Brooklyn Properties in Bankruptcy, Fraud and a Madoff-Style Property Ponzi Scheme – Clever Fraudsters

Clockwise from left: 119 Rogers Avenue, 325 Franklin Avenue, 53-55 Stanhope Street and 73 Empire Boulevard (Credit: Google Maps)

Clockwise from left: 119 Rogers Avenue, 325 Franklin Avenue, 53-55 Stanhope Street and 73 Empire Boulevard (Credit: Google Maps)

Amid fraud case, a bevy of Brooklyn properties end up in bankruptcy court

Nearly 20 limited liability companies for individual multifamily buildings that are linked to a federal fraud complaint are now bankrupt.

The filings late last month in a U.S. bankruptcy court in White Plains also relate to over a dozen foreclosure cases initiated by an affiliate of Maverick Real Estate Partners, which in court filings is seeking information on the identity of the owner behind the low-rise, residential properties, all of which are scattered throughout Brooklyn.

In April 2017, Israeli investors Jacob and Binyomin Schonberg, Binyomin Halpern and Raphael Barouch Elkaim alleged in a complaint filed in federal court in Brooklyn that Yechezkel Strulovich and Yechiel Oberlander defrauded them out of more than $20 millionin a scheme carried out “in the style of Bernie Madoff.”

Eleven properties that are now in Chapter 11 proceedings — located predominantly in the neighborhoods surrounding Williamsburg and Crown Heights — were also named as defendants in the fraud case against Strulovich and Oberlander. That case, which a judge dismissed in part and sent to arbitration in 2017, included more than 40 defendants, mostly LLCs that have not filed for bankruptcy.

GC Realty Advisors' David Goldwasser (Credit: LinkedIn)

The LLCs that are bankrupt and own the underlying Brooklyn properties all list David Goldwasser of GC Realty Advisors as their authorized signatory, according to court filings. GC Realty is described as a commercial real estate advisory firm, per its LinkedIn page, which notes that it is based in Boca Raton, Florida, and has offices in New York. The state’s Division of Corporations shows that GC Realty has an address in East Midwood, Brooklyn.

Goldwasser is also listed as a principal at FIA Capital Partners, which is also based out of Florida and New York, according to his apparent LinkedIn profile.

A message left with FIA was not returned by the time of this story. The firm specializes in acquiring distressed properties and portfolios, according to its website.

Questions over control

The series of bankruptcies filed in White Plains starting on May 20 show that all of the properties, which number at least 18, are also affiliated with 73 Empire Development LLC. The latter owns the ground lease on a roughly 30,000-square-foot development site — it’s currently a vacant one-story retail building — at 73 Empire Boulevard in Crown Heights.

Empire Development, which is one of the defendants in the fraud case against Strulovich and Oberlander, also filed for bankruptcy in February. The debtor’s plan, according to court records in White Plains, is to build a 58,000-square-foot, two-story retail property at 73 Empire Boulevard.

Maverick's David Aviram (Credit: LinkedIn)

But the connection between Goldwasser’s GC Realty, Empire Development and the 18 other bankrupt properties is not yet clear. Maverick, the debt fund led by David Aviram that buys distressed mortgages, wants some clarity on the matter.

A recent filing from the debtors claims that one of Maverick’s affiliates, Brooklyn Lender LLC, took on 13 notes and mortgages — totaling $36 million — on 26 properties that originated with Signature Bank. As a result of the Chapter 11 filings, Maverick wants a judge to allow a full examination into who controls the various debtors, pointing to Goldwasser’s name in court documents.

“To Brooklyn Lender’s knowledge, Goldwasser was not previously involved with the Debtors, and understanding his new role and responsibilities with respect to these Bankruptcy Cases and the Debtors’ management is of paramount importance,” Maverick said in a recent filing.

Maverick noted that when the Signature Bank loans were made, Strulovich maintained that he was the 100 percent sole member of the debtor entities. In the fraud case, however, he admitted this was not the case. In October 2017, Maverick’s Brooklyn Lender filed 14 foreclosure cases against the now bankrupt properties, alleging that the loans were in default, in part due to misrepresentations by their owners.

The petition made by Maverick in bankruptcy court now asserts that a further examination is needed to determine who actually owns the Brooklyn properties, citing a guilty plea by Goldwasser to defrauding two banks in the early 2000s. Goldwasser was sentenced to 27 months in federal prison — Federal Bureau of Prisons records show he was released in September 2005 — and ordered to pay $2.8 million in restitution. A judge also ordered that Goldwasser “is not to be employed in any position requiring fiduciary responsibilities.”

