Trump
and the oligarch
He
claims no ties to Russia. Here’s how he made millions from one of
its wealthiest men.
By
Michael Crowley
7/29/16, 9:53 AM CET
The house wasn’t
built for a Russian oligarch, although it looked the part. The
62,000-square-foot, 17-bedroom mansion is a palace of new-money
flash, featuring Greek fountains, tennis courts, trompe l’oeil
murals, underground parking for dozens of cars, and a 100-foot
swimming pool and hot tub overlooking the ocean. It even had a
faux-aristocratic name: “Maison de l’Amitie,” or the House of
Friendship. It was the trophy of a Boston-area nursing home magnate,
until he lost his fortune in 2004. That’s when Donald Trump scooped
it up.
After paying $41
million for the place in November 2004, Trump called it “the finest
piece of land in Florida, and probably the U.S.” He vowed to
upgrade the structure into “the second-greatest house in America.”
(Second, of course, to his nearby Mar-a-Lago resort.) But Trump had
no intention of living there. He intended to flip it for a quick —
and huge — profit. His initial asking price, less than two years
after buying it, was $125 million. By the time Trump listed the
property, in early 2006, the real estate market was already cooling
off. The property sat on the market for about two years as a
frustrated Trump churned through real estate brokers and slashed his
price 20 percent. It wasn’t at all clear who might pay Trump three
times his buying price for a neoclassical palace amid a looming
recession.
In the summer of
2008, Trump found a solution to his problem in the form of one of the
world’s hundred richest men: a 41-year-old Russian billionaire
named Dmitry Rybolovlev. Then with a net worth that Forbes estimated
at $13 billion, Rybolovlev had made his fortune in the wild west of
1990s post-Soviet Russia. He’d spent a year in prison on murder
charges (he was later cleared) and wore a bulletproof vest when his
own life was threatened. He would pay Trump $95 million for Maison
L’Amitie in what was widely described as the most expensive U.S.
residential property sale ever.
“People were
shocked” at Trump’s coup, said Jose Lambiet, a local
reporter-turned-blogger who knows Trump and once toured the property
with him. “They couldn’t believe that he did it.”
“It was a great
deal,” Trump told POLITICO in a mid-July telephone interview. “I’m
good at real estate.”
That’s hard to
deny. Trump more than doubled the property’s sale price in less
than four years. All it took was a signature Trumpian combination of
bravado and exaggeration, along with something more controversial:
Russian money.
The nature of
Trump’s connection to Russia has exploded recently as a campaign
issue, thanks to his friendly comments about Russian President
Vladimir Putin; the ties that several of his advisers have to Moscow;
his contrarian views on NATO and Ukraine, which happen to echo
Putin’s; and his startling call on Wednesday for Moscow to find and
release Hillary Clinton’s deleted private emails.
But the connection
isn’t just political. Trump has repeatedly explored business
ventures in Russia, partnered with Russians on projects elsewhere,
and benefited from Russian largesse in his business ventures.
“Russians make up a pretty disproportionate cross-section of a lot
of our assets,” Donald Trump Jr. said at a real estate conference
in 2008.
On Wednesday, Trump
angrily insisted that he has “nothing to do with Russia,” and
said that he has no investments in the country.
He did, however,
grant one pointed exception: Maison de l’Amitie. “The closest I
came to Russia, I bought a house a number of years ago in Palm Beach,
Florida,” Trump told reporters. “I bought the house for $40
million and I sold it to a Russian for $100 million including
commissions.”
It is also a
story of a classic Trump deal: a lucrative flip, figures on both
sides that don’t really add up, and at the center, a house that may
not have been what either party claimed.
Why did a Russian
billionaire pay Trump so much money for a house the new owner is
believed never to have set foot in, which he has denied owning, and
which he now intends to tear down? The answer offers an important
window into Trump’s kinship with Russia’s oligarchs, and what he
likely sees in them as business allies. It is also a story of a
classic Trump deal: a lucrative flip, figures on both sides that
don’t really add up, and at the center, a house that may not have
been what either party claimed.
***
Even by Palm Beach’s
standards of splendor and excess, the French Regency-style estate at
515 N. Country Road, with its spectacular ocean views and hundreds of
feet of private beach, stood out. A butler employed there once
encountered tourists with cameras outside the house’s front gates,
ogling the modernist statues outside. “When does the museum open?”
they asked.
