Chetrit Group settles dispute over Kazakh embezzlement

Developer was accused of helping bigwigs hide $40M in condo projects

TRD New York /
Nov.November 12, 2015 03:07 PM

Developer Joseph Chetrit has disentangled himself from allegations that he helped a banker and former politician in Kazakhstan launder tens of millions of dollars through two Manhattan real estate projects.

Following last month’s accusations, the developer settled with the city of Almaty and BTA Bank, one of the country’s biggest lenders — according to a joint statement Thursday. Previously, the city and bank accused Chetrit of helping the corrupt Kazakh bigwigs hide $40 million in two condo conversion projects.

“This dispute has been amicably resolved after cooperation by the Chetrit Group LLC and its affiliates,” the parties said in a joint statement. The city and bank “voluntarily dismissed with prejudice” its former claims against Chetrit.

According to a complaint filed in U.S. District Court in Manhattan, BTA Bank’s former chairman, Mukhtar Ablyazov, and Almaty’s former mayor, Victor Khrapunov, allegedly pocketed over $4 billion through embezzlement and corruption deals. Through a shell company, they invested in Chetrit Group and Clipper Equity’s Flatotel at 135 West 52nd Street and Cabrini Medical Center at 227 East 19th Street. The complaint accused them of doing so with Chetrit’s help, according to the filing.

Boies, Schiller & Flexner’s Matthew L. Schwartz, an attorney for Almaty and BTA Bank, said in a statement that as part of the agreement, the city and the bank “reclaimed a significant asset that was traceable to the billions of dollars that were stolen from them.”

Schwartz also said the city and the bank “secured the cooperation of an important witness” — the Chetrit Group — “as they continue to pursue their claims against … the people directly responsible for the crimes against Almaty and BTA Bank.”

According to the initial complaint, Ablyazov allegedly stole billions from BTA and Khrapunov allegedly stole about $300 million from Almaty.

One of the city’s most prolific developers, the Chetrit Group bought Sony Corp.’s former U.S. headquarters at 550 Madison for $1.1 billion in 2013. It co-owned the Willis Tower in Chicago, before selling it to the Blackstone Group for $1.3 billion earlier this year.

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