All of the debtors in the bankruptcy cases, except Empire Development, have opposed the motion by Brooklyn Lender, claiming that its parent Maverick has an “unspoken agenda” and that they are working on a plan that includes paying back Maverick. Lists of unsecured creditors in the various bankruptcy cases show that Brooklyn Lender is owed between $2.7 million and nearly $5 million, while the New York-based law firm Abrams Fensterman is owed a little more than $150,000.

Mark Frankel, an attorney with New York’s Backenroth Frankel & Krinsky representing the debtors in bankruptcy proceedings, declined to comment, as did Maverick’s Aviram, which is being represented in bankruptcy court by Stroock & Stroock & Lavan. Strulovich and Oberlander could not be reached and their lawyers did not return requests for comment.

Unresolved fraud claims

In the fraud case against Strulovich and Oberlander, the defendants said that the money they received from the plaintiffs would be invested in Brooklyn properties that they would buy, develop and rent out, with returns on those investments coming in six to seven months. The plaintiffs also would receive 45 percent of the profits from the multifamily purchases.

But plaintiffs claimed that Strulovich, Oberlander and other defendants inflated the value of that real estate and used their money to acquire and develop properties for their own personal benefit, pay off personal debts and support their “lavish lifestyles,” according to the civil complaint filed two years ago. The Brooklyn sites purchased with their funds were “left to languish, undeveloped and dilapidated,” alleged the plaintiffs.

“The entire process was nothing more than an elaborate fraud to personally enrich the individual defendants,” said their lawsuit.

Court filings in that litigation claim that Oberlander allegedly approached the plaintiffs in early 2012 about investing in a project with him and Strulovich at 908 Bergen Street in Crown Heights. Oberlander sent prospectuses for 19 properties between 2012 and 2014 that were meant to entice the plaintiffs into make more investments, they asserted in the dispute.

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Suing for Silence – Rabbis who Report Sexual Abuse, Bloggers who Write About Fraud, Housing, etc. The Courts as a Weapon One Example [video]

 

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We do not do the justice to the subjects within the community that FailedMessiah did. He was better at it. Had he not moved on, we would not have found our place on this crusade of sorts. We can only try to do our best.

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The Plaintiff had another victory at the hearing on May 8, 2019, leaving much of the Complaint and other documents sealed, in clear violation of the First Amendment. The articles in question were written in 2016, outside the Statute of Limitations, brokering no argument, except when you have the Kings County deck stacked against you.

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17 Properties, $173M Price Tag, $43-$200M Appraisals, Property Owners Controlling Process – Profiteering from Homelessness

Appraisers question process NYC used to value properties before shelling out $173 million to shady landlords

Appraisers question process NYC used to value properties before shelling out $173 million to shady landlords

Mayor de Blasio’s release of hundreds of pages of appraisal documents used in the city’s controversial $173 million purchase of 17 properties from two shady landlords has raised more questions than it has answered, appraisers who reviewed the records said.

The biggest irregularity, they said, is that BBG Inc., the appraiser hired by former owners Jay and Stuart Podolsky, submitted an unsigned, “restricted” draft estimate intended only for the client, not the buyer. But the buyer, the city in this case, received a copy of that appraisal.

“It’s inappropriate to use it, especially if you know someone other than the owner might have to rely on your report,” said Michael Vargas, president of the Vanderbilt Appraisal Company. He said the use of draft and “restricted” appraisals is frowned upon in the industry because it gives a client the ability to influence an appraisal.

“It’s a way for the client, the property owner, to control the process,” Vargas said. “It’s kind of like talking to the client and asking him, ‘Let me know if I should change the value to your liking.’”

Paula Konikoff, a lawyer and expert on appraisal standards, said the city should not have accepted an appraisal from the sellers without a signature because it carries little weight as an estimate. “Frankly, they should know better,” she said. “Why didn’t they bother to get the signed document?”

Eight appraisal estimates of the properties offered widely divergent assessments of their worth. One, conducted by the city Department of Housing Preservation and Development, set the total value at $49 million. Another, commissioned by the city Law Department and conducted by Metropolitan Valuation Services, estimated the value of the properties was $143 million. A third, conducted by the Podolsky firm of choice, BBG Inc., was done by appraiser Joel Leitner, who worked for BBG at the time and put the value at $200 million.

