Feds Say Condo Involved In NYC's Largest Foreclosure Tied To Nigerian Corruption Case

New York City real estate, particularly the luxury market, is a popular refugee for world’s corrupt, self-dealing public servants and the crooked businessmen who bribe them. China cracked down on wealthy citizens seeking to stash their wealth in international real estate by adding several deterrents to its capital controls earlier this year (Among them, Chinese investors moving money out of the country must now sign a pledge saying it won’t be used to buy real estate, or investment securities). Shortly after, the New York real-estate – literally half a world away – was rattled by a crush of stalled deals.  

So, it’s unsurprising that the mystery behind the largest residential foreclosure auction in NYC history would have this kind of sordid backstory. Last month, we met Kola Aluko, a Nigerian oil magnate and the purported owner of One57’s Apartment 79, a $50 million apartment that will be sold next week in what appears to be the largest foreclosure auction in New York City history.

And now the US government has added a new twist: In a lawsuit filed Friday in Houston by the Justice Department’s Kleptocracy Asset Recovery Initiative, the Feds are seeking to recover $144 million in assets, including proceeds from a luxury condominium on Manhattan’s Billionaires’ Row in New York, which prosecutors claim were spoils from bribes paid for Nigerian oil contracts, according to Bloomberg.

The targets of the suit were none other than Aluko and another Nigerian businessman, Olajide Omokore. However, judging by the government’s price tag, Aluko’s assets – including the One57 condo and Aluko’s $80 million yacht, 213-feet (65 meters) luxury yacht the Galactica Star – appear to be the focus of the suit. In the past, Aluko would frequently rent out his yacht to his friends. In 2015, Jay-Z and Beyonce rented it for the bargain-basement price of $900,000 per week to sail around the Mediterrainean.

The Justice Department alleges that two Nigerian businessmen made corrupt payments to a Nigerian official who oversaw the country’s state-owned oil company in exchange for contracts, according to Bloomberg. The official used her influence to direct contracts to two of their shell companies -- Atlantic Energy Drilling Concepts Nigeria Ltd. and Atlantic Energy Brass Development Ltd. -- through a subsidiary of the Nigerian National Petroleum Corp, according to the complaint. The companies failed to abide by the terms the contracts, yet were permitted to sell more than $1.5 billion worth of Nigerian crude oil, the U.S. alleges. They then laundered the money through the US.

"Corrupt foreign officials and business executives should make no mistake: if illicit funds are within the reach of the United States, we will seek to forfeit them and to return them to the victims from whom they were stolen," Acting Assistant Attorney General Kenneth Blanco said in a statement.

The Justice Department’s recovery lawsuit comes just days before Aluko’s penthouse at One57, one of Manhattan’s most expensive buildings, is scheduled to be sold at a foreclosure auction forced by his mortgage lender, the Luxembourg-based Banque Havilland SA, which said in court filings earlier this year that he failed to pay back the full loan amount in September.

As we’ve previously noted, Aluko took out an 'unusually large' ($35.3 million) mortgage with an even more unusual term: one-year.

Aluko’s condo is a full-floor, 6,240-square-foot (580-square-meter) penthouse that was the eighth-priciest sold in the building located at 157 W. 57th Street, just across the street from Carnegie Hall, according to real estate data firm PropertyShark.

Now of course one lawsuit doesn’t necessarily prove that a market is infested with criminality, but the opaque nature of real-estate transactions, and the ease with which buyers and sellers can conceal their true identities behind LLCs, make buying real estate in a market like NYC an attractive option for any would-be money launderer.

And while one foreclosure certainly doesn’t signal that the market is collapsing, there are other more worrying trends in NYC luxury real estate. As we’ve previously noted, buildings like One57 are struggling with unsustainable vacancy rates. To wit: Nearly 40% of apartments in one comparable building remained on the market years after it had opened.

As Bloomberg points out, One57, along with a cluster of ultra-high end luxury buildings around Central Park collectively known as “Billionaire’s Row,” has become a symbol of New York’s luxury-development boom -- and eventual slowdown. The tower, which broke ground in 2009, drew investors willing to pay large sums for lavish residences they rarely lived in, inspiring other developers to build similar offerings, creating an effective “Billionaires' Row” along West 57th Street. One57 still holds the record for the most-expensive residential sale in New York in December 2014 at $100.5 million.

The bribes were paid between 2011 and 2015 to Diezani Alison-Madueke, then Nigeria’s minister for petroleum resources, according to the complaint. The defendants are accused of spending millions to fund a lavish lifestyle for Alison-Madueke. They acquired real estate in London that was used by the minister and her family, and bought her more than $1 million of furniture and artwork from several stores in Houston, Texas, the complaint said.

We wonder: In what tony neigborhood is her apartment?
 

Comments

LA_Goldbug Jul 17, 2017 3:14 AM Permalink

This is truly funny.

I bet that for years they knew who was putting what where and did nothing. Now that the financial shit storm is kicking into overdrive they are vacuuming those dollars wherever they can and however they can. They did a beautiful job on the Swiss (who fk-ed themselves by opening in US) and now a target of opportunity has been located, The Idiots from Nigeria.

"a $50 million apartment that will be sold next week "
I bet Kushner will be buying it for $1 million.

chosen (not verified) Jul 17, 2017 12:59 AM Permalink

You mean I am not going to make any money from that $100,000 I sent to a Nigerian prince.

adr Jul 16, 2017 11:28 PM Permalink

Did he bankroll the production of the Niger Delta Avengers or whatever?Heard they're back now that oil was in danger of dropping below $40.But they dissappeared again with oil safely above $47 heading back to the $50s.Come on Giant Meteor!!! Can't wait for our government brought to you by the producers of Fox summer reality TV! Remember the Man vs Beast, The Swan, and the rest of the Wall Mart crowd pleasers. Fuck America. It's dead. 

CheapBastard Joebloinvestor Jul 16, 2017 11:15 PM Permalink

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The US is a good place for bad people to stash their money America vows to promote financial transparency, yet it will let just about anyone register an anonymous shell company. When Viktor Bout — the arms dealer extraordinaire who inspired the 2005 Nicolas Cage movie "Lord of War" — sought to set up anonymous shell companies, according to a Senate panel, he turned to, of all places, the U.S. http://www.msn.com/en-us/money/markets/the-us-is-a-good-place-for-bad-p…

In reply to by Joebloinvestor

lamont cranston Jul 16, 2017 11:11 PM Permalink

Wow. Used to date a woman who was the co-op pres at 205 E 77th (Apt 8A, Dover House). We stay in touch. She'a Hiilarycrat. I'm the opposite.She hates what has happened to her town. We have zero problems here in the Blue Ridge Mtns.   

LetThemEatRand Bigly Jul 16, 2017 11:24 PM Permalink

Don't Trump and his son-in-law own a few buildings in NYC?  The real scandal if everyone in power were not in on it would be the money laundering that is going on in NYC, Vancouver, Toronto, San Fran, and many other places.  But the club is in on those deals, so we are left with arguing about Russiagate.

In reply to by Bigly