Dirty Condo Money Seized by Courts

The federal government is trying to crack down on foreign money launderers who pay cash for pricey New York condos. But that, apparently, hasn’t stopped foreign investors from trying to run their ill-gotten gains through the spin cycle of New York’s soaring real estate market.

A State Supreme Court judge ruled last week that a monitor will have access to the books and will hold onto $10.5 million in sales from Chetrit’s condo conversion of the Flatotel at 135 W. 52nd Street in Manhattan, Crain’s reports. The order springs from allegations that two investors in the project – Victor Khapunov, the former mayor of Almaty, in Kazakhstan, and Mukhtar Ablyazov, the former chairman of a Kazakh bank – stole $4 billion in their homeland, then sought to launder $40 million of it in the Flatotel condo conversion.

The $10.5 million escrow account will be untouchable until a federal judge decides who is entitled to the money.

Meanwhile, 22 units worth $148.7 are still available at the 109-unit Flatotel. They come equipped with washers and dryers.