Skip to main content

Boymelgreen, Newswalk developer and Forest City ally, settles with AG, barred from condos for 2 years

So the Newswalk developer (who got it cheap)--and flipper of the Ward Bakery and Forest City Ratner ally--maybe wasn't the most honorable businessman. [Was Boymelgreen merely a counterparty, as he subleased property to Forest City? Evidence suggests more overlap of interests, given that Boymelgreen agreed to the lease without contacting landlord Henry Weinstein.]

The New York Times today had a hand-delivered scoop, New York Attorney General Settles Inquiry Into Once-Successful Developer:

The New York attorney general said on Monday that his office had settled a long-running investigation into the business practices of Shaya Boymelgreen, a once-high-flying developer whose collapse during the recession left a trail of irate condominium owners, partners and lenders.
Attorney General Eric T. Schneiderman said the agreement would put “an end to Mr. Boymelgreen’s perpetual fraud and abuse in New York City real estate securities.”
Later today, Schneiderman issued a press release, A.G. Schneiderman Announces Settlement Barring Major NYC Developer From Participating In Real Estate Offerings:
NEW YORK—Attorney General Eric T. Schneiderman today announced a settlement with real estate developers Jeshayahu Boymelgreen, Itzhak Katan, and Domenick Tonacchio and several of their entities. The settlement ends the Attorney General’s investigation of potential Martin Act violations at six condominiums in Manhattan and Brooklyn that were developed by Boymelgreen either in partnership with others or on his own. The agreement also bars Boymelgreen from participating in the offer or sale of securities, including condominiums, in or from New York State for a period of two years. The Attorney General’s investigation found numerous violations at the properties, including failure to complete construction projects after selling residential units and failure to remedy alleged construction defects. Should Boymelgreen fail to fulfill his obligations under the settlement, he will be automatically and permanently barred from participating in the offer and sale of securities in or from New York State.
“Today’s settlement should serve as a lesson to other developers who choose to ignore and break the rules,” said Attorney General Schneiderman. “We will not hesitate to take tough action against unscrupulous individuals who violate the rights of purchasers and tenants. I am pleased that this settlement will return restitution to those who have been harmed by these illegal practices.”
The six properties included in the settlement are:
The Downtown Condominium at 15 Broad Street in Manhattan;
The 20 Pine Condominium in Manhattan;
Beacon Tower at 85 Adams Street in Brooklyn;
The Novo Condominium at 353 Fourth Avenue in Brooklyn;
The Crest Condominium at 302 Second Street in Brooklyn; and
The Newswalk Condominium at 535 Dean Street in Brooklyn.
The various projects involved partnerships, but Boymelgreen and entities he controlled were the sole developers involved in the Newswalk Condominium, according to the AG.

Why the AG's involved

The press release stated:
The Martin Act, New York’s blue sky law, requires offerors of real estate securities, such as cooperatives and condominiums, to disclose the terms of the offering to purchasers in an offering plan. The law also gives the Attorney General broad enforcement powers to compel developers to fulfill their legal obligations and promises made in the offering plan. For example, developers are required to complete construction of their projects by procuring the permanent certificate of occupancy (PCO) promised in the offering plan, and they must set aside money necessary to complete the project. Developers are also required to deliver properties that conform to the New York City Building Code which establishes standards for fire-safe construction and prevention of water leaks.
Regarding Newswalk, the press release steated:
Newswalk is a 137-unit condominium in Prospect Heights, Brooklyn. Boymelgreen began development of the property in 2000 and all residential units have been sold. Respondent Boymelgreen promised to deliver a building compliant with the New York City Building Code. The Attorney General has collected evidence indicating that the building is lacking fireproofing and suffers from other construction defects. Newswalk unit owners sued respondent Boymelgreen in a private action nine years ago and Boymelgreen has failed to resolve that litigation. Today’s settlement requires Boymelgreen to deposit funds with the Attorney General and, if the Newswalk case is not resolved by a date certain, those funds will be released to the Newswalk homeowners.
Also under the settlement the respondents will pay the Attorney General $100,000 to cover the cost of its investigation.
The Times reported:
The investigation dates to 2013, but condo buyers in Mr. Boymelgreen’s buildings began filing lawsuits as early as 2007. Residents complained of unfinished work, widespread leaks and a lack of fireproofing. At Newswalk, condo owners had to spend an additional $8 million “in order to make the building habitable,” said David L. Berkey, a lawyer for the condo board, which sued Mr. Boymelgreen and his partners.Mr. Berkey said he was hopeful that the attorney general’s settlement would quickly lead to a settlement with his clients. Mr. Boymelgreen’s offering plan for Newswalk in 2002 indicated that the apartments would generate $127 million. “There should be enough proceeds to enable a settlement,” Mr. Berkey said, “unless it’s been lost on other bad deals.”


Comments

Popular posts from this blog

Barclays Center/Levy Restaurants hit with suit charging discrimination on disability, race; supervisors said to use vicious slurs, pursue retaliation

The Daily News has an article today, Barclays Center hit with $5M suit claiming discrimination against disabled, while the New York Post headlined its article Barclays Center sued over taunting disabled employees.

While that's part of the lawsuit, more prominent are claims of racial discrimination and retaliation, with black employees claiming repeated abuse by white supervisors, preferential treatment toward Hispanic colleagues, and retaliation in response to complaints.

Two individual supervisors, for example, are charged with  referring to black employees as “black motherfucker,” “dumb black bitch,” “black monkey,” “piece of shit” and “nigger.”

Two have referred to an employee blind in one eye as “cyclops,” and “the one-eyed guy,” and an employee with a nose disorder as “the nose guy.”

