Russian billionaires battle for Fisher Island
Illustration by Curt Merlo
Two middle-aged men sat at a corner table inside Nobu, London's hippest Japanese restaurant. One of them was slightly bent-over and heavy-browed, his frumpy clothing thoroughly stained with cigarette ash. The other wore a sweater and jeans, with a loose crop of hair clinging stubbornly to the top of his balding dome. Gravity and menace hung in his dark and dramatic eyebrows.
They spoke in emphatic Russian while female companions quietly picked at $15 slices of raw fish and two large bodyguards in suits and ties sat nearby. If you didn't speak the language, you'd think they were old friends catching up. They weren't.
Boris Berezovsky — the short, balding one — was a billionaire who once had the power to appoint presidents. He had been raised modestly in the gray muck of the Soviet Union before making immense fortunes through ruthless acquisition of entire Russian industries. He lived in exile as an enemy of Vladimir Putin.
The other man was Emanuel Zeltser, a New York lawyer who specialized in the representation of Russian oligarchs — ruthless businessmen possessing staggering wealth.
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It was the night of March 11, 2008, and the pair was haggling over the estate of a mutual friend named Badri — one of the world's most powerful men and a recent presidential candidate in the former Soviet Republic of Georgia — who had suddenly dropped dead a month earlier. His wealth had been estimated at $12 billion. But he had not planned for death at age 52, and his will was in dispute.
Up for grabs was a global package of real estate and business assets worth between $2 and $8 billion. The most valuable piece was Fisher Island, a posh 216-acre enclave just 200 yards from South Beach but accessible only by chopper or boat. Until the recent real estate meltdown, Forbes dubbed it "America's most expensive zip code." It is still among the leaders.
Berezovsky argued he was entitled to big chunks of those assets. "Without me," he explained calmly, his right hand twirling in the air, "much of this would have never happened."
Zeltser mostly listened, recording the percentages Berezovsky wanted to carve from each asset. Every ten minutes or so, he stepped out into the cold March night to suck down a Marlboro, his eyes lolling upward with the power of each drag.
He believed Berezovsky had poisoned his longtime friend Badri. But he didn't let on because he was here representing clients in New York — and a career of dealing with Russian titans had hardened him to such cutthroat tactics.
Back at the table, Zeltser plowed through his customary parade of Diet Cokes, which were served in closed cans. He also drank cappuccino.
As the dinner came to a close, Berezovsky seemed to be in a chipper mood. He jokingly lamented that he's often mistaken for the famous pianist with the same name. Zeltser stood up and suddenly felt a bit dizzy.
Berezovsky offered the services of his chauffeur and Rolls Royce Phantom for Zeltser's trip to the hotel. After sliding into the back seat, which was separated from the front by tinted glass, the lawyer slipped into a state of semiconsciousness. He would later believe he had been drugged. Soon the car pulled up beside a private jet at a small suburban airport.
It's a plane, the lawyer thought serenely. We're probably flying someplace.
A few hours later, the jet landed in Minsk, Belarus. Zeltser was seized by men and driven to a former KGB prison where he would spend the next 16 months. "On day one, I was beaten so badly that I couldn't see my face," he says. Then came the torture by near-suffocation.
The imprisonment and abuse of an American citizen sparked an international incident that would garner the attention of U.S. Secretary of State Hillary Clinton. But it was only another chapter in the incredible global battle over what was once Miami's most elite real estate. Largely unbeknownst to its millionaire residents, the saga of Fisher Island's Russian invasion stretches from Moscow to New York's Meatpacking District to South Beach and includes claims of murder, forgery, and paramilitary raids on American soil.
Berezovsky has angrily denied the kidnapping and poisoning allegations. He insists he simply loaned Zeltser the private jet. "Good riddance!" the billionaire declared in the Russian press as the attorney sat in prison. "[He is] an absolute world-class swindler."
Emanuel Zeltser was born in the year of Joseph Stalin's death — 1953 — on a 70-degree-below-zero day in a Siberian labor camp. His parents conceived him only to avoid execution. At that point, Soviet policy prohibited killing families of new mothers. "It was one of the most horrible places on earth," says Zeltser, who would spend the first six years of his life there. His family had been declared "enemies of the people" because they were descended from great wealth.
