Trump's Would-Be Moscow Partner Faces Ire of Homebuyers

(Bloomberg) -- Demonstrators plan to gather Saturday beneath a thicket of concrete apartment towers rising from the mud in the unfashionable eastern outskirts of Moscow. Their families are supposed to be living inside, but are among the owners of some 5,000 units they say the developer failed to complete on time. Some have appealed to Russian President Vladimir Putin on Youtube. “Help us get our homes,” chanted one group who identified themselves as “deceived investors” in a recent video shot before tower blocks resembling a ghost town.

The sprawling development, called Novokosino-2, is the most significant project to date of a Russian property firm called IC Expert. The firm was to be the partner in a separate venture: Donald Trump’s failed bid during the 2016 presidential campaign to launch “Trump Tower Moscow,” according to a statement given to congressional investigators this week and a person familiar with the effort. Trump’s plans were revealed this week in correspondence from Trump’s longtime business lawyer, Michael D. Cohen, in answering inquiries from investigators looking into Trump’s connections with Russia. As a candidate, Trump said he had “nothing to do with Russia.”

Trump and the company behind the suburban housing development would seem an odd pair. Novokosino-2, the Russian firm’s signature project, with its towers cast in beige and brown, is built among car dealerships and shopping malls in gritty sprawl. It is miles away, geographically, economically and aesthetically, from the proposed site of the abortive Trump Tower development. That was to be built in the glitzy Moscow City district, home to Russia’s tallest skyscrapers, Kremlin spokesman Dmitry Peskov said this week, noting that he had first heard of the plans only because of an email Cohen sent to a general Kremlin address in early 2016. The Trump Organization wanted its tower to reach higher than any of the others.

Board Service

The never-completed tower deal isn’t the only tie between the firms. The Russian developer’s chairman survived the wreckage of one of the country’s biggest real-estate collapses in 2008-9 amid the financial crisis, as did the broker who put the deal together for Trump.

IC Expert’s chairman is a Russian businessman named Andrei Rozov. In 2008, Rozov served on the executive board of a Moscow real estate company called Mirax Group alongside a Russian-born U.S. citizen named Felix Sater, according to multiple Russian press reports at the time about the board appointments. The reports cited a Mirax press release.

Sater, who served as an FBI informant in the prosecution of reputed mobsters on Wall Street after pleading guilty to racketeering in 1998, is a longtime Trump business associate. He brokered the Trump Tower Moscow deal with IC Expert, according to the written statement Cohen gave congressional investigators this week. Rozov himself signed a Oct. 28, 2015 letter of intent for IC Expert on the deal, according to the person familiar with it. Donald Trump’s was the signature for the other side, Cohen told investigators.

Cohen said he pulled the plug on the deal in February 2016 after he didn’t get any response to the email he had addressed to Peskov seeking Kremlin assistance in pushing the project forward.

Reached by phone at IC Expert’s office, a company official declined this week to discuss any possible business IC Expert may have had with Trump and said Rozov has been unreachable since news of the deal was made public.

Compared To Trump

Mirax, where Rozov and Sater served together on the executive board, was headed by a Russian billionaire and property developer named Sergei Polonsky. At the height of his wealth, Polonsky’s larger-than-life persona and braggadocio often drew comparisons to Trump in the media.

Mirax ran into debt troubles after the 2008-9 financial crisis, as Polonsky tried to build Europe’s tallest skyscraper in the heart of Moscow. In July, he was convicted of fraud by a Moscow court, but he was released because the statute of limitations had expired.

Polonsky didn’t respond to an emailed request for comment.

Novokosino-2, the housing project for Rozov’s current company, IC Expert, was drawing controversy in local news reports even as the Trump Organization was signing its deal to develop and build the Moscow tower with the firm. “People started protesting back in 2015 but we see nothing is happening, the promises aren’t being fulfilled,” said Anton Goryainov, one of the protest organizers.

