FinCEN Files: Banks Flagged Felix Sater for $100 Million In Suspicious Activity

Six financial institutions alerted the government to payments that had the hallmarks of financial crime — including millions that passed through an upstate New York mall — but Sater said they’re all legitimate.

Long before he emerged as one of the central figures in then–special counsel Robert Mueller’s investigation of President Donald Trump and Russia’s interference in the 2016 election, Felix Sater was conducting business in ways that US financial institutions considered suspicious.

Between 2013 and 2017, Bank of America, Wells Fargo, American Express, and three others alerted the government at least 10 times to more than $100 million in unusual transactions by Sater, his businesses, his wife’s granola company, and associates that included a powerful political family in Kazakhstan.

The financial records are part of the more than 2,100 suspicious activity reports, or SARs, that BuzzFeed News received and shared with the International Consortium of Investigative Journalists and more than 100 news organizations around the world as part of the FinCEN Files investigation. Banks must file SARs to the Treasury Department's Financial Crimes Enforcement Network, or FinCEN, when they spot the hallmarks of money laundering or other misconduct, but SARs are not in and of themselves evidence of a crime.

Sater’s SARs shed new light on one of the most inimitable figures of the Trump era and his complex and sometimes questionable financial dealings — dealings that, within the span of two decades, almost landed him in prison, restored him to a position of great comfort, and allowed him to rub shoulders with the rich and powerful.

The documents show that he had set up hard-to-track accounts in Switzerland and the British Virgin Islands. He also allowed relatives of a politician later accused of looting public funds to travel the globe on Sater’s credit card. And Wells Fargo reported that it suspected he opened an account for the “sole purpose of layering money,” a key step in the laundering process.

During two weeks of wide-ranging interviews with Sater, BuzzFeed News went through transactions that the banks flagged as suspicious. Amid asides about politics, his childhood, and his plans for the future, Sater said all the transactions were legitimate and that he had not laundered money. He said he believes the banks kept a particularly close watch on him because of his past financial crimes and his role in the special counsel’s investigation.

“I completely understand why I would get flagged in a suspicious activity report,” Sater said. “I understand it. I don’t like it. But I understand it.”

Referring to the massive fines that some financial institutions have had to pay for failing to stop criminal activity, he said: “Think about these banks. Them calling me suspicious is like Willie Sutton calling a pickpocket a criminal.”

Sater is a singular figure: a convicted felon who also helped the US fight financial crime; a guy from Brooklyn who went undercover in Cyprus and Istanbul to catch Russian and Ukrainian cybercriminals; a man who’s always up for a hustle; and someone who blew the whistle on assassination attempts of former president George W. Bush and former secretary of state Colin Powell, according to court documents.

Sater immigrated to the US from Russia when he was a boy. He grew up in Brighton Beach, New York, and went to work as a stockbroker on Wall Street. In 1991, he severely cut a man’s face with a broken margarita glass during a drunken brawl, then spent a short period in jail, and lost his broker's license. So, Sater admits, he turned to a different kind of financial activity: a $40 million “pump and dump” stock scheme that used muscle from New York City mafia families to shake down victims. In 1998 he pleaded guilty to racketeering charges.

He went to work in Russia when the stock scheme began to fall apart. While there, he was recruited to collect information for the US Defense Intelligence Agency. Sater went on to serve for nearly two decades as a confidential source for the FBI and other federal agencies, gathering intelligence on a wide range of fronts, from al-Qaeda to North Korea’s nuclear weapons program, according to court documents unsealed last year. Todd Kaminsky, a former US attorney for the Eastern District of New York, said his cooperation “was of an extraordinary depth and breadth, almost unseen.”

During the years that he was working for the government, however, multiple financial institutions were monitoring his accounts for transactions that looked like they could be related to money laundering. Report after report filed to the Treasury Department — each of which was accessible to his FBI handlers and other law enforcement investigators — shows Sater and his companies behaving suspiciously.

Sater said no one from the FBI ever questioned him about his financial dealings.

More recently, Sater tried, along with Michael Cohen, Trump’s former attorney and fixer, to build a Trump-branded tower in Moscow. In 2015, he wrote to Cohen that he could get buy-in from Vladimir Putin himself and that “we will get Donald elected” in the process. Sater, who denied having anything to do with Russian interference in the election, told BuzzFeed News he was just doing what he’s always done: working a deal.

As part of the election inquiry, the Senate Intelligence Committee asked FinCEN to provide reports on Sater and accounts he controlled dating back to 2012. Like other documents in the FinCEN Files, these reports reveal how suspicious payments crisscross the globe — and also how little banks do to stop them.

Take Wells Fargo, which took four years to alert the US government about suspicious transactions on its books. By the time it sent a report to the Treasury Department, Sater, his associates, and their companies had used the bank to move $16 million in transactions for real estate projects — a shopping center in Cincinnati and another in Syracuse, New York — that both went bust.

Court records claim that one of the companies, Tri-County Mall Investors, purchased the Cincinnati property on behalf of Viktor Khrapunov, the former mayor of Almaty, Kazakhstan’s largest city, and Mukhtar Ablyazov, the former chair of a Kazakh bank, BTA. Both men were convicted in absentia in Kazakhstan: Khrapunov for looting the city and Ablyazov for an elaborate embezzlement scheme.

Iliyas Khrapunov, the son of Viktor Khrapunov, said the SAR was the result of the prosecution, which both he and Ablyazov denounced as politically motivated. “There will always be a SAR report as long as my father-in-law, Mukhtar Ablyazov stays the main political opponent of the Kazakh dictatorship,” he said in a written statement.

