Faulty Towers Carpet tycoon wants Trump to testify in his lawsuit against Deutsche Bank

Plans to build Trump Towers in Germany in the early 2000s were never realized but nevertheless live on in legal battles. Deutsche Bank now faces an €11 billion lawsuit from a businessman who says the bank ruined him.
Quelle: Sabet Teppiche
The art of no deal.

(Source: Sabet Teppiche)

It’s the last thing Deutsche Bank needs right now: an €11 billion lawsuit that could involve Donald Trump.

Hafez Sabet, once the world’s biggest dealer of oriental carpets, said the bank ruined his business over a failed 2001 property deal to build a Trump Tower in Stuttgart. The tower was to have 24 floors of offices, 5 floors of luxury apartments, a high-end hotel, a shopping mall and a waterfall.

It was never built, but its legacy has lived on through years of legal cases. 

Devaluation conspiracy?

Sabet has so far lost every case he's filed against Deutsche Bank. But he now has new documents and is accusing the bank of lying in previous cases. He filed a criminal complaint that triggered an investigation by state prosecutors. Germany’s flagship lender, which has been plagued for years by costly lawsuits and struggling to boost its profitability, vigorously denies any wrongdoing.

The dispute centers on the land the Trump Tower was to be built on. Sabet signed a contract with TD Trump Deutschland AG on March 7, 2001, for two properties in Stuttgart’s Pragsattel neighborhood for a total of €20.9 million.

But then things went south. Deutsche Bank had secured liens on the property for loans it granted to Sabet. The liens gave the bank the right to make the investor pay for a right of way on the land.

When it emerged that a Trump Tower was supposed to be built at the site, Deutsche Bank initially demanded €665,000 in collateral and then €3.6 million. The deal collapsed.

“Our bank suddenly bounced checks and bills, and business partners got doubts about our liquidity,” Sabet says. At the end of 2003, the bank even forced an insolvency filing. “Behind our backs,” he complains. Another business of Sabet's, a motor research facility, sputtered to a stop. He says the revolutionary engine he had developed would have sold millions, banking more than €5 billion, if Deutsche's deal hadn't tanked him.

Deutsche Bank issued a strong denial. Spokesman Tim Oliver Ambrosius said the company was not going to pay for estimated lost sales. "We will now use all legal means to defend ourselves."

Ready for your cameo, Mr. Trump?

Sabet alleges that Deutsche Bank offered to help Trump by driving his company out of business so the magnate could save money on the real estate purchase in Stuttgart. But the Americans declined the offer, Sabet said. The complaint quotes Hans Ulrich Gruber, the head of TD Trump Deutschland at the time, as saying: “Trump isn’t available for dirty tricks like that.” Gruber is no longer available as a witness; he has since died. A telephone note from June 21, 2001, is to serve as evidence. 

To support their case, Sabet’s lawyers have called on the most high-profile witness imaginable: President Donald Trump.

Deutsche had established a business relationship with Trump in a bid to widen its US exposure. It started lending him money after US banks cut him off. In the early 1990s, U.S. banks had to write down hundreds of millions of dollars on various Trump insolvencies.

Deutsche lent him $640 million for a project in Chicago and went on to grant him further credit reaching into nine digits. Trump’s son-in-law, Jared Kushner, also became a Deutsche Bank customer.

Sabet said he suspects Deutsche Bank had to drive down the value of the Stuttgart properties to protect itself. “The real estate at Pragsattel was worth far more than the loans for which it was used as collateral,” he says. “The bank had to make sure that the properties were sold well below their value. Otherwise we could have sued them for demanding too much collateral.”

Deutsche Bank remains steadfast. “The accusations are completely devoid of substance and the compensation sum being claimed is absurd,” Deutsche Bank's Ambrosius says, pointing out the plaintiff's claims have failed in all courts so far.

Meanwhile, all these years after the dream of a Trump Tower ended, the site still hasn’t been redeveloped. It remains deeply annoying to the people of Stuttgart, which has a chronic housing shortage.

But Sabet isn’t done. He is also suing private bank Hauck & Aufhäuser, accusing them of profiting from a subsequent below-value purchase and profitable resale of the Stuttgart properties. The bank declined to comment.

Doubts about the €11 billion in damages are obvious, but the plaintiff cannot be dissuaded. His team has already paid the advance court costs of €329,000.

Sönke Iwersen leads Handelsblatt's team of investigative reporters. Volker Votsmeier is an investigative reporter with Handelsblatt. To contact the authors: [email protected] and [email protected]