Raids in New Jersey town target ultra-Orthodox Jews accused of welfare fraud. ‘What is going on here?’
It was the dramatic kickoff of a series of well-publicized raids that since late June have netted 26 suspects on charges of stealing $2 million in government benefits. Prosecutors say that the suspects understated their income to get free healthcare, food stamps, rental subsidies and other benefits.
All of those arrested — 13 men and 13 women — were ultra-Orthodox Jews. The charges have tapped into a well of festering hostility toward an insular and eccentric minority.
nce a backwater at the edge of New Jersey’s Pine Barrens, Lakewood is now home to one of the largest concentrations of ultra-Orthodox Jews outside of Israel. They are a fast-growing population with a high birthrate; the population of Lakewood has exploded from 45,000 in 1990 to more than 100,000 today. Many of the newcomers are from large families priced out of Brooklyn by gentrification.
At first glance, little sets Lakewood apart from any number of other suburban communities on the fringes of the New York metropolitan area. But the differences are there. Signs are commonly in Hebrew and Yiddish. The Shop-Rite has closed and was replaced by Glatt Gourmet, a kosher supermarket. New subdivisions have Jewish-themed street names, like Hadassah Lane.
Like the Amish, these strictly observant Jews are instantly recognizable by their modest dress — the women in long skirts and wigs that cover their hair, and the men with yarmulkes or black fedoras and tzitzit, the strings hanging out of their shirts that remind them of their religious obligations. Instead of buggies, though, they mostly drive SUVs or minivans to fit large broods of children.
Around New York, there are a handful of similar towns that are dominated by ultra-Orthodox Jews, but only in Lakewood have federal and state authorities laid down the gauntlet so definitively.
Many young families are heavily dependent on government benefits. Couples marry and bear children young, usually in their early 20s while the fathers are full-time students in religious schools, the mothers working part-time doing office work.
With five or more children, many of them with special needs — a result attributed to women having multiple births until late in life and genetic disorders in a relatively closed population — families cannot survive without government assistance, especially to buy health insurance.
In Lakewood, 65,000 people — more than half the town’s population — are on Medicaid, the government health program for low-income families, according to state data. Lakewood has more children with two parents receiving government benefits than any other municipality in New Jersey, including large, chronically depressed cities such as Newark and Camden. A report by the Asbury Park Press found that Lakewood had received 14% of the money from a $34-million state fund for catastrophic illnesses in children, despite having only 2% of the state’s children. It also found that the town had 29 times more grant recipients than any other town in New Jersey.
In 2015, the New Jersey state controller’s office flagged the disproportionate sums of government money being absorbed by Lakewood. The town didn’t look poor by any conventional yardsticks of poverty.
“You have a family or six or seven or eight, somebody is paying the mortgage, somebody is paying the taxes, they have two cars in the driveway, they’ve got food for all the kids … and they’re reporting their total income at $10,000,’’ said Joseph Coronato, the Ocean County prosecutor who took the lead in the case. “You have to ask — what is going on here?’’
In one case unsealed by the court in June, a couple with six children are alleged to have reported their income at $39,000 per year — low enough to qualify for Medicaid — when in fact they were getting more than $1 million annually from a limited liability corporation.
Members of the religious community say that cases of deliberate fraud are rare. For the most part, they say, the couples caught up in prosecutions had failed to report money they’d gotten from parents who were either paying the tuition for children in private schools or helping with the mortgage.
“The rules are very confusing. You have to be a Talmudist to figure out which program treats gifts from family as ordinary income,” said Rabbi Moshe Weisberg, the Lakewood head of what is called the Vaad, a self-governing council for the ultra-Orthodox community.
People most often got in trouble with their Medicaid applications, motivated by their inability to afford market-rate health insurance, which he said ran as high as $30,000 annually for a large family. Several of the families have disabled children, he noted.
“None of these people used any of this welfare money for an extravagant lifestyle. They were struggling to make ends meet and trying to pay medical bills,” said Harold Herskowitz, a businessman who runs a toy store in Lakewood. He believes the prosecutions were motivated by hostility toward the ultra-Orthodox.
“I’m the child of Holocaust survivors; I don’t appreciate Jewish people dragged out in public early in the morning,” Herskowitz said.
