The Alexander Brothers Got 30 Years. The Story Isn't Over.

0:05Welcome to Deconstruct, a podcast from The Real Deal. I'm Lila Burke. And I'm Hannah Kramer. And this week on Deconstruct, we'll give you some new insights on JPMorgan Chase's super fancy Manhattan office tower, updates on the Community Opportunity to Purchase Act, and why some new South Florida residents might be paying a whopping$2 million to join their country club. And for our main story, we'll have senior reporter Catherine Kalurgis on to talk about the sentencing of the Alexander brothers. Let's jump into it.

0:38Last Tuesday, a story that has been for us two and a half years in the making and for some of the victim several decades coming concluded. The Alexander brothers, Tall, Oren, and Alone were sentenced to 30 years each in federal prison for 10 counts of crimes, including sex trafficking. Today, we have senior reporter and South Florida Bureau Chief, Catherine Kalargis, here with us. Catherine, welcome to the pod. Thanks for having me. Now, you broke our original story on the Alexander brothers, along with our colleagues Sheridan Wall and Ellen Cranley, and covered the case throughout last spring's trial and through sentencing this past week.

1:22Tell us what it was like in the courtroom as this final sentencing was coming down.

1:27Katherine Kallergis: The energy had definitely shifted. What was interesting is the Alexander family was not there. The only person who was there was their oldest brother in support of them. And there were also, you know, a group of women who were victims of the brothers. There were at least 15 of them. They took up about half of the courtroom. The trial was obviously very emotional, very intense. There were ups and downs, but the sentencing was different. Like, it was a different tone. The women were saying their piece. It was heavy, but they had a sense of hope. And were you surprised about anything? Were you surprised about the sentence, 30 years each?

2:02Katherine Kallergis: I didn't really have an expectation. I did kind of think it would be somewhere in the middle, given the seriousness of their crimes and what the minimum sentence was, which was 15 years and the number of counts. So I did kind of think it could go that way. And the judge said that she doesn't hand out life sentences because she considers them draconian unless it's mandated by the law. It kind of felt like that's where it was going. And do we know where they will serve these prison sentences? No. So Judge Caproni makes her suggestions to the Bureau of Prisons and then they'll decide where the brothers go.

2:34Katherine Kallergis: Whether they're together or not, it will also be up to the Bureau of Prisons. So we don't know if they'll be separated. They may be in a facility like as close to Southern Florida as possible because that's where most of their family is. But we still don't know yet where they're going to be. And have they made any requests? We know that they want to be together in prison if they can. And are they able to make any other requests? Have they asked for things as they kind of face down these sentences? Yeah, they did request to be together because they want their family to be able to see them. Beyond that, they had sought the minimum, which was 15 years.

3:07Katherine Kallergis: They talked a lot about how they were going to miss their kids' childhoods and that anything beyond that would be severe. But that was what they asked for. And have you heard any conversation about a potential pardon for them? Yes. So the New York Times reported this summer that they had hired attorney Alan Dershowitz more than a year ago to seek a pardon. Beyond that, we really haven't heard much. But I don't believe that he has had success during this term in getting pardons for his clients. Mm-hmm. And I want to just kind of take it back to the beginning. Thinking about, you know, what you knew about particularly Tal and Oren, who were, of course, top brokers who you covered regularly before all of these stories broke, and then back to kind of breaking that first story.

3:54I mean, did you have a sense when you were writing the first story that this could be an outcome? How has this kind of journey been for you?

4:05Katherine Kallergis: You know, when we first reported the initial story, I thought there might be other women because of what we had heard that there was, you know, an alleged rape in high school. But I did not have any idea that it would be this big. I did not expect that they would be convicted on sex trafficking charges and there would be this long-running conspiracy. For us to report it in June 2024 and then for the feds to arrest them in December 2024, it was a very fast timeline. I did not know it would be of this magnitude. And have you heard from the victims that this has given them some sort of sense of closure?

4:41Katherine Kallergis: Yeah, I mean, during the sentencing, when they spoke before the judge and before the brothers, they talked about how the trial was obviously very difficult, but it was part of their healing process. Some women have said that they can finally breathe again. I think it's going to help them process their trauma and their pain and their grief and all that. And how many women spoke at the sentencing hearing? So 11 women spoke, and then the prosecutor read out another woman's statement. She couldn't be there. So there were 12 statements that were delivered that day. I want to take it back to, you know, the business side of things.