In an interview,
Trump shrugged off the Maison de l’Amitie sale as a “small deal,”
compared to his other ventures, the way some people might refer to a
summer cabin in the woods. “That was a house I bought for fun,”
Trump said. He also downplayed his personal investment in the place,
saying that he only made minor improvements to the property. “I
cleaned it up a little bit, but not too much,” Trump told POLITICO.
“The primary thing was, I painted it.” The implication, of
course, would be that the price differential between his purchase and
sale was almost entirely profit.
Back when Trump was
trying to flip the house at a dizzying price, however, he claimed to
have done far more. “I bought the land and gutted the house,”
Trump told a reporter in late 2005. After the property went on the
market, Shawn McCabe, vice president of Trump Properties in Florida,
told Forbes that Trump had put in at least $25 million of his own
money. Kendra Todd, a former contestant on Trump’s hit NBC show,
The Apprentice, who went to work for Trump and helped to oversee the
property’s renovation, said in an interview that Trump had done
extensive work, from redoing a pool house to landscaping. “He was
really involved with the project. He made the selections for the
stone and the fixtures,” Todd said.
Documents submitted
in March to Palm Beach’s architectural commission by a private firm
retained by the buyer suggest that the actual work was modest. They
say Trump had the main house’s interior “remodeled, updating with
a new kitchen and dividing a large room to create additional bedrooms
and bathrooms,” along with “some minor interior alterations of
doors, frames & windows.”
Whatever
improvements Trump actually made, they weren’t enough to quickly
attract a buyer. As the house went unsold for months, according to a
2008 account in the New York Observer, Trump churned through three
real estate brokers.
Republican
presidential candidate Donald Trump
Republican
presidential candidate Donald Trump | John Moore/Getty Images
Some thought his
asking price ludicrous. Lambiet, a former Palm Beach Post reporter
who now publishes the local blog GossipExtra, noticed flaws and
shortcuts during a personal tour Trump gave of the property in 2007.
Trump, for instance, boasted that he’d installed gold fixtures in
the bathrooms. But when Lambiet scratched a faucet, he found gold
paint under his fingernails. And when Trump pointed out hurricane
windows, which he also claimed were bulletproof, Lambiet found them
suspiciously thin. “You knew in a hurricane the first wave was
going to come right in,” he recalled in an interview.
In March 2008, Trump
slashed the price to $100 million.
Trump rejected at
least one offer for less than his asking price, one of his former
brokers, Dolly Lenz, told the Observer in 2008. Lenz described the
would-be buyer as an American socialite. Perhaps Trump understood
that the payoff he was demanding would have to come from outside the
U.S. A new generation of ultra-wealthy foreigners had emerged in the
previous decade, many of them Russians who had reaped mind-boggling
wealth as formerly state-controlled industries were privatized, the
spoils mostly shared among political cronies. By then, Trump had
pursued or completed multiple deals with Russian partners. “We see
a lot of money pouring in from Russia,” Donald Jr., said at that
2008 real estate conference. Lenz told the Observer that she also
believed a Russian might be Trump’s savior: “If you didn’t
target the Russian billionaires, then you shouldn’t be in
business.”
***
Enter Dmitry
Rybolovlev. Barely over 40 and worth a Forbes-estimated $12.5 billion
in 2008, Rybolovlev was not exactly a familiar name on the Palm Beach
social circuit. A former medical student who became a stock broker as
the country transitioned from socialism to a market economy in the
1990s, he invested in heavy industry. In 1995, then just 29 years
old, he was chairman of the Russian fertilizer giant Uralkali. Dubbed
“the fertilizer king,” he would become one of the world’s
wealthiest men, peaking at No. 59 on the Forbes 500 list. (Today,
he’s listed as the 148th wealthiest man.) Like many Russian
oligarchs, his success unfolded in the shadow of violence. Caught up
in the dangerous world of 1990s Russian industry, he began wearing a
bulletproof vest and moved his family to Switzerland. In 1996, he was
jailed for almost a year, accused of plotting the murder of a rival
businessman. (Rybolovlev has said he was pressured in jail to sell
shares of his company for his freedom, suggesting possible extortion;
he was later acquitted.)
Today, Rybolovlev is
better known for other things. There was his record-setting purchase
of an $88 million Manhattan apartment for his 22-year-old daughter;
his ownership of Monaco’s pro soccer team; and recent accounts in
the New York Times and The New Yorker of claims that an art broker
who helped him purchase works by the likes of Picasso and da Vinci
overcharged him by hundreds of millions of dollars.
