The Russians are Leaving, the Russians are Leaving

House of Outrageous Fortune

The Russian invasion of Ukraine in February sparked a tidal wave of fury and inspired a fresh burst of scrutiny of that nation’s oligarchs. The uber-wealthy jet-setting pals of President Vladmir Putin, they are presumed to be his puppets, both on his payroll and providing him with the funds to pursue his revanchist agenda, while serving as human shields, protecting Putin’s own assets, which many assume to be one of the world’s largest hordes of wealth. If, as Balzac said, a crime is behind every great fortune, then Putin and his oligarchs may well be the most nefarious criminal cartel in human history, willing to destroy a great nation and its people to serve their own selfish, shabby needs.

Despite a deficit of taste, shabby is not a word previously associated with the oligarchs. And each day brings fresh evidence of the upmarket expenditures that marked their triumphal rise from the ashes of the Soviet Union. Outrage has mounted as news reports about where the oligarchs have parked their money pile up. Russians have been sanctioned by the United States, the European Union and the United Kingdom; their assets frozen and sometimes seized.

The Biden Administration even formed a task force with the colorful name KleptoCapture for that purpose and planned to ask Congress to pass laws that would allow asset sales and the transfer of the proceeds to Ukraine. “I say to the Russian oligarchs and corrupt leaders who have bilked billions of dollars off this violent regime: no more,” President Joe Biden said in his State of the Union Speech this year. “We are joining with our European allies to find and seize your yachts, your luxury apartments, your private jets. We are coming for your ill-begotten gains.”

Among the greatest hits of this anti-Russian band have been the seizures of Dmitry Pumpyansky’s $75 million yacht Axioma in Gibraltar, Andrey Melnichenko’s Sailing Yacht A, valued at $577 million, in Trieste, Alisher Usmanov’s $700 million yacht Dilbar in Hamburg, Viktor Veselberg’s $90 million yacht Tango in Mallorca, a $50 million yacht docked at London’s Canary Wharf, more yachts detained in Spain, properties owned by Roman Abramovich in France and on the Channel Island of Jersey, Sardinian real estate valued at well north of $200 million, billions of dollars more in properties and assets in Italy, France, Switzerland and Belgium. Legal difficulties and challenges will no doubt ensue, but a moral point has already been made. And Russians-in-New York thus far untouched by the crusade should be looking over their shoulders as local legislators, including Manhattan borough president Mark Levine, Congresswoman Carolyn Maloney and state Senator Brad Hoylman target these piggies’ banks.

Two prime candidates for sanctions played outsize roles in my 2015 book House of Outrageous Fortune, the story of the limestone condominium on Central Park West, just north of Columbus Circle. Neither oligarch seems outwardly concerned, but appearances can deceive.

Today, Dmitry Rybolovlev is thought to spend most of his time in Monte Carlo, where he owns a majority stake in the soccer club Monaco; it’s been speculated that like Chelsea FC owner Roman Abramovich, he might be forced to sell it, but Rybolovlev hasn’t commented. He was last seen in public the day before the invasion of Ukraine, when his superyacht Skorpios won a race off the island of Antigua. Early in March, another of his yachts, the Anna, was also in the Caribbean. And the New York Post recently reported that Valery Kogan, born in Mariupol, Ukraine, but later Russia’s 41st wealthiest man, has put his American real estate holdings, including two Manhattan properties, his 15CPW apartment and a Plaza Hotel condo quadruplex, on the market via so-called shadow (or unofficial) listings. While waiting to learn their post- invasion fate, you can read about the era when these two flew through the radar unconcerned in this excerpt from House of Outrageous Fortune.

Fifteen Central Park West

Woe and rejection long met attempts by Arab sheikhs, Latin potentates, and Russian oligarchs who hoped to buy a home in one of New York’s traditional “good” co-ops. Condos appeal to newer, faster money, and those who won’t reveal their finances to their wives, let alone a co‑op board. But that tide turned as the twentieth century ended. As Elizabeth Stribling, founder of the eponymous brokerage, put it, “Money trumped the club,” and today, “It’s a different kind of club,” says an apartment owner at Fifteen Central Park West, New York’s most famous condo. “You just need a big checkbook.”

