The calls came from New York and Miami, two hot spots popular with wealthy Russians, a possible sign of what may become the rapid sale of luxury homes, beachfront properties and apartments in the cities’ skylines as Russians scramble to get ahead of international sanctions.
“People like that have their handlers call,” Elliott said of the Russian owners. They asked, “‘If I was to sell, how fast could you sell this and how fast could you sell that?'”
“It’s interesting how the feelers are going out,” he noted. “Maybe that’s the beginning of the scramble.”
The impact of coordinated sanctions from the US, United Kingdom and European Union has sent shockwaves through the Russian elite as oligarchs, some targeted and others taking steps in anticipation of what could come, look to move yachts, shed assets and adapt to a wave of sanctions that have come swifter than usual, and are more expansive than before.
“This is a very worrying moment if you’re a Russian billionaire,” said former State Department official Max Bergmann. “Lawyers are busy right now, trying to figure out how to expunge oligarchs from various company boards and how to divest assets in the United States.”
“We’re getting a new inquiry every hour,” said Erich Ferrari, a lawyer who represents foreign companies and individuals in navigating sanctions. “The phone has been ringing off the hook with people all around the world who have been sanctioned or their parent company has been sanctioned.”
Financial institutions in jurisdictions where there are no sanctions, such as United Arab Emirates, are following the lead of the US and European Union and freezing accounts held by Russians, Ferrari said. Some Caribbean countries — where Russian-controlled entities have domiciled offshore businesses for secrecy — will no longer serve as corporate secretaries for such entities, leaving many of them unable to operate, Ferrari added.
“I don’t recall a program” of international sanctions, Ferrari said, that “has sent everybody scrambling.”
“This caused a sudden panic,” Bergmann noted, “because the old guard class, I think, interestingly enough, didn’t know that this [invasion] was coming, and I think they were surprised that (Russian President) Vladimir Putin ultimately decided to invade.”
Bergmann explained that an oligarch can ultimately sue to try to stop the sanctions, but in the short term, these Russian billionaires are selling off and shipping out.
“What you’re seeing already are oligarchs freaking out about this and moving their yachts to places where they can’t be extradited,” Bergmann said. “We’ve seen yachts start to sail for Montenegro, where there’s no extradition treaty.”
“We will leave no stone unturned in our efforts to investigate, arrest and prosecute those whose criminal acts enable the Russian government to continue this unjust war,” Attorney General Merrick Garland said when announcing the new task force.
Experts watching the effort unfold across multiple government agencies — the Treasury and Justice departments at the forefront — believe the amount of coordination is unprecedented and signals a determination to go after these oligarchs and any illegal activities with renewed force.
“It can take quite a bit of prosecutorial and regulatory heft to enforce sanctions on extraordinarily wealthy individuals who have a lot of resources,” said Edward Fishman, a former State Department Russia sanctions lead. “By putting together this high-level task force that clearly has oversight by some of the most senior officials in the Biden administration, I think it signals they are going to enforce these sanctions quite aggressively.”
Many oligarchs use shell companies that shield their ownership, leaving authorities to untangle a layer of companies before discovering the true owner.
“Part of the reason why we haven’t seen a lot of legal action is because these oligarchs are extremely rich and even though many are committing white-collar crime, they hire really high-priced lawyers to do things correctly,” said Bergmann, the former State Department official.
“What oligarchs have done is just make it not worth law enforcement’s time to pursue them,” Bergmann said. “And what Biden has said is no, no, no, we’re going to make time and we’re going to devote the assets, and we’re going to devote the people to really start opening up the books, knocking on doors, and seeing what we find.”
This crackdown could ultimately cause upheaval within Russia, experts warn. “One problem for Putin is that he has a very angry class of people who are very rich and powerful that are all returning to Moscow and St. Petersburg, and they don’t want to be there,” Bergmann said.
One possible area of vulnerability for Russians in the US is the millions of dollars Russian oligarchs have poured into property in New York, Miami, and elsewhere.
Elliott, of Nest Seekers International, said wealthy Russians are savvy and he predicted, “There’s going to be liquidation from these guys because they’re smart. They’ll put it at least 20% below market price because at the end of the day 80% of something is better than … nothing.”
Time is of the essence for some Russians who are not currently sanctioned but may be worried that they’re next.
“As of today, there’s nothing illegal about liquidating your assets,” Elliott said.