Com­pany part-owned by Jared Kushner got $90m from un­known off­shore in­vestors since 2017

The Guardian (USA) - - Front Page - Jon Swaine in New York

A real es­tate com­pany part-owned by Jared Kushner has re­ceived $90m in for­eign fund­ing from an opaque off­shore ve­hi­cle since he en­tered the White House as a se­nior ad­viser to his fa­ther-in-law Don­ald Trump.

In­vest­ment has flowed from over­seas to the com­pany, Cadre, while Kushner works as an in­ter­na­tional en­voy for the US, ac­cord­ing to cor­po­rate fil­ings and in­ter­views. The money came through a ve­hi­cle run by Gold­man Sachs in the Cay­man Is­lands, a tax haven that guar­an­tees cor­po­rate se­crecy.

Kushner, who is mar­ried to Trump’s el­der daugh­ter Ivanka, kept a stake in Cadre af­ter join­ing the ad­min­is­tra­tion, while sell­ing other as­sets. His hold­ing is now val­ued at up to $50m, ac­cord­ing to his fi­nan­cial dis­clo­sure doc­u­ments.

Cadre’s for­eign fund­ing could create hid­den con­flicts of in­ter­est for Kushner as he per­forms his work for the US gov­ern­ment, ac­cord­ing to some ethics ex­perts, who raised con­cerns over the lack of trans­parency around the in­vest­ments.

“It will cause peo­ple to won­der whether he is being im­prop­erly in­flu­enced,” said Jes­sica Til­lip­man, a lec­turer at Ge­orge Washington Univer­sity law school, who teaches gov­ern­ment ethics and anti-cor­rup­tion laws.

Kushner re­signed from Cadre’s board and re­duced his own­er­ship stake to less than 25% af­ter he joined the White House, ac­cord­ing to his at­tor­neys. He failed to list Cadre on his first ethics dis­clo­sure, later ad­ding the com­pany and say­ing the omis­sion was in­ad­ver­tent. Cadre says he is not ac­tively in­volved in the com­pany’s op­er­a­tions.

The names of the for­eign­ers in­vest­ing in Cadre via Gold­man Sachs are not dis­closed by the com­pa­nies, which are not re­quired to make the in­for­ma­tion pub­lic. Two sources familiar with the firm said much of the money came to the Cay­man Is­lands ve­hi­cle from a sec­ond off­shore tax haven, while some came from Saudi Ara­bia.

Kushner was ini­tially de­nied a se­cu­rity clear­ance by ca­reer of­fi­cials when he joined Trump’s ad­min­is­tra­tion. A whistle­blower has told Congress it was blocked due to con­cerns about Kushner’s out­side busi­ness in­ter­ests and “for­eign in­flu­ence”. Kushner was later granted a clear­ance, al­legedly af­ter a Trump ap­pointee in­ter­vened.

The White House and Abbe Lowell, an at­tor­ney for Kushner, did not re­spond to questions about the for­eign in­vestors and Kushner’s stake in Cadre.

A spokesman for Cadre de­clined to com­ment on the record. A spokesman for Gold­man Sachs, Patrick Scan­lan, said: “Cadre does not have ac­cess to any in­for­ma­tion about the Gold­man Sachs clients who have in­vested in these ve­hi­cles.”

Cadre was founded in 2014 by Kushner, his brother Joshua and their friend Ryan Williams, who pre­vi­ously worked for Gold­man Sachs. The com­pany op­er­ates from a build­ing in Man­hat­tan owned by the Kushner fam­ily’s real es­tate cor­po­ra­tion.

The com­pany styles itself as an on­line mar­ket­place where in­vestors can come to­gether to buy property. But it has also built a real es­tate in­vest­ment fund, now worth more than half a bil­lion dol­lars, that is used to buy prop­er­ties across the US. The fund’s value has risen five­fold since 2017, when Kushner was ap­pointed a White House ad­viser, fol­low­ing ear­lier slower growth.

The off­shore Gold­man Sachs ve­hi­cle be­gan col­lect­ing funds for Cadre in Au­gust 2017, ac­cord­ing to a se­cu­ri­ties fil­ing. The bank an­nounced in Jan­uary last year that it had struck a deal for clients to in­vest up to $250m in to­tal with Cadre.

The ve­hi­cle is man­aged by ac­coun­tants in the Cay­man Is­lands and is owned by an­other off­shore Gold­man Sachs en­tity. The ar­range­ment is le­gal. Off­shore ju­ris­dic­tions have come un­der in­creased scru­tiny in re­cent years from in­ter­na­tional au­thor­i­ties con­cerned about their se­crecy.

Fund­ing from the Cay­man Is­lands ve­hi­cle goes into Cadre’s real es­tate purchases in the US, ac­cord­ing to sources familiar with the com­pany’s work. Cadre charges an an­nual fee and takes a cut of prof­its made from the prop­er­ties.

This fund­ing is sep­a­rate from own­er­ship stakes in Cadre itself bought by ven­ture cap­i­tal­ists in Sil­i­con Val­ley and for­eign bil­lion­aires, in­clud­ing the

Chi­nese technology ty­coon Jack Ma and the Rus­sian in­vestor Yuri Mil­ner. Cadre last year held talks with a fund backed by money from the Saudi Ara­bian gov­ern­ment, but no deal was done.

Trump and sev­eral mem­bers of his ad­min­is­tra­tion, in­clud­ing Kushner, have bucked prece­dent by re­tain­ing busi­ness in­ter­ests af­ter en­ter­ing the gov­ern­ment. Ge­orge W Bush and Bill Clin­ton moved their wealth into “blind trusts”, while Barack Obama had few as­sets be­yond sav­ings ac­counts and in­vest­ments in in­dex funds.

