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Meet the ex-con who ties himself to Trump

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PORT WASHINGTON, New York Fresh from snatching up a former insane asylum in foreclosure for a cheap $1.2 million, a mystery man went running down a Syracuse, N.Y., street, iPad covering his face, as reporters gave chase and TV cameras rolled.

It was April 11, 2013, and the man — whose identity was hidden until now — was Felix Sater, two-time ex-con turned government informant, and at least one-time adviser to Donald Trump.

Sater was describing himself by then as “a very interesting guy with a colorful background,” according to Kenneth Silverman, the bankruptcy trustee for that New York property Sater bought at auction. It was no idle boast.

His story is the stuff of Hollywood scripts. Sater has been tied to a jailed Russian-American diamond thief, the Italian mafia and wealthy Kazakh fugitives; he also appears on the fringes of an unsolved double murder in New Jersey that detectives considered a mob hit. He served time for stabbing a fellow securities dealer with a broken margarita glass.

Of course, he was also named Man of the Year at his synagogue and, according to federal prosecutors, helped put a lot of bad guys behind bars.

Now Sater has reemerged as investigators probe deeply into Donald Trump’s connections – business and political – in the former Soviet Union. Court documents show Sater’s onetime company, Bayrock Group — successor to an earlier firm that was caught up in a major Wall Street scandal – was contracted by Trump in 2005 to find a suitable tower in Moscow that could bear the mogul’s name. In 2010, he even carried a Trump Organization business card that stated he was a “Senior Advisor to Donald Trump.”

This is the story of the ex-con who claims ties to the president.

Slash and Crash

Born in Russia in March 1966, Sater immigrated to Brooklyn as a grade schooler, escaping rampant anti-Semitism. As a hot-headed 25-year-old Wall Street trader, Sater had his first brush with notoriety when he drove the jagged stem of a glass into a fellow trader in a barroom altercation. He was convicted in 1993 and spent 15 months behind bars, walking free in September 1995.

The conviction cost him his brokerage license, which in turn led him to team up with childhood friends involved in an illicit stock-manipulation scheme. One of those friends: Gennady “Gene” Klotsman, a Russian-American who, as it happens, according to a story last year in the Moscow Times, was drinking with Sater on the ill-fated night of the stabbing in 1991.

Sater and Klotsman teamed up to form White Rock Partners in the late 1990s. Unluckily for them, their activities there put them in the headlights of what became a broad federal probe into stock manipulation known as Operation Uptick.

So much of life turns on the smallest of details. It was a missed monthly payment on a storage locker that led to the arrests of Sater, Klotsman and another White Rock partner, Salvatore Lauria. Citing a criminal complaint, BusinessWeek reported in 1998 that when police opened the locker they found weapons and a gym bag with documents. And those documents outlined stock manipulation and money laundering through a network of shell companies. They pointed at White Rock.

The FBI established that the operation was rife with underworld figures from both the Italian and Russian mafias. It was a nasty business: In 1999, two traders were found murdered in a mansion in Colts Neck, N.J. One of them, Alain Chalem, was shot in the chest, forehead, nose and in both ears — hallmarks of a mob hit, as news reports said at the time.

Lauria later confirmed in a book he authored (which was summarized in SEC filings) earlier rumors that Sater had threatened to kill Chalem, who detectives said had represented Russian investors. But he also wrote that he didn’t think Sater was the actual killer.

The murders were a chapter in the FBI’s larger struggle to rid Wall Street of mob influence.

Lauria and Klotsman pleaded guilty and cooperated with the feds to at least some degree. In 2002, Klotsman was sentenced to six years in prison and restitution of the $40 million lost by investors. In 2004, Lauria was sentenced to five years of probation and a $20,000 fine.

Klotsman was released early and moved to Moscow in 2006, where old habits resurfaced: He was charged with helping pull off a spectacular 2010 heist in which thieves posed as intelligence agents and made off with diamonds and other jewelry worth more than $2.8 million. He was sentenced to 10 years in a gulag and was offered up last year to the United States as potential bait in a yet-to-happen U.S.-Russia prisoner swap.

The Informant

Sater, on the other hand, did far more than his former partners: He became a government informant, working with law enforcement for at least 11 years and initially helping the feds bring 19 indictments against traders and alleged mobsters, court records show.

FBI agents testified at Sater’s sentencing hearing, which finally happened in 2009, that he’d helped prosecutors bring down crooked trading companies and figures from the Russian and Italian mobs.

They and Sater told the judge that after the stock probe ended, Sater — who court documents show also went by Satter, Slater, Sader, Haim F. Sater, Hai Ying Sater and his birth surname of Sheferofsky — continued working with the U.S. government, helping to get missiles off the global black market.

