Bruce Ratner and Forest City Ratner made a deal with Russia’s richest man for the New Jersey Nets and a major Brooklyn project called Atlantic Yards.

The project was facing financial difficulties.

A Brooklyn community organization, headed by Daniel Goldstein, which has been fighting the development, sent out an e-mail message denouncing the deal. The project includes a proposed arena for the Jets team, owned by Bruce Ratner.

Goldstein in a blistering analysis labeled the Atlantic Yards now as “Oligarch Field.”

The organization is named Develop Don’t Destroy Brooklyn and its reaction to the deal follows:

NEW YORK, BROOKLYN, MOSCOW — Enter the oligarch. Start the vetting.

Just when you thought the Atlantic Yards project couldn’t get more corrupt, developer Bruce Ratner has announced a partnership with Russia’s richest oligarch, Mikhail Prokhorov, in an attempt to rescue the floundering Atlantic Yards project. The precise terms of the deal, in a signed letter of intent, are not clear, but the oligarch's Onexim Group would invest $200 million and make certain contingent funding commitments to acquire 45% of the arena project and 80% of the NBA team, and the right to purchase up to 20% of the Atlantic Yards Development Company, which would develop the non-arena real estate (16 proposed skyscrapers). 

The project faces a major legal obstacle in an eminent domain challenge to be heard in New York State’s high court—the Court of Appeals—on October 14. If the property owners fighting to keep New York State from seizing their homes for Ratner and Prokhorov’s enrichment, Atlantic Yards, arena and all, will be dead.

Other litigation is pending and more lawsuits against the project are expected from the community's opposition to the project.

For years, and as recently as last week, Ratner said publicly that his money-hemorrhaging team was not for sale. That appears to be yet one more deception from the untrustworthy developer.

“This has got to be a huge wake-up call for Ratner’s political supporters. The only reason Ratner would make this deal is because he is in dire financial trouble. If Ratner has to go overseas to get major funding for the arena, how on earth is he going to finance the rest of the project,” said Develop Don’t’ Destroy Brooklyn spokesman Daniel Goldstein. “Eminent domain abuse and massive taxpayer subsidies to enrich a Russian oligarch and modernize the Russian basketball system—is that what Bloomberg, Paterson, Schumer and Markowitz are all about? They’ve got to be kidding. And now that Prokohorov has a big foot in the door, who will really be running the beleaguered Atlantic Yards project show?” 

There are many unanswered questions about Mr. Prokhorov's—a former nickel baron, now the chairman of Polyus Gold, Russia’s largest gold producer, and head of the Onexim investment group—wealth, his liquidity claims and where the money is coming from for his proposed investment in the Nets and Ratner’s arena. 

Russian oligarchs are under sway of the Kremlin—they are not who they are without the backing of the Kremlin. Any Prokhorov investment in the Nets and the Brooklyn arena will be influenced by the Kremlin.  According to Irina Y. Yasina, a researcher at Russia’s Institute for the Economy in Transition, quoted in The New York Times, “In Russia today, no serious deal can be made without approval from the Kremlin.”

“Russians and Kremlin leadership should understand very clearly that with this deal Mr. Prokhorov is entering into one of the biggest real estate boondoggles in New York City’s history, and New York’s most controversial real estate deal this decade “ Goldstein said.

Prokhorov has been accused of asset stripping, abuse of corporate governance and violations of minority shareholder rights. He was arrested in France in 2007 on suspicion of involvement in a prostitution ring. 

More ominous for Forest City Ratner is Prokhorov’s recent reneging on his deal to purchase the $643 million Villa Leopold, the most expensive mansion on the French Riviera.. This doesn’t bode well for the strength of the oligarch’s commitment to Ratner’s project and the Nets.

Amongst other disturbing aspects of the multi-billionaire potential Ratner partner and NBA owner—the National Basketball Association would have to vet Prokhorov and 75% of the 30 team owners would have to approve the deal with Ratner, as would the US Treasury Department’s Committee On Foreign Investment In The United States (CFIUS)—is the reported link of the Russian aluminum giant, UC Rusal, with organized crime. 

The Wall Street Journal reported in December 2008:

“Suspected ties to organized crime -- which [UC Rusal head] Mr. [Oleg] Deripaska denies -- led U.S. officials to revoke Mr. Deripaska's entry visa in 2006. Mr. Putin and other top Russian officials have repeatedly raised the issue on his behalf with their U.S. counterparts, so far to no avail, according to people familiar with the situation.”

Mr. Prokhorov owns 18.5% of UC Rusal and there is evidence, according to the Asia Times, that he might replace Deripaska at the helm of UC Rusal. Deripaska is the only oligarch whose business ventures in the US have been vetoed by the US government.

Mr. Prokhorov wrote on his blog on September 22 (see the full translation of his blog post below or here):

“For our group, participation in such a complex project undoubtedly is interesting only in the event that NBA technology can be used for the systematic development of basketball in Russia.
…

For our group ‘ONEKSIM’, the realization of this very profitable [Atlantic Yards and Nets] business project, to which we were invited thanks to the world financial crisis (there has never been a foreign owner of an NBA club), will be yet another path for developing our sports interests alongside the biathlon, support for children’s sports and sports of high achievements.”

“Bruce Ratner has really done it this time. He’s desperate to stop the bleeding on his New Jersey Nets so he has turned to a Russian oligarch whose finances and business practices are questionable and require scrutiny and vetting not just by the NBA and David Stern, but by the federal government including the Treasury Department,” Goldstein said. “We never thought the fight against the crooked Atlantic Yards deal could get more crooked or that it would require a degree in Kremlinology, but clearly Mr. Prokhorov is eyeing the Nets and this key piece of Brooklyn to build some Russian-NBA pipeline, and sow his wild playboy oats—so much for Ratner’s mantra that this project is ‘about Brooklyn.’ We don’t need to be Kremlinologists to know that Mr. Prokhorov doesn’t care one nickel about Brooklyn or know squat about Brooklyn."