 

City Department of Finance tax records list the total value of the 17 properties at just over $40 million. City tax levies are based on that number. If the properties were worth millions more, as some of the appraisals suggest, it means the city may have taxed the owners too little for years. If the true value of the properties is around $49 million, as one appraisal suggested, the city paid far too much for them..

De Blasio spokeswoman Jaclyn Rothenberg said the broad difference exists because the “valuations prepared by our independent appraiser were based on different assumptions than those used by DOF to annually assess all real property in the city.”

“DOF follows state law in valuing property and its assessments are based on current use. The independent appraisers valued the properties for acquisition purposes,” she said.

Even Leitner described it as “unusual” for anyone but the client to have a copy of such a draft appraisal.

“If my client asked me to give it to the city, I would have said no because it’s unsigned,” Leitner told the Daily News. “That should not be affecting the sales price,” he said, referring to the unsigned appraisal.

The Podolskys have a history of real estate woes in New York City. In 1986, they pleaded guilty to more than two dozen felonies in connection with their real estate holdings in Manhattan. They also allegedly covered up extensive fraud involved in acquiring the properties they are now selling to the city, several sources have told The News.

 

Last month, the city said it had finalized the deal to buy the 17 properties in the Bronx and Brooklyn used to house the homeless for $173 million. The city plans to convert the “cluster-site” apartments to permanent affordable housing.

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Homelessness in NY, Real Estate Enterprises and Sweetheart Deals and The Money that Owns NY Politics

De Blasio and Cuomo are failures on homelessness, report says

De Blasio and Cuomo are failures on homelessness, report says

Homelessness in New York City is projected to increase by 5,000 people in 2022 — 7,500 more than Mayor de Blasio predicted when he outlined his plan to tackle the problem in 2017, a new report from the Coalition for the Homeless revealed.

The report — the findings of which the Daily News obtained Monday — projects the spike unless de Blasio “immediately changes course” by increasing the number of apartments set aside for the homeless by 30,000.The Coalition, which plans to release its report Tuesday, slammed both de Blasio and Gov. Cuomo, giving both failing grades in four categories.

De Blasio got an F for his inability to create more housing. Cuomo received failing grades for his performance on housing vouchers, homelessness prevention and cost-shifting practices that the Coalition claims hurt the city.

“The mayor currently has a completely inadequate plan to address homelessness,” Coalition policy director Giselle Routhier said.

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In the city’s 2017 Turning the Tide on Homelessness report, de Blasio administration officials predicted the shelter population would dip by 2,500 by 2022.

But according to Routhier and the Coalition, that isn’t happening unless the city creates more permanent affordable housing, more quickly. Routhier would like to see 24,000 new apartments created through new construction and 6,000 added through preservation efforts.

“With this simple change, the city can provide thousands of homeless men, women, and children with safe, clean, and stable homes,” she said.

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De Blasio recently made a move to add more permanent affordable housing to the mix when it purchased 17 properties used as “cluster” site homeless shelters from notorious landlords Jay and Stuart Podolsky for $173 million. The two pleaded guilty to dozens of felonies in 1986 in relation to their Manhattan real estate holdings. They hired Frank Carone, a de Blasio donor and friend, to shepherd their most recent deal with the city to the finish line..

While technically adding permanent affordable housing to the market and potentially improving the lives of tenants, the units will house many of the same homeless people they housed when classified as shelters.

The Coalition did not spare Cuomo in its assessment either, taking him to task for not increasing the money it puts toward housing vouchers and failing to come up with a better plan to house people leaving prison.

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From Zoning to Nursing Care Centers to PAC’s, Selling New York City for Votes – Going for the Presidency Prize…

De Blasio is still selling City Hall, with not an ounce of shame

Mayor de Blasio is back to selling City Hall, if he never even stopped.

In his second term as in his first, the crusading progressive who won the mayoralty vowing to drive out the special interests is instead thoroughly in bed with those same lobbyists and fat-cat donors — and he barely even bothers hiding it.

De Blasio, The City reports, is personally soliciting donations for his latest political action committee — the one financing his delusional presidential ambitions — from people doing business with the city and seeking favorable treatment.