5:18We started covering the Alexander Brothers because of their incredibly successful and influential real estate business. Something that has struck me throughout the process watching you guys report these stories is how wide their circles were. A documentary came out about them on Peacock. In the documentary, I was really struck by how many photos there were of them with people that we report on, who we cover for their business deals, development projects. Do you think there is still support for the Alexanders in the real estate industry? Or to what degree has the whole industry sort of turned against them?

5:58Katherine Kallergis: I think publicly the industry has turned against them. I think a lot of people have also turned against them. I'm sure they still have supporters. I mean, we do kind of see it like in our comments. Prosecutors said that they didn't act alone. There are obviously other people who either participated or were aware of or in some way, you know, complicit. And that hasn't necessarily come out yet. So I think it will take more people coming forward for that to happen. You know, I would say they do have some support in the industry, but those people aren't calling us and saying that they want their quote printed in the real deal, you know.

6:31Katherine Kallergis: Sure. And going back to the documentary, one of the things that really struck me and disturbed me candidly was the allegation that Lexi Zettel, one of the victims, made about Tal basically coercing her into having sex with a billionaire client, right? I listen to that anecdote and think, you know, is that someone that we report about? Is that a transaction? Was a transaction induced there that we covered? What do you think is the likelihood that other people will be held to account for being involved with some of these crimes? I have no idea. I don't know. I mean, I think it depends on what the appetite is.

7:12Katherine Kallergis: Like, are the prosecutors interested in that? Are they trying to kind of close the door on this as the win for them? Will it come out? in more civil lawsuits. Like, I think it just depends on what information is brought to light, but we don't know yet. And for those who knew them, for those who were around the Alexander brothers, how much of that has become a stain on them? I don't think it's really been a stain on the agents. I would say there are a couple who had very strong affiliations with the Alexanders, and so people are aware of that, but those names haven't been associated with any of the crimes.

7:48Katherine Kallergis: People have kind of moved on. Some have gone back to Douglas Elliman. Some took their teams with them. For the most part, I don't really see it. I mean, there are some clients who were associated with them who have defended them. And so that has been out there. But that's kind of their doing. You know, as you just said, some of those agents worked with them at Elliman, came to their own firm, now have gone back to Elliman or gone on to other firms. Something that we've talked about a lot and that people have brought up a lot is, you know, how can something like this continue to happen? when people are saying, and now everyone loves to say, oh, well, everyone knew.

8:22Yeah. You know, people knew about this. Do you think that there was a culture within real estate that enabled this to happen, that because they were such rainmakers bringing in, you know, so much money to first Elliman and then, you know, their own firm, that people were sort of happy to overlook what was going on?

8:40Katherine Kallergis: I mean, they had relationships with Howard Lorber, who was the CEO and chairman of Douglas Elliman until he stepped down in the fall of 2024. there were people in positions of power who had relationships with them. And so that protected them for a long time. There were agents who were collateral damage because of that. And so they lost business or business was stolen from them. There was definitely a culture of enablement at the time. Do you see this as kind of the capstone of your reporting here? There are still civil suits. How much will you be following those? And how much do you think this is kind of, you know, a story that's now been told?

9:17Katherine Kallergis: I don't think the story is over. I think there is more that's going to come out. I think that it will go on for a while. I mean, beyond the fact that they're appealing their conviction, there is obviously this part in effort. There are also so many questions that still remain. So I think this is a huge part of the story. This is definitely like the end of probably the biggest chapter, but it will continue to go on. And you've spoken a little bit about the remaining questions here. What are those questions? You know, beyond what we learned in the trial, I think it's who worked with them, who also were part of these attacks on women.

9:55Katherine Kallergis: If they did use their business, right, as a tool and these women as pawns, like who were those businessmen? What did they get in exchange? And did anybody else ever step in and say like, this is wrong and try to kind of create some accountability? We would have been in a different position today. All right. So while we'll continue to cover ongoing cases, appeal efforts, new suits as they rise against the Alexander brothers and anyone who might have been affiliated with them, this chapter is coming to a close. Catherine, thanks for joining us. Thank you. Thanks for having me. All right, Lila, this week I think you have a fraud story you're obsessing over a little bit.

