The calls came from New York and Miami, two hotspots popular with wealthy Russians, a possible sign of what could become the rapid sale of luxury homes, beachfront properties and city rooftop apartments as the Russians scramble to get ahead of international sanctions.
“People like that get their handlers called,” Elliott said of the Russian owners. They asked, “If I were to sell, how quickly could you sell this and how quickly could you sell that?” »
“It’s interesting how the feelers come out,” he noted. “Maybe this is the start of the rush.”
The impact of coordinated US, UK and EU sanctions has sent shockwaves through Russia’s elite as oligarchs, some targeted and others taking action in anticipation of what that could happen, are looking to move yachts, shed assets and adapt to a wave of sanctions faster than usual and heavier than before.
“It’s a very worrying time if you’re a Russian billionaire,” former State Department official Max Bergmann said. “Lawyers are busy right now, trying to figure out how to remove oligarchs from various boards and how to dispose of assets in the United States.”
“We get a new investigation every hour,” said Erich Ferrari, an attorney who represents foreign companies and individuals in the sanctions. “The phone kept ringing with people around the world who have been sanctioned or whose parent company has been sanctioned.”
Financial institutions in jurisdictions where there are no sanctions, such as the United Arab Emirates, are following the lead of the United States and the European Union and freezing accounts held by Russians, Ferrari said. Some Caribbean countries — where Russian-controlled entities have domiciled offshore companies for secrecy — will no longer serve as secretaries-general for those entities, leaving many of them unable to operate, Ferrari added.
“I don’t remember a program” of international sanctions, said Ferrari, which “sent everyone to a frenzy”.
“It caused a sudden panic,” Bergmann noted, “because the old guard class, I think, interestingly enough, didn’t know that this [invasion] was coming, and I think they were surprised that (Russian President) Vladimir Putin finally decided to invade.”
Bergmann explained that an oligarch may eventually take legal action to try to stop the sanctions, but in the short term, these Russian billionaires sell and ship.
“What you’re already seeing are oligarchs freaking out about this and moving their yachts to places where they can’t be extradited,” Bergmann said. “We have seen yachts start sailing to Montenegro, where there is no extradition treaty.”
“We will spare no effort in our efforts to investigate, arrest and prosecute those whose criminal acts allow the Russian government to continue this unjust war,” Attorney General Merrick Garland said when announcing the new task force.
Experts watching the effort unfold across multiple government agencies — the Treasury and Justice Departments at the forefront — say the degree of coordination is unprecedented and signals a determination to tackle these oligarchs and any activity illegal with renewed force.
“It can take a bit of prosecutorial and regulatory clout to apply sanctions to extraordinarily wealthy people who have a lot of resources,” said Edward Fishman, a former Russian State Department sanctions official. “By putting together this high-level task force that is clearly overseen by some of the most senior people in the Biden administration, I think that signals that they’re going to be pursuing these sanctions quite aggressively.”
Many oligarchs use shell companies that protect their property, leaving authorities to unravel a layer of businesses before discovering the true owner.
“Part of the reason we haven’t seen a lot of lawsuits is that these oligarchs are extremely wealthy and while many are committing white collar crimes, they hire very expensive lawyers to make it right” , said Bergmann, the former State Department official.
“What the oligarchs have done is just not worth the time for law enforcement to pursue them,” Bergmann said. “And what Biden said is no, no, no, we’re going to buy time and we’re going to dedicate the assets, and we’re going to dedicate the people to really start opening the books, knocking on doors, and seeing what we find.”
This crackdown could eventually cause upheaval in Russia, experts warn. “A problem for Putin is that he has a very angry class of people who are very rich and powerful who are all going back to Moscow and St. Petersburg, and they don’t want to be there,” Bergmann said.
One area of possible vulnerability for Russians in the United States is the millions of dollars Russian oligarchs have invested in real estate in New York, Miami and elsewhere.
Elliott of Nest Seekers International said wealthy Russians are savvy and he predicted: “These guys are going to be liquidated because they’re smart. They’ll put it at least 20% below market price because at the end of the day 80% of something is better than… nothing.”
Time is running out for some Russians who are not currently sanctioned but fear they may be next.
“As of today, there is nothing illegal about liquidating your assets,” Elliott said.