In Other News, More Evidence Of Money Laundering Shows Up

Ken AshfordCorporate Greed, L'Affaire Russe, Trump & AdministrationLeave a Comment

McClatchy News has the goods:

Aleksandr Burman, a Ukrainian who engaged in a health care scheme that cost the federal government $26 million and was sentenced to a decade in prison, paid $725,000 cash for a condo at a Trump Tower I in Sunny Isles Beach, Fla. in 2009.

Leonid Zeldovich, who has reportedly done extensive business in the Russian-annexed area of Crimea, bought four Trump units outright at a cost of more than $4.35 million, three of them in New York City between 2007 and 2010.

And Igor Romashov, who served as chairman of the board of Transoil, a Russian oil transport company subject to U.S. sanctions, paid $620,000 upfront for a unit at a building adorned with the future U.S. president’s name in Sunny Isles Beach in 2010.

Buyers connected to Russia or former Soviet republics made 86 all-cash sales — totaling nearly $109 million — at 10 Trump-branded properties in South Florida and New York City, according to a new analysis shared with McClatchy. Many of them made purchases using shell companies designed to obscure their identities.

“The size and scope of these cash purchases are deeply troubling as they can often signal money laundering activity,” said Rep. Adam Schiff of California, the top Democrat on the House Intelligence Committee and a former federal prosecutor. “There have long been credible allegations of money laundering by the Trump Organization which, if true, would pose a real threat to the United States in the event that Russia were able to leverage evidence of illicit financial transactions against the president.”

There’s nothing illegal about accepting cash for real estate. But transactions that do not involve mortgages — which account for one in four residential purchases in the country — raise red flags for law enforcement officials as it could be a way to commit fraud or launder money.

In 2016, the Treasury Department targeted Miami and New York — where cash purchases account for half of residential sales — for increased scrutiny, requiring title insurers to report the names behind the shell companies buying homes with cash. It was later expanded to include a handful of other localities, including Broward County, Fla., which includes Fort Lauderdale and its wealthy suburbs.

Special Counsel Robert Mueller has spent more than a year investigating whether Trump’s campaign colluded with Russia to interfere in the 2016 presidential election, a widening probe that appears to include questions about his family business, the Trump Organization. “This is all about money laundering,” former White House chief strategist Steve Bannon is quoted as saying about the Mueller inquiry in the book, Fire and Fury.

Glenn Simpson, co-founder of Fusion GPS, the firm behind a dossier alleging ties between Trump and Russians, told the House Intelligence Committee in November that his group uncovered “patterns of buying and selling that we thought were suggestive of money laundering” at Trump-branded properties around the globe. “Generally speaking, the patterns of activity that we thought might be suggestive of money laundering were … fast-turnover deals, and deals where there seemed to have been efforts to disguise the identity of the buyer,” he said.

The Trump Organization, the collective name for about 500 Trump businesses owned by the president and now run by his adult sons, did not respond to a request for comment about the data, which was compiled by the left-leaning group American Bridge 21st Century and focused on areas that the Treasury Department targeted. But company officials have previously told McClatchy that the company generally focuses on branding and management and is not involved with sales or development.


Other news reports have looked at Russian buyers of Trump Organization properties but less attention has been paid to the all-cash purchases.

“We’ve long suspected that Donald Trump’s businesses were a front for money laundering and our research suggests it could be true,” said Harrell Kirstein, communicators director for the Trump War Room at American Bridge. “The millions of dollars in previously unreported, all-cash real estate deals we discovered raise troubling questions about who is funding his businesses, why, and what they’re getting in return.”

The group looked at real estate records at 2,769 condo units at 10 luxury buildings that the Trump Organization either develops or licenses in Miami-Dade and Broward counties in South Florida and New York City; three Trump Towers, Trump Palace and Trump Royale, all in Sunny Isles Beach, Fla., Trump Hollywood in Hollywood, Fla. and Trump Soho, Trump Place, Trump World Tower and Trump International Hotel & Tower in New York — offering a snapshot into the buyers of Trump properties.

In New York, deeds explicitly state if purchases lack a mortgage. But in Florida, sales were deemed all cash if the property deed lacked a corresponding mortgage document. The group did not document how many total purchases were all cash.