Sater lamented to the federal judge that the bar fight decades earlier had left him in a personal ditch, transcripts show.

“I hated myself, despised myself for doing the things I was doing while I was doing them, because my parents did not sacrifice what they have sacrificed to have me come to this country and become a criminal,” said Sater. (Just a few years earlier, his father Mikhail Sheferofsky had been convicted for extorting fellow Russians in the New York enclave of Brighton Beach.)

Sater also described how his past painfully caught up with him in December 2007 when The New York Times published a story about his criminal history, noting he was a key Trump associate.

“The worse (sic) thing that could happen, your honor, despite whatever sentence you impose on me, I went into real estate development and I built a company right up the block, a Trump project, built the whole thing,” Sater testified. When he was forced to leave that company, Bayrock, after the Times story was published, “I thought my life was over.”

 

Sater appears to have done business with Trump for the first time while at Bayrock. When the tycoon was looking to put his name on towers on nearly every continent, Sater helped him scope out possibilities in Moscow (nothing panned out). He has also said that he took Trump offspring Ivanka and Donald Jr. around Moscow at Trump’s request in 2006.

Sater’s pleas to the judge suggested he’d turned a corner. When it was all done, Sater had avoided prison or probation, getting hit with a mere $25,000 fine.

A New Leaf Turned?

There are hints that Sater hadn’t actually gotten himself on the straight and narrow.

When a worker died in January 2008 during the construction of the Bayrock-developed Trump SoHo project in New York just weeks after news of Sater’s dark past embarrassed the Trump Organization, multiple news accounts said the building’s concrete was coming from a mafia-connected company, drawing further unwelcome attention.

And a July 2012 report by the Miami Herald about Sater and a failed South Florida Trump project noted that a civil racketeering suit accused Sater of helping to conceal millions of dollars invested in the project, while Bayrock paid his former associate, Lauria, a $1.5 million consulting fee. Much of Sater’s criminal past had been hidden from investors by the government while he continued as an informant.

This resurfaced in a congressional hearing on victims’ rights in 2015.

"The net result is that victims of Sater’s crimes, including a number of Holocaust survivors, have yet to recover any of their lost funds. And Sater continues to live well, apparently off of money that he stole from his victims,” Paul G. Cassell, a former federal judge and University of Utah law professor, testified at the time.

Then there were the Kazakhs.

Around the time that Sater left his leadership role at Bayrock, but before his 2009 sentencing, the company had already established a venture with a prominent family from Kazakhstan, the Khrapunovs. Kazbay — a partnership of Bayrock and a Dutch firm, which was owned by Leila Khrapunova — was to invest in energy projects in Kazakhstan.

Khrapunova was a prominent Kazakh TV anchor-turned-businesswoman. Her husband Viktor was an ex-energy minister and former mayor of Alamaty, Kazakhstan’s most populous city. They fled to Geneva about the same time that Sater’s past became public in the New York Times. The Panama Papers, a massive collection of leaked data and documents revealing the existence and activities of secret offshore entities, show that Leila set up shell companies in this period to hold Swiss bank accounts.

Leila, Viktor and son Ilyas are all now targets of Interpol detention requests by Kazakhstan, citing theft of government funds. They also face civil lawsuits in New York and Los Angeles. The Khrapunovs claim persecution at the hands of long-ruling Kazakh autocrat Nursultan Nazerbayev.

A recent McClatchy investigation details how Sater and a business partner worked with the Khrapunovs to invest more than $40 million in the United States, much of it while multiple members of the Kazakh family were already on the Interpol list.

The Trump Ties

Multiple people who worked for or with Bayrock tell of Sater repeatedly going to see Trump over the most minor details as the Trump Soho project progressed. Yet when asked about Sater in an unrelated court deposition in Florida in 2013, Trump disavowed a well-documented relationship.

“If he were sitting in the room right now, I really wouldn’t know what he looked like,” Trump said.

Still, Sater remains loyal to his old associate, giving more than $10,000 in 2016 to Trump’s presidential campaign and a joint Trump-Republican National Committee fund. He has already given more than $6,000 this year to that joint committee, according to Federal Election Commission records. Earlier this year Sater was in the news again, getting a Ukraine-Russia peace proposal in front of Lt. Gen. Michael Flynn, Trump’s national security adviser, fired in mid-February for misleading statements about his Russia ties.

Sater himself would appear to be in a somewhat precarious place. In 2011, in a lawsuit that sought to unseal court documents to learn about Sater’s cooperation with federal investigators, government lawyer Todd Kaminsky said revealing details could bring Sater harm.