Richard Painter, a for­mer ethics lawyer in Bush’s ad­min­is­tra­tion who ran for the Demo­cratic US Se­nate nom­i­na­tion in Min­nesota last year, said he was trou­bled by the lack of dis­clo­sure around some of Cadre’s fund­ing.

“The prob­lem with Kushner – and with Trump – is that we have all these cor­po­rate en­ti­ties, and of­ten nobody knows who is in­vested in them and where those in­vestors bor­rowed their money. We sim­ply have no idea,” said Painter.

Gov­ern­ment of­fi­cials are barred by law from being in­volved “per­son­ally and sub­stan­tially” in ac­tions that ben­e­fit them fi­nan­cially, and are obliged to en­sure they do not create an ap­pear­ance of bias.

Kushner says he has ex­cluded him­self from gov­ern­ment pol­icy on real es­tate. A foot­note to his fi­nan­cial dis­clo­sure form said he was re­cused from “par­tic­u­lar mat­ters in the bro­kerdealer, real es­tate, and on­line fi­nan­cial ser­vices sec­tors to the ex­tent they would have a di­rect and pre­dictable ef­fect on Cadre”.

The con­flict of in­ter­est law treats spouses’ fi­nan­cial in­ter­ests as com­bined. Ivanka Trump has been cred­ited by Trump with ad­vo­cat­ing for an ad­min­is­tra­tion pol­icy that prom­ises to be lu­cra­tive for real es­tate de­vel­op­ers and in­vestors. She de­nies any im­pro­pri­ety.

Kushner’s own re­cusal on real es­tate mat­ters in front of the gov­ern­ment would not in itself pre­vent him from tak­ing ac­tions in other pol­icy ar­eas that could en­tice for­eign in­vestors to Cadre.

In all, Cadre’s in­vest­ment arm man­ages more than $522m in as­sets, ac­cord­ing to its lat­est fil­ing to the Se­cu­ri­ties and Ex­change Com­mis­sion, which was sub­mit­ted at the end of March.

Kushner has had fi­nan­cial ties to sev­eral dif­fer­ent coun­tries. His fam­ily’s sin­gle most ex­pen­sive pur­chase, a sky­scraper on Man­hat­tan’s Fifth Av­enue, was last year re­fi­nanced by a fund backed by the Qatari gov­ern­ment. In an ar­ti­cle for the Washington Post de­fend­ing the fam­ily’s busi­nesses, Kushner’s fa­ther, Charles, said for­eign in­vest­ments were “a le­gal and ap­pro­pri­ate stream of fund­ing”.

As Trump’s spe­cial rep­re­sen­ta­tive in the Mid­dle East, Kushner has de­vel­oped a close re­la­tion­ship with Saudi Ara­bian of­fi­cials, par­tic­u­larly the crown prince, Mo­hammed bin Sal­man. Cadre says it does not have any sov­er­eign wealth funds among its in­vestors.

Sources familiar with Cadre’s setup said a small amount of money in the Gold­man-Cadre ve­hi­cle, es­ti­mated at about $1m, came from Saudi Ara­bia. Other fund­ing ar­rived through ve­hi­cles based in the Bri­tish Vir­gin Is­lands, ad­ding an­other layer of off­shore se­crecy to its ori­gins.

Vir­ginia Can­ter, the chief ethics coun­sel at the watch­dog group Cit­i­zens for Re­spon­si­bil­ity and Ethics in Washington, said the opaque in­vest­ments in Cadre would con­tinue rais­ing con­cerns as Kushner car­ried out his gov­ern­ment du­ties.

“It was one of the only as­sets that Kushner re­tained and it con­tin­ues to col­lect for­eign in­vestors with­out trans­parency,” said Can­ter, a for­mer White House at­tor­ney for Obama and Clin­ton.

Kushner owns a stake worth be­tween $25m and $50m in a “hold­ing com­pany for” Cadre, ac­cord­ing to his most re­cent fi­nan­cial dis­clo­sure form, which he filed in May 2018. Kushner and his wife es­ti­mate their to­tal wealth at be­tween $235m and $812m.

Cadre was one of dozens of hold­ings added to a re­vised ver­sion of Kushner’s 2017 fi­nan­cial dis­clo­sure form that cor­rected his orig­i­nal fil­ing.

Williams, Cadre’s chief ex­ec­u­tive, has said the firm is “de­moc­ra­tiz­ing” real es­tate in­vest­ment. The small print of its web­site says its of­fer­ings are in­tended only for peo­ple who earn at least $200,000 a year or have a net worth of $1m excluding the value of their home. The com­pany re­quires a min­i­mum in­vest­ment of $50,000.

Cadre re­cently an­nounced plans to raise mul­ti­mil­lion-dol­lar funds to in­vest in real es­tate de­vel­op­ments in parts of the US cov­ered by the Trump ad­min­is­tra­tion’s “opportunit­y zones” pro­gram, which of­fers valu­able tax breaks to de­vel­op­ers and in­vestors.

The pro­gram was cham­pi­oned by Ivanka Trump, ac­cord­ing to her fa­ther, who said at the White House that Ivanka had been “push­ing this very hard”. The re­marks raised al­le­ga­tions that pol­icy she worked on could ben­e­fit her hus­band fi­nan­cially. She has de­nied any im­pro­pri­ety.

Pho­to­graph: Joshua Roberts/Reuters

Jared Kushner, who is mar­ried to Don­ald Trump’s el­der daugh­ter Ivanka, kept a stake in Cadre af­ter join­ing the ad­min­is­tra­tion.

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