Russia’s Millionaire ‘Refugees’
Russian elites fear they’ll be locked behind the new iron curtain: punished by Western sanctions on one side, by Russian courts on the other.
MOSCOW—Here in the Russian capital, even though black snow has finally melted after the endless freezing winter, many people still feel a lack of vitamin D. But not everybody.
Thousands of rich Russian citizens—those not under U.S. sanctions—have been working on their tans around Biscayne Bay in the United States. Many spend their winters relaxing at Sunny Isles Beach in North Miami, enjoying the multi-bedroom condos they call their “distant dachas.” But there’s been notable tension wafting in on the sea breezes.
There are signs the good times are ending.
Yelena Berdichevskaya, an event manager, organizes concerts by famous Russian musicians in Miami. “This is the first time at least in a decade when we see half-empty Moscow-Miami airplanes,” Berdichevskaya told The Daily Beast.
In 2014 after Moscow took the Crimean Peninsula and backed a war in eastern Ukraine, Washington and the European Union imposed sanctions and the Kremlin banned tens of thousands of rich Russians, employees of law enforcement agencies, from traveling abroad. The U.S. sanctions were tightened further after extensive revelations about Moscow’s interference in the U.S. elections that put Donald Trump in the White House.
As a result, many rich Russian residents of Miami have had to rent out or sell their condos in the extravagant high-rises at Sunny Isles Beach, including one of the towers named Porsche Design, and another three of them bearing the label “Trump.”
To give you a sense of the extravagance: Porsche Design is famous for glass elevators allowing you to drive your car into your apartment up to 60 stories above the sea.
“The most recent talk of the town,” says Berdichevskaya, “was of a Russian family who due to politics had to sell their condo in the Porsche Design tower—everybody in the family was crying.”
They were not shedding tears about millions of their countrymen trying to deal with horrifying state hospitals who have no money to take their children or old parents to private clinics, much less the 20 percent of Russian families who don’t have indoor plumbing.
What makes the Russian elite in their little “Moscow by the Sea” worry about their Miami investments these days is fear of prison.
In 2017, Reuters published an extensive investigation into Trump properties in Florida, most of them at Sunny Isles Beach, and found that “at least 63 individuals with Russian passports or addresses” had bought “at least $98.4 million worth of property in seven Trump-branded luxury towers in southern Florida.”
Those numbers do not include those who successfully mask ownership through front companies, or go to Miami to rent and have their children born as Americans. Like many big-ticket real estate developments, there are always suspicions that the Miami properties serve not only as luxury getaways, but also as money laundries.
“I don’t think that corrupt Russian bureaucrats on sanctions are going to travel to their Miami homes any time soon,” says Gennady Gudkov, a former KGB officer who is now an opposition politician. “I hope they will be punished.”
The Anti-Corruption Foundation run by opposition leader Aleksey Navalny reported, for instance, that Nizhny Novgorod mayor Ivan Karnilin invested first $824,000 and then $1.1 million in Miami apartments in December 2013 and July 2014. This on a civil servant’s salary. The mayor allegedly registered the property in the names of his wife, Albina Karnilina and his daughter, Irina Ovchinnikova. Soon after Navalny published his reports, the mayor retired.
The Moscow team of Transparency International has conducted a series of investigative projects about “Russian Miami” or, as some call it, “Little Moscow.”
“Russian corrupt bureaucrats continue to see Miami as an attractive place for investment,” the deputy head of Transparency International here, Ilya Shumanov, told The Daily Beast. “Our project ‘Miami is Ours’ covered estates that belonged to businessmen, bandits, bureaucrats, politicians and even law enforcement officers, including former Interior Minister Gen. Anatoly Petukhov, who had invested over $30 million in Florida; even people responsible for the security system invested their money in Miami.”
Due to sanctions and to independent investigations conducted by corruption fighters, some hypocritical Russian state servants who invest and pay taxes in the United States have lost their jobs at home or had to sell their Miami residences, while others are banned from traveling to the U.S. altogether.
Russian legislators in Moscow may condemn the “Russophobic U.S. State Department,” but in Miami or in New York they seem to admire “the air of freedom,” as Member of Parliament Igor Lebedev said last fall. (Lebedev, take note, is the son of the controversial nationalist MP Vladimir Zhirinovsky, a big fan of Donald Trump.)
