Crain’s Business: 225 Rector
- Posted on:
Crain’s Business: Marc Held, Partner at Held & Hines, LLP quoted re: 225 Rector
Article can be found at https://www.crainsnewyork.com/article/20101201/REAL_ESTATE/
Court puts Yair Levy in state’s crosshairs The New York State Supreme Court gives state attorney general green light to proceed with its case against troubled developer for raiding the $7.4 million reserve fund for 225 Rector Place. By Amanda Fung Published: December 1, 2010 – 1:41 pm The court has ruled against Yair Levy and given the New York attorney general’s office the right to proceed with its charges against the troubled developer for defrauding purchasers at his failed Battery Park City condo conversion Rector Square and raiding the building’s $7.4 million reserve fund. Attorney General Andrew Cuomo charged Mr. Levy and his firm, YL Real Estate Developers, for depleting the reserve fund to a mere $70 for the 303-unit Rector Square conversion project. The fund was supposed to be used to ensure that repairs and improvements were made at the building. Mr. Levy motioned to dismiss the lawsuit, arguing that he had up to five years to replenish the reserve fund without violating the law. The New York State Supreme Court in Manhattan denied Mr. Levy’s request and ruled that the developer “failed to meet the funding obligations,” according to the court ruling filed Monday. Mr. Cuomo’s office declined to comment, and Mr. Levy could not be reached for comment. Last year, the attorney general began investigating Mr. Levy and discovered that the developer depleted the building’s reserve funds for personal and general purposes unrelated to the condo conversion located at 225 Rector Place. “These included payments of Macy’s and American Express credit card bills, payments personally to Levy and his family…and payments to Staples, Verizon Wireless and to the Oxford Health Plan,” said the court filing. In June, Mr. Cuomo’s office sued Mr. Levy and his firm for restitution, damages and penalties. Separately, 45 tenants of Rector Square sued Mr. Levy and other parties involved in the project for $100 million, alleging fraud. A decision on that lawsuit is pending. “The unit owners are pleased that the court has prevented Yair Levy from getting out of his legal and financial responsibilities under the law by denying Mr. Levy’s claims that the attorney general’s office did not have the authority to act,” said Marc Held, an attorney with law firm [Held & Hines] who is representing the Rector Square tenants. “Clearly, a sponsor should be held fully accountable when he raids a segregated reserve fund account designated for the benefit of unit owners in order to pay his personal bills.” Meanwhile, earlier this month, Rector Square’s lender, Anglo Irish Bank, bought the property back at a deep discount during a foreclosure auction. Last year, YL Real Estate defaulted on its $165 million mortgage on Rector Square. In its defense, YL Real Estate claimed that Anglo Irish did not comply with its loan obligations, which stalled the condo-conversion project. Anglo Irish, which was owed roughly $135 million on the project, bought it back for just $82.7 million. To date, only 72 units at the building have been sold. It’s unclear what Anglo Irish has planned for the building, but the new owner could choose to continue the conversion or maintain it as a rental property. Entire contents © 2010
