Sunday, August 19, 2018
Politics

Why did Russian oligarch pay so much for mansion owned by Trump?

PALM BEACH — Why did a Russian oligarch pay now-President Donald Trump $95 million for his Palm Beach mansion?

Almost a decade later, the answer is less clear than it was at the time of the sale, the largest price paid for a Palm Beach home.

In 2008, Dmitry Rybolovlev bought the Palm Beach mansion owned by Trump for $13 million more than the most expensive Palm Beach mansion sale up to that moment. It's been almost a decade since the sale, but the transaction is newsworthy again as new questions surround contacts between members of Trump's administration and Russian government officials.

Last week, a Rybolovlev spokesman said his client, who made his fortune in fertilizer potash, purchased the former mansion at of 515 N. County Road for his family's trust.

"The property was acquired for investment purposes by the Rybolovlev family trust, as was clearly stated at the time of the purchase in 2008," according to Brian Cattell, a New York-based spokesman for Rybolovlev.

But this is not what Rybolovlev's representatives said in 2008, when Rybolovlev purchased the 62,000-square-foot mansion formerly known as Maison de L'Amitie, or House of Friendship.

In 2008, Rybolovlev characterized the purchase as a company investment: "This acquisition is simply an investment in real estate by one of the companies in which I have an interest," Rybolovlev said at the time through a spokesman for Uralkali, the fertilizer company he previously owned.

Rybolovlev added that he didn't plan to live in the United States.

Nonetheless, he went ahead and paid an exceptionally high, $50 million premium to Trump, then a real estate tycoon and reality show host, for a property he never sought to live in, not even on a part-time basis.

It was a Rybolovlev entity, County Road Property LLC, that bought the property. Its ownership subsequently was transferred to a trust.

But not before Rybolovlev had disavowed any interest in the property during his messy divorce from now-ex-wife, Elena.

•••

In her 2009 lawsuit, Elena said Dmitry "has a history of secreting and transferring assets in order to avoid his obligations" — including paying her money as part of their divorce. As a result, she filed a legal action in Palm Beach County Circuit Court to claim her share of the Palm Beach mansion.

At the time, Rybolovlev was on Forbes' list of the world's billionaires at No. 59, with an estimated net worth of $12.8 billion.

In 2011, court documents in his divorce stated that "Mr. Rybolovlev has not purchased or managed any real estate in Florida for investment purposes, either directly or indirectly," according to a motion filed in the divorce case.

That was news to Trump.

"Somebody paid me $100 million," Trump told a Palm Beach Post reporter in February 2011.

Trump made a hefty profit on the flip: He had scooped up the estate for $41.35 million in 2004 out of health care magnate Abe Gosman's bankruptcy filing. In essence, Trump sold for more than double what he had paid four years before.

Prior to the Trump sale, which at the time was the highest price paid for any single-family home in the country, the most expensive home sold on Palm Beach had been an estate at 1236 S. Ocean Blvd. That property traded hands for $81.5 million earlier in 2008.

Throughout the divorce litigation, Rybovlovlev gave his wife's attorneys differing reasons for the mansion purchase, said David Newman, a partner with Sills, Cummis & Gross in New York.

At various times in court records, Rybolovlev said the house was for investment purposes, then said it would be for his children, or maybe an inheritance, or it might be used in connection with his daughter because she was an equestrian, according to Newman.

There's also the issue of Rybolovlev's marital status, "and whether he was trying to protect his assets in connection with a divorce-mode situation," said Newman, who represented Elena.

Newman said he found the whole deal curious: "It was out of the ordinary because of the uniqueness of the property, the speed of the transaction," and the fact that Newman's team never was able to uncover any evidence that Rybolovlev had performed any professional reviews of the property.

"If someone is paying $90-something million, more than anyone else has ever paid for a private residence, one would think they might look around and do a little due diligence, or even have an inspection," Newman said.

But Newman said his team never found any evidence Rybolovlev hired experts to weigh in on the property's condition as a residence -- or its value as a teardown -- before he bought the place.

The Rybolovlev's divorce was finalized in 2014, with a record $4.8 billion awarded to Elena. That amount subsequently was slashed to $604 million by a judge in 2015, then later settled privately.

•••

In addition to the mansion intrigue, Rybolovlev and Trump recently have drawn attention in another peculiar way.

Federal Aviation Administration records reviewed by the Palm Beach Post and other news outlets have tracked Rybolovlev's private plane to cities where Trump has traveled, during his campaign and into his presidency.

In October, for example, Trump appeared at a campaign rally in Las Vegas. Rybolovlev's plane arrived in that city an hour after the campaign event started.

A month later, FAA records show Rybolovlev's plane, an Airbus 319, also landed in Charlotte, N.C., 90 minutes before Trump's plane arrived. Trump was scheduled to host a campaign event there that day -- Nov. 3 -- five days before the presidential election.

The latest juxtaposition of Trump's and Rybolovlev's aircrafts occurred last month, the weekend of Feb. 10-12, when the oligarch's plane landed at Miami International Airport while Trump was at Mar-a-Lago entertaining Japanese Prime Minister Shinzo Abe.

Cattell said none of the conjectures about his client are true, including stories of the men perhaps having rendezvous before or after the election. Trump has said he has never met Rybolovlev, who was represented by a real estate broker in the mansion sale.

"We are aware of a number of rumors and far-fetched theories circulating but none of them has any basis in fact," Cattell said. "Mr. Rybolovlev has never met Donald Trump."

As for Rybolovlev's Palm Beach mansion, it's been demolished and divided into three lots. The northern-most lot sold for $34.34 million, according to the Palm Beach Daily News.

The vacant property's hefty price is proof the acquisition price, although steep, was worth it, according to Cattell.

"Given the ongoing sale process ... there is every chance the investment in the property will yield a good return," Cattell said.

And even though Rybolovlev paid an astronomical $95 million for the house, Cattell said his client still got a good deal.

"The original asking price for the home was significantly higher than the price that was eventually paid, and that final price followed the back and forth of negotiation," Cattell said.

In fact, the asking price was $100 million, cut from a previous sales price of $125 million after the property languished on the market for a couple of years with no takers.

When the deal finally closed, the sale was recorded at $95 million, down $5 million from the ask.

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