“It involves violent organizations such as Al Qaeda, it involves foreign governments, it involves Russian organized crime,” he said. “And, most particularly, it involves various families of La Cosa Nostra” — part of the Italian mafia.

That’s a lot of intrigue for a man who today lives in the open.

McClatchy knocked on Sater’s door at his luxury property in Port Washington one recent morning. A sporty white Porsche in the driveway touted his wife Viktoria’s business on its license plate, which reads “GR8NOLA.”

Answering the door in shorts and a T-shirt, Sater calmly took a pass on questions.

“I am running late. I am going to go play golf,” Sater said. He asked that questions be sent by email so he could share them with his lawyer.

Three days later, the lawyer, Robert S. Wolf, emailed back: “On behalf of Mr. Sater we decline to comment.”

An angrier response came from Sater’s rabbi, Shalom Paltiel. He’d bestowed Man of the Year honors on Sater in 2014 at his synagogue in Port Washington, a rich Manhattan suburb. Announcing the award, Paltiel recounted how he accompanied Sater to a meeting of law enforcement and intelligence officials who gushed about him.

“They’re taking turns standing up one after the other, offering praise for Felix. Praising him as an American hero for work and assistance in the highest levels of this country’s national security interests,” Paltiel said in a speech , adding warmly “they were speaking about Felix Sater: My Felix!”

Paltiel made no mention of Sater’s two felony convictions. And when McClatchy reporters tried to interview him at his synagogue, the polite rabbi’s mood quickly shifted.

“Next time don’t walk into my office, make an appointment. And you won’t get one, because I don’t talk to reporters,” he said, defending Sater. “You’re looking to dig up dirt on somebody — that happened 20 years ago, 15 years ago, maybe you’ll get a story. And maybe he won’t be able to move on with his life. Shame on you!”

Back to Syracuse

Remember Sater’s winning bid in Syracuse? Turns out Paltiel played a role in that deal as well — another thing he wouldn’t discuss in McClatchy’s attempted interview. A Los Angeles rabbi, Mayer Schmukler, granted Sater’s rabbi authority to sign the memorandum of sale on his behalf, auction records show. Schmukler hoped to develop the abandoned facility into a school like the Jewish Educational Trade School he ran in L.A.

“We were working on a plan for it. We had a partnership with another organization and everything, but it went wrong,” Schmukler said in a phone interview, stressing he never had actual ownership of the property now mired in litigation and saddled with unpaid bills.

But partners Schmukler wouldn’t identify backed out after the bid had been won and a deposit placed in escrow, he said. Records show Sater made the deposit, wiring the $250,000 the day after the sale.

“I can’t tell you who the partners were, but I can tell you it was an organization with no rabbis,” he said.

When the deal closed months later, the deed’s recorded owner was Syracuse Center, LLC, an entity incorporated in New York two days earlier

One Cesare Cerrito signed its documents. He was CEO of Triadou, a subsidiary of the Swiss Development Group in Geneva — which, it turns out, had been owned by the Khrapunovs, the fugitive Kazakhs.

SDG was sold to a Swiss businessman that same year but Cerrito had stayed aboard. Lawyers pursuing Ilyas and Viktor Khrapunov allege the sale was just a paper confection, designed to make it look as if they were no longer involved in the company. The Khrapunovs deny this.

Martin Dowd, a senior broker with the commercial real estate firm CBRE in Syracuse, said he received an email in August 2015 from a man who declined to share his surname but identified himself as “Ilyas.” The man, writing from an encrypted address, sought help listing the property for sale. Dowd said he did so in January 2016.

In March of this year, real estate investor Marc Webster made a $3.5 million offer on the parcel. The faraway owner or owners accepted, he said, at $2.3 million above what Sater had bid at auction. But the purchase agreement was never returned with a signature, Webster said, even though he offered a $50,000 non-refundable deposit.

“The deal took an unusual course,” Dowd said of the rejection of Webster’s offer. “We brought them a full-price offer, and they said they changed their mind and didn’t want to sell.”

Four years later, the still-vacant building in the central New York city of Syracuse — where all three Sater daughters have gone to college — is mired in litigation over thousands of dollars racked up in liens; plaintiffs claim the ownership is shrouded in such secrecy they can’t collect.

Even the groundskeeper said he hasn’t been paid.

"Well I'm (expletive) on a shingle," said Mike Ciaramella maintaining he’s owed for several years of property upkeep. “Nobody ever came to the property, and I never really knew who the real owners were.”

Gabrielle Paluch is a special correspondent

Kevin G. Hall: 202-383-6038, @KevinGHall

Ben Wieder: 202-383-6125, @BenBWieder

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