(Bloomberg) — A Moscow-born deal maker who was once part of Donald Trump’s inner circle testified at a civil trial where he’s accused of helping a Kazakh man launder money through US real estate including condos at the Trump SoHo tower.
Felix Sater on Tuesday told a federal jury in Manhattan that he knowingly lied when he helped the wealthy Kazakh, Ilyas Khrapunov, conceal his role in the lucrative deals to dodge a worldwide freezing order that tied up his family’s assets. Sater allegedly made millions in the process.
“I wasn’t legally obliged to tell the seller, the buyer of anything, to tell anyone of dirty laundry of a deal I was working on,” Sater testified. “They had a due diligence department. If they found it, they found it. If they didn’t find it, they didn’t find it.”
The suit was filed by the city of Almaty, Kazakhstan, and one of the country’s biggest lenders, BTA Bank. They claim Sater helped Khrapunov launder a portion of the billions of dollars allegedly looted from the bank by his father-in-law, former BTA Chairman Mukhtar Ablyazov, in the years before the financial crisis.
Trump, 78, isn’t a defendant and isn’t accused of wrongdoing in the case, but the trial may put fresh attention on Trump’s dealings as he campaigns to return to the White House, including his ties with Russia before the 2016 election. Sater, who advised Trump on real estate investments and at one point led his failed effort to build a Moscow skyscraper, was one of many witnesses interviewed in Special Counsel Robert Mueller’s probe into Trump’s 2016 campaign.
Ablyazov, who fled Kazakhstan, allegedly used a web of shell companies around the world to hide the money, while Khrapunov is accused of helping move some of that money into the US with Sater’s assistance. Sater said he knew about the freezing orders BTA obtained from an English court and wasn’t bothered.
“You didn’t care one way or the other if the money was dirty, did you?” John Zach, a BTA lawyer for Boies, Schiller & Flexner LLP, asked Sater.
“Not really,” Sater said, adding that he doesn’t believe he’s done anything wrong.
The Trump campaign didn’t immediately respond to a message seeking comment on the trial.
Margarita Glass
The case is part of a broader global effort by BTA to recover about $6 billion that Ablyazov allegedly siphoned from the bank by arranging for bogus loans to entities he controlled.
Sater, who worked at Bear Stearns and other Wall Street firms in the 1980s, served time in prison for stabbing a rival commodities broker in the face with a broken margarita glass in a bar fight in Midtown Manhattan in 1991, which led to lasting nerve damage for the victim.
He later pleaded guilty to racketeering for taking part in stock swindles that defrauded investors of more than $40 million. To stay out of prison, Sater worked as an informant to US prosecutors investigating the mob’s role on Wall Street. BTA says Sater turned to real estate after he was banned from selling securities in 1999.
Sater met Khrapunov in Trump Tower to discuss laundering the allegedly stolen money and personally arranged meetings between the wealthy Kazakh and Trump to discuss possible investments, BTA and Almaty said in the complaint.
“There is no suggestion that either Ilyas or Sater disclosed to Mr. Trump the illicit origin of the stolen funds, or that Mr. Trump engaged in any impropriety whatsoever in connection with Ilyas Khrapunov,” according to the lawsuit.
Khrapunov has denied wrongdoing and previously said that he managed his own family’s investments legally and denied that his Swiss company was a front for his father-in-law or that he had laundered any ill-gotten gains. Ablyazov has also consistently denied wrongdoing.
Trump SoHo
Sater’s ties to Trump date back to around 2005, when Sater’s Bayrock Group LLC and the Trump Organization partnered to build the Trump SoHo, a 46-story hotel and condo development in Manhattan, according to the complaint. That same year, Trump struck a one-year exclusive deal for Sater’s company to build a Trump International Hotel and Tower in Moscow, the suit says.
Sater had an office at Trump Tower for years, and as late as 2011 was handing out business cards to prospective clients identifying himself as a “Senior Advisor to Donald Trump.” Sater used his Trump ties to help drum up business, according to the suit.
Sater got connected to Ilyas Khrapunov through his father, Viktor Khrapunov, who was the mayor of Almaty from 1997 to 2004. Sater testified that he worked with the elder Khrapunov on multiple natural resources deals and frequently stayed at the family’s mansion in Kazakhstan. When Ilyas Khrapunov married Ablyazov’s daughter, Sater attended the wedding and met the oligarch.
Viktor Khrapunov later enlisted Sater to help his son get started in business, according to the suit. With Sater’s assistance, Ilyas Khrapunov used a Swiss company set up by his family to launder some of money allegedly stolen by Ablyazov.
The money used in the US deals was laundered through a shell company in Latvia, where it was invested in an oil and gas company before being withdrawn and moved to a series of shell companies in Cyprus. From there, the money entered the US “where it was invested in at least five separate real estate investments in New York City, upstate New York, and Ohio, as well as in two private equity deals,” according to the lawsuit.
BTA alleges Sater eventually turned on Khrapunov and stole at least $40 million of the money he had laundered into the US “for his own personal benefit.”
Almaty v. Sater, 19-cv-2645, US District Court, Southern District of New York (Manhattan).
(Updates with quote from Sater testimony.)
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