Music ran in their blood. Even in the freezing prison, his mother entertained the guards by playing elaborate compositions on confiscated pianos. After the family was pardoned and returned to what is now Moldova, his older brother Mark was handpicked to join the Moscow Conservatory. He is now one of the world's premier concert pianists.
A budding pianist himself, Zeltser says he was pushed by his father into graduating from Russian law school. In 1972, he married a childhood friend named Anna, and they resolved to escape the Soviets at their first chance. In 1974, with $120 each, they joined a wave of mostly Jewish refugees streaming through Europe and into the United States.
After one miserable year in Dallas, where Zeltser toiled at fast-food joints and played piano at a cabaret, they made it to New York. In 1980, the couple had a son, whom they named Edward. Eight years later, they divorced.
Zeltser finally gave up on the piano, took a few American law classes, and passed the bar exam in 1990. His early career as an attorney was rocky, to say the least. Zeltser represented Inkombank, which was then one of Russia's most notoriously corrupt financial institutions. But the company fired him in 1994 and would later claim in federal court that he had doctored orders to transfer $2 million into accounts controlled by his ex-wife.
Inkombank's attorneys also accused him of fabricating his Russian law degree. (Zeltser calls the claims "bullshit.") The bank went bellyup before the civil case was resolved.
Despite the troubles, Zeltser's timing was charmed. The Soviet Union had just fallen, and cash-rich oligarchs — Kremlin-connected businessmen making obscene profits by gobbling up newly privatized Russian industries — were eager to invest around the globe.
To do so, they would need American representation. Zeltser was the rare attorney licensed in both countries and fluent in both languages. And an unflappable streak suited him to work with ruthless titans who tended to plot like Dostoevskian villains.
His firm, Sternik & Zeltser — the name paying tribute to a dead law professor — became an oligarch boutique. "I kind of had a monopoly," Zeltser recalls.
In 1995, he found the client who would define his practice and nearly cost him his life. Arkady Patarkatsishvili was from the Republic of Georgia, in the Caucasus Mountains, near Armenia. Because his name twisted Western tongues, he went by "Badri." Since 1987, he had partnered with the kingmaker Berezovsky, who was already well into an ascent in Russian commerce and politics. Badri and Berezovsky would control near-monopolies in Soviet automobiles, television, and metals.
A mutual acquaintance hired Zeltser to do some minor legal work for Badri in New York. Afterward, he met the billionaire in the lobby of the Waldorf Astoria, where the 39-year-old businessman kept a suite, to negotiate his fee.
Badri was slim and gregarious, Zeltser recalls, with a white Monopoly Man mustache that would grow more outlandish with his wealth. He was accompanied by his regal, redheaded wife, Inna Gudavadze.
Zeltser admits that on that day, he asked for a $50,000 fee when he would have been pleased with a fifth of that. After naming his price, the young attorney left for the bathroom. When he returned, Badri was gone — and Zeltser was sure his greed had killed the deal.
But an associate informed Zeltser that Badri had simply sent his wife shopping and headed out for a date with his mistress. He had left the attorney a check for $150,000.
Badri was already a globetrotting playboy. Besides his public marriage to Inna, he was also secretly wed to a woman in Moscow, with whom he had a son. In total, he had six kids. "He had a permanent mistress in just about every major city in the world," Zeltser says. "He put each of them in a nice apartment."
Zeltser quickly became the rich Georgian's consigliere. He also grew close to Inna. When he visited the couple's $20 million estate in Surrey, a haughty London suburb, Inna berated her husband for stocking the fridge with regular instead of Diet Coke for Zeltser. A masterful cook, she stuffed the lawyer with his favorite dish, Russian-style cutlets.
"Inna loved me," Zeltser declares. "Either that or she pretended, which is the same thing."
Badri had little formal education. But he had a knack for navigating the Soviet dogpile through connections. As a kid, he was active in the Communist youth organization Komsomol and initially worked as a car repairman. He quickly jumped to a job overseeing a state clothing factory and then became an engineer for Soviet carmaker AvtoVAZ.
It was there, in 1987, where Badri met Boris Berezovsky, who was then only a middle-class mathematician. They were, it turns out, professional soul mates. Where Badri ingratiated himself to others to get ahead, Berezovsky proved to be a master of the well-planned coup.