10:39Tell me about that. Yes. So the story here is that a New York bank allegedly turned a blind eye to hundreds of millions of dollars of fraud. Ooh, okay. Which bank and why? Okay, so the bank here is Flagstar Bank in New York. And the fraudster at the center of this is Mark Nussbaum. He's an attorney. He's alleged to have diverted hundreds of millions of dollars in escrow fraud, in joint venture fraud. You know, he was holding this money that's supposed to be untouched and he was lending it out. He was donating it to congregations. He was sending it to his mother. We don't really know why. And new lawsuits are saying that Flagstar Bank, where Nussbaum was holding this money, knew about what he was doing and was ignoring it.

11:30Ooh, OK, so who's making these allegations? And I mean, why do they think that? That's a really pretty serious allegation that a bank would turn a blind eye to something like that, right? Yeah. So the plaintiffs here are people who loaned money to Nussbaum and then had their money taken away, one of them to the tune of$148 million. And they're saying that they have evidence that Flagstar Bank was aware of what was happening. They saw these suspicious transactions in this escrow account, which is regulated by state law, and they would inquire with him about these suspicious transactions. But there was a VP at the bank who would call or email Nussbaum ahead of time to warn him about the fraud inquiries and to kind of advise him on what to say to make the issue, quote unquote, go away.

12:18and Nussbaum was allegedly giving this guy you know expensive wine buying breakfast for his office diverting business to him and when this vice president left for another bank Nussbaum followed him and opened up an account there and then this guy leaves Flagstar Bank is finally like okay we're gonna close Nussbaum's account where he's doing all of this fraud but they let him continue to make transactions out of this account for basically another two months after, in which time he does allegedly more fraud, diverting a lot of this money that people gave him into donations, loans, things like that.

13:00And these creditors have not gotten their money back. Yikes. Okay, so Mark Nussbaum is one of the characters at the center of this mortgage fraud scandal that we've been covering really for months and months now. Interesting to see how, you know, a bank like Flagstar gets caught up in it and start to think about what the kind of larger ripple effects are. In the finance world, we've covered a lot of the ripple effects in kind of the multifamily world, these buildings that this fraud has happened to, right? I'm wondering, what does Flagstar have to say about this so far? So Flagstar told me that they would decline to comment on ongoing litigation and on former customers.

13:38We do know that the vice president, who was mentioned in the lawsuits moved to Customers Bank. Customers Bank says as of 2025 he no longer works there. So I don't really know what that's about, but hopefully we can find out more. Okay, so this will be an interesting one for us to cover going forward. Thanks, Isla.

13:59Okay, for our first headline, let's head down to Miami, where one country club is allowing people to come in and join for a whopping$2 million initiation fee. Okay, I'm not a country club attendee. That's not usually what it costs, right? That's really high. No, I mean, look, country club fees in South Florida and many places have become absolutely astronomical. But especially with this influx of centimillionaires, billionaires into this region, one of the trends we've been tracing is how much that influx of wealth spikes the price of everything else. And the fact that places like country clubs private schools, other sort of luxury amenity spaces are running these crazy wait lists.

14:43It has a real impact on the real estate market, which we've been tracking. So this particular news is about the Riviera Country Club in Coral Gables. And Coral Gables has been a real hub for some of these super luxury home purchases that we've been tracking really closely. We have tech founders, hedge funders, a lot of people buying these big home spreads in Coral Gables specifically. as well as across the whole South Florida region. So it's interesting for us to say, okay, some of these spaces are able to not only, you know, run long wait lists, but even to demand multi-million dollar fees for people who are saying, I got to get into the country club now.

15:24Do we think people are really paying this$2 million fee? I mean, so they think they have 10 spots available for the$2 million fee. I think they'll get taken, honestly. When you talk to people in this area, you know, about their problems or concerns with moving to South Florida, the lack of availability of everything seems to be the biggest concern, right? Like I said, there aren't enough spots in the private schools. They're trying to build more private schools. There aren't enough spots in the country club. They're expanding the access you can get to the country club if you can pay this fee, which then the country club can use that money to go back and expand itself, improve its facilities, you know, deepen its own pockets, right?

