Monday, December 17, 2007

Donald Trump and the Penny Stock Kingpin

There's an intriguing article in the New York Times today about the "tangled past" of Felix Sater, who is partnering with the Trump organization in real estate deals.

"At 24 he was a successful Wall Street broker, at 27 he was in prison after a bloody bar fight, and at 32 he was accused of conspiring with the Mafia to launder money and defraud investors," the Times reports.

Sater has every right to turn his life around, as apparently he has done. Good for him. But what I find interesting are the expressions of "shock" that came from Sater's business associates, including Trump.

But Alex Sapir, president of the Sapir Organization, a partner in Trump SoHo, said he was “not happy” to have just learned of Mr. Sater’s past on Thursday. “This is all news to me,” he said.

Mr. Trump also said he was surprised to learn of Mr. Sater’s past. “We never knew that,” he said of Mr. Sater. “We do as much of a background check as we can on the principals. I didn’t really know him very well.”

Some background check. If you put Sater's name in Google, the first two results are a press release and disciplinary proceeding from NASD Regulation (now FINRA) laying out a snippet of salient facts. (True, he added a "t" to his name, but that should not have fooled a good white collar investigator.)

The press release says:

Doukas violated NASD rules by permitting Felix Sater, a statutorily disqualified individual, to play a significant role in the firm’s securities-related activities. Doukas allowed Sater to conduct meetings with the firm’s brokers, hold sales contests, and award cash to brokers who sold the firm’s securities despite the fact that Sater was disqualified from the securities industry as a result of a prior felony conviction.

I presume that the phrase "prior felony conviction" might have raised eyebrows in the Trump organization. Why ignore Sater's background? The reason might have to do with this quote in the Times story:

“They seemed to get along just fine,” said Justin Henderson, a Denver developer who worked with Mr. Trump and Mr. Sater on an ultimately unsuccessful deal to build the tallest towers in Colorado. “It seemed that Mr. Trump relied heavily on Mr. Sater’s opinion on certain markets.”

Don't ask, don't tell, I guess. Or as Sergeant Schultz used to say on Hogan's Heroes: "I know nothing!"

© 2007 Gary Weiss. All rights reserved.

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Wall Street Versus America was published by Penguin USA on April 6.
Click here for its listing and here for more information on the book, from my web site,

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