Berezovksy cobbled together his savings with those of a few other partners and bought another Soviet car company for the bargain-basement price of $120,000. With Badri's help, Berezovsky soon wrested control of AvtoVAZ as well.
Profits from that takeover fueled an incredibly lucrative buying spree that was still continuing seven years later, when Badri hired Zeltser. Through a blatantly rigged government auction, the partners purchased oil-and-gas giant Sibneft — valued in the billions a few years later — for $100 million. They snagged similar criminally good deals for Russia's national airlines and its largest television station.
Berezovsky quickly became an important figure in the Kremlin. He began to control President Boris Yeltsin's cabinet moves. And there were signs that, even in those early days, he sparked fear in his Georgian partner.
Badri began secreting cash and assets without Berezovsky's knowledge and funneling them to a lesser-known cousin, who would bring the wild-oligarch show to Miami and Fisher Island.
Though Badri and Joseph Kay were only half-cousins, they often called each other brother. And if Badri was Michael Corleone, Kay was Fredo.
Built like a bulldog, with a bald, bulbous head, the short-tempered Kay had a habit of storming out of boardrooms in cursing fits. In recent court filings, he boasts of his own business savvy — taking credit for decades-old deals for shipments of Jeep Cherokees — and insists he has wealth beyond trickle-down assets from his cousin.
Kay's and Badri's fathers sold clothes together in Georgia, and the two cousins were extremely close as children. Kay immigrated to New York City at age 16. He drove cabs and then worked in Manhattan's diamond district, where merchants walked the streets with briefcases handcuffed to their wrists.
By 1985, Kay had his own business selling jewels and was making a profit of $2 to $3 million a year. He apparently dabbled in the Soviet black market, later testifying he had imported cigarettes and Chinese-made clothing to Russia.
Around 1990, Kay reunited with his long-lost cousin at London's President Hotel. They again became inseparable. Within a couple of years, Badri was giving Kay spare millions to stash in a secret New York bank account "to keep [the cash] away from Berezovsky," Kay would claim in a court filing.
Kay also contends he was a "silent partner" in some of Badri and Berezovsky's biggest acquisitions: the oil conglomerate, a television station, the world's largest aluminum company. The finances got muddy, though, when Berezovsky and Badri became fugitives.
After the resignation of Yeltsin in 1999, Berezovsky funneled corporate money and closed-door sway into helping steer former KGB spy Vladimir Putin into the president's seat. Within a year, the puppet politician — a black belt in judo who shoots whales with crossbows — bared his teeth. He threatened to prosecute Russia's oligarchs.
Under investigation for economic espionage and money laundering, Berezovsky fled to London, where he continues to plot Putin's political demise. Badri moved back to Georgia, where he became a Robin Hood figure by pulling stunts such as paying the gas bill for the entire capital city of Tbilisi in 2001.
But Badri was worried his wealth might be seized, so he transferred more assets and trusts to Kay. Hugely valuable agreements were documented in an incredibly casual manner. One scrap of paper, for instance, has come to be referred to as "the $300 million document" in Georgian court. Purportedly signed by Badri, it declares that Kay's "participation in [their] business activities would not be officially formalized due to various reasons" and then adds that the younger cousin is owed $300 million "upon his request."
"We were cousins and had a close relationship," Kay explained in court. "Badri trusted me, and I trusted Badri."
The loose, labyrinthine partnerships were "distinctly Russian," Zeltser says. "They invested together for fun. A will itself is a crazy concept in Russia." (Berezovsky and others have challenged the authenticity of many documents in courts throughout Europe and the United States.)
In 2004, Kay traveled to Florida to find a retirement home for his parents. He struck out until the last day of the trip, when some associates took him to a sprawling, elegant island just off South Beach.
White condo towers with red-tiled roofs reminded him of his travels to Spain. Peacocks strutted a golf course and parrots flew by as Kay bounced around green hills in a golf cart.
In a later court affidavit, Kay recalled turning to a companion and asking "jokingly whether [he] could buy the whole island. He said it might be possible, and within a year, the deal for the acquisition was done."