The initial arrests in June received extensive news coverage, with television crews tipped off in advance to film the scenes of couples in handcuffs being led away. Following complaints, the prosecutors have made subsequent arrests more discreetly, but still the publicity rankles.
The case has tapped into a wave of hostility toward the community. Last month, somebody hung an anti-Semitic banner on a Holocaust memorial in Lakewood, and fliers were distributed on the windshields of cars with photos of those arrested under the caption, “Thieving Jews Near You.”
Under fire from many sides, the observant Jews of Lakewood are trying to burnish their reputation in New Jersey. They’ve hosted outreach programs between the community and the police — Bagels, Lox & Cops, as the meetings have been called. Other public programs have been designed to advise ultra-Orthodox families on how to stay on the legal side of public assistance programs.
Lakewood, about 50 miles from New York City, was a resort town for the New York elite beginning in the late 19th century, attracting luminaries such as Mark Twain and members of the Rockefeller family. Their fancy retreats were later turned into kosher hotels catering to working- and middle-class Jews, the town becoming an extension of the Catskills’ Borscht belt across the border in New York state.
In 1943, the Rabbi Aharon Kotler, a Holocaust survivor who fled Lithuania, picked the town for his Beth Medrash Govoha, a yeshiva — religious school — that is now one of the world’s largest with 6,500 students, all men. That would in turn attract other yeshivas, along with Jewish primary schools, kosher delicatessens and shops.
“It was an idyllic little town with a strong Jewish flavor,’’ said Aaron Kotler, the founder’s grandson and current head of the yeshiva, in an interview in his sprawling suburban ranch house, the walls proudly displaying oil paintings of previous generations of bearded rabbis. “My grandfather chose Lakewood because it was quiet, which is ironic because people complain the yeshiva has ruined the quiet.’’
Kotler describes Lakewood today as one of the most attractive destinations for young religious Jews to study and raise families, making the demographics similar to other university towns.
“I like to think of Lakewood as poor by choice,’’ said Kotler.
The community has shown itself to be unusually adept at navigating the intricacies of politics and government.
“Their lives depend on knowing everything about how Section 8 [subsidized rental housing] works and getting into WICs,” the government Women, Infants and Childrenfood assistance program, said Samuel Heilman, a sociology professor at Queen College who has written several books on the community.
Politically speaking, the ultra-Orthodox wield clout beyond their numbers, with adult members almost always turning out for elections and voting as a single bloc.
“They tend to vote like the Christian right, and they have learned to make their votes very important,” said Heilman.
In all of New Jersey, Lakewood had the highest concentration of Donald Trump voters in last year’s presidential election – 74.4%. With their children all in private religious schools, they are strong supporters of Betsy DeVos, the education secretary who has called for school vouchers. Charles and Seryl Kushner, the parents of Trump aide and son-in-law Jared Kushner, are benefactors of the Beth Medrash Govoha yeshiva, and the rotunda of the school’s 2-year-old main building is named for them.
Ultra-Orthodox votes are even more important in local political races. They have installed candidates who favor their interests on the Lakewood school board, township committee and zoning board.
Lakewood’s 30,000 ultra-Orthodox children are ferried to 130 private religious schools on public school buses — boys and girls separately, since they attend single-sex schools — while public schools with only 6,000 children, mostly Latino and African American, have been gutted by a lack of funding. (This is in part due to a quirk in New Jersey’s school financing formula that requires busing for private school students but reimburses the districts based on public school enrollment.)
Some 4,000 new units of housing have been approved in Lakewood in the last two years, making the township the fastest-growing municipality in New Jersey. Real estate developers catering to the ultra-Orthodox are carving new subdivisions lined with four- and five-bedroom townhouses for large families.
“When I moved here, there were trees. Now I wake up and I’m surrounded by high-density townhouses,” said Tom Gatti, a retiree who heads a coalition of senior citizens opposing the pace of new development in Lakewood. “Anytime you try to challenge anything the ultra-Orthodox are doing, they drop the anti-Semitic card on the table.
“They are not looking to assimilate into the community; they are trying to take over,’’ Gatti said.
The ultra-Orthodox Jews also face criticism from less religious and secular Jews.
