Olympic Tower stands 620 feet tall at the corner of Fifth Avenue and 51st Street, in the heart of Midtown Manhattan. The lobby is empty, save for a well-heeled apartment broker. Does anyone actually live here?
An apartment on the 48th floor is for sale. Look out the window, and there’s the Empire State Building. Look down, and there’s the cross on the roof of St. Patrick’s Cathedral. “It’s the only place where you can look down on God,” says the broker.
The apartment was once owned by the actor Nicolas Cage. When he had tax troubles, he supposedly sold it to a Saudi prince, but the prince never moved in. It was then sold to an Indian banker, who bought it for $8.6 million in 2015. It’s now on the market for $14.95 million. “I love the apartment,” says the banker, “but I already own another in the building, where my daughter now lives, as well as homes in Connecticut, Paris, and India.”
Aristotle Onassis unveiled Olympic Tower in the early 1970s as the original condominium where the global rich could stash their cash. But it didn’t just attract Hollywood stars and respectable businessmen. Buyers have also included arms dealers such as Adnan Khashoggi, dictators such as Ferdinand Marcos and his wife, Imelda, and, more recently, convicted felons like Anne Hathaway’s ex-boyfriend the “Vati-Con” real-estate scammer Raffaello Follieri, who kept a closet in his office filled with priestly robes for his criminal associates to wear when impersonating Vatican officials.
Nearly 50 years after Onassis created Olympic Tower, this part of Manhattan is a forest of luxury high-rises built specifically for foreign money. The sheer abundance of them is one of the main reasons why Treasury Secretary Janet Yellen declared earlier this year that “the best place to hide and launder ill-gotten gains is actually the United States.”
However, a big change is coming. A new Treasury rule—likely to be announced within weeks—could significantly curb money-laundering. It will require real-estate professionals to reveal to the Treasury’s Financial Crimes Enforcement Network (FinCEN) the owners of any companies buying properties with cash, ridding them of their anonymity.
“If Treasury gets this rule right, they can help stop money from the C.C.P. [Chinese Communist Party], Russian oligarchs, Venezuela’s narco-government officials, and others from laundering money,” says Scott Greytak, director of advocacy for Transparency International U.S., an anti-corruption organization.
This isn’t the first time the U.S. has tried to stop its real estate from being bought by shadowy criminal powers. After 9/11, Congress passed the Patriot Act, which included legislation to curb terrorists’ use of the American financial system. But the real-estate industry as well as hedge funds, private equity, and art dealers have received “temporary” exemptions to the Anti-Money Laundering Act every year since.
In 2016, another attempt was made to reveal anonymous property buyers, with the Treasury’s implementation of Geographic Targeting Orders (G.T.O.’s), which require U.S. property-title insurers to report the beneficial owners of shell companies buying residential properties with cash. But the program remains limited. Although G.T.O.’s now cover more than 30 areas, from cities such as New York, Miami, Los Angeles, and Chicago to the Hawaiian Islands and even Litchfield County, in Connecticut, it isn’t national law. What’s more, it has to be renewed every six months by Congress and has obvious loopholes.
For example, while New York is on the G.T.O. list, New Jersey isn’t. That may explain why Chinese national Guo Wengui, Steve Bannon’s former business partner, who is currently being held without bail in a U.S. prison facing a $1 billion fraud-conspiracy charge, bought a $26 million mansion in Mahwah, New Jersey, allegedly with dirty money.
This coming January, another attempt to halt corruption and money-laundering in the real-estate market and other industries is scheduled to begin, when the U.S. is slated to create a registry for all anonymous, American-based shell companies. The registry is expected to contain personal information on the owners of, reportedly, at least 32 million U.S. businesses. But the final registry is going to be a watered-down version of what was originally proposed. It will be accessible only by law enforcement, not the public, and anti-corruption activists say that FinCEN doesn’t have the staff or funding to act on the registry’s information.
What’s more, it doesn’t stop the huge problem of anonymous companies registered outside the U.S. buying real estate inside the country, argues Jack Blum, an expert on financial crime and money-laundering, whose work investigating the Lockheed bribery scandal, in the 1970s, led to the passage of the Foreign Corrupt Practices Act. “The American Bar Association fought to keep the registry as tight as it can be, as a way to protect the secrecy they have been selling,” says Blum. “I feel they should not be in this business, but I’m a minority.”
Hedge funds, private equity, and art dealers have received “temporary” exemptions to the Anti-Money Laundering legislation.
The massed forces of foreign wealth that anti-corruption activists face are considerable. In the wake of the Pandora Papers, in 2021—the millions of leaked documents that revealed the extent to which the global rich hide their billions—the Enablers Act was passed in the U.S. House of Representatives, a rare moment of bipartisan legislation, described by Greytak as “the single most important anticorruption measure the United States Congress can adopt right now to prevent corrupt Russian officials and future kleptocrats from hiding and growing their dirty money in the United States.”
The Enablers Act was designed to force lawyers, real-estate brokers, and accountants to abide by the same anti-money-laundering regulations that U.S. banks must follow. But it was killed in the U.S. Senate, allegedly by former Republican senator Patrick Toomey, who in March 2023 accepted a cushy board appointment to Apollo Global Management, which has long had close ties to Russian kleptocrats. (Apollo’s former C.E.O. and co-founder Leon Black, whose relationship with Jeffrey Epstein has been extensively covered in Air Mail, served on Vladimir Putin’s Russian Direct Investment Fund’s international advisory board.)
Still, incremental steps are being taken. While anti-corruption activists wait for the federal government to act, New York’s state government recently passed the LLC Transparency Act, which requires the disclosure of all beneficial owners of limited-liability corporations. It is currently waiting for Governor Kathy Hochul’s signature. What’s more, this registry will be made public and searchable.
“It’s bad for developers,” says top real-estate broker Dolly Lenz, “but for people who live in New York buildings, it is super-important. We want to know who our neighbors are.” Indeed, the bill’s sponsor, State Senator Brad Hoylman-Sigal, linked it to the war in Ukraine, stating, “These oligarchs who have stolen money from the Russian people are propping up Putin in the meantime. That money needs to be exposed and returned.”
What a difference a decade makes. Ten years ago, the then mayor Bloomberg said in an interview with New York magazine, “Wouldn’t it be great if we could get all the Russian billionaires to move here?” Now the city wants them gone as it tries to end, or, at least significantly curb, their ability to launder money through real estate.
But is it too late? The Russian and other foreign billionaires have become so entrenched in American institutions that they have been able to influence the very legislation intended to curb them, anti-corruption activists say.
“Capitalism has bought democracy,” says Raymond Baker, author of Invisible Trillions: How Financial Secrecy Is Imperiling Capitalism and Democracy—and the Way to Renew Our Broken System. “It’s an existential problem. Capitalism and democracy should be working in sync. Instead, they are becoming decoupled.... The shenanigans that go on in real estate are just the tip of the iceberg.”
Will the pending legislation help curb the problem? “It’s a step in the right direction,” Baker says. “A full-fledged beneficial-ownership registry that is publicly and electronically available is the only way to begin to rebuild some transparency and accountability in capitalism.”
Jack Blum is more circumspect. “All you can do is gain ground temporarily, as the bad guys will always figure out something new,” he says. “You are permanently matching wits with some very smart people. But it will become more difficult and costly for people to launder money. Will it stop it? No. But maybe some of it.”
And it might just mean a few more apartments for sale in the lofty heights of Olympic Tower.
Jennifer Gould covers real estate and food for the New York Post. She is currently working on a book about covert foreign influence in the United States.