Syracuse, N.Y. — One of the worst tax-delinquent properties in Syracuse is owned by a company with, of all things, alleged ties to a Kazakhstan corruption scandal.
The huge, vandal-wrecked former Syracuse Developmental Center on the city’s West Side has been owned since 2013 by Syracuse Center LLC, a limited liability company once thought to be owned by a Jewish trade school in California.
But it turns out the center is actually owned by a company that Kazakhstan officials allege to be a shell corporation formed to hide tens of millions of dollars in stolen money, syracuse.com has learned.
The company is Triadou SPV, a holding company incorporated in Luxembourg with an office in Switzerland.
The city of Almaty, Kazakhstan, has alleged that Triadou is one of many foreign shell companies formed by its former mayor, Viktor Khrapunov, and his family to launder $300 million looted from the city during his tenure, which ran from 1997 to 2004.
In a lawsuit in U.S. District Court in the Southern District of New York, Almaty alleges that the shell companies have used the “ill-gotten” money to purchase real estate in the United States, including the former Syracuse Developmental Center. It has sought to block Triadou from profiting from the sale of any of the real estate, including the Syracuse property.
Khrapunov, 70, took office six years after the Soviet Union collapsed and broke into 15 smaller countries, one of them Kazakhstan stretching from the Caspian Sea all the way to China. The years following the collapse led to the rise in the former Soviet republics of oligarchs, politically connected individuals who accumulated vast wealth as state property was privatized.
Almaty, Kazakhstan’s biggest city with 1.8 million residents, said it and other departments of the former Soviet republic began a series of investigations in 2008 into the family of Khrapunov based on allegations that he had “abused his position to transfer public assets to himself and his family members,” according to court documents.
“Almaty and other governmental authorities subsequently discovered that Mr. Khrapunov had looted an estimated $300 million during his tenure as mayor, funneling these assets through his family members into foreign holding companies,” the city said. “In response to this investigation, Mr. Khrapunov fled Kazakhstan to reside in Switzerland, and has not returned to answer these charges.”
Khrapunov and his wife, Leila, were sentenced in October to lengthy prison terms in absentia after a court in Almaty found them guilty of organization of a criminal group, financial fraud and bribe-taking. The couple, who remain fugitives in Switzerland, have called the charges politically motivated.
Triadou was also accused of using embezzled money to purchase a former Manhattan hotel and the Cabrini Medical Center in New York City.
Jumping into this complex international mess, the city of Syracuse is moving to seize the former Syracuse Developmental Center at 800 Wilbur Ave. for $765,089 in unpaid property taxes. But its foreclosure proceeding has been moving slowly because of the property’s murky ownership, according to Syracuse officials.
“We’re actively working on it,” said Honora Spillane, deputy commissioner of the Syracuse Department of Neighborhood and Business Development. “The ownership is extremely complicated.”
Built on the site of a former 19th century asylum, the center sits on 48 acres halfway up a steep, grassy hill between Wilbur Avenue and the Rosamond Gifford Zoo. It features an impressive view of the Syracuse skyline to the east.
Syracuse Center LLC acquired the 628,808-square-foot former home for children and adults with developmental disabilities in a bankruptcy auction for $2.1 million in 2013. It has not paid a dime in property taxes since January 2016, according to the city Department of Finance.
The state opened the center on the site of a former mental health asylum, the Syracuse State School, in the early 1970s and closed it in 1998 as part of a shift toward placing the developmentally disabled in smaller residential facilities in their own communities. New York state sold the center to Syracuse Resort Development Inc. in 2008 for $2.2 million.
The Long Island investors behind Syracuse Resort at first talked about turning it into a resort for disabled people and later expressed a desire to redevelop it as a business park, but those ideas went nowhere.
In 2010, a proposal to lease the facility to the Syracuse City School District for use as temporary classroom space went nowhere as well. Soon after that, Syracuse Resort filed bankruptcy, leading to Syracuse Center LLC’s purchase of the property in 2013.
The true ownership of Syracuse Center has always been something of a mystery because, under U.S. law, the owners behind limited liability companies are not required to disclose their identities.
Adding to the intrigue were the actions of the man who submitted the bid for Syracuse Center at an auction in April 2013 at the Onondaga County Courthouse. After submitting the winning bid of $2.1 million, the man ran from reporters, refusing to identify himself and even hiding his face with an iPad.