“Being observant should, first and foremost, involve living and working ethically,’’ complained a hard-hitting editorial in the Forward, the Yiddish- and English-language Jewish publication based in New York. The editorial called the welfare fraud cases “a desecration of God’s name.’’
“It’s too simple to say that this is a problem with Jews,’’ said Heilman, the sociology professor. “It is not their Jewishness that has created the problems; it is the way they interpret the demands of being Jewish.’’
Creative Kushner mapping underscores holes in visa program
NEW YORK (AP) – The Kushner Cos. engaged in a bit of creative mapmaking to qualify one of its buildings in a booming New Jersey waterfront neighborhood across from Manhattan for a federal visa-for-investment program targeting struggling areas.
Emails obtained by The Associated Press show that the family of President Donald Trump’s son-in-law Jared Kushner placed its 65 Bay Street building in Jersey City in a map stringing together two dozen other areas, some with high unemployment.
The map was included in a 2015 application to the EB-5 visa program that allows overseas investors to obtain U.S. residency in exchange for investments of $500,000 or more in rural areas or those with high unemployment.
The maps are legal, and many other developers engage in the practice. But the practice is one of the reasons the EB-5 visa program has come under criticism from both Democrats and Republicans.
James Yolles, a spokesman for the Kushner Cos., declined to comment. The Kushner property is co-owned with developer KABR Group. KABR has not responded to voicemail and email requests for comment.
The special maps were reported earlier by The Washington Post.
The building at 65 Bay Street has licensed the Trump name from the president’s company, and is better known as “Trump Bay Street.” It received millions from wealthy overseas investors through the EB-5 program.
The Kushner Cos. was recently pitching to potential EB-5 investors in China for another Jersey City property. Called One Journal Square, it is a planned 79-story two tower complex in a struggling area of the city. The company is seeking 300 wealthy Chinese to invest a total of $150 million.
Jared Kushner’s sister, Nicole Kushner Meyer, created a stir in March after reports she had mentioned her brother, a senior adviser to Trump, in a presentation in China. Marketing materials for the event also cited the Kushner family’s “celebrity” status.
The Kushner Cos. said Meyer’s intention was not to use the connection to the White House to lure investors. Jared Kushner stepped down as CEO of the Kushner Cos. when he joined the White House. His lawyer has said that he has sold his stake in One Journal Square.
To handle the mapmaking for Trump Bay Street, the Kushner Cos. turned to Evans, Carroll & Associates, an economic consultancy in Boca Raton, Florida.
On May 6, 2015, Evans emailed the New Jersey Department of Labor & Workforce Development requesting that it review a proposed map stretching over two dozen census tracts. The map formed an odd shape, with some relatively low unemployment areas separated by a few miles to high unemployment ones.
By the end of the month, came New Jersey’s reply: The areas included in the map, called a Targeted Employment Area, had an overall unemployment rate of 9.8 percent – high enough to qualify for the EB-5 program.
The unemployment rate for the single census tract that includes 65 Bay Street was not mentioned in the emails, but has typically been much lower, according to Dave Evans of Evans, Carroll & Associates. Evans said the unemployment rate last year for the census tract that includes 65 Bay Street averaged 1.3 percent.
In order to qualify for EB-5 financing, a building needs to be in a Targeted Employment Area with unemployment 150 percent above the average U.S. rate.
Critics have faulted the EB-5 program for failing to bring investment into poor communities as intended. By gerrymandering together rich geographic areas with poor ones, developers have managed to win approval from economic development authorities for luxury projects in Manhattan, California’s Beverly Hills and Miami’s South Beach.
Earlier this year, Evans, Carroll & Associates emailed New Jersey state officials for Kushner’s One Journal Square project, too.
To read the article in its entirety click here.
Kushner tapped program meant for job-starved areas to build a luxury skyscraper
Jared Kushner and his real estate partners wanted to take advantage of a federal program in 2015 that would save them millions of dollars as they built an opulent, 50-story residential tower in Jersey City, N.J.’s booming waterfront district, just across the Hudson River from Lower Manhattan.
There was just one problem: The program was designed to benefit projects in poor, job-starved areas.
So the project’s consultants got creative, records show.
