$29M Forfeiture Sheds Light On How Drug Money Infiltrates Commercial Real Estate

There are documentaries and books outlining how drugs fueled Miami’s real estate market 40 years ago, but a new report shines a light on how illicit funds continue to make their way through commercial properties in South Florida and beyond.

Miami-based real estate investment firm Sefira Capital agreed to forfeit more than $29M in assets in 2021 as part of a settlement with the federal government over a Drug Enforcement Agency investigation into money laundering.

Sefira, which admitted no wrongdoing in the deal, was accused of not only ignoring red flags about the sources of its investors’ capital but was also caught up in a DEA sting operation that revealed the investment fund received millions of dollars in drug money. 

Among the investments tied up in the investigation were a $63M hotel acquisition near Washington, D.C., and an office building in Fort Lauderdale where prosecutors with Broward County’s Drug Trafficking and Economic Crimes units lease space, the Miami Herald reported.

The case is one of five highlighted in a report published last month about money laundering in commercial real estate by the Global Financial Integrity, FACT Coalition and the Anti-Corruption Data Collective. The transparency and governance advocates analyzed money laundering risks in commercial real estate by analyzing 25 cases from over the last 20 years. 

The cases totaled $2.6B in laundered cash from 14 countries being used to buy real estate across 22 states. California, Florida and New York were the most popular states for nefarious real estate investments, they found.

In the case of Sefira, the Department of Justice alleged that the investment firm raised millions of dollars in criminal proceeds between 2016 and 2019. 

DOJ prosecutors claimed Sefira had little due diligence in place and ignored red flags in its transactions, such as discrepancies in the entity names sending money and differences in purported investment amounts and what was actually transferred to its accounts.

Sefira received millions from criminals leveraging The Black Market Peso Exchange, which allowed drug traffickers and other criminals to exchange ill-gotten U.S. dollars at a bulk discount for local currencies, prosecutors found.

Part of the DEA investigation included buying dollars on the black market before transferring those funds to U.S. accounts controlled by Sefira at the direction of money laundering brokers. 

Sefira, founded in the fall of 2015 by Aby Galsky and Mijael Attias, purchased at least seven properties in Florida and three in South Florida between 2015 and 2021, when prosecutors allege they used laundered money for acquisitions, the Miami Herald reported. 

Sefira didn’t respond to an email or phone call requesting comment, and Galsky and Attias couldn’t be reached for comment. 

“The government’s lengthy investigation proved that there was no knowledge or intent on the part of Sefira,” Sefira said in a statement to the Herald. “The investigation revealed that Sefira had no practical way of knowing whether the funds were clean or not; they were merely the passive recipient of the funds.”

Sefira partnered with Miami-based Highline Real Estate Capital to buy the 183K SF Courthouse Place office a few blocks from the Broward County courthouse. The joint venture paid $13.8M for the property in April 2017 and sold it three years later for $18.2M, property records indicate

The pair paid $13M for a two-building, 63K SF office portfolio in Weston in November 2017. It traded one of the properties, located at 1040 Weston Road, for $8.9M in 2018 while selling the other at 1625 N. Commerce Parkway for $8.3M in 2021.

David Moret, who founded Highline in 2016, told Bisnow that the DEA never asked for financial details about or froze accounts associated with the joint venture's properties. 

 “Highline made three investments with Sefira which were all extremely successful and they were wonderful partners," Moret said in a statement. "While I am aware of the fact that there was an investigation as to whether one of their investors may have exchanged money in a black market exchange, I can only assume by virtue of the fact that our ventures were never questioned in any manner that the investor being investigated was not involved in our deals."

"Since this investigation did not involve Highline’s investment with Sefira, I have no further knowledge,” he said.

Sefira also purchased The Jaxon Apartments in Jacksonville, a Tampa office building and a self-storage facility in Naples. 

One of its larger acquisitions was the Westin Tysons Corner outside Washington, D.C. The investor partnered with Driftwood Capital and Merrimac Ventures to acquire the 407-key hotel for $62M in February 2018. 

"Driftwood Capital conducts a thorough due diligence of all LP investors in its sponsored deals and is proud to maintain best-in-class [know-your-customer] protocols," a Driftwood spokesperson said in an emailed statement. 

Sefira came onto the acquisition through a special purpose vehicle and remains a passive limited partner, the spokesperson said.  

As part of its settlement with the DOJ in 2021, Sefira agreed to strengthen its due diligence and pay $6.5M to avoid foreclosure on certain assets, along with the forfeiture of $22.5M in assets that had already been seized. 

Galsky and Attias appear to have cut ties with the company and started over. Sefira still has a website — which still touts its ownership of several properties, including the Westin Tysons Corner — but it has no social media presence and the company doesn't appear in the work history of either of the two founders’ LinkedIn profiles. 

Both executives have since launched new private investment firms. 

UPDATE, JUNE 12, 9:30 A.M. ET: The story has been updated with a statement from Highline founder David Moret.