The cover story of the newest issue of New York Magazine is all about the influx of foreign buyers into the ultra-high end New York City real estate market. Some of those foreign buyers see their purchases as relatively stable and lucrative investments, but with others there's something more shady at work, namely money laundering. The author of the piece, Andrew Rice, delves into the loopholes and practices that make real estate, particularly NYC real estate, such an attractive option for mysterious international billionaires looking to hide their assets. (20 Pine Street, and its alleged connection to a massive case of Russian tax fraud, is prominently featured.) The whole thing is most certainly worth a read, but here are 13 of our favorite lines from the piece, just to whet the appetite:
1) "The Related Companies is using a federal program that promises green cards to foreign investors to raise cheap capital for its Hudson Yards project. (A website features a rendering and the slogan 'Your Gateway to the U.S.A.')"
2) "'Real estate is a wonderful way to cleanse money. Once you buy real estate, the derivation of that cash is forgotten.'"
3) "Escape From New York LLC's three-bedroom condo, purchased for $32 million, was immediately placed on the resale market. Asking price: $41 million."
4) "The first rule of selling property to the ultrarich is that you can't try to sell them property—you offer them status, or a lifestyle, or a unique place in the sky."
5) "While robber barons built Fifth Avenue mansions, the buyer of 432 Park Avenue's top penthouse (asking price: $95 million) will get an observation-deck view of Manhattan."
6) "[Broker Gennady] Perepada said his clients insist on confidentiality and instructed me not to identify our location, a popular one with foreign buyers. 'Just say 'classy building,''' he told me as we looked down on St. Patrick's Cathedral."
7) "Perepada doesn't drag his clients to a bunch of open houses. He takes them to Jean Georges, gets them hockey or Broadway tickets, rents helicopters or horse carriages, sets them up with plastic surgeons."
8) "'Did you see The Wolf of Wall Street?' Perepada asked as we drove. 'I love this movie. You see how he works? Amazing.'"
9) "'We recently purchased a vacuum cleaner,' [lawyer Martin Jajan] told me. 'It was for one of our high-net-worth clients that bought $15 million worth of property this year. We're not about to say, 'We don't do that, we're lawyers.''"
10) Behind a New York City deed, there may be a Delaware LLC, which may be managed by a shell company in the British Virgin Islands, which may be owned by a trust in the Isle of Man, which may have a bank account in Liechtenstein managed by the private banker in Geneva. The true owner behind the structure might be known only to the banker.
11) "'A lot of times, I don't even know where my clients are from,'" says the lawyer Bruce Cohen."
12) "It turned out that offshore locales like the Caymans were the most stringent about complying with international anti-money-laundering standards. It was easier to set up an untraceable shell company in the U.S. than in any country other than Kenya."
13) "Competition will continue to drive the wealthy—foreign and domestic—to Brooklyn and middle-class buyers to despair."
· Stash Pad [NY Mag]