They worked with state officials in New Jersey to come up with a map that defined the area around 65 Bay Street as a swath of land that stretched nearly four miles and included some of the city’s poorest and most crime-ridden neighborhoods. At the same time, they excluded some wealthy neighborhoods only blocks away.
The tactic — critics liken it to the gerrymandering of legislative districts — made it appear that the site was in an area with extraordinarily high unemployment, allowing Kushner Cos. and its partners to get $50 million in low-cost financing through the EB-5 visa program.
The move was legal, and other developers have used similar strategies in recent years, often aided by state officials who welcome the infusion of cash. But it illustrates how Kushner — who ran his family’s real estate company before he became a senior advisor to President Trump — and his partners exploited a loophole in a federal program that prominent members of both parties say has been plagued by fraud and abuse.
On the south side of Jersey City, which has some of the most entrenched poverty in the New York City region, many people interviewed one day last week were surprised that their neighborhood’s troubles were part of the reason that 65 Bay Street got cheap financing.
“That’s very sad,” said Pastor Shyrone Richardson of the World Outreach Christian Church in the struggling Bergen-Lafayette section of Jersey City. “Unfortunately, the people who are benefiting from this are not the people in this area.”
Richardson’s church is in a five-block area where nearly one in five were jobless and there were three fatal shootings in 2015, according to an analysis of crime and census data.
His neighborhood seems a world away from the gleaming office towers and trendy cafes that surround 65 Bay Street. The Jersey City waterfront saw a building boom after 9/11 that transformed the area into one of the hottest real estate markets in the New York metro region, drawing residents from Manhattan and Brooklyn.
Apartments in the Bay Street building, marketed as Trump Bay Street, rent for up to $4,700 a month and offer sweeping views of Lower Manhattan. A nearby commuter train shuttles passengers to the World Trade Center within minutes. The area within a roughly three-block radius around the building had an unemployment rate of just 2.6% in 2015, according to census data.
Under the EB-5 program, a wealthy foreigner can get a fast-track visa granting U.S. residency by investing at least $500,000 in a project in a “targeted employment area.” To qualify, the area must have an unemployment rate at least 1½ times the national average. For developers, the terms of the investment are more favorable than a bank loan.
The Trump administration is considering whether to adopt changes that would prevent EB-5 gerrymandering. Kushner has said he will recuse himself from any discussions on the program.
Kushner Cos., meanwhile, is rushing to raise $150 million in low-cost financing through EB-5 for a separate project in Jersey City: a pair of luxury towers in an area called Journal Square. Kushner’s sister caused a stir this month when she mentioned her brother in a pitch for the project to investors in China.
For that project, too, the company is linking the development to blighted neighborhoods miles to the south while excluding adjoining neighborhoods that have lower unemployment rates, records show.
An executive at U.S. Immigration Fund-NJ, a firm helping Kushner Cos. raise EB-5 money for both projects, defended the practice. Mark Giresi, chief operating officer, called it a “common sense” approach that reflects the broader economic reality of each project’s surroundings. He also said jobs created by the project could be filled by workers from the depressed areas only miles away.
“In large urban markets like Jersey City these types of real estate development projects create much-needed jobs, particularly in the construction industry across areas of the city that cover multiple census tracts,” Giresi said in a statement. Census tracts are government-defined neighborhoods, sometimes as small as a few blocks.
Giresi said the Bay Street project created more than 1,280 construction and other jobs and that 1 Journal Square is projected to create 6,600. Under the program, each $500,000 investment must create at least 10 jobs.
The program’s critics say that cobbling together multiple census tracts to push up the average unemployment rate too often benefits developers and areas that do not need the government help. They point to EB-5 projects in prosperous areas of Manhattan, downtown Washington and in Beverly Hills.
“Many of these affluent-area projects would have been built and jobs created without the infusion of EB-5 capital,” said Gary Friedland, a scholar in residence at New York University’s Stern School of Business. “Consequently, deserving projects can’t be built and the resulting jobs are lost because the projects are deprived of the essential capital to proceed.”
The government caps the number of EB-5 visas it issues each year, and most of the resulting investment goes to high-profile projects in prosperous areas.
A spokeswoman for Kushner Cos. declined to comment, as did Jared Kushner’s spokesman.
