection between the Trump family and Russia. Specifically, the special counsel wants to see whether or not Deutsche Bank sold any of Trump’s debt to Russia, which could potentially give Russia leverage over the President of the United States. Russian state-run banks VTB Group and Sberbank have both denied any connection.   

Backlash from the President

Earlier this year, Trump indicated that any investigation into his personal finances beyond what was strictly necessary for the Russia investigations would be crossing “a red line.” 

On Tuesday, when asked by shouting reporters whether this subpoena crossed that line, the President declined to respond

On Wednesday, President Trump’s legal team denied that the US special counsel had issued a subpoena. German media outlet Handelsblatt, which originally broke the story that Deutsche Bank had been ordered to hand over financial records to the Mueller investigation, maintains their story, but emphasizes that they never claimed the records were for the personal data of President Trump himself. If the claims of Trump’s lawyers are true, it means that the subpoena may be looking into financial loans and transactions of one of President Trump’s family members who also uses the bank, such as First Lady Melania Trump, First Daughter Ivanka Trump, or her husband Jared Kushner.

What Does This Mean for Mueller’s Investigation?

The subpoena of Deutsche Bank doesn’t come as much of a surprise; the bank has been expecting a role in the special counsel’s investigation for months, according to a New York Times article from earlier this year. The fact that Mueller has issued the subpoena now, after the President has clearly stated that to do so would be a “red line”, means that it’s not being done lightly.

Whether he is looking into Trump’s financial history, actions taken by Russian parties, or the $285 million that Jared Kushner borrowed from Deutsche Bank in the final days of the 2016 presidential campaign, Mueller is onto something, or very much thinks he is. In the upcoming weeks and months, we might just find out what.