Ex-Trump Associate Felix Sater Loses Money-Laundering Trial

(Bloomberg) -- Felix Sater, the Moscow-born deal maker who was once part of Donald Trump’s inner circle, lost a civil trial in which he was accused of helping a wealthy Kazakh man launder millions of dollars through US real estate including condos at the Trump SoHo tower.

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A federal jury in Manhattan issued the verdict Wednesday in favor of the city of Almaty, Kazakhstan, and one of the country’s biggest lenders, BTA Bank, awarding more than $32 million in damages, including interest, according to the lawyer for the plaintiffs, Matthew L. Schwartz of Boies Schiller Flexner LLP.

The loss in court is a setback for Sater, a controversial real estate operative who once had offices at Trump Tower. “I reject the verdict and will be appealing,” Sater said in a telephone interview. The verdict has yet to be posted on the court docket.

“We are privileged to have been able to present this evidence to a US jury, and are thrilled with the verdict in favor of our clients, including the jury’s imposition of punitive damages for the deliberate and particularly morally culpable conduct of Felix Sater,” said Schwartz, Boies Schiller’s chairman-elect and managing partner.

Global Recovery Effort

Almaty and BTA claimed that Sater helped Ilyas Khrapunov launder a portion of the roughly $6 billion allegedly looted from the bank by his father-in-law, former BTA Chairman Mukhtar Ablyazov, in the years before the financial crisis. The case is part of a global effort by BTA to recover the money, which was allegedly siphoned from the bank through a web of shell companies and bogus loans.

Almaty alleges some of the laundered money was stolen from the city by Khrapunov’s father, when he was mayor, through corrupt sales of municipal land.

Sater, who as late as 2011 was handing out business cards identifying himself as a “Senior Advisor to Donald Trump,” denied the allegations. But he testified that he lied when he helped Khrapunov conceal his role in lucrative deals to dodge a worldwide freezing order that tied up his family’s assets. Sater allegedly made millions in the process.

“I wasn’t legally obliged to tell the seller, the buyer of anything, to tell anyone of dirty laundry of a deal I was working on,” Sater testified on June 18 during a nearly three-week trial. “They had a due diligence department. If they found it, they found it. If they didn’t find it, they didn’t find it.”

The investments at the center of the case included several units at Trump SoHo, an Ohio mall and private equity deals.

Trump Adviser

Trump, 78, isn’t a defendant and isn’t accused of wrongdoing in the case, but the trial put fresh attention on Trump’s dealings as he campaigns to return to the White House, including his ties with Russia before the 2016 election. Sater, who advised Trump on real estate investments and at one point led his failed effort to build a Moscow skyscraper, was one of many witnesses interviewed in Special Counsel Robert Mueller’s probe into Trump’s 2016 campaign.

Sater met Khrapunov in Trump Tower to discuss laundering the allegedly stolen money and personally arranged meetings between the wealthy Kazakh and Trump to discuss possible investments, BTA and Almaty said in the complaint. But the bank and the city went to great lengths in court documents to distance Trump from the allegations.

“There is no suggestion that either Ilyas or Sater disclosed to Mr. Trump the illicit origin of the stolen funds, or that Mr. Trump engaged in any impropriety whatsoever in connection with Ilyas Khrapunov,” according to the lawsuit.

Stabbed Rival Broker

Sater, who worked at Bear Stearns and other Wall Street firms in the 1980s, served time in prison for stabbing a rival commodities broker in the face with a broken margarita glass in a bar fight in Midtown Manhattan in 1991, which led to lasting nerve damage for the victim.

He later pleaded guilty to racketeering for taking part in stock swindles that defrauded investors of more than $40 million. To stay out of prison, Sater worked as an informant to US prosecutors investigating the mob’s role on Wall Street. BTA says Sater turned to real estate after he was banned from selling securities in 1999.

Wednesday’s verdict is the latest legal twist for one of the more colorful people in Trump’s orbit. BuzzFeed News in 2018 reported that Sater spent more than two decades as an intelligence asset for the US government.

Khrapunov has denied wrongdoing. He previously said that he managed his own family’s investments legally and denied that his Swiss company was a front for his father-in-law or that he had laundered any ill-gotten gains. Ablyazov has also consistently denied wrongdoing.

The case is City of Almaty v. Sater, 19-cv-02645, US District Court, Southern District of New York (Manhattan).

(Updates with BuzzFeed report and case caption in fourth section.)

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