Jared Kushner has sold his interest in 1 Journal Square but maintains an ownership stake in 65 Bay Street. The KABR Group, a partner in the luxury tower on Bay Street, also declined to comment.
Kushner’s prominence is drawing renewed attention to the practice, which has been the subject of years of debate in Congress and furious lobbying by the real estate industry. In interviews along Martin Luther King Drive in Jersey City last week, there was a common reaction.
“It’s like we’re being used,” said Helen Gathers, a registered nurse who has lived in Jersey City for 38 years.
Down the block, Laville Penn, a 54-year-old who was released from prison in early 2016 after a drug possession conviction, was looking for employment. He had been searching for steady work in construction for more than six months, he said, but had found only temporary day jobs.
Now, hoping to pick up some hours, he stopped by a lot where a friend was doing contract demolition work. Penn said the high-rises built in Jersey City are typically union jobs. “It’s difficult to get into the union if you don’t have certification or experience,” he said.
The EB-5 program was initiated in 1990 to help attract foreign investment to rural and poor, urban areas that have trouble drawing conventional financing or investment.
But developers are free to string together an endless number of contiguous census tracts until they reach the unemployment threshold. In the years since the Great Recession, this has often meant finding the nearest poor area and drawing a line to it.
Documents obtained from New Jersey through a public records request show just how easy that was for Kushner Cos. and KABR Group as they sought to build the Bay Street tower.
On May 6, 2015, Michael Evans, a consultant working on behalf of the project, sent an email to an official in the New Jersey Department of Labor asking that the Bay Street area be deemed an area with high unemployment. Individual states are responsible for reviewing unemployment data and issuing letters certifying that projects qualify for the federal program.
Evans wrote that such an area could be created by combining 26 census tracts in Jersey City that stretch more than two miles to the northwest and three miles to the southwest.
“The client as always is in a great hurry so if you can e-mail me the letter as soon as it is finished it would be appreciated,” Evans wrote. Evans did not respond to a request for comment.
There was a problem, though. The census tracts weren’t contiguous — and didn’t include the the project itself.
Three weeks later, the state, wrote back that the project qualified under a different but similarly attenuated configuration that achieved the same goal. New Jersey’s state website says it will help developers “perform a special tabulation for the area” of their project using census data.
The state-approved map strung together 16 census tracts that went nearly four miles to the southwest, crossing the New Jersey Turnpike and heading south to the Bergen-Lafayette and Greenville areas. Together, those neighborhoods had an average unemployment rate that edged just higher than 9.3%, the qualifying rate at the time.
That probably saved Kushner and his partners millions of dollars.
Developers typically pay only 4% to 8% interest annually on money raised through EB-5, experts said. Conventional financing can carry an interest rates of between 12% and 18%. On the $50 million for Bay Street, that difference amounts to millions of dollars annually over the life of the loan.
On Jan. 5 of this year, a little over two weeks before Trump was to take office, another consultant working on behalf of Kushner Cos. got in touch with New Jersey state officials again. This time, it was about 1 Journal Square. The census tract where it is located had an unemployment rate of 2.9% in 2015, but the consultant suggested adding five neighborhoods to triple that unemployment rate.
The approval came four days later, records show. Kushner’s sister went to China in May seeking the $150 million in EB-5 financing.
The Trump administration will decide in the coming months whether to enact rules, proposed by the Obama administration, limiting the census tracts that can be considered for EB-5 eligibility to only those directly adjacent to the tract containing the development.
The proposal is being considered by Secretary of Homeland Security John Kelly. Under the proposed rules, neither the 65 Bay Street tower nor the proposed 1 Journal Square project would be in a “targeted employment area.”
EDITORIAL: Where’s outrage over Lakewood?
When are the officials who are elected to represent all their constituents going to address the funding inequities and unequal treatment of the taxpayers and public schoolchildren in Lakewood? Where have state Sen. Bob Singer, Rep. Chris Smith, Gov. Chris Christie and U.S. Sens. Cory Booker and Bob Menendez been on this issue?
Absolutely nowhere. Thanks to the money and power of the Orthodox community, they have done nothing to address problems that could be easily resolved if they had the courage to speak up and the integrity to represent all of their constituencies equally.