Fisher Island is a storied hideaway. It was once owned by the Vanderbilts and has been a vacation home to A-listers such as Oprah Winfrey and Julia Roberts. In 2007 and 2008, Forbes named it America's most expensive zip code, with average homes selling for $3.85 million. Bolstering its prestige — but also the notion that it's an Alcatraz for status-obsessed rich people — is the fact that it can be reached only by boat or helicopter, and with an invitation.
The island's sale to a European investment group in 2005 made a splash in South Florida. According to his court testimony, Kay bought the property with a $27 million down payment and a $79 million loan.
Zeltser remembers it as a bargain of Soviet proportions. "We just recently had it appraised at $700 million," says the lawyer, adding of the former owner, Blockbuster cofounder John Melk: "The old man wanted to sell, and there aren't too many buyers who can pay cash."
The Russians had gaudy plans. They held a lavish party in 2005 for Spanish Vogue magazine at the country club, bringing hundreds of outsiders onto the grounds where a membership goes for more than $175,000. And the investment group announced it would build 47 condos, some of them as large as 25,000 square feet, surrounded by waterfalls, fountains, and a manmade lagoon. Kay himself moved into a $4.4 million mansion — owned by Fisher Island Holdings, of which he was president — overlooking the golf course.
(The condo plans were scrapped after the economic downturn. Once a speculator's haven, Fisher Island is now riddled with foreclosures. No longer the globe's most expensive zip code, it has fallen to 37th.)
As Kay cavorted around the tropical island in a black Ferrari Spider — also titled to Fisher Island Holdings — Badri finally split from Berezovsky back in Europe. They announced their financial "divorce" in March 2006.
Observers speculated, and Berezovsky himself would later maintain, that publicly separating their business interests was a ruse. Badri had decided to run for office, and his notorious partner would make that difficult.
But Zeltser insists his client had finally heeded his warnings. "Berezovsky is no good for you," the attorney says he had told Badri for years. "He's going to hurt you one of these days."
Just a month later, a personal tragedy shook Zeltser. His 26-year-old son, Edward — himself a musician — was found dead in his Manhattan apartment. Police called it an "accidental overdose."
But Zeltser immediately thought of KGB methods of assassination. He knew that Soviet spooks liked to use a "death serum" called sodium fluoroacetate, which disappeared from a victim's bloodstream within a few hours.
"He went home and never woke up," Zeltser says. "He was with some girls, partying the night before, but nothing that would have killed him."
But when he told New York detectives his suspicions involving untraceable poison, their eyes glazed over. "You're talking about an international matter," Zeltser says they responded. "This stuff is way beyond our reach."
At the advice of his ex-wife, Zeltser let it drop. According to the New York City coroner's office, Edward died of "acute intoxication due to the combined effects of opiates, cocaine, and benzodiazepines."
In 2007, Badri — the freewheeling Bruce Wayne of the Baltic — announced his candidacy for the next year's presidential election in Georgia. His opponent: entrenched quasi-dictator Mikheil Saakashvili. That move might not have been a smart one. Within weeks of the announcement, a high-ranking official alleged on national television that Saakashvili was attempting to have the challenger assassinated.
"I have 120 bodyguards, but I know that's not enough," Badri professed to a Georgian newspaper. "I don't feel safe anywhere."
So in November of that year, Badri finally decided it was time to clarify his estate, Zeltser says. He flew to New York City and penned a "letter of wishes." The document, which Zeltser did not reveal until after Badri's death, has been ruled authentic in a Georgian court. Berezovsky — and Badri's wife Inna, who formed an alliance with the billionaire — maintain it is a forgery.
"I believe that my political ambitions," the letter reads, "may have brought me to the point of being placed in the jeopardy of being physically eliminated either by my political opponents, if I succeed, or by my own allies, if I should fail... I did what I did with open eyes and seek no revenge against or prosecution of anyone."
According to the missive, Kay was to be made executor of his estate, which he was to distribute among Badri's wives and children. Badri put aside nothing for Berezovsky.
On January 4, 2008, as expected, the incumbent Saakashvili soundly walloped Badri in the presidential race. The billionaire became fatalistic, Zeltser says. "If I'm killed, it's Boris [Berezovsky] and Inna who did it," Badri purportedly told his lawyer. "I failed them. If it happens, it happens."