16:06It's just kind of an interesting knockdown effect of this huge wealth surge in the area and something that gives us a little bit of additional insight into the growth of the 1 or 0.001 percent of wealth in Miami. I also really want to know what you get for$2 million at a country club. Well, not voting shares, first of all. You only get golf access, right? So you better love to golf. I'm sure there are people who do. Oh, yeah. Maybe I should learn. All right. Let's go back to New York. Right. So the latest news in New York is that the city council has passed COPA. COPA is the Community Opportunity to Purchase Act, and it basically allows nonprofits to sort of cut the line a little bit in purchasing distressed buildings.

16:56And this is something that the real estate industry was very fearful about. But at least our columnist Eric Enquist in his latest article seemed to sort of suggest it's not quite as bad as we had thought, right? Yeah, this is a case where the initial bill would have really applied to a lot of properties to give nonprofits, you know, a chance to submit an offer first. Now, the universe of buildings that this applies to has really been narrowed over time. And, you know, it really seems like that's kind of an effective real estate's influence. Everyone's sort of saying they won here. The city council's like, we passed this really progressive bill.

17:33You know, the real estate lobby is like, we kind of whittled this down. We're pretty happy about it. So we'll have to see what effect it really has. I mean, there may be, you know, more nonprofits and tenants buying these buildings, these distressed buildings. But the universe of buildings that this applies to is now much narrower. Right. And it doesn't change anything about the economics of these buildings, right? There's no tax incentive for, you know, the nonprofit or the community group to buy it, right? So I would imagine that it would still be pretty hard for those groups to raise the fund they would need to do this in the first place.

18:07Yeah, that's true, especially when you consider that if the building is distressed, you know, it's likely that it needs a lot of maintenance and a lot of repair. But these, you know, community opportunity to purchase acts, tenant opportunity to purchase acts are, you know, really popping up around the country. I mean, there have been some legacy ones like in D.C., but, you know, Chicago is seeing similar potential legislation. So we'll have to see what it looks like in New York. And maybe that will tell us something about what it'll look like in the rest of the country. All right. On the total other end of the New York City real estate spectrum, we have updated numbers about the JPMorgan Chase Tower at 270 Park Avenue.

18:49So this is Jamie Dimon's sort of monument to his finance empire, I would say. If you walk by this building in Midtown East, it is incredibly imposing. I mean, it is beautiful in its way. I find it kind of daunting to walk past, honestly. But, you know, the initial sort of estimates from inside JPMorgan Chase were that this building was going to cost something like$3 billion. I think Jamie Dimon had said something like$4 billion. The latest numbers coming out, and this was from the Wall Street Journal, said that the number was closer to$6 billion for the construction of this shiny new office tower.

19:25That's crazy. But I kind of I like it. I like that it's so excessive. I like all the details. You've been there, right, Hannah? I've walked around the outside of it. I would love to take a tour inside. But I mean, just some of what you hear, you know, from people who work in the building, from others who've toured it, is that it's kind of insane. I mean, there's a lot of amenities. They have spent a lot of money on, you know, the art and infrastructure of this. They had to do some infrastructure work around Grand Central to do it. So I imagine that contributed to the cost as well. They also apparently pump extra oxygen inside like they do in casinos to make you happier while you're working your finance job until 11 o 'clock at night and back at five o 'clock in the morning.

20:07So interesting to see if that is working for them. Yeah, I think they I heard they have like desk delivery for lunch. It gets delivered right to your desk. They have that flag on the inside. I read about in an article that like is always waving. I'm fascinated by this. So the idea that it costs six billion to me is not super surprising, but that's it's a lot of money. It's a lot of money. And I think it's also interesting just in the context of how incredibly expensive it's gotten to build, you know, build generally in New York and especially to build, you know, this really, truly class A, totally top of the line office product.

20:44And, you know, we hear a lot from developers and brokers these days about how there's not enough new super class A office on the market. But, I mean, that's very capital intensive to build something that's going to rival a project like that. So, something fun, some crazy numbers for you today. And that's our show for you. We'll see you next week. Our script today was written by Lila Burke and Hannah Kramer, edited by Kara Ivan Press, and our in-room producers were Mary Jaduk and Usha Sukai. Our sound engineer and post-producer is Mila Miller.