A Platinum/Uber Collaboration and $8M In Losses to Investors

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How several small-time investors got hosed when Uber crashed the taxi market

Unhappy about their losses the green cab owners have sued their broker and his partners for allegedly cheating them out of $8 million

When Dr. Amarpreet Singh received a tip from a patient back in 2013, he was all ears. The city was expanding its taxi fleet, the patient explained. Would he be interested in investing in cabs? “I said I’d certainly like to talk to someone about that,” recalled Singh, chief of oculo-facial plastic surgery at Harlem Hospital Center.

Singh’s patient introduced him to a taxi broker, who said the city was issuing thousands of permits for a new line of cabs, called green taxis, that would pick up passengers in the outer boroughs and upper Manhattan. Some green-taxi owners were already reaping profits of as much as $550 every week, the broker said, and it wasn’t expensive to get in on the action, because the city was offering incentives for cabs retrofitted to accommodate passengers in wheelchairs.

Singh liked the idea of helping disabled New Yorkers get around town, so he paid the broker $75,000 for five green-cab permits, plus another $325,000 for vehicles. Then he waited for drivers to rent his taxis. And waited some more. After nearly two years he got in touch with his patient to see what was up with the investment. Singh learned his cabs were lying fallow in Mill Basin, Brooklyn. He dashed over and found a parking lot filled with 600 cars, none with license plates and some not even outfitted as taxis.

“It was just a sea of green,” said Singh. “I walked out telling myself, Oh my God, what have I done?”

The collapse of the taxi business has dramatically altered New York’s streetscape. Spurred by the advent of Uber and other apps, the number of drivers looking for passengers has grown by 40%, but the surge has meant less business for cabbies, who are making 30% fewer trips than only three years ago. Those who invested in yellow or green cabs are seeing their investments wiped out as drivers flock to rivals or pursue other work and cars sit idle. Since 2013 5,000 taxi drivers have thrown in the towel, and last month Queens-based Melrose Credit Union was seized by state regulators after delinquent cab loans soared tenfold in just 18 months. The stock price of the city’s preeminent taxi lender, Medallion Financial Corp., has fallen so far that one share now costs less than a subway ride.

Among those sucked into the vortex are scores of novice investors who saw the same potential in green cabs as what yellow-taxi medallions offered decades ago: cheap investments (the first medallions sold for $10 in 1937 before peaking at more than $1 million) with yearly returns that far outpaced the stock market. But these small-time players bought green cabs just before the taxi business began its free fall. Singh is in this group along with a dozen other investors, including a home health care company president, a purchasing manager at a software firm, a vice president of sales at a printing company and a commercial real estate broker in Baltimore.

Jake Zamansky, a prominent plaintiff lawyer on Wall Street, said people need to be wary about buying into taxis and other investments that don’t have the same disclosure requirements as publicly traded stocks and bonds. “It’s imperative investors do their own due diligence or stay away,” he said.

The taxi investors are not happy about their losses and have sued in Brooklyn state court, alleging their green-cab broker and his partners cheated them out of $8 million by selling taxi permits “in the manner of a Ponzi scheme.” They also allege the defendants funneled millions of dollars’ worth of taxi money into Platinum Partners, a large hedge fund that federal prosecutors likened to a Ponzi scheme after it collapsed last year.

Billed as a slam dunk

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Williamsburg Waterfront Transformer (and all Related Companies) Sued – Investor Fraud

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Case 1:17-cv-02161-CBA-RML Document 1 Filed 04/10/17

 

DNAInfo – https://www.dnainfo.com/new-york/20170418/bushwick/real-estate-landlord-tenant-housing-scam-investors

Man Behind Williamsburg Waterfront Transformation Sued for Investor Fraud

WILLIAMSBURG — The Brooklyn developer who laid the groundwork for an explosion of residential properties along the Williamsburg waterfront ran a get-richer-quick real estate scheme for five years, conning a small group of Israeli investors out of more than $20 million, according to a Brooklyn federal lawsuit.

Instead, the duo overcharged investors Jacob Schonberg, Binyomin Schonberg, Binyomin Halpern and Raphael Barouch Elkaim hundreds of thousands of dollars for each property and funneled the extra funds into 20 “secret properties,” according to the suit filed on April 10. From those hidden assets, they collected all the rental income — an extra $90 million for themselves.

While the buildings Strulovich and Oberlander were supposed to be refurbishing sunk into neglect, accruing building violations and stop-work orders, the partners sent their investors fictitious updates to trick them  into believing things were going according to plan, and to encourage them to invest in additional properties, the lawsuit charges.

Williamsburg developer Yechezkel Strulovich and his Israeli business partner, Yechiel Oberlander, sweet-talked four well-heeled investors into sinking millions of dollars into 20 properties in Bushwick, Williamsburg, East New York, Bedford-Stuyvesant and Prospect-Lefferts Gardens, promising to fix up and manage the buildings and give the investors their money back in a matter of months, according to the suit filed on April 10. They also promised the funders a big cut of future profits.

The elaborate scam began in 2012, when Oberlander, a member of the small Orthodox Jewish community living in Israel, propositioned the four Israelis about investing in a series of Brooklyn properties, according to the suit.

They would see a full return on their investment within a matter of months, and they would reap 45 percent of the profits after that, Oberlander said, promising to take care of all the construction, renovation and property management needs.

