Unraveling the tale of Hunter Biden and $3.5 million from Russia
The Washington Post April 8, 2022
"She [Russian billionaire Elena Baturina] gave him [Hunter Biden] $3.5 million so now I would think [Russian president Vladimir] Putin would know the answer to that. I think he should release it. I think we should know that answer."
- Former president Donald Trump, in an interview with Just the News, March 29, 2022
"The FBI knew of the laptop, knew that Hunter received a $3.5 million wire transfer from the former mayor of Moscow's wife."
- Sen. Ron Johnson, R-Wis., interview on Fox Sunday Morning Futures, April 3, 2022
Less than 50 days before the 2020 presidential election, the Republican staff of the Senate Finance and Homeland Security Committees issued a joint report with a startling claim - that Joe Biden's son Hunter had received a $3.5 million wire transfer from Elena Baturina, a Russian billionaire and the widow of the former mayor of Moscow.
Trump quickly weaponized the factoid, mentioning it 42 times in the final weeks of the campaign. He sharply questioned Biden during the first presidential debate: "They were the ones involved with Russia, turns out not me, it was the opposite. But why did your son get three and a half million from the wife of the mayor of Moscow?"
An attorney for Hunter Biden denied the allegation in 2020 but it has lived on, especially in the right-wing media. Recently Trump called on Putin to reveal what he knows about it.
People familiar with the transactions, reviewed property and real estate documents and probed for leads in the emails contained on a hard drive copy of the laptop Hunter Biden supposedly left behind for repair in a Delaware shop in April 2019. None of these sources would speak on the record because of continuing investigations of Hunter Biden and his business practices, but The Washington Post sought confirmation from corporate filings and other records.
The flimsiness of the allegation was apparent from the start merely by carefully reading the Senate GOP report itself.
The executive summary offers a seemingly definitive bullet point almost exactly the same as Johnson's comment: "Hunter Biden received a $3.5 million wire transfer from Elena Baturina, the wife of the former mayor of Moscow." But the two pages in the report that deal with this transaction are considerably more nuanced, never saying outright that Hunter Biden received this money and making no claim that any laws were broken.
The GOP report itself does not provide evidence to back up the claim that became a talking point. The best explanation about what really happened is a complicated story, involving a web of corporate entities, that eventually leads to the purchase of millions of dollars worth of real estate in Brooklyn by the Russian billionaire. The Washington Post found no evidence that Hunter Biden was part of those transactions.
Let's start the story in China, where Hunter Biden invested in a private investment fund backed by Chinese state entities at a time when his father was vice president - a controversial practice that has raised ethical questions. The allegation that he received this payment hinges on his involvement with a firm called Rosemont Seneca Thornton that initially invested in the fund, generally known as BHR Partners.
The report says that on Feb. 14, 2014, Baturina wired $3.5 million to Rosemont Seneca Thornton LLC, which it said was "co-founded" by Hunter Biden. The payment was listed as "Consultancy Agreement DD12.02.2014," the report said.
The report attributes details on financial transactions to a "confidential document" obtained from the Treasury Department. Johnson and Sen. Chuck Grassley, R-Iowa, then chairman of the Senate Finance Committee, in 2019 had announced they had sought Suspicious Activity Reports (SARs) on individuals and entities, including Hunter Biden. SARs are akin to an informant's tips, not evidence of fraud.
Rosemont Seneca Thornton was created on May 28, 2013 according to corporation records, and was incorporated in Delaware, which does not require shareholders or directors to be revealed. But Devon Archer, Hunter Biden's former business partner, sometimes used "Rosemont" in company names and Biden used "Seneca." Thornton referred to Thornton Group, run by Jim Bulger, who brought expertise in investing in China.
But almost as immediately as Rosemont Seneca Thornton was created, the partners decided to dissolve it, according to a person with access to the board minutes. The original structure had added unexpected regulatory burdens to Thornton, and so Bulger's lawyers advised that the group split up, this person said.
Within a year, Chinese corporate records reflected that the foreign investors in BHR were Rosemont Seneca Bohai LLC, with 20%, and Thornton Group LLC, with 10%. Corporate records show Rosemont Seneca Bohai, the replacement corporate vehicle, was formed on Feb. 13, 2014, the day before the Baturina transfer.
In theory, for Hunter Biden, Rosemont Seneca Thornton was no more.
But Rosemont Seneca Thornton was not dissolved as planned. Four people familiar with the company said that Devon Archer, Hunter Biden's former business partner, controls it. Archer had kept the vehicle alive for his own real estate business, Rosemont Realty, which raised money from Eastern European and Central Asian investors, two people knowledgeable about his activities said. But he did not inform either Hunter Biden or Bulger, they said.
Archer's secret was exposed when the Senate report was published. Confronted, Archer told Bulger that he had used Rosemont Seneca Thornton to transfer funds from Baturina to purchase real estate in Brooklyn, according to a participant in the conversation.
Archer and his attorney, Matthew Schwartz, did not respond to queries. Hunter Biden's attorney, Chris Clark, declined to comment.
Baturina did not respond to emailed questions. When the report was released, she told the Daily Mail she was "not interested" in explaining an alleged consultancy fee. Her estranged brother Viktor Baturin claimed to the news organization that "it was a payment to enter the American market." Baturin, who is reported to be in custody after losing a fraud case filed by his sister, could not be reached for comment.