Not only Zeltser claims to recall such conversations. Sophie Boubnova — an ex-wife of Kay and good friend of Badri — later said the billionaire's wife was enraged by his bigamy. "Badri on many occasions told me that he expects to be killed by people who are closest to him," Boubnova told an interviewer on Russian television, "[and] that Inna is simply going crazy over the fact that he had this second family."
Badri spent the last hours of his life with Berezovsky. On February 12, he was in the billionaire's downtown London office until around 7 p.m., according to accounts given to police. He then left in a chauffeured Maybach to his Surrey estate.
Badri collapsed that evening. Berezovsky would later tell reporters that he sped to Surrey in tears, only to be turned away by police. Though investigators initially declared the death "suspicious," it was ultimately attributed to a heart attack.
Zeltser was in New York when he received a call about the death. He has no doubt Badri was poisoned. "From the very first moment, I thought Berezovsky was behind it," he declares matter-of-factly, "and whoever knows Berezovsky would think that way."
He would ultimately make that claim in a wrongful death suit in New York court, accusing Berezovsky and Inna, among others, of planning Badri's murder. Both the billionaire businessman and the widow have angrily denied the allegation. They blame somebody else.
"I believe there has been a criminal agreement between two groups of swindlers," Berezovsky told the Russian Novaya Gazeta when asked about Badri's demise. "The first group includes Joseph Kay [and] Emanuel Zeltser... The other group includes [former Georgian president] Saakashvili and his ring."
The fight for Badri's estate began the day after his death, when Inna signed an agreement giving Berezovsky half the estate. (She then later "changed [her] mind," resulting in a lawsuit between Inna and Berezovsky.) After revealing the disputed "letter of wishes," Kay attempted to transfer $21.3 million from the Fisher Island corporate account to his personal holdings.
A month after the death, Zeltser received a surprising phone call. "Let's meet," Berezovsky intoned. "We'll resolve the whole thing."
Zeltser jumped on a plane to London. That was the trip that would take an unexpected detour to KGB Penal Colony Number 15.
The moment Zeltser — still groggy from the spiked cappuccino, he says — stepped off the private jet in Belarus, he was seized by men in suits. They took him to a spare room in the airport. Among his interrogators was the chief of staff to the president of Belarus. First, goons punched him in the face. Then came an offer: Confess to spying on the country's industrial chemical complex, and he'd be freed to the American embassy.
Zeltser demanded to speak to an American representative. The goons punched him in the face some more and then delivered him to a penitentiary full of political prisoners, where he was tortured. Among the tactics: A gas mask with no air supply was slapped onto Zeltser's face, bringing him to his knees in a gasping fit.
His jailers tried such techniques for a month before deciding to just let him rot in a cell with three others. One hour a day, Zeltser shuffled along an exercise run and looked up at the gray sky through netting hung overhead. Food was potatoes and bread.
He eventually learned more about his arrest. One of Berezovsky's attorneys, on behalf of Inna, had sent a letter to the Belarus prosecutor general alleging that Zeltser and Kay had "embarked on a concerted attempt to gain improper and unlawful access to [Badri's] worldwide assets" through forgery.
With no trial, Zeltser was convicted of industrial espionage and forgery and sentenced to three years in prison.
One day, he was taken from his cell to an ornate room in the bowels of the prison. A guard brought him a Diet Coke. Then Berezovsky himself walked into the room.
"I don't understand why you're not signing whatever they want," the billionaire allegedly said.
Berezovsky could barely conceal a grin, says Zeltser. "It did not feel like he actually wanted something. He wanted to feel good seeing me in jail. He enjoyed himself."
There's a handy business tactic sometimes employed in Russia called "raiding." It's where you take a business by force, and while the original owners are tied up in court trying to regain ownership, you sell everything of value.
While Zeltser was puffing Minsk brand cigarettes in a prison cell, armed men were storming properties once controlled by Kay and changing the locks on Fisher Island.
Less than three weeks after Zeltser was imprisoned, a small troop of men dressed in black exited a van in Manhattan's chic Meatpacking District. Accompanied by locksmiths, they busted into a restaurant. Some interrogated the Russian cleaning ladies while others drilled their way into the safes.