After Fifteen apartments went on sale in 2005, some of the biggest checks were written by Russians, even though that wasn’t what the building’s developers–Will and Arthur Zeckendorf and their partners, Goldman Sachs and Israeli billionaire Eyal Ofer–wanted. Said Ofer, “I don’t think we allowed Russians to be first,” doing what they could to ensure that early buyers would be “an inducement and not a deterrent. Since we were all intending to live there, we wanted to have the right group of people, a base of quality, not of pure money.”

Among the real estate lawyers watching that process was Edward Mermelstein, who’d left his native Ukraine in 1974 and built a thriving New York practice advising high-net-worth individuals on the purchase of “second to fifth homes” in New York City. After September 11, 2001, “Everybody took off,” he said. “They were very scared.” But Russian nationals knew their country was “a very unstable place, and as quick as they made money, they could lose it,” so by 2003, they were eyeing Manhattan again.

Mermelstein advised them to avoid cooperatives. “They have no way of showing credit history,” he said. “There was no history. Why start the process and subject clients to an impossibility?” So Eastern Europeans focused like lasers on high-end condos, and their wealth changed the market, “Because they were willing to pay whatever it took. They go to developers and say, ‘You’re asking fifty million dollars? Here’s sixty, but we close next week.’” Mermelstein understood that the 15CPW developers weren’t exactly eager to sell to them. Still, Russians did infiltrate the ranks of early buyers.

One of the first to kick Fifteen’s tires was Dmitry Rybolovlev, an oligarch who wasn’t fond of winters in Geneva, where he was based, and was hoping to find a warm place to spend the season, as well as a pied-à-terre in New York, or so he said. He first made an unsolicited offer for Citigroup chairman Sandy Weill’s penthouse—one of the best in the building—but it wasn’t for sale. Then he agreed to buy another penthouse being flipped by an Israeli who’d never moved in.

Born in Perm, an industrial city in the Ural Mountains, Rybolovlev studied medicine while working as a cardiac-unit orderly and nurse, and married a fellow student, who quickly gave birth to their first child, a daughter named Ekaterina. Dmitry became a local doctor and prepared to join the Communist Party, but under the last Soviet leader, Mikhail Gorbachev, some dormant capitalist instinct arose, and instead, he went into business, setting up a company to sell alternative medical treatments using magnets.

With the Soviet economy teetering on ruin, Rybolovlev found himself bartering treatments for goods instead of money and abandoned medicine, became a middleman for whatever was on hand—bringing beer from Moscow to Perm, for instance. In 1992, Rybolovlev became one of the first graduates of a Finance Ministry–sanctioned broker course in Moscow, earning government certification as a securities dealer.

Wild West Days

In the Wild West days after the dissolution of the Soviet Union, with Boris Yeltsin as the new leader of the smaller Russian Federation, the shares of what had been state-owned industrial enterprises were distributed to workers. Returning to Perm, Rybolovlev opened an investment company, and like other oligarchs-in-training around the country, started buying up those shares on the cheap. By 1994, he had his own bank and made an agreement with the local committee that managed state property to keep an inventory of the shares of a former state-run enterprise that mined potassium and manufactured potash for fertilizer. Then, he located the shareholders and began to buy their shares. Knowing the local mentality, he would pull semi-trucks filled with the Russian cars called Ladas up to the gates of factories and offer them to workers for their shares.

By 2007, Rybolovlev had about $1 billion. His ascent wasn’t smooth, though. In the mad bad Russian 1990s, enemies lurked in both the criminal shadows and the corrupt bureaucracy. In 1993, he’d moved his family to Odessa, and by 1995, he’d deposited them and, presumably, some of his money in Switzerland, and begun trying to force criminal elements out of his companies. “He left the bank only behind a live shield of bodyguards,” said a friend. “Identical cars with identical license plates” registered to him roamed the city to foil ambushes. He was right to worry. One of those cars was attacked, and then, in May 1996, he and a partner were arrested as the masterminds of a murder.