Over the past couple of weeks, readers have been exposed to two more disturbing stories about Lakewood schools. The district faces a $15 million budget deficit, the possible layoffs of more than 100 teachers and deep program cuts. And the director of the School for Children with Hidden Intelligence (SCHI), Rabbi Osher Eisemann, was indicted on theft and money laundering charges involving more than $630,000 in public school funds.
It’s a disgrace — two more in the steady drip, drip of outrages that characterize a school district that has had to squeeze resources and programs to accommodate the ever-expanding needs of the Orthodox community’s private schools.
The sad part is that there is virtually nothing in the works in Trenton to correct any of it. Without vocal, organized pressure from the nonOrthodox community inside Lakewood and in the communities surrounding it, there is no reason to believe things won’t get progressively worse.
Why should anyone who lives outside of Lakewood care? First, everyone should be outraged by the injustice that it is taking place in Lakewood’s predominantly minority public schools. Second, the population pressures in Lakewood could, over time, eventually spill over into neighboring towns — something public officials and growing numbers of residents in those town are becoming increasingly conscious of.
If Singer, Christie and other legislators with the ability to influence what goes on in Lakewood had an interest in righting the wrongs there, here are five things they could do that would help:
•The state school funding formula is a mess. But changes proposed by Christie’s “Fair Funding formula” would likely make matters worse. Those suggested by Democratic Senate President Steve Sweeney and Assemblyman Jack Ciattarelli would be an improvement, but would not fundamentally address the unique circumstances confronting Lakewood — specifically, the fact that the busing costs to transport 30,000 Orthodox children to private schools and the extraordinary $97,000 per-pupil cost to educate special education students at SCHI in Lakewood absorb about 40 percent of the school district’s $90 million budget.
No other towns in New Jersey have similar public school budget stresses attributable to the prevalence of private schools within their boundaries. Lakewood is a special circumstance. It requires an aid formula that takes the special circumstances into account.
•Offset the undue influence of the Orthodox community on the school board by requiring that a majority of its members have children in the public school system. Right now, the Orthodox members — all of whom send their children to private Orthodox schools — are in the majority, and decisions they make often are at odds with what is best for non-Orthodox public school students.
•Draft courtesy busing legislation that ends the practice in Lakewood of having separate bus runs to private schools for girls and boys, which dramatically increases the courtesy busing tab. Taxpayers should not have to foot the bill for segregated busing. The Legislature also should reconsider the cost benefit of any courtesy busing.
•Require that private schools be certified by the state in order to be eligible for state funding. Unless basic educational, facilities, health and safety standards are being met, the state should not be providing funding assistance.
•Establish specific criteria and spending caps for private special education schools such as SCHI, where the $97,000 per-student cost is far higher than similar private schools. What is the justification? The short answer: There is none. What SCHI says it needs to implement its program, SCHI gets, on the taxpayers’ dime. The indictment of the school’s director should provide extra incentive to make sure money is being spent wisely and for the stated purpose.
At the same time, the state must ensure that the students who are enrolled at SCHI are representative of the community as a whole. Historically, they have been almost exclusively Orthodox. The state needs to ensure that placements there by Lakewood’s child study teams are based entirely on need.
Some of the valid criticisms about the inequities in the school district have been wrongly directed toward state monitor Michael Azzara. There is only so much he can do. He is bound by existing rules and hamstrung by public officials who have shown no inclination to address the problems.
Editorials, letters to the editors and complaints at public meetings aren’t likely to change the trajectory in Lakewood. Putting direct pressure on lawmakers who can change the rules of the game and challenging in court some of the rules that allow the situation to persist offer the only hope for relief — and justice.
Write, email and phone Singer, Smith, Christie, Booker and Menendez, and demand action. Otherwise, expect more of the same — and worse.
Allure demands lender pay $40M for Brooklyn nursing home
March 06, 2017 01:40PM
By Kathryn Brenzel
The Allure Group fired back against a lawsuit filed by its lender on a Brooklyn nursing home, claiming that the financial firm should pay $40 million for the property.