As waitresses showed up for work, the invaders grabbed them by the arm and told them to meet "the new authority." They carried batons and appeared to have guns tucked at their waists.
It all happened the morning of March 31, 2008, at Ajna Bar, the kind of place you read about in Us Weekly when Sarah Jessica Parker orders a saketini. At least a dozen accounts filed in New York court describe the onslaught of the goon squad, led by Berezovsky's small, pugnacious New York lawyer, Martin Russo. (The attorney did not respond to several emails and phone messages seeking comment for this story.)
The 18,000-square-foot restaurant, according to documents he later filed in court, was owned by Joseph Kay. Following the bizarre occupation — cops were dispatched but no arrests were made — a debate over Ajna Bar's ownership began in civil court, an ordeal that slogs on today in Miami's federal bankruptcy chambers.
A corporate chess match was also under way on Fisher Island. The month of Badri's death, perhaps trying to preempt an ouster, Kay attempted to fire his fellow officers in Fisher Island Holdings. The move didn't work. A document later filed in court shows that the company's parent corporation, Euro Properties Investments, canned Kay and replaced him with his Fisher Island underlings — and current honchos of the island's community association — Gary Snider and Roberto Sosa.
Kay continues to argue in court that he could not be forced out of power on the island he purchased. But during a trip to Georgia, he was physically shut out of Fisher Island. The locks were changed to the management offices and social club.
Kay's name was ultimately scoured from Fisher Island Holdings — the company of which he still claims to be the rightful owner — in corporate records. This year, the firm even filed eviction proceedings for his residence at 6921 Valencia Dr. The property was padlocked, as was the steering wheel of the Ferrari parked in the garage. Kay was relegated to the employee queue in the island's all-important ferry hierarchy. (Kay has wrested back control of the house, says Zeltser. It's unclear what became of the $115,000 sports car.)
As the Fisher Island takeover was under way, Zeltser's imprisonment in Belarus was coming to a head. Word had reached Washington, D.C., that the lawyer was being denied medication for various ailments including heart disease and diabetes. On his MSNBC show, Keith Olbermann called the growing scandal "Torturegate." Secretary of State Hillary Clinton professed she was "very focused on this troubling situation."
In June 2009, U.S. Sen. Benjamin Cardin, a Maryland Democrat, and seven members of Congress traveled to Belarus to demand Zeltser's release. The last day of that month, Belarus President Alexander Lukashenko caved, remarking, "I have never thought that this man could become an issue in relations between our countries."
Zeltser was pardoned and released into American custody, having spent nearly a year and a half in Minsk prison. (His assistant Vladlena Funk, who was also imprisoned, had been released four months earlier.)
Immediately upon returning to the United States, Zeltser fired off legal motions to retake Fisher Island, Ajna Bar, and other properties in contention.
No one would have dared to seize the companies had Badri been alive, Zeltser grumbled in Miami court. "He would have just moved his mustache — a very big mustache — and they would go away."
In January 2010, Zeltser filed the wrongful death suit in New York Supreme Court against Berezovsky, Inna, and a few alleged co-conspirators. He claimed Berezovsky had spiked Badri's drink with the KGB death serum before sending him off to die. "I realize I don't have the evidence to prove this beyond a reasonable doubt in a criminal case," he reasons. But he points to the O.J. Simpson saga, in which the former football player was acquitted of murder but found culpable in civil court. "I think a jury will find it more likely than not that Badri was murdered."
The claim is only one in a worldwide maze of legal action sparked by Badri's death. Suits have been filed in Georgia, London, and Gibraltar, as well as others in New York.
Much of it now hinges on a bankruptcy case being handled in Miami: that of Fisher Island Investments. In March 2011, creditors for the island and Ajna Bar dragged the company into federal court to collect $32 million in debt — from whomever it is who owns it.
U.S. bankruptcy Judge A.J. Cristol is apparently exasperated by the saga. In an April 11 court hearing to decide which side should pay for a bankruptcy examiner on Fisher Island, he quipped, "Can we sell a ferry or something?"
The judge later ruminated, "It seems to me a simple solution would be we should get a big sword and cut all the lawyers in half, and cut all the claiming owners in half, and put them all in one big dumpster and then shake it up, and see what tumbles out."
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