This, just days after the disclosure that the city Department of Investigation concluded that de Blasio had violated conflict-of-interest laws by soliciting cash for his now-defunct nonprofit from those seeking favors — despite being warned against it by his own counsel.

The mayor’s response, now as then: “Everything we’re doing is legal.”

“Legal” meaning “we can get away with it” — because the US Supreme Court has made prosecuting official corruption incredibly difficult these days. But it still reeks.

In his defense, de Blasio says every donation he personally solicits is checked against an official database of entities doing city business. But, as The City shows, that list is “hardly complete.”

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Rezoning Projects by the Books in Crown Heights, Hardly… Judge Halts Project

Arrested development: Judge halts controversial Crown Heights project amid legal battle

A Kings County Supreme Court judge slapped a controversial mixed-use development with a temporary restraining order on April 17, after local anti-gentrification advocates claimed the developer used every trick in the book to avoid having to preform a state-mandated environmental-review process, while the city let them get away with it to pave the way for more affordable housing.

We fought the Department of City Planning, and watched our elected officials allow the developer to lie on their applications, so they did not have to be held accountable for creating the largest residential complexes in Brooklyn,” said Alicia Boyd, founder of anti-gentrification group Movement to Protect the People.

The city awarded developers Cornell Realty and Carmel Partners the rights to build two 16-story towers near Franklin Avenue and the Brooklyn Botanic Garden at 40 Crown St. and 931 Carroll St. following a rezoning process that capped off with a December Council vote, where Crown Heights Majority Leader Laurie Cumbo wielded her key vote as the area’s representative to green-light the project, in exchange for the developer’s promise to expand the project’s affordable-housing component from 140 to 258 units.

But Boyd’s suit — which names the Department of City Planning and Cumbo as co-defendants, in addition to Cornell — alleges that the developers lied on re-zoning and building documents to underplay the scope of their proposed mixed-use project, misstating the amount of new residential units included in the development and ignoring vast swaths of affected land in a preliminary assessment of the project.

And fudging the numbers allowed the developers to illegally circumvent a much more thorough environmental review of the project, which the advocates claim would have demonstrated a serious strain on local sewers, roads, and schools as a result of the towers and the influx of new Crown Heights residents they would attract.

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Mahna From Heaven, $173M Land Deal, an Appraiser Accused of Embezzlement, A Democratic Heavyweight – de Blasio Donor and a Delayed FOIA Request

De Blasio hands over appraisals after weeks of evasion

De Blasio hands over appraisals after weeks of evasion

One of the appraisers hired by two shady landlords to value properties they would sell to the city for $173 million was fired from his firm amid allegations of embezzlement, misappropriation and fraud, court records and city appraisal documents show.

Joel Leitner, who formerly worked for BBG Inc. before his acrimonious departure from the appraisal firm, submitted a $200 million appraisal on the 17 properties in Jan. 2018, documents released late Monday afternoon by City Hall show.

Just months after Leitner finished his appraisal, BBG alleged on May 29 in state Supreme Court that Leitner’s behavior at the firm constituted “embezzlement, material misappropriation, fraud and dishonesty.” The allegations were made as part of a counterclaim the firm filed in response to Leitner suing over being fired by the firm.

Leitner and BBG were working for the Podolsky brothers, two shady landlords who just sold the buildings earlier this month to the city after years of charging taxpayers exorbitant fees to house homeless people in them.

Stuart Podolsky (left) and Jay Podolsky (right) from Park West Hotel are pictured Feb. 15, 1988. The Podolskys are the sons of notorious slumlord Zenek Podolsky.
Stuart Podolsky (left) and Jay Podolsky (right) from Park West Hotel are pictured Feb. 15, 1988. The Podolskys are the sons of notorious slumlord Zenek Podolsky. ((Clarence Davis)/New York Daily News)

Court filings do not indicate that Leitner’s work on the Podolsky appraisal had anything to do with the firm’s decision to fire him in April 2018.

During a Q and A with reporters Monday, city Social Services Commissioner Steve Banks suggested the firm is well-respected.

“They have experience working regularly on affordable housing,” he said.

Leitner’s appraisal handiwork went on full display late Monday afternoon when the city released documents connected to the controversial land deal that’s taken heat for its lack of transparency and potential conflicts of interest.

The release of almost 2,000 pages of redacted appraisal documents came a month after the Daily News requested the records be made public and weeks after Comptroller Scott Stringer slapped City Hall with a subpoena to obtain them.

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