Investors in the failed $200m Trump International Hotel & Tower in Fort Lauderdale, Florida are suing* the developer, whose prior Federal criminal felony conviction was sealed by a New York District Court Judge, due to his cooperation with law enforcement. The investors have asserted that they would never have gotten involved had they known that the developer, Felix Satter, who real name is either Felix Sater or Chaim Felix Sater, was convicted of a major fraud in 1998.
Sater, or Satter,** who was born in Russia, but grew up in the US, was found guilty of a $40m stock manipulation fraud, and of money laundering, in a case involving organised crime. He later reportedly became a Confidential Source for the Federal Bureau of Investigation (FBI), and was allegedly released from prison after assisting in a black-market ballistic missile investigation.
|Trump Fort Lauderdale project|
When counsel for the investors filed their civil suit in New York, a Federal Judge took the unusual step of not only sealing the complaint, so that the public and the media could not read it, but cautioning all parties against sharing it with others. Apparently, details of Satter's Substantial Assistance to law enforcement were included in the allegations. The Court was also critical of the investors' lawyer.
The lesson here: sometimes, the government protects criminals, especially when it serves their interests. Satter's status with law enforcement is being protected, to the detriment of the investing public.
This is exactly what I have been referring to when discussing the mandatory nature of Enhanced Due Diligence investigations, on all parties and entities whom your client wishes to conduct business. In this case, a simple Federal database search would NOT uncover Sater's sealed conviction; Enhanced Due Diligence will, as it includes an extensive review of the target's background, as well as business history.
|Enhanced Due Diligence|
With the deployment of increasingly sophisticated methods of hiding negative information on the Internet, routine searches and background checks will generally not reveal the information on the target that you are seeking. EDD has now become a mandatory element of any important business matter.
* The Complaint remains sealed. Kriss et al vs. BayRock Group LLC, 10-cv-03959-PAE ( SD NY).
** Fraudsters often change one or more letters in their legal name, with or without a court order, so that database searches will not turn up their criminal records.