Sater, the Khrapunov family, and Ablyazov have since had a falling-out; last year, BTA and Almaty sued Sater, laying out those messy relationships and alleging a series of money laundering schemes. Sater called it a ‘’nuisance suit.’’

From the beginning, Wells Fargo was skeptical about Sater’s accounts, including one for Tri-County Mall Investors. For reasons not explained in the SAR, the bank first turned the company down when it tried to open an account. When Sater tried again later, Wells Fargo approved it. The bank then allowed money to flow back and forth between entities that it believed were shell companies, activity that can be associated with money laundering.

Wells Fargo would not comment on specific transactions, but a spokesperson said the bank “has robust anti-money laundering policies and procedures in place, and we follow all applicable financial crimes-related laws and regulations.”

On Aug. 30, 2013, Tri-County used an account at Chase Bank to send $2.6 million to Bayrock Group, Inc., a company where Sater was a managing director. A week later, Bayrock sent $2.5 million to a Canadian company that the bank believed was set up in such a way as to obscure its “true ownership and purpose of its transactions,” according to the SAR filed by Wells Fargo. Later in September, Tri-County’s Chase account wired an additional $866,000 to Bayrock. On the last day of the month, Tri-County sent more than $1.3 million from its Chase account to its Wells Fargo account.

The final transaction was one week later, when Tri-County used a Wells Fargo account to send $1.75 million to Bayrock. Sater closed that Tri-County account that day. When bank investigators looked years later, the back-and-forth between related accounts — with Sater in the middle — set off alarm bells.

“The overall flows of funds combined with the use of multiple shell companies whose ownership and funds sources are not transparent are consistent with the layering stage of money laundering,” the bank reported.

Sater disputed the bank’s characterization.

“We were just doing a bunch of transactions. It was real estate. I don't remember specifically. But it was related to the mall, Tri-County,” he said.

The same month that Wells Fargo was closing the account, Bank of America was investigating a different flow of money from Sater’s accounts. On Oct. 29, 2013, Sater sent $32 million to his real estate investment company, Sands Point Partners. Three days later, it sent $25 million to a granola company on Long Island started by Sater’s wife.

“The relationship between a real estate investment company and a granola food company does not appear to make business sense,” wrote the compliance team at Bank of America. A lawyer for Sater’s wife, from whom he is separated, did not respond to questions.

What happened next made even less sense to Santander Bank, where the granola company had an account. Nearly two months after the $25 million hit the granola company’s accounts, the bank wrote in a SAR, Sater’s wife went to a branch on Long Island and tried to deposit a $20 million check into an account belonging to Moses & Singer, a Manhattan law firm.

That check bounced, however, so she tried a different way: On Dec. 30, 2013, she wired $15 million from the granola company’s account to the law firm.

“If you’re trying to do something illegal and obscure something, you don’t do it through your own accounts.”

Sater said he was out of the country at the time and sent the money to his wife so she could transfer it to the law firm. That law firm sent the money as a settlement payment with the Khrapunov family, Sater said, and his wife wasn't aware of its intended purpose.

“Here’s what I really, really would like to put a dot on — you would have to be literally just a moron to conduct money laundering transactions through your own company, through your own bank account, where everything is known,” Sater said. “If you’re trying to do something illegal and obscure something, you don’t do it through your own accounts. It’s as simple as that. Guys — think of my history.”

Over the next three years, at least four banks and a credit card company all filed suspicious activity reports on Sater and his companies. Wells Fargo, for instance, documented that it couldn’t figure out why Bayrock, a real estate company, sent multiple transactions totaling nearly $1 million to a children’s clothing retailer in Milan from late 2014 to early 2015. Sater said he believed it was a loan to a relative.

In early 2017, news broke that Sater had invited Cohen and Andrii Artemenko, a Ukrainian politician, to the Loews Regency hotel in Manhattan to discuss a “peace plan” between Ukraine and Russia. American Express looked back through Sater’s records and found a charge for $512.01 at that hotel. A one-time charge for a room at a hotel does not, in itself, suggest money laundering or another financial crime. But it, too, made its way into a SAR, an example of how external events can influence whether a financial institution flags transactions or just lets them glide through.

Sater said the proposed peace plan, which was supposed to be delivered to Michael Flynn during his brief tenure as Trump’s national security adviser, would have been the “most anti-Russian deal of the century.” He also said it could have yielded $1 billion in profit had they been able to follow through and build nuclear power plants in Ukraine.

In August 2017, American Express noticed one more unusual payment: wire transfers totaling $38,000 from a mysterious company, Lit Co LLC. When American Express tried to learn more about it, its team was stumped. Lit Co had no address and no owner. It wasn’t clear that it existed at all.

Sater told BuzzFeed News he is the sole owner of that company, which is actually LitCo LLC — without the space between the first two words. He said he formed it as a limited liability company after he was hired “to assist the city of Almaty and BTA to recover money that was stolen.”

Sater added that in order to “hide my name from the bad guys,” he did not set up the company in his name.

SARs are supposed to be secret documents, held closely by the government and unavailable through public records requests. People who are named in SARs are never supposed to find out, let alone learn of their contents. But hearing in detail about the SARs filed on him, Sater seemed unfazed. He was relaxed and confident, pausing for the occasional smoke or self-deprecating aside.

Sater said if something looked suspicious, it was up to the banks to inquire.

“Why wouldn't somebody just pick up the phone and ask?” he wanted to know. “Mr. Sater, we have a transaction here. It's a large transaction. We’d like an explanation.”

“Simple,” he said. ●

Banks Flagged Felix Sater for $100 Million In Suspicious Activity

Six financial institutions alerted the government to payments that had the hallmarks of financial crime -- including millions passed through an upstate New York mall -- but Sater said they're all legitimate.
Bryan Thomas for BuzzFeed News
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