Could Trump’s Jones Day Lawyers End Up in Deutsche Bank-Gate?

By Pam Martens and Russ Martens: May 9, 2019 ~

Don McGahn With President Trump and First Lady Melania

Don McGahn With President Trump and First Lady Melania

Lawyers from Jones Day have been functioning like a Praetorian Guard around the president since the day he took office. How the firm landed so many of its partners into key positions in the Trump administration has baffled the media, especially since its partners were big supporters of Hillary Clinton’s campaign. According to Bloomberg News, Jones Day’s lawyers contributed $7,422 to Trump’s campaign while showering Hillary Clinton’s campaign with $267,899.

Wall Street On Parade has previously reported that Jones Day lawyers in Trump’s White House Counsel office had previously represented Freedom Partners, the front group of Koch Industries, the giant fossil fuels company majority owned by the billionaire Koch brothers. Freedom Partners had quickly provided the Trump administration with a list of regulations it wanted gutted – like the Paris Climate accord (which Trump revoked on June 1, 2017) and numerous EPA rules. Jones Day had also been a lead law firm for Koch Industries’ mergers and acquisitions for years. SourceWatch reported last year that a dozen people who previously worked at Freedom Partners were given jobs in the Trump administration. Among that group was Marc Short, former Freedom Partners President, who became Director of Legislative Affairs for Trump. Short stepped down in July of last year after many of his key objectives had been achieved.

On the same day that Donald Trump was sworn into office, the Jones Day law firm issued a press release indicating that 13 of its lawyers were heading to the Trump administration. Key among the posts were Don McGahn, who had been General Counsel to Trump’s campaign committee, and was now going to be serving as White House Counsel. McGahn’s Chief of Staff was also coming from Jones Day, Annie Donaldson. Both had previously represented Freedom Partners.

McGahn had another curious item on his resume, he had been the former Chairman of the Federal Election Commission, where he was credited with loosening regulations on campaign spending – an agenda that benefited men like the billionaire Koch brothers who have been setting up and funding front groups to meddle in elections for the past forty years.

Four Jones Day lawyers were heading to the Justice Department: Noel Francisco (Principal Deputy Solicitor General), John Gore (Deputy Assistant Attorney General, Civil Rights Division), Chad Readler (Principal Deputy Assistant Attorney General, Civil Division), and Michael Murray (Counsel to the Deputy Attorney General).

In addition to McGahn and Donaldson, surrounding the President from Jones Day was Bill McGinley (Deputy Assistant to the President and Cabinet Secretary), Greg Katsas (Deputy Counsel to the President), James Burnham (Senior Associate Counsel to the President), David Morrell (Associate Counsel to the President).

Other Jones Day appointments included: James Uthmeier (Special Advisor to the Secretary of Commerce), Stephen Vaden (Special Assistant to the Secretary of Agriculture) and Kaytlin Roholt (Special Counsel to the Senate Judiciary Committee.)

One name not included in the Jones Day press release who also moved to the White House on inauguration day was Michael Roman. Roman’s primary salary was coming from Freedom Partners, but his financial disclosure form indicated that he had also received compensation “exceeding $5,000” from Jones Day for “research consulting” prior to moving to the White House.

Ken Vogel reported at Politico in 2015 that Roman headed a CIA-lite intelligence operation at Freedom Partners. Vogel writes:

“The competitive intelligence team has a staff of 25, including one former CIA analyst, and operates from one of the non-descript Koch network offices clustered near the Courthouse metro stop in suburban Arlington, Va. It has provided network officials with documents detailing confidential voter-mobilization plans by major Democrat-aligned groups. It also sends regular ‘intelligence briefing’ emails tracking the canvassing, phone-banking and voter-registration efforts of labor unions, environmental groups and their allies, according to documents reviewed by Politico and interviews with a half-dozen sources with knowledge of the group.

“The competitive intelligence team has gathered on-the-ground intelligence from liberal groups’ canvassing events in an effort to assess the technology and techniques of field efforts to boost Democrats, according to the sources. And they say the team utilizes high-tech tactics to track the movements of liberal organizers, including culling geo-data embedded in their social media posts.”

According to a subsequent report from Politico, Roman had worked directly under McGahn in the White House counsel’s office. He left last year. Nancy Cook of Politico reported last year:

“As a former Koch operative and longtime opposition researcher, he cut a mysterious figure in the White House — as one of the few high-level non-lawyers working in the White House counsel’s office. Few were certain of his exact job.”

For what the Koch campaign machine has been up to lately, see our report Republican Candidates Are Paying a Fossil Fuels Conglomerate for Voter Data Mining.

Now, as Congressional subpoenas are flying at Deutsche Bank, Germany’s largest bank with a large presence on Wall Street, and Trump is suing Deutsche Bank to prevent it from responding to the subpoenas – Jones Day is in a sticky wicket. Its former partners are advising the President but Deutsche Bank has been a long-term client of Jones Day.

As luck (or fortuitous planning) would have it, the Jones Day lawyers had received “a blanket waiver clearing them of ethical conflicts,” and allowing them “to take up some matters they may have worked on in prior jobs,” according to a report in the National Law Journal in May of 2017.

Last month the House Intelligence and the House Financial Services Committees subpoenaed documents from Deutsche Bank, President’s Trump long time banker which has, over the years, loaned Trump “a total of well over $2 billion,” according to the New York Times. During much of the time these loans were being made by Deutsche Bank, other banks refused to loan to Trump because of his history of defaulting and his businesses filing bankruptcy. That fact has raised the curiosity of these two House Committees because what Trump also has in common with Deutsche Bank is Russian money.

