de Blasio’s “Alluring story” – No Knowledge of Events, Huh?

joel-landau-45-rivington-street

De Blasio’s Ignorance is Bliss…

De Blasio is playing the “I did not know” card with respect to the crimes potentially committed under his watch (and in our view with his knowledge and approval). He claims to “want to know the same answer you’re looking for.” Does he really want the questions asked in the first place? Likely, not. There were dozens of articles published in the New York Post and the Forward before he acknowledged the events. Did he not read for a few weeks?

LostMessiah, April 6, 2016

From the New York Times, April 5, 2016

New York Attorney General Begins Inquiry Into Sale of Nursing Home to Developer

“The New York State attorney general, Eric T. Schneiderman, has opened an investigation into a series of transactions surrounding the lifting of a deed restriction on a Manhattan nursing home that enabled its purchase by a luxury condominium developer for $116 million.

The attorney general’s office began sending subpoenas on Friday to the developer and several other companies involved in the transactions involving 45 Rivington Street, a former school building on the Lower East Side that had been a nonprofit health care center for AIDS patients until last year.

The question of how and why the city removed restrictive conditions on the deed for the property, paving the way for its transformation into market-rate apartments, has already drawn the scrutiny of the city’s comptroller, Scott M. Stringer, and the city’s Investigation Department. A spokesman for the attorney general’s office, Eric Soufer, confirmed its investigation on Monday but declined to discuss its details or targets.

As of Tuesday, subpoenas had been received by several parties in the transactions, including Allure Group, a for-profit nursing home company, and Capalino and Company, a lobbying firm that represented the operator of the health care center, Village Care, in its negotiations with the city to try to lift the deed restriction. In February 2015, Allure bought Rivington House from Village Care for $28 million, and several months later it paid the city $16.15 million to remove the restriction. After the city did so, the company resold it to the developer.

The subpoenas came from the attorney general’s Medicaid Fraud Control Unit, according to a person with direct knowledge of the inquiry. The unit’s involvement suggests that the focus of the inquiry into possible wrongdoing was the companies that received the subpoenas, and not the city.

City Hall officials were not aware of any subpoenas being sent to the city. “We will cooperate with the A.G.’s investigation, any investigation, because we want to get to the bottom of what happened,” the mayor’s spokeswoman, Karen Hinton, said in a statement. The Wall Street Journal reported the inquiry on Tuesday.

A sale of a nonprofit asset like Rivington House would normally come to the attention of the attorney general’s Charities Bureau, which oversees the activities of nonprofits in the state. It was not clear what that office knew of the sale.

The State Health Department is also looking at the actions of Allure Group, which applied for state certification in 2014 and had it granted on the basis that it would provide nursing home beds. Those beds, the department said in a statement, were no longer occupied by the end of last year.

Mayor Bill de Blasio has said that he did not know that his administration had agreed to lift the protections. After learning of the deal last month, he said that Allure Group had misled city officials by promising to keep the property as a for-profit nursing home.

“Someone should have said no farther down the food chain, and if they didn’t know how, they should have come to me and I would have said no very, very quickly,” Mr. de Blasio, a Democrat, told reporters on Monday. “I want to know the same answer you’re looking for.””

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12 thoughts on “de Blasio’s “Alluring story” – No Knowledge of Events, Huh?

  1. There is a new wrinkle in that it is being reported that a court must approve any changeover from non-profit to for-profit and absent that the deal is void.

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  2. “CB3 District Manager Susan Stetzer had been in contact with Joel Landau, an executive of the Allure Group throughout December. At one point, she invited him to attend an upcoming community board meeting to talk about the closure of the nursing home and plans to open another facility elsewhere on the Lower East Side. Landau declined, saying he would be out of town. Stetzer also asked him about reports from neighbors of the nursing home, who said they’d been contacted by people working with Slate Property Group. The neighbors were told Slate was in the process of buying the building and was planning condos. How did Landau respond? “He said he never heard of Slate,” Stetzer explained today. We now know that the Allure Group signed a contract for 45 Rivington with Slate and its partners in May of last year, seven months before Landau denied involvement with the firm.”

    Very honest busimessman, this Landau is, who claims on his site is a “master” at turning around failing properties:

    “We now know that the Allure Group signed a contract for 45 Rivington with Slate and its partners in May of last year, seven months before Landau denied involvement with the firm”

    http://www.thelodownny.com/leslog/2016/03/follow-the-money-mayor-struggles-to-explain-rivington-house-debacle.html

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  3. The government officials may have been lax or even negligent but if Allure (through Landau) made a false representation, as he apparently did, the government has the necessary proof it needs to claim fraud and to claw back the funds he made in profit and to undo the deal. The IRS systematically allows fraudulent refunds every year but that does not absolve those who stole the money from punishment if caught. de Blasio rightfully sees this moment (along with Rechnitz) as an existential threat to his political future and he is going to go hard after both of these thieves.