The IC Expert official confirmed there had been construction delays but said the firm was working to finish the remaining apartments.

Though the original completion date was 2015, much of the area still resembles a construction site. Ground hasn’t yet been broken on a school and kindergarten that were to be part of the project, though officials promise those for next year, according to a report in July on the local television station.

Political Partner

Buyers remain skeptical. “Some people have been practically living at the construction site, they were given keys to unfinished buildings,” said Yevgeny Kuts when reached by phone this week. He’s been renting an apartment for his family while they wait for the apartment they bought in the complex that was originally promised in 2015. “Tens of thousands of people have been deceived,” he says.

IC Expert’s construction partner on the housing project also is headed by a man who has long drawn comparisons to Trump in the press. The Moscow-based building firm is called the Avanti Stroi Group, and its website says it’s owned by “entrepreneur, statesman and philanthropist Umar Dzhabrialov.” Dzhabrialov, 59, is the chairman of the Russian-Qatar Business Council, ran unsuccessfully for the Russian presidency in 2000 and later held a seat in the upper house of parliament. He first drew notoriety in the West two decades ago following the murder of his American business partner in Moscow’s Radisson Hotel, an Oklahoman named Paul Tatum.

In Moscow this week, Dzhabrailov was at another hotel, the Four Seasons, just off Red Square. Police detained him late on Tuesday after he allegedly fired a handgun into the ceiling in his room, according to Russian news agencies. Police encountered no resistance from Dzhabrailov or any of his numerous bodyguards, according to TASS, the state-owned Russian news service. He has been charged with “hooliganism.” In an interview with Russia’s REN-TV this week, he said he regretted the incident.

’Not Related in Any Way’

Cohen, the lawyer for the Trump Organization, told investigators his decision to drop Trump Tower Moscow was made from “solely a business standpoint” and had nothing to do with Trump’s campaign. “I did not ask or brief Mr. Trump, or any of his family, before I made the decision to terminate further work on the proposal,” Cohen said in the two-page statement. “The Trump Tower Moscow proposal was not related in any way to Mr. Trump’s presidential campaign.”

Cohen, at Sater’s behest, sent an email in mid-January 2016 to Peskov, Putin’s press secretary, “since the proposal would require approvals within the Russian government that had not been issued,” according to the Cohen statement. “Those permissions were never provided,” Cohen said. His email was addressed to Peskov and sent to a general account at his office for press inquiries.

Peskov confirmed the Kremlin received the email seeking help with a building but said it never responded.

The Washington Post and the New York Times reported this week on details of emails from Sater to Cohen about the project in late 2015, after Trump had launched his bid for the White House. “Our boy can become president of the USA and we can engineer it,” Sater wrote in an email, the Times reported. “I will get all of Putins team to buy in on this, I will manage this process,” he wrote in an apparent reference to the real estate project.

Sater’s project with IC Expert was separate from earlier efforts to build a Trump Tower in Moscow, including one that dated to 2013, when Trump visited the Russian capital for a Miss Universe pageant. Russian developer Aras Agalarov paid $20 million to bring the beauty spectacle there. About a third of that sum went to Trump in the form of a licensing fee, according to Forbes magazine.

Trump also discussed plans for a Moscow tower with Agalarov, but they were shelved months later as the market cooled, Agalarov has said. The beauty pageant is one of several Russia-linked Trump deals that are under investigation by Robert Mueller, the U.S. Special counsel investigating possible ties between the campaign and Russia, Bloomberg reported in July.

To contact the reporters on this story: Alex Sazonov in Moscow at asazonov@bloomberg.net, David Voreacos in federal court in Newark, New Jersey, at dvoreacos@bloomberg.net, Irina Reznik in Moscow at ireznik@bloomberg.net.

To contact the editors responsible for this story: Cam Simpson at csimpson13@bloomberg.net, Ethan Bronner at ebronner@bloomberg.net, Gregory L. White at gwhite64@bloomberg.net.