In 2017 Deutsche Bank settled with U.S. and U.K. authorities over a $10 billion Russian money laundering scheme, paying a combined fine of $630 million. In November of last year, Deutsche Bank’s offices in Frankfurt, Germany were raided by 170 law enforcement officials. The probe involved potential money laundering.

We know what the Democrats, now in charge of House Committees since January, are thinking about when it comes to Trump and Deutsche Bank because of earlier reports. The draft report released by Democrats on the House Permanent Select Committee on Intelligence on March 13 of last year contained this paragraph:

“Donald Trump’s finances historically have been opaque, but there have long been credible allegations as to the use of Trump properties to launder money by Russian oligarchs, criminals, and regime cronies. There also remain critical unanswered questions about the source of President Trump’s personal and corporate financing. For example, Deutsche Bank, which was fined $630 million in 2017 over its involvement in a $10 billion Russian money-laundering scheme, consistently has been the source of financing for President Trump, his businesses, and his family. We have only begun to explore the relationship between President Trump and Deutsche Bank, and between the bank and Russia.”

Deutsche Bank’s “$10 billion Russian money-laundering scheme” which became known as “mirror trades,” was the subject of a May 23, 2017 letter sent by Maxine Waters, then ranking member of the House Financial Services Committee and other House Democrats to John Cryan, then the CEO of Deutsche Bank. (Waters is now Chair of that Committee with the power to subpoena.) The letter began:

“We write seeking information relating to two internal reviews reportedly conducted by Deutsche Bank (‘Bank’): one regarding its 2011 Russian mirror trading scandal and the other regarding its review of the personal accounts of President Donald Trump and his family members held at the Bank. What is troubling is that the Bank to our knowledge has thus far refused to disclose or publicly comment on the results of either of its internal reviews. As a result, there is no transparency regarding who participated in, or benefited from, the Russian mirror trading scheme that allowed $10 billion to flow out of Russia. Likewise, Congress remains in the dark on whether loans Deutsche Bank made to President Trump were guaranteed by the Russian Government or were in any way connected to Russia. It is critical that you provide this Committee with the information necessary to assess the scope, findings and conclusions of your internal reviews.”

In February 2008, right in the midst of the financial crisis that would take down Wall Street in September of that year, Henry Klehm, the Global Head of Compliance for Deutsche Bank, joined Jones Day. He has been there ever since. Klehm had worked at Deutsche Bank from June 2002 to October 2007 when many of the instruments like Residential Mortgage Backed Securities (RMBS) and Credit Default Swaps (CDS) that blew up and deepened the financial crisis were created at Deutsche Bank.

For Deutsche Bank frauds which included the period when Klehm was there, the U.S. Justice Department fined the bank $7.2 billion in January of 2017. Part of the charges, which Deutsche Bank admitted to, were these:

“Deutsche Bank knowingly and intentionally securitized loans originated based on unsupported and fraudulent appraisals. Deutsche Bank knew that mortgage originators were ‘giving appraisers the value they want[ed]’ and expecting the resulting appraisals to meet the originators’ desired value, regardless of the actual value of the property.  Deutsche Bank concealed its knowledge of pervasive and consistent appraisal fraud, instead representing to investors home valuation metrics based on appraisals it knew to be fraudulent. Deutsche Bank misrepresented to investors the value of the properties securing the loans securitized in its RMBS and concealed from investors that it knew that the value of the properties securing the loans was far below the value reflected by the originator’s appraisal.

“By May 2007, Deutsche Bank knew that there was an increasing trend of overvalued properties being sold to Deutsche Bank for securitization.  As one employee noted, ‘We are finding ourselves going back quite often and clearing large numbers of loans [with inflated appraisals] to bring down the deletion percentages.’  Deutsche Bank nonetheless purchased and securitized such loans because it received favorable prices on the fraudulent loans. Ultimately, Deutsche Bank enriched itself by paying reduced prices for risky loans while representing to investors valuation metrics based on appraisals the Bank knew to be inflated.”

A key area where Jones Day has provided repeated legal representation to Deutsche Bank has been in the Credit Default Swap area.

Some of the Jones Day lawyers who took their seats in the Trump administration on inauguration day are no longer there. In less than a year’s time, Gregory Katsas went from Jones Day to the Trump administration and was then nominated by Trump and confirmed as a Federal Judge on the U.S. Court of Appeals for the D.C. Circuit. Jones Day partner Chad Readler was confirmed in a highly controversial vote of 52-47 in March of this year to sit as a Federal Judge on the 6th U.S. Circuit Court of Appeals. Federal Judges, once confirmed, have a lifetime appointment to the bench.

Don McGahn has returned Jones Day where he is listed as “Practice Leader Government Regulation.” He is not enjoying a quiet return to corporate law practice, however. The House Judiciary Committee has issued a subpoena to him for documents related to Trump’s potential obstruction of justice in Bob Mueller’s Special Counsel probe. According to Politico’s reporting this week, McGahn is defying the subpoena, raising the risk that he may be held in contempt of Congress.

If there is any hope for America to restore itself to a true democracy, the House must continue to take this investigation where the facts lead – including the outsized influence that the Jones Day law firm has had in the Trump administration and its ties, and the President’s ties, to Deutsche Bank. Another key area for investigation are the Jones Day ties to the Koch’s Freedom Partners and the role that group has played in dismantling critical regulations and safeguards that protect the American people.

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