The only one of Rybolovlev’s executives to refuse bodyguards had been shot in the doorway of his own apartment building. One Oleg Lomakin, arrested for the shooting, won a promise of reduced charges for saying Rybolovlev put him up to it. The potash prince was jailed on charges of conspiracy to murder and spent eleven months in prison. Offered his freedom if he would sell his fertilizer company shares, he refused.
Finally, Rybolovlev was released on bail of a billion rubles, and at the end of 1997, Russia’s Supreme Court dismissed the charges and found Lomakin guilty of organizing the murder; his puppeteers, assuming they existed, were never identified. In a rare interview, Rybolovlev said, “When you’re afraid, that’s the beginning of the end…You must be absolutely confident: no matter what happens, you won’t give away what’s yours.” In a Russian newspaper profile, he was described as “a totally lonely person,” who’d by then cut ties with all his old associates, spent most of his time on airplanes, and a week or less a month with his family. He was “a sea of charisma but with steel teeth and the cold gaze of a professional appraiser. . .a matchless and most rare intellect of a strategist and at the same time blindness to people and their human qualities.”

Donald Trump: Palm Beach, Florida

Rybolovlev’s interest in American real estate emerged in the summer of 2008 with his purchase of a mansion in Palm Beach,

Florida, from Donald Trump for $95 million. He called it an investment. Around the same time, he offered $75 million for that Israeli’s 15CPW penthouse and his offer was accepted. He transferred a deposit and contracts were drawn up. But the seller got cold feet, most likely after he learned of the serious tax implications of a short-term capital gain by certain types of corporations owned by foreign nationals.

Meantime, other Russians had infiltrated Fifteen. The most important—at least until Dmitry Rybolovlev came along—was Valery Mikhailovich Kogan. With an estimated $1.6 billion fortune, he ranked number 804 on the 2012 Forbes list of the world’s billionaires, thanks to his co‑ownership of a company that held a 75-year contract to run Moscow Domodedovo Airport.

Born in Ukraine, Kogan is a former Soviet navy man who’d studied economics and worked as a diplomat. In the 1990s, he and a partner grew wealthy by moving merchandise between Russia and China and building homes on a former chicken farm near Moscow, which resulted in an accusation of deceitful practices. Kogan moved to America after Russian authorities disputed his airport lease in 2005 and threatened to nationalize it. Ever since, it’s been unclear if Kogan’s company owns, leases, or merely operates the airport. Making matters even murkier, an Israeli newspaper alleged that Kogan was connected to the secret services in Russia and was a close but “secret” friend of Russian president Vladimir Putin.

What is sure is that Kogan also collected luxury real estate. Public records indicate he’s owned estates in Atherton, California, and Fairfax, Virginia; a $30 million apartment near Tel Aviv; a beachfront complex in Caesarea, just down the road from former Israeli prime minister Benjamin Netanyahu; and an $18.5 million estate in Greenwich, Connecticut, which the Kogans hoped to raze and replace with a home so massive, even by the loose local standards, that it set off protests (“It’s not a residence, it’s an industrial project,” said one neighbor) and was subsequently scaled back considerably. More relevant to 15CPW was Kogan’s ownership of a $10 million duplex apartment on the thirty-fourth and thirty-fifth floors of the Zeckendorfs’ 515 Park, likely the reason he was able to get around the quiet ban on Russians at Fifteen and buy both penthouse 40A, for almost $23 million, and a second $2 million one-bedroom unit.
In November 2011, Sandy Weill abruptly began, as he put it, “downsizing a little bit,” offering both his Fifteen penthouse and his yacht for sale, explaining to the Wall Street Journal that it was “a pretty good time” for the American rich “to be quiet,” and that his intention was to give “the proceeds of what we get” to charity. Within weeks, his penthouse was reported sold and word leaked that Dmitry Rybolovlev had finally gotten a foothold at Fifteen. Or had he? A spokesman for the Russian oligarch claimed it wasn’t Rybolovlev but his elder daughter, Ekaterina, a twenty-two-year-old student at an unnamed American college, doing the buying. That assertion set off one of the looniest episodes in 15CPW’s short history.

That fall, father and daughter had repeatedly visited another brand-new condo, starchitect Jean Nouvel’s 100 Eleventh Avenue, to look at one of its penthouses, and after a bidding war, flew into New York late in November to sign a contract to buy it for about $20 million. They’d set up the appropriately named Property NY 100–11 LLC to do that a few weeks earlier. But that day, the pair appeared, speaking only in Russian, until Ekaterina turned and coolly told the broker, “We’ll let you know.” It later emerged that on the spur of the moment, she or they had decided to buy Sandy Weill’s penthouse instead. They used that same LLC to do it.

