Yesterday, CREW sent a letter to the Office of Government Ethics raising ethics concerns related to White House senior advisor and assistant to the president Jared Kushner’s investment in Cadre, the real estate tech startup that he co-founded, and asking the office to determine whether Kushner must divest of his financial interests in Cadre.

Cadre is a members-only online investment platform that connects investors with commercial and residential real estate investment opportunities.The business is essentially two affiliated companies, which both operate under  the trade name Cadre; CCV LLC functions as the investment adviser side of the business, while RealCadre LLC is the registered broker-dealer. Kushner holds an ownership interest in Cadre through several layers of private companies. The extent of Kushner’s ownership in Cadre, and in the assets of the private equity funds that it appears to manage, remains unclear — Cadre’s opaque structure and the extent of Kushner’s disclosure makes it impossible to assess the conflicts he may have related to the company.

Kushner did not disclose several entities related to his Cadre ownership on his personal financial disclosure. Kushner disclosed his position as a board member of the entity that reportedly owns Cadre, Quadro Partners, Inc., but he failed to disclose the entity that reportedly owns his portion of the company, JCK Cadre LLC, and, most importantly, failed to report his ownership of the company itself. One of Kushner’s attorneys told the Wall Street Journal that Kushner’s stake in Cadre is held in BFPS Ventures LLC, an entity that appears on his personal financial disclosure, but the description of that asset on Kushner’s form, “Real Estate in New York, NY,” does not mention the Cadre stock it supposedly contains, nor does it mention several private equity investments in which Kushner appears to have an interest through Cadre.

According to Form D disclosures on file with the Securities and Exchange Commission (SEC), which are used for certain private securities offerings that are exempt from the extensive disclosure requirements of public companies, Cadre received compensation for brokering at least nine private offerings between March 2015 and April 2017. In the SEC reports, three of  the companies reported they are part of the “real estate” industry group, but the other six issuers listed themselves as private equity funds. Each of these six companies uses the same address as Cadre and is signed by a Cadre broker or legal counsel, acting as the “Vice President of the General Partner” of the issuer, which suggests that Cadre may have a position in these funds. Language found on Cadre’s website also suggests this may be the case. “We invest alongside our clients and assume ongoing oversight and asset management responsibilities on behalf of our investor,” the website reads.

If Cadre has a financial position in these six entities, Kushner does too. Four of of these six funds were active before Kushner signed his disclosure and therefore they should likely have been listed on Kushner’s personal financial disclosures. They were not. Kushner’s apparent failure to disclose the interests he appears to have in Cadre-brokered private equity investment offerings adds to the many questions surrounding Kushner’s ties to Cadre. In addition, the contents of these funds are not publicly known, so if Kushner is indeed invested through Cadre, each fund could raise possible conflicts of interest for Kushner that are unknown to the public.

The three issuers listing “real estate” as their industry group are linked to Kushner personally. For Chatham Hill Holdings LLC, Kushner disclosed his position as a “key person” on his personal financial disclosure, and he appears on the SEC filing as a “managing member of the issuer’s managing member.” For Cadre Astoria LLC, Kushner disclosed his position as a “non-member manager” of a managing member, K Astoria LLC, on his personal financial disclosure, where he also disclosed K Astoria as an asset and source of income. Lastly, for Ditmar Blvd I LLC, Kushner himself is listed as the “sole member of the manager” on the SEC filing. Ditmar Blvd I does not appear on his personal financial disclosure, but the SEC form is from 2015, so Ditmar Blvd I may not have been subject to disclosure.

According to his personal financial disclosure, Kushner appears to have stepped away from his formal roles in both Chatham Hill Holdings LLC and K Astoria, LLC, in January 2017.  However, it is unknown whether he also stepped away from his role in Ditmar given it did not appear on his personal financial disclosure in the first place.

Though Kushner’s involvement with Cadre may be in flux or include unknown layers, the graphic below depicts CREW’s assessment of how Kushner’s involvement is likely structured, drawing on several sources. It also shows the investments that Cadre has brokered according to SEC filings. Real estate investments are yellow, while private equity funds are green. Each double-arrow represents a Cadre-brokered investment, where Cadre may have some type of financial position.

In total, Cadre’s SEC disclosures show that the firm earned more than $4.5 million in commissions from brokering these offerings. Over $900,000 of those commissions were earned after Jared Kushner’s January 22 appointment as White House senior advisor and assistant to the president, all from investments in private equity funds. A portion of these commissions presumably flow through this chain of private entities as income to Kushner, but due to the limited information about Cadre on his personal financial disclosure, the origins and amount of income is unknown. Not only has Kushner profited through his Cadre ownership by way of commissions that flow up through BFPS Ventures LLC, but there may be additional conflicts (and profits) attributed to him if Cadre has an investment interest in these funds. To the extent that any income in excess of $201 flowed from these entities through Cadre, or from Cadre itself, to Kushner during the reporting period, these entities likely should have been disclosed as sources of income on Kushner’s personal financial disclosure. Neither Cadre nor any of the issuers for which it brokered these private offerings were disclosed as assets or sources of income on Kushner’s personal financial disclosure, and without divestment of Cadre, the conflict and undisclosed income continue to exist.

Though Kushner has reportedly reduced his share of the company, the value of the company has shot up since he assumed his White House role. Following a third round of investing announced last month in which Cadre raised an additional $65 million, the company is now valued at $800 million.

Kushner’s understanding of the potential conflicts of interest at stake here is demonstrated by his decision to let go of his interests in Thrive, a venture capital firm that invests in technology and e-commerce companies, and in a different real estate technology firm, WiredScore, creating a stark contrast with his inexplicable decision to retain his stake in Cadre. Kushner’s failure to disclose Cadre’s structure and assets further obscures possible conflicts of interest in a way that is distinct from the way he disclosed other interests on his personal financial disclosure. Additionally, involvement with Cadre may require Kushner to recuse himself from any policy matters related to internet commerce and technology. While a Kushner representative has said his Cadre ownership will be described in a forthcoming amendment to his disclosure, this does not go far enough. In order to avoid conflicts of interest, Kushner must divest from Cadre.

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