“I know several FSB [security service] and army generals who have huge properties in Miami but cannot travel outside of Russia,” Gudkov, the former KGB man, told The Daily Beast. “I don’t think that anything can change that now, after Mueller’s report comes out, since the sanctions are not the punishment for ‘collusion’ but for Russia’s bandit-like behavior all over Europe, Ukraine and the United States.”
Russians who can still travel stay in Miami during the winter months when it is dark and miserable here, returning back home mainly to make money. Russian business and real-estate deals are often discussed at the restaurants in the Bal Harbor mall.
That is where Lana Bell, a broker of luxury properties at Sotheby’s International Realty, tells Russian clients about attractive condos with spectacular sea views, and it appears, from what she says, that the election of Trump on Nov. 8, 2016, prompted an instant era of good feelings as well as high rolling for Russians in Miami.
Trump may have failed that year to seal a deal for a Moscow tower, but Muscovites made their way to his branded condos in Miami. Almost instantly their numbers and luxury investments surpassed those of traditional buyers from Colombia, Venezuela and Argentina.
The starting price for the condos Bell sells begins at about $3 million, she told The Daily Beast in a telephone interview. “My Russian clients have been buying condos in the most expensive towers, including the Trump Towers.” She noted that those are are right next to the “Kalinka” and “Matryoshka” stores specializing in Russian cuisine.
Bell, who has been in this highly competitive business for more than a decade, says that unlike American elites, who tend not to make their money so extremely obvious, Russian men show off their wealth as much as possible: “Russians can be easily recognized by their Bentleys and Rolls-Royces,” Bell says. “But this year the sales have gone down. It is becoming problematic for the Russian elite to take their money out of the country; and here the rules demand full disclosure, the name of the buyer and the source of money.”
Do Russian buyers, especially those loyal to President Vladimir Putin, feel bad about their secret estates in the nation the Kremlin constantly accuses of “Russophobia”? Hardly.
“Look, Russian patriots are happy here; Sunny Isles is a happy place. Russian men make money at home, they visit their Miami property just for a few months in winter.” Bell laughs. “Some of these rich daddies are in their fifties or older, while their women are in their twenties; the beach is packed with really young pregnant Russian girls, girls with babies. I sometimes wonder about their age—and life.”
Then there’s the question of what President Trump likes to call “anchor babies,” infants born in the United States and thus entitled to U.S. citizenship, thus making it easier for their parents eventually to apply for citizenship as well.
Natalia Borisova, a former manager at a Moscow state agency responsible for regional investments and Vasily Zubakin, a leading manager at Lukoil, one of Russia’s gas and oil giants, had their baby boy in Miami in September 2014. They followed the same agenda pursued by many rich Russians: rented a condo in the third Trump tower, spent a couple of nice months on the ocean, and got their newly born baby a U.S. passport.
“We were in Miami, where everybody around us spoke Russian,” Borsonova recalled in a recent interview with The Daily Beast, noting the irony that at that time, “Moscow was banning Western products in a move against the sanctions.”
“The medical service cost us around $4,000, the rent was around $6,000 a month; we had the nicest doctor, everything was easy, comfortable and pleasant,” Borisova said. “Our baby boy had Hollywood, Florida, as a place of birth in his passport.”
On a recent afternoon Tatiana Voloshin, a New York entrepreneur, was watching a loud group near her table on the veranda of Mira 5 Stars, a restaurant popular with rich Russians because its chef, Mirko Cldino, previously worked at Putin’s dacha outside Moscow. There were, as Voloshin recalls, six men and nine women with high heels and cosmetically-enhanced lips. “Some of the men were from Chechnya, I realized when one of the Russians said that their Chechen sober friends should drive.” Presumably the Muslims were not drinking.
The guests hopped into three Bentleys and one Maserati and took off. Voloshin said that she felt frustrated. She came to Miami to look for an apartment but the prices for real estate close to the beach turned out to be unaffordable. “I did not find a nice place, thanks to rich Russians who have spoiled the real estate market with their crazy bottomless budgets.”
Voloshin’s real-estate agent, Mikhail Shilt, says that his clients are both Russian and Chechen. “Some of my Chechen clients lived in Moscow before they came here; my buyers are businessmen and government officials, fifty-fifty,” Shilt said.
When the agent asked his Russian clients how their passion for investing in Miami condos went along with their loyalty to the Kremlin’s politics, they usually said that “their own happiness is their priority,” the agent said.