Back in Russia, Rybolovlev had an issue: the Kremlin was trying to take his company away, opening a fresh investigation of a mine collapse two years earlier, which drove its stock down 60 percent. More of the backstory emerged after filed for divorce and sought a freeze on her husband’s assets, alleging that he’d been hiding their money.

A Double Life

Elena had concluded that her husband had lived a double life since they’d moved to Switzerland. In 2000, when she was four months pregnant, she’d received an anonymous package containing a photo of her husband and another woman. Five years later, she alleged, Rybolovlev had asked her to sign a postnuptial contract that would have given her $100 million in the event they split up. But he was worth $1 billion then, so she saw a lawyer and refused. Ever since, he’d kept having affairs, and spending lavishly on his girlfriends, having assignations with multiple young women in Courchevel, Venice, Monaco, and Dubai. When she confronted him, she said he boasted of his conquests of girls Elena suspected were younger than Ekaterina. She even alleged that he shared his women with other oligarchs and said he’d bragged he’d organized everything “in an industrial way”: the girls were all virgins and submitted to VD tests before boarding his yacht. Ekaterina, Elena believed, knew all about his exploits and Elena charged that he’d bought his daughter’s silence with gifts: a $1 million horse and a $500,000 car.
Elena also quantified the family’s fortune, claiming it fluctuated between $7 billion and $13 billion, and provided a list of their assets, which included more real estate in Gstaad, Moscow, Perm, and Cyprus; four private jets; two yachts; three Mercedes, a Bentley, and a Rolls-Royce; art and furniture worth $670 million; cash and billions in stock, tucked away in banks and anonymous shell companies in Cyprus, the British Virgin Islands, Panama, and Jersey, all tax havens known and loved by the rich for their loose financial regulation; paintings by Modigliani, Monet, Picasso, van Gogh, Gauguin, Degas, and Rothko, and a vast collection of museum-quality, eighteenth-century French and German furniture.

“Love and trust have completely disappeared from the life of the couple,” the divorce filing concluded. “Madame can no longer put up with his infidelities, his egotism and contempt.”

In spring 2009, Dmitry agreed to pay family support, the mortgage on Elena’s Swiss home, and her share of their taxes while they battled it out over their fortune. But he also informed Elena that he’d transferred most of his assets to two irrevocable trusts in Cyprus, and now, even though he was the protector of those trusts, as well as a beneficiary (the others were his daughters, but not his wife), under Cypriot law the trustees were refusing to tell him what they contained or what they earned. Back and forth the charges flew. And the war of the Rybolovlevs became an international affair when the Palm Beach Post uncovered documents showing Elena had sought a court order to freeze the former Trump mansion—and her husband claimed he didn’t own it after all.

In March 2012, after the Swiss divorce court ordered all his assets frozen, she filed suit in New York, too, seeking to freeze the Fifteen apartment—and all hell broke loose. The suit contended that the apartment wasn’t Ekaterina’s at all, but rather, that the LLC was a sham created “with the specific intent of hiding and diverting” Dmitry’s assets. The story was an irresistible feast for the city’s feisty tabloid press.

Harvard University

After months of silence, Rybolovlev finally shot back at his wife and chose the New York Times to give his side of the story in a piece on Russians trying to get money out of their homeland by buying trophy real estate. His lawyer claimed that his asset machinations were set in motion by a desire to keep them out of reach of the Russian authorities—not his wife. And the lawyer seemed to be the source of an unattributed claim that elder daughter Ekaterina had “bought the condominium with cash” from “a trust set up to benefit her and future children.” Her plan was to use the apartment for four months while finishing her studies for a liberal arts degree from Harvard University Extension School.

After that, silence descended. Between September and December 2012, the lights in the disputed penthouse rarely came on. Finally, Christmas week 2012, the whole place blazed with light for several evenings. Then it went dark again.

Adapted from “House of Outrageous Fortune: Fifteen Central Park West, the World’s Most Powerful Address,” by Michael Gross Copyright © 2014 by Idee Fixe Ltd.. Published by Atria Books, a division of Simon & Schuster, Inc. All Rights Reserved