Some of the buyers appeared to spend above market value — one of the signs, along with a lack of information about where the money comes from and properties sitting empty — that raises suspicion, said Elise Bean, former staff director of a Senate subcommittee that investigated money laundering.

In one case, a Florida-registered LLC, Unit 1101 Holdings, tied to Vadim Sachkov, paid $1.4 million for a unit in Trump Tower I in 2016 though the assessed market value was $1.2 million, according to the Miami-Dade Property Appraiser. In another case, Natalia Sivokozova spent $1.3 million for a unit in Trump Royale in 2016, though the assessed market value was $923,803, according to the Miami-Dade Property Appraiser.

The group looked at the 69 buyers or shell companies who indicated they were from Russia or a former Soviet republic, previously lived or studied in Russia or a former Soviet republic; had done extensive business in Russia or a former Soviet republic; or purchased a unit using a shell company whose registered agent or officer was from Russia or a former Soviet republic.

Several had questionable backgrounds, including:

  • Anatoly Golubchik was found guilty in 2013 of operating a sports betting ring for a Russian-American organized crime group, according to the U.S. Attorney’s Office for the Southern District of New York. He purchased a unit in Trump Tower I for $830,000 in 2010, according to the Miami-Dade Property Appraiser.
  • Peter Kiritchenko, a Ukrainian businessman who prosecutors accused of laundering tens of millions of dollars alongside that country’s former prime minister Pavel Lazarenko. He pleaded guilty to one count of receipt of stolen property and testified against Lazarenko, according to the U.S. Attorney’s Office’s for the North District of California. Kiritchenko’s daughter, Lidia, paid $1.25 million for a unit in Trump Tower II in 2013, acording to the Miami-Dade Property Appraiser.
  • Eduard Nektalov, a Uzbeki diamond dealer was arrested on charges he laundered drug money before he was killed in New York, according to multiple news reports. He purchased a unit at Trump World Tower for $1.6 million in 2003, according to the New York City Department of Finance.
  • The Sivokozov family, which has ties to organized crime, according to various Russian media reports. Patriarch Vasily Sivokozov was director of a Russian bank whose license was revoked, according to the reports. His son, Igor, went into business with a Russian-American criminal who had been convicted of fraud. Igor Sivokozov and his daughter, Natalia, paid $660,000 for a unit in Trump Royale in 2015 though the assessed market value was $483,223. Natalia Sivokozova bought two units at Trump Royale, one in 2015 for $675,000 — which had an assessed market value of $534,630 — and another for $1.3 million — which had an assessed market value of $923,803 — in 2016. Her sister, Ksenia Sivokozova, paid $675,000 for a fourth unit in 2015, though it had a market value of $474,474.
  • Burman, who does not have a medical license, opened six clinics in Brooklyn as part of a scheme to defraud Medicare and New York State Medicaid programs of more than $26 million between 2007 and 2013, according to the U.S. Attorney’s Office for the Southern District of New York. It was during that time in 2009 that he paid $725,000 for a unit at Trump Tower I in Sunny Isles Beach, according to the Miami-Dade Property Appraiser. Burman, who was born in Kiev and came to the U.S. in 1992 , pleaded guilty and, in May 2017, was sentenced to 10 years in prison.
  • Zeldovich, who according to social media is likely from Minsk, Belarus, had a company accused of violating anti-monopoly laws and may have continued to do business in Crimea, despite U.S. prohibitions about doing business there after Russia annexed it from Ukraine, according to Russian news reports. Zeldovich and his wife, Erna, purchased two Trump Place units in 2007, one for $790,000 and another for $995,000, according to the New York City Department of Finance. They spent $750,000 for a Trump Royale unit in 2008, making them one of the first buyers, according to the Miami-Dade Property Appraiser. Zeldovich Living Trust, which lists Zeldovich as a representative , spent $1.85 million on a unit at Trump Place in 2010, according to the New York City Department of Finance.
  • Romashov served as chairman of the board of Transoil when it was on the Treasury Department’s sanctions list in March 2014. Transoil was founded by Russian billionaire Gennady Timchenko, who has close ties to Putin and is under U.S. sanctions. Romashov paid $620,000 cash for a unit in Trump Tower I in Sunny Isles Beach in 2010, according to the Miami-Dade Property Appraiser.