Back then,
Rybolovlev was just starting to collect the treasures for which he is
now famous. He and his wife, Elena, whom he married in 1987, were
developing an appetite for grand properties, and planned to build a
replica in Geneva of Marie Antoinette’s chateau at Versailles. But
they also hunted for estates overseas, and in early 2008, a broker
led them to Maison de l’Amitie.
By then Trump had
lowered his asking price, but he was determined to make a nine-figure
sale sure to draw national headlines. “He wanted to break $100
million,” said David Newman, a lawyer at Day Pitney who represented
Elena Rybolovleva. Trump clearly felt competitive about the final
price. When the Saudi Prince Bandar bin Sultan listed his home in
Aspen, Colorado, for $135 million a few months earlier, Trump
publicly complained that “some character [is] putting on a price
just to try to top Trump.”
Ultra high-end real
estate sales are often detached from normal market forces. An
ego-driven buyer might have a perverse incentive to pay more, not
less. “People are happy to say, ‘I got the most expensive house
in the U.S.,’” Newman said. This is particularly true of Russian
oligarchs, he added: “They like to buy the biggest and the best.”
In this sense, Trump and Rybolovlev had something fundamental in
common.
Delegates cheer
at the DNC
Also On Politico
The Russians at
the DNC
Julia Ioffe
But as the deal took
shape, the Florida real estate market began to crash. And for all of
Trump’s talk of renovations, sources close to the Rybolovlevs would
later tell reporters that the house was uninhabitable. (Lambiet says
it’s hard to air condition and has persistent mold.) Perhaps
fearing they were being played, the Rybolovlevs pressed Trump for a
$25 million discount, an undisclosed source close to the family told
the New York Times in 2012.
But Trump wanted his
magic number. If he really did put $25 million into the house, a $75
million sale wouldn’t leave much profit. Trump also said in the
interview that he could tell Rybolovlev was hooked: “He wanted it
very badly.” Trump held firm.
And Rybolovlev
caved. It may be that the Russian decided the extra $25 million was
breadcrumbs from his $13 billion fortune. It’s also possible that
Rybolovlev’s wealth far exceeds his financial acumen. Last year,
the Russian accused a Geneva-based art dealer of swindling him out of
$500 million to $1 billion through huge markups on fine art
purchases. In one case, Rybolovlev paid $118 million for a nude
portrait by Modigliani, which he now believes the dealer bought for
just $93.5 million on his behalf.
In July 2008, a
family trust established by Rybolovlev paid Trump $95 million,
according to a warranty deed recorded by Palm Beach County. Trump,
for whom appearances are everything, continues to state the price as
$100 million (“plus commissions,” as he put it Wednesday; he has
previous said that total included a $5 million credit for broker
fees).
A reporter asked
Trump about the confusion: Did he know exactly who had bought his
house? “Somebody paid me $100 million,” Trump joked.
Five years after the
sale, Palm Beach County appraised the house for just $59.8 million.
It has since rebounded to a healthier $81.8 million, still nearly 15
percent less than Rybolovlev paid.
“I got a good
price,” Trump said, dismissing skeptics who say he took advantage
of Rybolovlev. “People don’t want to see that big a profit being
made.”
But the drama around
what had become Palm Beach’s most famous trophy house had only
begun.
Within months, the
Rybolovlev marriage broke apart in ugly fashion. Elena accused her
husband of serial infidelity, charging in her divorce petition that,
during parties on his yacht, he shared his “young conquests with
his friends, and other oligarchs.” Among her demands on his assets
was a claim to half the value of Maison de L’Amitie, which she
accused Dmitry of buying with a trust to keep it from her. Her
lawsuit charged that her husband had “a history of secreting and
transferring assets in order to avoid his obligations.” The Panama
Papers leaked in April showed that, around the time the couple split
up, Rybolovev used offshore companies to move luxury assets like real
estate and fine art out of Switzerland, where they would have been
exposed to her divorce claims, according to the International
Consortium for Investigative Journalists, which acquired the
documents. (Rybolovlev has denied trying to hide assets from his
wife, and in an April statement, a lawyer for his family’s trust
said his offshore holdings had been set up “completely
legitimately.”)
