The Russian Tycoons Are Coming, The Russian Tycoons Are Coming – to Manhattan

The former Russian secretary of state under Presidnet Boris Yeltzin, Andrey Vavilov, is buying a penthouse at the Time Warner Center for $37.5 million. This purchase is the opener to a fascinating NY Times investigation of the migration of new wealth from Russia to the U.S.

Pootin’s Tycoons, it appears, have been working on their exit strategies. After a quarter century in which state owned resources have been turned over—legally—first to those in President Boris Yeltzin’s inner circle, and then President Vladimir Putin’s, much of that wealth is today fueling the luxury condominium boom in New York City.

Yeltzin’s and Putin’s favorite tycoons have been sending their money abroad from the start, but the rate of that hemorrhaging of Russian funds has reached a staggering level last year, as , an estimated $150 billion left the country. And this in the midst of a Kremlin campaign, that same year, to repatriate Russian funds floating abroad.

The worse the Russian economy is doing, the faster the tycoons are pumping the cash off shore.

For the Russian tycoons, writes the Times, owning a New York luxury condo means a safe haven for their money, and, if the need arises, for them physically. So it’s well worth it to them to keep paying expenses and taxes on a luxury condo in Manhattan, keeping it dark but humming, for that inevitable day in the future.

Of course, the flow of such enormous sums into the housing market is having its impact on the local real estate market.

The condo boom ground zero is at the Time Warner Center, which went looking for foreign buyers when real estate values in the U.S. started plummeting a decade ago.

Just to give you an idea about the wealth of Andrey Vavilov and his fellow Russians that have crossed the ocean on bales of cash — the reason this former government minister settled on the TWC was because his wife, actress and dancer Mariana Tsaregradskaya, complained that their suites at the Plaza were too small and dinky.

Many of the apartments there were purchased through shell companies, of which the Times claims at least 20 have been owned by folks from the former USSR, who together invested more than $200 million in Time Warner Center condos.

The Times says there’s evidence of more Russian owners, which their investigation has not been able to reveal.

The Times story looked into new Manhattanites like Oleg Baybakov, whose family has owned three Time Warner Center apartments at different times. Baybakov made his fortune as an executive of the mining company Norilsk Nickel, which he got for a fraction of its value. Another beneficiary from the Norilsk deal, Mikhail Prokhorov, is now the principal owner of the Brooklyn Nets basketball team.

The Time Warner apartment 74A belongs to a shell company called Ff Property Management, which the Times traced to Maxim Finskiy, also a former Norilsk Nickel executive.

Then there’s Vitaly Malkin, a banker who actually lost on the Norilsk Nickel deal — you’ll find him in 74B, a duplex he bought in 2010 for $15.65 million.

Vasily Anisimov, who serves on a board of Malkin’s bank, bought a TWC penthouse in 2004 for $9.8 million, through a trust on the name of his daughter, who was a student at New York University.

Anisimov is an associate of Arkady Rotenberg, a longtime friend of President Putin.

Konstantin Kagalovsky, another Yeltzin oligarch, is also a long time resident at TWC. In 1999, his wife, Natasha Gurfinkel Kagalovsky, was investigated for money-laundering as an employee of the Bank of New York. She administered the Russian accounts as head of the bank’s Eastern European division. The bank suspended her, she sued and received a settlement for wrongful suspension.

Back in 2013, then departing Mayor Michael R. Bloomberg told New York magazine: “Wouldn’t it be great if we could get all the Russian billionaires to move here?”

Well, be careful what you wish for, because many of them have already done just that.