During Chen Shui-bian’s second term as Taiwan’s president, several people lugged five or six fruit boxes into the presidential residence in Taipei. Inside the crates was 200 million in New Taiwan Dollars (about US $6 million) courtesy of Yuanta Securities, a financial firm involved in a contested merger.
Intended as a bribe for first lady Wu Shu-jen—with the hope she would prevail upon her husband to intervene on Yuanta’s behalf—the cash followed a circuitous path thereafter. It was held in a bank vault in Taipei along with other piles of loose cash that the first lady described as “political donations.” Later, much of the cash in the vault was stuffed into seven suitcases and stored in a basement at the home of a Yuanta executive. It was moved through banks in Hong Kong and the United States, then landed in a Swiss account controlled by the first couple’s son.
In the spring of 2008, a chunk of that money was wired into an account in Miami, where it was used to buy a $1.6 million apartment in Manhattan’s Onyx Chelsea, a residential and commercial tower described by its promoters as “an elegantly-layered sculpture of glass, metal and granite illuminated at night by vertical bands of light.” Amenities included radiant-heated bathroom floors and rooftop terraces with dramatic views of the Empire State Building.
The journey of Wu Shu-jen’s ill-gotten cash illustrates one of New York’s dirty secrets: high-end real estate in the city is an alluring destination for corrupt politicians, tax dodgers and money launderers around the globe.
Since 2008, roughly 30 percent of condo sales in pricey Manhattan developments have been to buyers who listed an international address—most from China, Russia and Latin America—or bought in the name of a corporate entity, a maneuver often employed by foreign purchasers. Because many buyers go to great lengths to hide their interests in New York properties, it’s impossible to put a number on the proportion laundering ill-gotten gains. But according to money-laundering experts as well as court documents and secret offshore records reviewed by the International Consortium of Investigative Journalists, New York real estate has become a magnet for dirty money.
Public officials and real-estate operatives in New York have mostly applauded the city’s influx of mega-rich homesteaders from overseas, with former Mayor Michael Bloomberg leading the chorus during his time in office. “Wouldn’t it be great if we could get all the Russian billionaires to move here?” he told New York magazine in September.
Combine that give-us-your-rich ethos with state and local policies that lavish tax breaks on Manhattan’s wealthiest homeowners and federal policies that let real estate agents off the hook, and the results are predictable: New York is a magnet for the super-rich homebuyers from other lands bearing money of sometimes dubious provenance.
Jaikumar Ramaswamy, chief of the US Justice Department’s anti–money laundering section, says oligarchs and despots like to put their money into high-end real estate for a number of reasons: they need an escape option if things take a turn for the worse in their home countries; they want to park their assets in an investment that’s known to preserve value; and they want to be able to enjoy and flaunt their wealth. “They’re not buying real estate in Detroit,” he says. “They’re buying in places that give them some sort of status: London, Paris, New York, Malibu.”