The U.S. is seeking to confiscate a $22 million Bel Air Mansion from a company controlled by a private-jet entrepreneur, as it goes after assets it says the home’s previous owner bought with the spoils of corrupt Nigerian oil deals.
The 15,000-square-foot, six-bedroom Bel Air property, which its developer says has an infinity pool and an “olive grove reminiscent of Southern Italy,” was sold to the company, Sarbonne Estate Inc., or SEI, by Nigerian businessman Kolawole Aluko. Aluko has been accused of taking part in a massive government bribery scheme in Africa’s largest economy involving energy contracts that generated more than $1.5 billion in revenue.
The entrepreneur, who isn’t accused of playing any role in the Nigerian scandal, acquired the opulent home from Aluko through SEI in 2016. Initially, the Justice Department described SEI’s owner as a non-U.S. national who owns an aircraft services company and was a “close business associate” of Aluko. SEI itself said in court filings that it’s owned by a person whose business provides “global aviation services to high and ultra-high net worth clients.”
Last week, in its legal fight with the government, SEI filed a disclosure listing Thomas Flohr as the sole owner of the company, which he controls through an entity registered in the British Virgin Islands. Thomas Flohr is the name of the Swiss founder and chairman of VistaJet Group Holding Ltd.
In a civil lawsuit the U.S. filed in July to seize the Bel Air property, 755 Sarbonne Road, the government alleges that the buyer should have known the mansion would be subject to forfeiture because of an existing relationship with Aluko and news articles reporting that the Nigerian businessman was suspected of money laundering.
SEI counters in filings that Flohr understood Aluko to be a man of legitimate means and had no reason to believe the businessman had acquired the property with ill-gotten gains.
Threat of Prosecution
Aluko transferred the property to SEI to repay a $21.6 million debt he owed to another Flohr company, under a contract granting him “exclusive, owner-like access” to a Bombardier Global 6000 aircraft for 3 1/2 years starting in mid-2015, SEI told the court. Instead of making the required lump sum payment, the parties agreed he could “settle the outstanding debt” with the transfer of the mansion in April 2016, it said.
But Aluko designed the transfer to conceal or disguise “the proceeds of specified unlawful activity,” according to the government’s lawsuit, filed in federal court in Houston. The U.S. makes no such claim against SEI.
Read More: Remember Enron? Its Name’s Resurfaced in a Luxury-Yacht Battle
At the time, Flohr “did not reasonably have cause to believe” that Aluko had acquired the property “using funds traceable to any crime giving rise to potential forfeiture,” SEI said. He understood Aluko to be “a very wealthy executive” capable of purchasing the real estate “from legitimate sources,” it said.
SEI said that it wants to sell the home but that the U.S. has threatened criminal prosecution if it does.
Punching Back
Flohr and VistaJet Chief Legal Counsel Tobias Schramm didn’t reply to emails seeking comment on the lawsuit. Schramm is SEI’s sole director, according to corporate records in California, where the company is registered.
“VistaJet cannot comment on any additional roles that executives might have outside the company,” a spokesman for VistaJet said in an emailed statement. VistaJet “is not an interested or participating person” in the case, he said.
Asked for comment on the Justice Department’s claims about the property, Ashcroft Sutton Reyes LLC, which is representing SEI in Texas, declined to comment beyond SEI’s court filings. On Wednesday, the firm asked the Houston court to dismiss the government’s forfeiture action, arguing that the court lacked jurisdiction over the L.A. property and that the Justice Department was trying to seize the real estate without proving “any connection to criminal activity.”
SEI sued the U.S. in California in May seeking to ward off the risk that it would try to confiscate the mansion, two months before the government filed its suit to do just that. Allen Matkins LLP, which is representing SEI in California, didn’t reply to emails. The U.S. is contesting the case.
Aluko’s lawyer, Tokunbo Jaiye-Agoro, declined to comment on the proceedings over the property.
A Justice Department spokesman declined to comment.
‘Loyal Client’
Flohr founded VistaJet in 2004 with three planes and now operates a fleet of 115 Bombardier Inc. business aircraft that ferry wealthy clients around the world. Aluko partnered with VistaJet starting in 2010 to help it expand into West Africa, according to a statement he put out and an archived VistaJet web page, both from 2012.
The statement and web page described him as a member of the aviation company’s advisory board. He was “a loyal client with VistaJet for many years,” according to the page.
Read More: Private Jet Billionaire Bets on Bright Future for High-End Trips
The VistaJet spokesman said “no advisory boards were established” and “Aluko never had any role within or ownership in the group including any of its affiliates at any point in time.” The company “respects the privacy and business affairs of all its customers and as part of company policy does not disclose or discuss their identity,” he said.
Nigeria’s anti-graft agency has accused Diezani Alison-Madueke, the nation’s oil minister from 2010 to 2015 and the first female president of OPEC, of extensive corruption, some of it involving Aluko. The Nigerian government says it’s trying to extradite her from the U.K., where law enforcement authorities have also opened an investigation into her. Alison-Madueke, whose political party has been out of power for five years, has denied wrongdoing.
Superyacht and Penthouse
The U.S. claims Aluko and a Nigerian business partner helped fund “a lavish lifestyle” for Alison-Madueke. In exchange, they received lucrative contracts from the state oil company that generated more than $1.5 billion from the sale of Nigerian crude oil, and “laundered their illicit revenues into and through the U.S.,” it alleges.
In addition to the Bel Air mansion, which Aluko bought for $24.5 million in 2012, the U.S. is trying to seize a superyacht he purchased for $82 million and surplus funds from the foreclosure of a New York City penthouse he acquired for $51 million.
The U.S. made its claims against these other assets, which don’t involve Flohr or SEI, in 2017, filing the case in Houston because it claims the bribery scheme involved activities there. It is conducting a criminal investigation into the same alleged Nigerian corruption.
Read More: Nigerian Graft Agency Traces $615 Million to Ex-Oil Minister
Jaiye-Agoro, Aluko’s lawyer, dismissed the Justice Department’s allegations against his client as “unsubstantiated and grossly false.” Aluko’s source of funds is “legitimate income,” he said by email. Jaiye-Agoro said he was unable to comment further because his client’s relationship with Alison-Madueke is “the crux of an ongoing criminal case” in a Nigerian federal court.
In its suit to confiscate the mansion, the U.S. said SEI “knew and/or had reasonable cause to believe” the property, traded in a “lopsided” transaction for aircraft services worth about half its value, could be forfeited.
“Put simply,” it said, “an agreement between two corporate insiders concerning the corporation’s business is not an arms-length transaction.”
SEI “strenuously denies” that allegation, it said in Wednesday’s filing.
The case is U.S. v. 755 Sarbonne Road, 20-cv-02524, U.S. District Court, Southern District of Texas (Houston).
— With assistance by John Gittelsohn
