A Gilded Island, Swirling With Intrigue
Published On: The New York Times
FISHER ISLAND, Fla.
PHYLLIS WINICK’S blue eyes flashed excitedly as she drove the golf cart around this wealthy 216-acre enclave.
She pointed to pink flamingos standing on a grassy bank, a marina that holds yachts up to 250 feet long and the country club built around a former Vanderbilt mansion that is undergoing $60 million in renovations. She ticked off the celebrities who have owned homes on the island, including Oprah Winfrey, Mel Brooks and the tennis star Boris Becker.
After 27 years of working here, Ms. Winick, the longtime sales director for Fisher Island Real Estate, is still a bundle of energy when she tours the place. But when she slowed the cart next to an abandoned construction site facing the shipping channel that separates the island from Miami Beach, she grew tense and silent. A lone sign on the road — “Future site of ocean view residences” — only hinted at the behind-the-scenes intrigue casting a cloud over Fisher Island.
A protracted legal battle over real estate holdings here, pitting the family of a dead East European billionaire, Arkady (Badri) Patarkatsishvili from the Republic of Georgia, against investors aligned with his cousin and former business associate Joseph Kay, is holding any new development on the island at bay.
Ms. Winick is worried that if the battle isn’t resolved soon, Fisher Island will miss out on the current boom in luxury properties in Miami Beach, which set sale-price records for apartments and houses in 2012. The last condo development on the island was completed in 2007. Two planned buildings would have apartments big and lavish enough to command $20 million apiece, she said, pointing out that this would break the island’s apartment sales record of $14.2 million set last year for a 7,000-square-foot resale.Continue reading the main story
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Fisher Island Holdings, the developer, is hoping to begin sales of Palazzo del Sol, the next 10-story building in line to be built, by the middle of 2013, she said.
“We are anxious to get this going,” said Ms. Winick, who used to live here but now resides in Miami. “We feel that with all the excitement of the renovation, and what is happening in the high-end luxury market, now would be the time.”
That timetable may be overly optimistic. The struggle over 23 acres of residential development land on Fisher continues to languish in the Miami courts.
A bankruptcy judge and a district judge have ruled in favor of Mr. Patarkatsishvili and his family members. But investors aligned with Mr. Kay are appealing.
“Ultimately, I think this is going to trial,” said Mark Hauf, a director of Fisher Island Holdings who described himself as a friend of the late Mr. Patarkatsishvili. “These are unrelenting people.”
The situation became even stickier earlier this month when the lender A.I.G. filed a foreclosure suit against Fisher Island Holdings, which controls the development rights, for defaulting on a $76.7 million loan.
“We recognize the obligation,” Mr. Hauf said. “But I wouldn’t count on that preventing us from developing.”
Fisher Island is just one front in a battle for Mr. Patarkatsishvili’s fortune that began shortly after his death in 2008. He never wrote a formal will.
Boris Berezovsky, a Russian oligarch and former business partner who lives in London, has been aligned with Mr. Patarkatsishvili’s widow in efforts to lay claim to the fortune in several courts around the world. A notorious figure in Russia, Mr. Berezovsky is wanted by Interpol on charges of organized crime, fraud and money laundering. Granted political asylum by the British government in 2003, he has called charges against him in Russia and court convictions there politically motivated.
Mr. Kay also worked closely with Mr. Patarkatsishvili. He claimed in a wrongful-death suit filed in New York that Mr. Berezovsky, with the widow’s help, killed Mr. Patarkatsishvili in 2008 with a hard-to-detect poison. Mr. Patarkatsishvili’s widow, Inna Gudavadze, has been dismissed from the wrongful-death suit, and Mr. Berezovsky has never been served.
Mr. Kay and others have claimed that Mr. Berezovsky is involved behind the scenes in the battle for Fisher Island, even though he is not a party in the Florida court cases.
“It is nonsense,” Mr. Hauf said. “Boris has no role in Fisher Island and any of the other actions that Badri’s family are pursuing.”
Created in 1906, the resort became an island paradise after Carl Fisher, a notable Miami Beach developer, bought it in 1919.
