New York Times: Marc Held, Partner, Held & Hines, LLP quoted about AG’s lawsuit to ban Yair Levy, the Condo King, from Selling Real Estate in NYS
- Posted on: Jun 9 2010
June 9, 2010, 4:11 pm Developer Accused of Looting Downtown Building’s Reserve Fund By CHRISTINE HAUGHNEY The New York attorney general, Andrew M. Cuomo, is suing the developer of a troubled downtown luxury building, saying he stole $7.4 million from its reserve fund and demanding he compensate buyers of apartments there. The lawsuit, filed Wednesday in State Supreme Court in Manhattan, accuses the developer, Yair Levy, of leaving the 304-unit building at 225 Rector Place in Battery Park City with only $70 in its reserve fund to finance all “capital repairs, replacements and improvements necessary for the health and safety of the residents.” Mr. Levy was supposed to leave 3 percent of the proceeds from his sale of the condos — $7.4 million — in this dedicated fund. Instead, the lawsuit says, Mr. Levy used the money to write checks to American Express, Verizon Wireless and his son-in-law, Daniel Deutsch, who worked with him closely on development projects. Mr. Levy has been asked to pay back the $7.4 million and $5,000 apiece to the 72 purchasers of condos who bought in what the lawsuit called “misleading consumer transactions.” The attorney general also is trying to bar Mr. Levy from ever selling condos in New York State again. “This is huge,” said Marc Held, a lawyer involved in a $100 million lawsuit representing condo buyers affected by the conditions in the building and the money taken out of the reserve fund. “It’s a pretty severe penalty, absent being put behind bars.” Mr. Levy bought the building in 2005 from the Related Companies for $165 million, intending to renovate it and convert the apartments from rentals to condos. The building is now in foreclosure. Mr. Levy did not return a call for comment. Mr. Deutsch declined to comment. The lawsuit was welcome news to condo residents who had been trying to draw attention to the building’s problems. Pamela Flakowitz, a member of the condo’s board of directors and owner of a studio in the building, pointed out that most of the purchasers at this building were first-time home buyers with little extra financial resources to take on a major developer. She added that since residents moved into the property in 2008, they have been living in a largely unfinished building where they even had their heat and hot water cut off because the developer did not pay the bills. Ms. Flakowitz and her fellow tenants contacted the attorney general’s office in 2009 with their concerns and filed their lawsuit. She said that while the building had been in receivership, it has had most of its amenities finished. “It’s obviously been a long time coming for us,” Ms. Flakowitz said, adding that her condo purchase was “all my money from an investment standpoint.” Mr. Levy was accused of attacking Kent M. Swig, his partner in another troubled conversion, that of the Sheffield on West 57th Street, with an ice bucket in 2008. Last year Mr. Levy pleaded guilty to harassment and was sentenced to two days of community service.