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Manafort Indictment a Story of Brooklyn Boom

Image: Manafort Indictment a Story of Brooklyn Boom
A row of browstone apartment building on Union Street in Brooklyn, New York. (Colin Young/Dreamstime) 

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Monday, 30 Oct 2017 02:02 PM Current | Bio | Archive

Everyone will have their own reactions to the political and legal aspects of the indictment of President Trump’s former campaign manager, Paul Manafort, that was unsealed today. But what struck me was the Brooklyn angle. "More than $75,000,000 flowed through the offshore accounts," the indictment says. "Manafort laundered more than $18,000,000, which was used by him to buy property, goods, and services in the United States."

Some of these "goods and services" are standard-issue luxury items. According to the indictment, $520,444 went to a "clothing store in Beverly Hills, California." Another $655,500 went to a "landscaper in the Hamptons, New York." A New York antique dealer was paid $623,910, and an "antique rug store in Alexandria, Virginia" reaped $934,350. Manafort spent $62,750 on a Mercedes Benz, according to the indictment.

The Brooklyn angle is that in there on the list of expenditures, along with the Mercedes and the Hamptons landscaping and the Beverly Hills clothing, is "a brownstone on Union Street in the Carroll Gardens section of Brooklyn, New York." Manafort paid "approximately $3,000,000 in cash," for it in 2012, then borrowed more money, $1.4 million of which was to be spent on construction to renovate the building and convert it into a single family residence.

Maybe you have to know Brooklyn to appreciate this property properly. I lived nearby from 1998 to 2013. When I read the part of the indictment about the house on Union Street, I laughed out loud.

Part of it is the sheer insanity of Brooklyn real estate prices. A midblock brownstone — that is, a house with no windows on two of its four sides — can easily cost $4.4 million.

And that is for a stretch of Union Street that is a few blocks from both the Gowanus Houses, which is a public housing project, and the Gowanus Canal, which is so toxic that it has been designated as one of the EPA’s superfund cleanup sites. The street also attracts a fair amount of traffic because it has a bridge that crosses the canal into Park Slope, rather than dead-ending as many of the parallel streets do.

Not too long ago this was a middle-class, largely Italian neighborhood. If a homeowner was indicted by a federal grand jury, it more likely had something to do with the Mafia than with a presidential election.

But sometime while I was living there, things started to change. Brownstones that used to cost $500,000 started costing $1,000,000, and then brownstones that used to cost $1,000,000 started costing $2,000,000.

Part of the reason was a cultural change — young families that used to move out to New Jersey or Connecticut or Westchester or the Nassau County suburbs of Long Island now want to stay in the city. Part of the reason was a ripple effect. Manhattan neighborhoods where young singles used to live got so expensive that the young creative class moved to Brooklyn, and then brought hip bars and restaurants and coffee shops and bakeries and boutiques with them, so that Brooklyn became what Greenwich Village or the East Village used to be.

Part of the reason were two mayors of New York City, Rudolph Giuliani and Michael Bloomberg, who, from 1994 to 2013, presided over a remarkable reduction in crime and improvement in quality of life. Neither was perfect, but they both set a tone that sent a message that the city was a place for job creators and law-abiding families, not just welfare recipients or community activists.

On a net basis, this has been a huge positive, creating vast wealth for those lucky enough to have owned real estate in these neighborhoods before the boom. It’s also displaced some people who didn’t get in early enough, or didn’t play the real estate game shrewdly enough. I was shopping for Brooklyn real estate about the same time Manafort was. I didn’t have millions of dollars stashed offshore, and I couldn’t find anything I could afford. I wound up moving instead to Boston, where houses are cheaper, taxes are lower, the air is cleaner, and the snow removal is more efficient.

The big picture, though, is that Brooklyn used to be an accent or a punchline or a place that people, like the Dodgers, abandoned for someplace sunnier. Now it’s a luxury lifestyle brand like Mercedes Benz or the Hamptons or Beverly Hills, a place where the Paul Manaforts of the world buy real estate for their children. It is dynamic improvement and change that counts as a kind of progress.

Ira Stoll is editor of FutureOfCapitalism.com and author of "JFK, Conservative." Read more reports from Ira Stoll — Click Here Now.

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Ira-Stoll
Sometime while I was living in Brooklyn, things started to change. Brownstones that used to cost $500,000 started costing $1,000,000, and then brownstones that used to cost $1,000,000 started costing $2,000,000. Brooklyn is now a place where Paul Manaforts of the world buy real estate.
carroll gardens, union street
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2017-02-30
Monday, 30 Oct 2017 02:02 PM
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