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  4. The Post always wants to pile on De Blasio. In truth, he is no worse than Bloomberg was in utilizing frum gangsters as go-betweens –remember, Bloomberg owed his entire 3rd term to deals struck with the frum and with David Yassky.

    Also, while it’s easy to point at Landau as a Bobov, looking through his financials (which include a personal foundation) he has connections with many of the Hasidic institutions, including Satmar and Lubavitch schools.

    The sum truth, speaking as someone who’s studied it from many angles, is that both the state and the city governments assumed the other was going to do the enforcement, and the state is as guilty as anyone. This is why Schniederman is going after everybody, rather than Cyrus Vance –because it is the state that was ripped off.

    Walk through the chain of events: the State was warned back in 2014 that Rivington House was going under and that they were going to try to sell off the grounds. Truth is, people with AIDS do not die the horrible deaths they used to, so the hospice beds Rivington had were going empty anyway.

    The state then gave a blanket approval to the sale of Rivington House to Allure Group for use as a nonprofit geriatric facility. The state’s Dormitory Authority held the debts of Rivington House, and oversight is provided by the NYS Department of Health –they could have easily spelled out exactly what the grounds had to be used for before approving the sale to Allure. They didn’t.

    In other words, you can blame Andrew Cuomo’s DOH as much as De Blasio’s DCAS, if not moreso because without the DOH there would be no opportunities for ripoff.

    When Allure applied to have the deed restriction, they did so by blatantly lying to NYC by saying that they were merely going to turn it into a for-profit geriatric facility (hence the need for the deed restriction to be lifted).

    While hindsight is 20/20, there was nothing to suggest that Landau was lying at the time when he said that –Allure Group has a bunch of for-profit geriatric facilities in its portfolio. Landau’s whole line of work is in healthcare, not real estate. The city charged them what was a reasonable $16 million, with the idea that this was enough to compensate the city while giving Allure a profit margin (that would have taken a few years to reach Return on Investment).

    Allure flipping the property to Slate was then made a legal (if unethical, probably tortious) move.

    Now look at everyone involved. De Blasio has gone on the record, Capolino has gone on the record, various aides of De Blasio went on the record, the Rubins at Allure went on the record. Joel Landau has not gone on the record because he is the one who is squarely responsible for the ripoff.

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    • @stilldigging: We think that there are a few pieces you are missing. First, the deed restriction was not profit v. non-profit but residential versus business. It is our understanding that the restriction was lifted for the purpose of rezoning as a residential building rather than a business/nursing facility. Second the State did not need to give final approval (or inspect the premises) until 1 year after acquisition. When the State went in to inspect they discovered that the facility was empty. But, technically, they followed protocol. So, we are not certain that your analysis is correct.

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    • @Still Digging, A transaction based on an original fraud is not legal. At this point the city/state will rescind the zoning change and then let Slate/Allure fight it out over how to get the money back. It will be quite a show.

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    • You can look up the deed restriction in ACRIS. The deed restriction arises because Rivington House is former city property, and the restriction limited the property “into perpetuity [for] a not-for-profit ‘Residential-Healthcare-Facility.'”

      The “not-for-profit” part of the restriction demands that the entity using the facility be a 501(c) incorporated organization. That could easily be seen as too restrictive and self-defeating. If you want healthcare facilities, you have to face the fact that many aspects of healthcare that in the 1980’s would be handled directly by a nonprofit are now performed by for-profit companies.

      (And truth be told, on a long-term basis, it would be better for the city that the entity owning the deed be a for-profit, since this means that the city would get real estate taxes. Many non-profits are really abusers of their status to dodge such taxes –look at NYU and Columbia and their role in gentrification, and it is actually far worse than the developers.)

      As for what happened after the restriction was removed, this is a case of unforeseen consequences. When the restriction was tossed *all* of the restriction was tossed –not just the non-profit part. While Allure gave no indication that they were going to flip the property, there was nothing explicitly barring them from it. The sale to Slate happened as-of-right, and the total repurposing to condos was also as-of-right.

      As I wrote earlier, the problem that’s shown here is bureaucratic inertia; no one in government really took initiative to question the transactions, even though they had the right to.

      The state DOH certainly had the right to question both Rivington House and Allure on the initial sale in 2014.

      DASNY, for its part, was the holder of Rivington House’s debt –there is nothing saying that DASNY had to accept early repayment and loss of liquidation preference for a vitally needed bit of land.

      The City for its part could have played hardball and insisted upon certain new restrictions, or written agreements limiting use to geriatric facility.

      None of this happened, though. No one in government has to be seen as “evil” for this to be the case. You can much more likely the case it’s simple laziness.

      Now, Landau lying to the city about his intent for the property may be cause for civil action nullifying the sale or clawing back some of the value, but it’s far from a sure thing. Schneiderman would have to prove that Landau was deceptive the whole time, which is difficult –if Landau were smart, he wouldn’t have ever put any incriminating material in writing.

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