There's been no official response yet though arena spokesman Barry Baum told the Daily News they, but take “allegations of this kind very seriously” and have "a zero tolerance policy for…

Behind the "empty railyards": 40 years of ATURA, Baruch's plan, and the city's diffidence

To supporters of Forest City Ratner's Atlantic Yards project, it's a long-awaited plan for long-overlooked land. "The Atlantic Yards area has been available for any developer in America for over 100 years,” declared Borough President Marty Markowitz at a 5/26/05 City Council hearing.

Charles Gargano, chairman of the Empire State Development Corporation, mused on 11/15/05 to WNYC's Brian Lehrer, “Isn’t it interesting that these railyards have sat for decades and decades and decades, and no one has done a thing about them.” Forest City Ratner spokesman Joe DePlasco, in a 12/19/04 New York Times article ("In a War of Words, One Has the Power to Wound") described the railyards as "an empty scar dividing the community."

But why exactly has the Metropolitan Transportation Authority’s Vanderbilt Yard never been developed? Do public officials have some responsibility?

At a hearing yesterday of the Brooklyn Borough Board Atlantic Yards Committee, Kate Suisma…

Barclays Center event June 11 to protest plans to expand Israeli draft; questions about logistics

At right is a photo of a poster spotted in Hasidic Williamsburg right. Clearly there's an event scheduled at the Barclays Center aimed at the Haredi Jewish community (strict Orthodox Jews who reject secular culture), but the lack of English text makes it cryptic.

The website Matzav.com explains, Protest Against Israeli Draft of Bnei Yeshiva Rescheduled for Barclays Center:
A large asifa to protest the drafting of bnei yeshiva in Eretz Yisroel into the Israeli army that had been set to take place this month will instead be held on Sunday, 17 Sivan/June 11, at the Barclays Center in Downtown Brooklyn, NY. So attendees at a big gathering will protest an apparent change of policy that will make it much more difficult for traditional Orthodox Jewish students--both Hasidic (who follow a rebbe) and non-Hasidic (who don't)--to get deferments from the draft. Comments on the Yeshiva World website explain some of the debate.

The logistical questions

What's unclear is how large the ev…

Atlanta's Atlantic Yards moves ahead

First mentioned in April, the Atlantic Yards project in Atlanta is moving ahead--and has the potential to nudge Atlantic Yards in Brooklyn further down in Google searches.

According to a 5/30/17 press release, Hines and Invesco Real Estate Announce T3 West Midtown and Atlantic Yards:
Hines, the international real estate firm, and Invesco Real Estate, a global real estate investment manager, today announced a joint venture on behalf of one of Invesco Real Estate’s institutional clients to develop two progressive office projects in Atlanta totalling 700,000 square feet. T3 West Midtown will be a 200,000-square-foot heavy timber office development and Atlantic Yards will consist of 500,000 square feet of progressive office space in two buildings. Both projects are located on sites within Atlantic Station in the flourishing Midtown submarket.
Hines will work with Hartshorne Plunkard Architecture (HPA) as the design architect for both T3 West Midtown and Atlantic Yards. DLR Group will be t…

Not quite the pattern: Greenland selling development sites, not completed condos

Real Estate Weekly, reporting on trends in Chinese investment in New York City, on 11/18/15 quoted Jim Costello, a senior vice president at research firm Real Capital Analytics:
“They’re typically building high-end condos, build it and sell it. Capital return is in a few years. That’s something that is ingrained in the companies that have been coming here because that’s how they’ve grown in the last 35 years. It’s always been a development game for them. So they’re just repeating their business model here,” he said. When I read that last November, I didn't think it necessarily applied to Atlantic Yards/Pacific Park, now 70% owned (outside of the Barclays Center and B2 modular apartment tower), by the Greenland Group, owned significantly by the Shanghai government.
A majority of the buildings will be rentals, some 100% market, some 100% affordable, and several--the last several built--are supposed to be 50% market/50% subsidized. (See tentative timetable below.)

Selling development …

Forest City acknowledges unspecified delays in Pacific Park, cites $300 million "impairment" in project value; what about affordable housing pledge?

Updated Monday Nov. 7 am: Note follow-up coverage of stock price drop and investor conference call and pending questions.

Pacific Park Brooklyn is seriously delayed, Forest City Realty Trust said yesterday in a news release, which further acknowledged that the project has caused a $300 million impairment, or write-down of the asset, as the expected revenues no longer exceed the carrying cost.

The Cleveland-based developer, parent of Brooklyn-based Forest City Ratner, which is a 30% investor in Pacific Park along with 70% partner/overseer Greenland USA, blamed the "significant impairment" on an oversupply of market-rate apartments, the uncertain fate of the 421-a tax break, and a continued increase in construction costs.

While the delay essentially confirms the obvious, given that two major buildings have not launched despite plans to do so, it raises significant questions about the future of the project, including:
if market-rate construction is delayed, will the affordable h…

"There is no alternative": DM Glen on de Blasio's affordable housing strategy

As I've written, Mayor Bill de Blasio sure knows how to steer and spin coverage of his affordable housing initiatives.

Indeed, his latest announcement, claiming significant progress, came with a pre-press release op-ed in the New York Daily News and then a friendly photo-op press conference with an understandably grateful--and very lucky--winner of an affordable housing lottery.

To me, though, the most significant quote came from Deputy Mayor Alicia Glen, who, as the Wall Street Journal reported:
said public housing had been “starved” of federal support for years now, leaving the city with fewer ways of creating affordable housing. “Are we relying too heavily on the private sector?” she said. “There is no alternative.” Though Glen was using what she surely sees as a common-sense phrase, it recalls the slogan of a politician with whom I doubt de Blasio identifies: former British Prime Minister Margaret Thatcher, a Conservative who believed in free markets.

It suggests the limits to …