EXCLUSIVE: Judge stops Brooklyn facility owner from paying off elderly residents so they could leave
A Brooklyn judge has barred the owner of a troubled assisted-living facility from dipping into a developer’s deposit to pay off elderly residents to move out, the Daily News has learned.
Supreme Court Justice Wayne Saitta stopped Haysha Deitsch, the owner of 1 Prospect Park West, from using the $7 million down payment made by Sugar Hill Capital Partners to pay his five remaining elderly residents to vacate so the building can be converted to condos.
Deitsch agreed in May to pay the women, all older than 91, $3.35 million to move out by Aug. 31, but he defaulted on their final payment. He wanted to dip into the real estate developer’s deposit that’s been sitting in escrow since 2014 to settle the matter.
“Sugar Hill is prepared to fund the seller’s payment obligations to the tenants and to buy the building,” said a spokeswoman for Sugar Hill.
“Unfortunately, rather than respond to good-faith efforts to reach resolution, the seller is refusing to negotiate, threatening bankruptcy and seeking to wrongfully retain Sugar Hill’s down payment for its own benefit,” said the spokeswoman.
Sugar Hill entered into a contract with Deitsch to buy the old folks home for more than $80 million to turn it into condos once the residents were properly relocated, according to court documents.
The residents sued to stop the eviction and heard Deitsch cry broke in court throughout the two-year legal battle.
Nonetheless, he was able to buy two other properties on Fourth Ave. in Park Slope in September 2015 and afford a revolving door of attorneys to represent him.
Attorneys for the new owners of the prewar building filed a motion to ban Deitsch from using their down payment other than to pay them after he defaulted on the final $3.1 million payment to the tenants.
Saitta signed the temporary restraining order request Thursday.
“We are disappointed that the seller has failed to honor his obligations to the tenants and we continue to do everything in our power to resolve this situation,” the Sugar Hill spokeswoman said.
Deitsch’s lawyer did not respond to requests for comment.