The divorce took on
an action-movie flavor as Rybolovlev tried to dodge legal papers
staking Elena’s claim to his assets. In 2011, a process server
stalked Rybolovlev in Hawaii, where the Russian had purchased a $20
million house from the actor Will Smith. As the Russian tried to
escape, the server jumped on the mogul’s moving black Cadillac
Escalade to slap legal documents on the windshield, according to
affidavits described by the Palm Beach Post. Another incident, filmed
and posted on YouTube, shows a server sprinting toward Rybolovlev’s
SUV shouting, “Dmitry!” as the driver guns the engine and speeds
off.
With Maison de
L’Amitie in a legal tug of war, Dmitry Rybolovlev distanced himself
from the property. In one 2011 deposition, he denied owning the
house, “directly or indirectly.” (The actual owner was a family
trust created to secure the financial future of his two daughters, he
said.)
A Palm Beach Post
reporter asked Trump about the confusion: Did he know exactly who had
bought his house? “Somebody paid me $100 million,” Trump joked.
***
Trump has much in
common with Russia’s oligarchs — billions in wealth, supreme
self-confidence, a taste for trophies and a love of flaunting riches
— and in recent years, he has gravitated toward them. In 2013, he
partnered with the Russian real estate mogul Aras Agalarov to bring
the Miss Universe pageant, which Trump owned at the time, to Moscow.
Trump later boasted that “all the oligarchs” had attended the
event. While in Moscow, Trump discussed plans for real estate
projects there.
It is hard to verify
the claim Trump made this week that he has no investments in Russia
and that his dealings with Russians are very limited. His company is
private and is not required to disclose its finances. In a break from
modern presidential norms, Trump refuses to release his personal tax
returns.
Trump says he’s
never so much as shaken hands with Rybolovlev, his nearly $100
million man. “I never met him. He was represented by a broker.”
“The big question
is whether any hard evidence comes out about whether Trump has any
financial interests linked to Russia,” says Democratic consultant
Jeremy Rosner, who served on Bill Clinton’s national security
council staff. “And that’s why it’s so important that he
release his tax records. Otherwise, we could have a Manchurian
Candidate with the keys to the Oval Office who is under the control
of a foreign power. And voters deserve very clear evidence that that
is not the case.”
A close look at the
case of Maison de L’Amitie doesn’t suggest any connection to
Putin. Rybolovlev is not usually described in media accounts as a
close ally of the Russian leader, and Kremlin officials have publicly
criticized him over a 2006 industrial accident at a Uralkrali mine.
“He’s not very well received here in Russia,” an unnamed
adviser to the Russian government told the New York Times in 2013.
Trump says he’s
never so much as shaken hands with Rybolovlev, his nearly $100
million man. “I never met him. He was represented by a broker,”
Trump said in the interview. “I heard good things about him in many
ways, and about his family.” Trump added that Rybolovlev’s
nationality was not relevant to him. “He just happened to be from
Russia. He’s a rich guy from Russia.”
Asked whether Trump
and Rybolovlev had ever spoken, a spokesman for the Russian said he
“would [not] comment on a private, personal relationship.”
The dust is now
settling on Rybolovlev’s divorce. In 2014, a Swiss court ordered
Rybolovlev to pay Elena $4.5 billion, a sum later slashed to $600
million. The couple finally settled on undisclosed terms last fall.
Forbes currently estimates Rybolovlev’s net worth at $7.7 billion.
He now lives in Monte Carlo, residing in a penthouse apartment,
overlooking its famous harbor and attending games of his AC Monaco
soccer club with Prince Albert.
But dust clouds may
soon rise over Maison L’Amitie. In April, Palm Beach’s
architectural commission approved a plan to demolish the home. The
House of Friendship, having faced bankruptcy and bitter divorce, will
likely be torn down. Rybolovlev may never set foot in it.
Trump speculated
that the property will be subdivided. Which is fine by him, he says,
unsentimental about a home he once envisioned as America’s
second-greatest.
“I have no
emotion,” Trump said, “other than it was a great deal.”
That’s hard to
dispute. Even with the work Trump did on the house, Lambiet still
marvels at the quick profit he turned.
“This is what he
does with everything. He puts a little veneer on things and he
doubles the price, and people buy it,” Lambiet said. “He’s all
smoke and mirrors — and that house was the proof.”
Annabelle Timsit
contributed to this report.
Sem comentários:
Enviar um comentário