Messages left for these buyers or their attorneys at homes, businesses and Facebook were not returned. Some could not be located. Reached by phone, Zeldovich said “No thank you. We sold those” before hanging up.

Thirty-six of the 86 sales were original purchases, earning Trump a licensing fee. But most of them continue to help the president’s business. The Trump Organization promotes all the buildings — except for Trump Soho, which the company no longer manages as part of a licensing agreement — as it tries to sell its brand around the world. About five of the 83 units sold were in buildings the company developed, according to the analysis.

Trump ignored calls after he was elected president to fully separate from his business interests and placed his holdings in a trust designed to hold assets for his “exclusive benefit.” He can receive money at any time without the public’s knowledge and retains the authority to revoke the trust. Trump earned at least $453 million and had assets valued at least $1.4 billion, according to his most recent financial disclosure statement, which covered the 2017 calendar year. But his licensing and management deals are private, making it difficult to determine how how much he makes from individual projects.

“Regardless of who bought these apartments, the Trump Organization received the same amount of licensing fee,” Dezer said. “So if the unit was bought by a Russian or a Chinese or a Brazilian or someone from Zimbabwe, the Trump Organization received the same fee on the sale. ”

Alma Angotti, an anti-money laundering consultant who worked in financial crimes enforcement for the federal government, said the South Florida and New York City markets attract all cash purchases because they offer nice places to live, stable economies and strong real estate markets.

“If you are trying to hide assets there is no safer place than London, New York and Florida,” Angotti said.

The Trump Organization signed deals in the early 2000s to brand several condo towers in South Florida. Dezer downplayed the numbers in Florida, saying the 86 cash purchases don’t even add up to 5 percent of the 2,000 buyers at the Trump buildings. By comparison, Brazilians bought more than 300 units in cash in 2011, he said.

“We work with real estate brokers around the world,” he said. “While we sell majority to South America we have real estate professionals from Hong Kong to Paris representing our properties.”

Jack Blum, a Washington lawyer and expert on financial crimes, said sellers — unlike lenders — bear little responsibility in an all cash sale unless they have information of a crime. “If you know something then you are in big trouble. You are part of the conspiracy,” he said.

Foreign buyers can have legitimate reasons for paying for real estate upfront, such as avoiding fees or unfavorable exchange rates, or keeping the money from being seized by rogue nations, but U.S. officials have become increasingly concerned with possible illegitimate reasons.

Since the 1970s, U.S. laws have required real estate professionals to screen clients for signs of money laundering. The Bank Secrecy Act and the Treasury Department’s Financial Crimes Enforcement Network require institutions that provide financing to examine their customers and their source of wealth. But those laws don’t pertain to sellers.

“Criminals can use all-cash purchases to make payments in full for properties and evade scrutiny — on themselves and the origin of their wealth — that is regularly performed by financial institutions in transactions involving mortgages,” according to the Treasury Department’s Financial Crimes Enforcement Network. “Many all-cash transactions are routine and legitimate; however, they also present significant opportunities for exploitation by illicit actors.”

In 2001, after the 9/11 attacks, the USA Patriot Act required real estate professionals to adopt formal anti-money laundering programs, but lobbyists for the industry won a “temporary” exemption that remains in place.

“The evidence that corrupt officials, drug traffickers, and other wrongdoers are laundering criminal proceeds through cash purchases of U.S. real estate is overwhelming,” Bean said. “But Treasury continues to drag its feet on implementing the 2001 legal requirement to ensure real estate professionals aren’t taking dirty money.”

The publication of the Panama Papers — the massive 2016 leak of data that shows how the wealthy move money through offshore shell companies — prompted some to call on Congress to give federal agents more power to investigate money laundering. But the United States still fails to regulate most cash purchases in real estate.

Two bills have been introduced in the Senate to stop people from using shell companies to engage in illegal activities, including money laundering. Congress has yet to pass a bill.