A McClatchy DC story in 2017 identified the mysterious man as New York developer Felix Sater, who it said was a two-time ex-con turned government informant and a one-time adviser to Donald Trump.
BTA Bank, once one of the largest banks in Kazakhstan, has alleged that Sater and Ilyas Khrapunov, Viktor Khrapunov’s son, helped to launder some of the $4 billion stolen from the bank by ex-BTA Chairman Mukhtar Ablyazov by investing it in the United States, according to published reports.
U.S. court records show that Sater, a U.S. citizen born in Russia, signed a document in September 2013 authorizing the opening of a business checking account for Syracuse Center. In the document, Sater listed himself as one of Syracuse Center’s managers.
Adding to the mystery was a claim by a California rabbi later in the day. Mayer Schmukler, the founder and director of Jewish Educational Trade School, of Granada Hills, Calif., called a syracuse.com reporter to say the school was the organization behind the limited liability company.
Schmukler said at the time that the school might establish its East Coast campus on the site. But he added that he had not actually seen the property and would try to flip it to another buyer if its condition did not make his development plans feasible.
“We’re not sure about it,’’ Schmukler said. “We’re going to spend the next month or two evaluating.’’
No redevelopment of the property has been attempted. McClatchy DC reported in 2017 that Schmukler said in a phone interview that he never had actual ownership of the property.
Schmukler did not respond to a voicemail or email from syracuse.com last week seeking comment on the current status of his interest in the property.
Syracuse Center continues to be listed in Onondaga County tax records as the owner of the property. But in a challenge to its tax assessment in 2016, Syracuse Center listed itself and Triadou as the property’s owners.
Attorney Sidney Devorsetz, who is representing Syracuse Center in the assessment challenge, declined to comment on the litigation or the property’s ownership. The challenge is ongoing, but the city’s Department of Assessment lowered the property’s assessed full-market value from $5.3 million to $3.5 million this year.
Syracuse assessor David Clifford said he lowered the assessment after seeing how much damage vandals and thieves have done since a security firm that had been managing the property walked off the job a couple of years ago after not getting paid.
“They’ve actually taken metal roof panels off a large portion of the roof,” he said. “There’s a lot of physical deterioration of the property.”
Clifford said he’s aware of the “international intrigue” surrounding the property but has had no contact with anyone asserting ownership since Schmukler made his claim.
“Nobody knows who’s steering the ship on this thing,” he said.
In a 2013 corporate profile and financial report, Triadou said it was formed on Sept. 12, 2012, to “acquire, manage and hold real estate interests in the USA.” It said it was wholly owned by SDG Capital, a Swiss company based in Geneva. It listed the Syracuse property as one of its investments, having acquired it through its U.S. holding entity, Argon Holding Corp.
Triadou said it planned to redevelop the Syracuse property in partnership with a local developer into student housing that could be sold to an institutional investor. Noting that the property is about two miles from Syracuse University, it boasted that it “already has 600 parking spots, a swimming pool, lounges, a gymnasium and a vast re-developable residential infrastructure.”
“The asset should be valued as part of a whole redevelopment, in which scenario it could yield values in the area of USD ($) 5 million,” it said.
In 2016, Triadou listed the property for sale. According to court records, it temporarily pulled the listing in 2017 after rejecting a $3.5 million offer from a potential buyer.
The CBRE real estate company is again listing the property for sale — at a price of $3.5 million. It is promoting it as a potential site for senior housing. CBRE broker Martin Dowd confirmed the property is again for sale but said he could not comment on its ownership.
These days, the property gives every appearance of being abandoned.
Vandals have broken nearly all its hundreds of windows, ripped down ceiling panels, torn out wiring and light fixtures, and written graffiti on its walls, inside and out. (See photos above.)
At about 6 a.m. on March 18, Syracuse firefighters responded to a report of a fire at the center. When they arrived, they found heavy smoke coming from a fire on the third floor. It took them about an hour to put it out, but the fire does not appear to have caused major damage to the structure.
Fire officials said it appeared that someone intentionally started two separate fires in a mechanical room in the building, which has no working alarm or sprinkler system.
After the fire, the city had the center’s doors and windows boarded up. But within days, someone had pulled some of the plywood off.
Spillane said the city hopes to find a buyer willing to redevelop the property. However, the city will not be able to market the site until it takes ownership, she said.
“Site control is really a critical component of site development,” she said. “That makes it tricky.”