A few years later, William K. Vanderbilt II began acquiring tracts on the island, at one point trading a 250-foot yacht for seven acres of Mr. Fisher’s land. He built the Mediterranean-style Vanderbilt Estate, including a 19-bedroom main house, a golf course and a seaplane hangar, which today is home to the club spa. Over time, he acquired the rest of the island.
Years later, an investment group headed by Charles G. (Bebe) Rebozo, a friend of President Richard M. Nixon, bought a chunk of the island, including the Vanderbilt Estate.
In late 2004, Mr. Kay took control of Fisher Island real estate assets and development rights through a trust. That’s where the story gets murky. Mr. Patarkatsishvili’s family claims Mr. Kay was acting on behalf of the billionaire Georgian, as he often did. Mr. Kay says he acquired the assets and placed them in the trust for his own and his family’s benefit.
So far, courts in Gibraltar, Britain, Liechtenstein and Florida have sided with the family of Mr. Patarkatsishvili in battles over the estate, concluding in each case that the claims by Mr. Kay or a related investor partnership relied on fraudulent documents.
Fisher Island Holdings planned to spend hundreds of millions of dollars developing its sites into three 10-story buildings. It built Palazzo del Mare, a full-service building with 26 apartments that has been popular with Russians, and dug the foundation for Palazzo del Sol before the legal case forced the company to halt construction. Each of the two new buildings would have about 48 residences, Mr. Hauf said.
Because Fisher Island Holdings has a controlling majority of seats on the board of the Fisher Island Community Association, which governs growth on the island, it will effectively retain the remaining development rights through 2022, Mr. Hauf said. That is, provided the developer doesn’t have to surrender any of it due to A.I.G.’s foreclosure action.
For all the legal uncertainty, Fisher Island remains a privileged outpost. Forbes named it the richest community in the country in 2011, saying its residents had an average net worth of $57.2 million, based on taxpayers making at least $200,000 a year. The owners of the 722 residences on the island come from 40 countries, and fewer than half are Americans, Ms. Winick said. About a third live on the island full time, according to Bernard Lackner, the chief executive of the Fisher Island Club.
On two daytime visits to the island, it never felt crowded. Residents covet its privacy and security. The island is accessible only by ferry, which takes seven minutes from Miami Beach. The security force of about 50 requires residents to provide a password to allow oursiders to come onto the island, said Jill Eber, a real estate agent with Coldwell Banker who lives here. There is also a 24-hour marine patrol to prevent intruders from entering.
“We have the best moat in the world,” said Tom Murphy Jr., a resident and chief executive of the Coastal Construction Group.
An aviary on the island houses about a dozen species of birds. A gourmet market sells Russian caviar. The island’s day school charges $26,000 a year for tuition and requires children as young as 2 years old to learn Mandarin and Spanish.
The Fisher Island Club has a nine-hole golf course and a tennis center in addition to the spa. Mr. Lackner, who formerly managed the Hotel Plaza Athénée in New York, has been overseeing the $60 million renovation of the club facilities, including the old Vanderbilt mansion, which houses a ballroom, a bar and a snooker club. The work is expected to wrap up in mid-February.
Mr. Lackner buzzes around the club in a golf cart, stopping occasionally at the aviary. When I was there he coaxed a cockatoo named Sebastian to dance to the tune of Aretha Franklin’s “Respect,” played on Mr. Lackner’s iPhone.
Club fees are steep, not surprisingly. Initiation is $250,000. Annual dues are $20,651. Residents also must pay $22,890 a year to the community association. Then there are condo charges that range from $20,000 to $50,000 a year, depending on the building.
“Before you even have a mortgage you are paying $85,000 to $90,000 a year,” said Howard Lorber, the chairman of Douglas Elliman and a 20-year resident of the island. Since the real estate downturn, he said, the high charges have hurt sales of lower-cost apartments — ranging from $700,000 to $1 million.
Residences that have sold for up to $14.2 million are in greater demand, brokers say. Ms. Winick says the next developments plan even larger apartments to cater to the superwealthy.
When, or if, that happens matters little to some Fisher Island residents. Mr. Murphy said he would prefer it if residents got together to buy the development land and establish a park.
“We don’t care if this stays in the court for 50 more years,” he said.
But he doesn’t see that happening.
“Somebody is going to end up with that property and build luxurious units,” Mr. Murphy said. “This is very valuable property on one of the most valuable islands on earth.”