Hunter Biden's laptop does not contain significant evidence of direct interaction between Hunter Biden and Baturina, according to a review of emails that have been verified by experts working with The Washington Post as well as emails that the experts were unable to verify.
Her name, for instance, appears as a possible guest for a 2015 dinner that then-Vice President Joe Biden later briefly visited, according to the Washington Post’s reporting, but it’s unclear if she attended.
There's also no sign of a $3.5 million payment in Hunter Biden's reported income for 2014, the year of the wire transfer. That year, he reported earning almost $1.25 million, according to information contained in a verified laptop email he sent to his lawyer. The email said $400,000 of the income was related to Biden's board seat at Burisma, a Ukrainian gas company.
Archer did a lot of business with Hunter Biden and had originally brought him into the BHR deal. But Archer also had many side deals in that period unconnected to his business with Biden. So doing his own deal with Baturina would appear to be part of that pattern.
In February, Archer was sentenced to a year and a day in prison after being convicted of defrauding Native American tribes and various clients in relation to the fraudulent issuance and sale of tribal bonds between 2014 and 2016. "I was doing too many things at once and not paying enough attention," said Archer before he was sentenced. "I have deep remorse for the victims of the crime."
Besides the allegation about Hunter Biden, the GOP report made other claims about payments from Baturina to Rosemont Seneca Thornton. But that part of the report showed sloppiness in the reporting and calls into question the thoroughness of the investigation. The report critically misidentified the recipient, mixing up two entities with virtually the same names.
The Fact Checker identified the correct owner of the entity that received the funds - and traced the money to real estate purchases in Brooklyn that match a statement by Baturina as well as Archer's admission that he used Rosemont Seneca Thornton to transfer funds for Baturina for real estate investments in Brooklyn.
The Senate report said that "between May 6, 2015 and Dec. 8, 2015, Baturina sent 11 wires in the amount of $391,968.21 to a bank account belonging to BAK USA LLC," with the transactions listed as "loan agreement." The report said that nine of the transactions, totaling $241,797.14, were sent to a Rosemont Seneca Thornton bank account, which then transferred the money to BAK USA.
The report said "BAK USA was a start-up technology company headquartered in Buffalo, N.Y., that produced tablet computers in cooperation with unnamed Chinese business partners." It turns out there were two BAK USA LLCs, but the one that received the payments had a comma in its name - BAK USA, LLC, which corporate records show was formed on May 28, 2014.
In 2016, Baturina issued a statement saying she had opened a representative office in New York to oversee investments in the United States. "Baturina's company has acquired the first set of commercial buildings next to Barclay's Centre, a very popular sports and entertainment venue. The company owns the buildings with a total area of 1,500 square meters, and the investment that went into their acquisition totaled US $10 million," the statement said.
New York City real estate records show that BAK USA, LLC, using the same business address as Archer's firm Rosemont Capital, on June 27, 2014 had purchased two parcels in Brooklyn within a half mile of Barclays Center. One parcel was bought for $4.1 million and another for $5.4 million, or a total of $9.6 million. The properties had been auctioned by the unclaimed and seized assets program of the United States government.
The property records and a property tax bill directed us to Helen Gotman, who is active in New York City real estate. She confirmed to the Fact Checker she managed the properties on behalf of Baturina.
In 2018, the properties were sold for about $11.7 million each, property records show, for a gain of more than $14 million.
J.P. Folsgaard Bak, a Danish lawyer who moved to the United States to become an entrepreneur, headed the Buffalo company misidentified in the report. The company had closed its doors in 2018 after Trump's Chinese tariffs made Chinese components more expensive and the tablets unprofitable. Bak said he was reading the Daily Mail in 2020, shortly after the Senate report was released, and was stunned to see an article saying his company had received payments from a Russian billionaire.
The committee staff had not contacted the company before publication of the report. Bak said the story exploded on social media and threats were being made against him and his wife. He sought an immediate correction from the committee but said the company's appeals were not heeded, with officials being told the burden of proof was on the company.
After the election, on Nov. 18, 2020, the committee issued a supplemental report that on page 16 included a footnote stating: "It appears that the tablet company did not receive the wires, but rather the other entity under the name BAK USA LLC was the recipient of those funds." Bak said he did not learn of the footnote until May of the following year, when he received a letter from the Grassley's chief of staff alerting him to it.
Alexa Henning, a Johnson spokesperson, said he stood by the report.
"Our report cited information from factual statements in U.S. government records," said Taylor Foy, a spokesman for Senate Finance Committee Republicans. "We've been provided no evidence to change our findings or dissociate Hunter Biden's financial connections to Devon Archer and Yelena Baturina." In an apparent reference to the Biden laptop, he added: "In fact, additional evidence has come to light that suggests Hunter Biden and Devon Archer collaborated on financial transactions with Yelena Baturina around the time of the transaction in question, and were involved in additional financial ventures together than had been previously known."
As for BAK USA, Foy said, "Hunter Biden, Devon Archer and their associates would routinely set up multiple corporations with similar names for limited use." He said that "the committee received angry messages" from "combative" BAK company officials but sought to clarify the record with the footnote in the supplemental report.
Bak said as far as he knows, no news organization ever corrected its reporting on BAK USA. "Our old company officially is still identified as the receiver of the funds, if you look it up at the Internet," he said. "Typical Washington strategy: October surprise on front page and subtraction at page 11 next to the crossword."