It's long been suspected that laundered money, shady deals, bejeweled Russian oligarchs, and various ne'er-do-wells have been propping up South Florida's real estate market since the 2008 financial crash. The South Florida coastline — from South Beach all the way up to the Treasure Coast — has undergone such a growth spurt in the past few years that we've begun to wonder if it has an issue with its pituitary gland. We can't seem to drive 12 feet without having to swerve around a construction site.
The federal government in January began monitoring cash-only home purchases of $1 million or more in Miami-Dade County, sparking outcry at the Dade County Commission, which felt it was being unfairly singled out. Realtors in Broward, meanwhile, welcomed buyers to come northward.
But this week, after the largest journalistic leak in history showed how one Panamanian law firm — Mossack Fonseca — created shell companies that let some of South Florida's wealthiest investors anonymously buy property here, we're finally getting a sense of how sketchy Florida's real estate market really is. The leak — dubbed the "Panama Papers" — showed that Mossack Fonseca helped some of the world's wealthiest people, including more than 70 current or former heads of state and stars like Jackie Chan, hide trillions of dollars in wealth from tax collectors.
The scheme, though legal, works as follows: Wealthy individuals use law firms like Mossack Fonseca to set up shell companies in "tax havens" like Panama, which neither taxes offshore companies nor requires company owners to disclose their names. Owners can then clandestinely buy real estate or loan themselves money as needed, without any of it being subject to taxes in their home nations.
The leak has already claimed one major casualty — former Icelandic Prime Minister Sigmundr Gunnlaugsson, who resigned this week after being implicated in the scandal.
As it turns out, two businessmen with Broward and Palm Beach ties have been named in the leak as well. Both are Russian billionaires.
In 2008, Dmitry Rybolovlev — also known as Russia's "fertilizer king" — bought Donald Trump's six-acre estate in Palm Beach for $95 million. At the time, it was the largest home sale in Palm Beach history. (Rybolovlev is now looking to raze the property entirely.)
If you like this story, consider signing up for our email newsletters.
SHOW ME HOW
You have successfully signed up for your selected newsletter(s) - please keep an eye on your mailbox, we're movin' in!
According to the International Consortium of Investigative Journalists, which broke the Panama Papers scandal, Rybolovlev initially made his money in Russia roughly 20 years ago. In that country, he became "fabulously rich," married a woman named Elena, and started stockpiling priceless works of art by the likes of Picasso, Modigliani, and Van Gogh. He later spent some time lining in Switzerland.
When it came time to get divorced, the ICIJ reported, Rybolovlev had created a "complex network of offshore companies" to help hide his assets. As his marriage broke down around 2009, the report says, Rybolovlev stashed more and more items overseas, out of the hands of his soon-to-be ex-wife. In 2014, after "much legal wrangling," a Swiss court awarded Elena $4.5 billion. (The figure was reportedly then slashed to $600 million.) Rybolovlev has since denied any wrongdoing.
Olenicoff, who lives in Lighthouse Point in Broward County, is a certified billionaire and convicted tax cheat. In 2007, he pleaded guilty to hiding more than $200 million in Bahamian bank accounts without telling the IRS. He was forced to pay a $52 million penalty, in addition to back taxes, and was sentenced to probation. (At the time, he was living in an über-wealthy neighborhood in Laguna Beach, California.) In 2014, he was also caught forging expensive sculptures and lining his homes with them.
Given his clear hatred for the taxman, it should surprise no one that Olenicoff's name has popped up in Mossack Fonseca's files. On Tuesday, McClatchy Newspapers' D.C. Bureau reported that Olenicoff was listed as a shareholder in a company called "Olen Oil Management Limited."
Given the sheer size of the leak — the ICIJ says the files total 2.6 terabytes of data — more names from America may pop up in the future. Even if not, some realtors in Miami told our sister paper, Miami New Times, that the leak could tank the South Florida condo market for a long, long time.
Correction: A previous version of this article said Rybolovlev initially made money and met his wife in Switzerland. Those events occurred in Russia. We regret the error.