Oberlander advertised his connection to Williamsburg developer Strulovich, whose “vision” for the Williamsburg waterfront in 1998 — which involved converting factories in loft apartments — led Crain’s New York to anoint him as one of “Brooklyn’s miracle makers.”

But in purchase after purchase, Strulovich and Oberlander lied to the investors about the sale price of the properties they’d bought, the lawsuit claims. The two charged overcharged for properties at 901 Bushwick Ave., 106 Kingston Ave. 1213 Jefferson Ave., 369 Gates Ave., 853 Lexington Ave., and 14 other locations by hundreds and thousands of dollars, the investors later found out.

All that extra money supported their “lavish lifestyles” and paid off their personal debts, the complaint claims, although much of it appears to have been funneled into the 20 “secret properties” that Strulovich and Oberlander bought with cash and loans using the investors’ properties as collateral, according to the suit.

Strulovich and Overlander led on their four marks with periodic payouts and photographs of construction sites as evidence of their project’s progress, the lawsuit claims.

The duo intentionally took advantage of the four Israeli investors and “knew that they were not United States citizens or residents, knew they were unfamiliar with the complexities of New York real estate and construction,” the lawsuit reads.

In truth, their actual properties were “languishing, unoccupied and unrenovated” and plagued with stop work orders, code violations and defaulted loan payments, the lawsuit says.

Take, for example, the commercial property at 73 Empire Blvd. in Prospect Lefferts Gardens, where the partners claimed they had paid $1M to secure control of the ground-floor commercial lease.

They actually paid far less than that, the lawsuit alleges, and they never made any repairs on the building, eventually losing a potential contract with Dollar Tree, because actual trees growing inside made the building structurally unsafe, according to the lawsuit.

Another building at 454 Central Ave. has an active stop work order, 23 open Department of Building violations and owes the city more than $130,000 in unpaid Department of Building fines, city records show. It has been cited over the years for tilting dangerously and for collecting hazardous garbage and debris inside and out, DOB violation records show.

The investors first became suspicious in the spring of 2016, after Strulovich and Oberlander took out additional mortgages on three properties they said had run out of money. Then, in February, they found out the duo was trying to sell two of their properties without telling them, raising red flags and prompting them to probe their other investments.

The investors’ attorneys at Oved Law didn’t didn’t return a request for comment.

Judah Zelmanovitz, the attorney who represented the sales of several of the buildings, according to property records, couldn’t be reached for comment.

To read the article in its original format and for access to the case file click here.

Owing 1.3 Billion Dollars to Investors, Abe Goldberg Dies in Poland… and the Money?

 

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Australian corporate fugitive Abraham ‘Abe’ Goldberg dies in Poland, owing more than $1.3 billion

http://www.theage.com.au/business/australian-corporate-fugitive-abe-goldberg-dies-in-poland-owing-more-than-13-billion-20160807-gqmys8.html

 

One of Australia’s most notorious corporate fugitives, Abraham “Abe” Goldberg, has died in Poland more than 25 years after his textile empire collapsed with debts of $1.3 billion and warrants were issued for his arrest.

Creditors and corporate regulators will be incensed to learn that Goldberg is understood to have left an inheritance of more than €500 million ($728 million) after amassing a vast property portfolio in Warsaw since fleeing Melbourne.

Abraham ‘Abe’ Goldberg, one of Australia’s most notorious corporate fugitives, has died in Poland more than 25 years after fleeing Australia.

However, the Australian Taxation Office, disgruntled shareholders and more than 30 major lenders will not receive a cent.

To add further insult, tributes in Poland last week have hailed Goldberg as a “distinguished benefactor” for the significant financial contribution he made to several Jewish organisations based in Poland.

In the late 1980s, Goldberg ranked as Australia’s fourth wealthiest person with an estimated fortune of $600 million.

Known in corporate circles as the “square dancer” for his habit of rapidly changing business partners, Goldberg lived in a sprawling faux-Tudor mansion on Toorak’s Orrong Road.

At the time, his company Linter Group was reputed to be the world’s biggest textile manufacturer, with a stable of famous Australian brands including Speedo, Stubbies, Pelaco and King Gee.

The company was battered by the sharemarket crash in 1987 but continued to take on more debt.

The empire crumbled in 1990, when Linter Group was placed in liquidation, but millions of dollars had already been siphoned to offshore havens and trust accounts.

Goldberg followed the lead of other corporate villains such as Alan Bond and Christopher Skase by fleeing to Europe and thumbing his nose at the Australian Securities and Investments Commission.

He sought refuge in Poland, where he was born in 1929. His family had emigrated to Australia in 1948 after escaping from a Nazi ghetto during the war.

He changed his name to Aleksander Kadyks but used several aliases, including Adam Goldberg and Aleksander Goldberg, before establishing a string of businesses in Warsaw with his daughter and son-in-law.

Australian corporate investigators issued more than 10 arrest warrants for Goldberg, but the only person to face justice over Linter Group’s demise was the company’s finance director Katy Boskowitz, who received a five-year prison sentence in 1998.

While the global hunt by ASIC and liquidators foundered, a journalist from The Bulletin magazine tracked Goldberg down in 2005. He was hiding in plain sight, living in a luxury apartment in an upmarket suburb of Warsaw.

Goldberg was coy when asked if he intended to return to Australia.

“When I’m ready I will come,” he said.

“People live to 100. There’s plenty of time. I’ll come when it suits me,” he told The Bulletin.

Goldberg was 87 when he died last month.