Allure, headed by Joel Landau, claims that the Sabre Group must pay $40 million for 270 Nostrand Avenue and an additional $6 million because the sale of the property didn’t close on time, according to documents filed in state Supreme Court. Allure, one of the developers at the center of the Rivington House scandal, maintains that “the express and unambiguous provisions” of the mortgage it received from Sabre require the Midtown firm to pay $40 million for the property.
A spokesperson for Sabre would only say that Allure has “been in default for quite some time and that’s why we’re pursuing our claims.”
Sabre sued Allure in December, accusing the company of failing to repay a $20 million loan it provided to acquire the Brooklyn nursing home. Allure purchased CABS Nursing Home in Bedford-Stuyvesant in 2015 for $15.5 million. Sabre claims that, under the terms of the mortgage, it can purchase the nursing home for $25 million because Allure defaulted.
But Allure alleges that because the property was vacant and had no pending litigation at the time that Sabr tried to act on its purchase right, the lender is on the hook for higher purchasing price. The landlord also claims that a liquidated damages provision in the mortgage requires Sabr to put $6 million toward the outstanding balance on its loan, since the financial firm failed to acquire the property after Allure repeatedly scheduled closing dates.
Landau declined to comment.
In December, the city admitted that it did not have a legal case against Allure, despite Mayor Bill de Blasio’s promise to sue the company for flipping 45 Rivington Street. Allure made $72 million when it sold the property to Slate Property Group. In April, New York state Attorney General Eric Schneiderman issued subpoenas after Allure filed demolition plans for the Nostrand property, with the intention of replacing it with a seven-story, 241-unit rental building.
The nursing home filed a lawsuit against Allure in December claiming the company marketed itself as a nursing home business while bidding for the property and instead forced residents out. The lawsuit also notes that the property flip may have led to the deaths of a few nursing home residents, who they say were forced out.
Joel Landau, through a series of demands and other bullying tactics sent in the form of threatening letters from Wordpress, claimed an array of Copyright violations. The poor little man did not like having his face on our pages. So he had his pictures forcibly removed from our pages and our archives with threat of shutting us down for Copyright Violations. While that makes us kinda want to put a Metadata link to his name and Allure Group on every single one of our pages, so that he and Allure will forever be synonymous with every ill, morally bankrupt and skewed activity referenced on these pages (particularly where healthcare facilities are concerned), we figured that would simply be unproductive. Instead, we are going to publish every article about Landau and Allure. We will publish every piece of information available. Just send it over. We hope that one day someone, more clever than him and his band of merry loophole-finders, figures out a way to make him pay for his reprehensible though remarkably clever behavior. He is another person who manipulates the lives of our most vulnerable citizens for ill-gotten gains. To Joel Landau and Shlomo Rechnitz – L’chaim…
City admits it doesn’t have a legal case against Allure Group over Rivington House
Mayor said law department can’t find “pathway” to seeking restitution from Joel Landau’s firm
The city’s hands may be tied when it comes to seeking restitution for the controversial sale of a Manhattan nursing home to a luxury condo developer.
Mayor Bill de Blasio, who in April vowed to sue Allure Group for flipping the property at 45 Rivington Street, said Thursday that the city’s lawyers “cannot find an actual pathway” to restitution.
“I support anything that would get us further restitution for what happened,” the mayor said at a press conference, Politico reported. “I made very clear my anger at the way the private-sector firm handled things,” he said. However, “So far, our law department cannot find an actual pathway.”
Allure made $72 million when it sold 45 Rivington to Slate Property Group, after convincing the city to lift a deed restriction on the site. The de Blasio administration maintained that Allure did not tell the city it intended to sell the building to a developer while negotiations were taking place. But a report from the Department of Investigations found that reps for Allure told the city in March 2015 that if the deed weren’t lifted, it would consider a conversion of the property to luxury apartments.
Comptroller Scott Stringer also accused Allure of misleading City Hall, but mostly faulted the de Blasio administration for mishandling information at virtually every turn. Allure maintains it did nothing wrong.
The mayor has insisted he was not aware of the deal.
Allure, led by Joel Launda, has maintained it did not lie to the city, but earlier this month, the mayor signed a bill to increase oversight of deed restrictions.
Meanwhile, the city hired two law firms this year to represent it in the Rivington deal, and in campaign finance investigations. The contracts are for more than $10 million, Politico reported. [Politico] — E.B. Solomont