From left: Yair Levy, Rector Square (source: PropertyShark) and Attorney General Eric Schneiderman
A state Supreme Court judge has ordered developer Yair Levy to pay $7.4 million in restitution to the Rector Square condominium and permanently banned him from selling real estate in New York state.
Judge Joan Lobis found last month that Levy defrauded the Battery Park City condo conversion, spending millions of dollars in reserve fund money on illegal personal and general business expenses, including charge card accounts, mobile phone bills and writing checks to family members.
The judgment permanently bans Levy from selling condos or co-op projects in New York state, virtually ending a career lasting more than 30 years in the U.S.
“The state of New York has no tolerance for the kind of fraud perpetrated by Yair Levy,” Attorney General Eric Schneiderman said in a statement. “With today’s judgment, Yair Levy is out of business and tenants and homebuyers in New York are more secure without this predator in the marketplace.”
In addition to the judgment, the court ordered Levy to pay $360,000 in civil penalties to the state and another $4,000 in “discretionary allowances.”
Levy told The Real Deal that he plans to appeal the decision.
Former Attorney General Andrew Cuomo initially filed suit after The Real Deal helped uncover a wide range of spending irregularities at the property.
Rector Square, at 225 Rector Place, was foreclosed on by Anglo Irish Bank after contractors walked off the job, Levy defaulted on $165 million in loans, failed to make payments in lieu of taxes to the Battery Park City Authority and sold apartments to an Italian college and allowed an extended-stay hotel company to market certain apartments for transient guests. Anglo Irish bought the building back in an auction and later sold it to Related for $83 million.
Rector Square was one of the first condominium defaults in the current downturn to take place after buyers began closing on their apartments. Attorneys for Levy have have argued that Anglo Irish Bank was partially at fault. The bank was eventually taken over by the Irish government, after it lost billions of dollars in bad real estate loans both in Ireland and here in the U.S.
Marc Held, attorney for the Rector Square unit owners, said, “The unit owners have previously faced extraordinarily difficult living and financial conditions due to the conversion of monies from the reserve account and the commencing of a foreclosure action by Anglo Irish Bank against the sponsor before the building construction was completed,” Held said, adding: “It is the hope and expectation that Mr. Levy will now make restitution to the unit owners for what has transpired.”
Rex Whitehorn, Levy’s attorney, was not immediately available for comment. Kevin McConnell, attorney for the Rector Square Tenants Association, was not immediately available for comment.
Levy, owner of YL Real Estate and one of the city’s longest serving developers, had a number of controversial projects that he developed alone or with various partners.
Among his most controversial projects, he partnered with Kent Swig and Serge Hoyda on the Sheffield, a massive luxury condo conversion at 322 West 57th Street, which was eventually foreclosed on by Fortress Investment Group, which bought the debt from the original lenders. He also teamed up with Swig and investor Charles Dayan on two Upper West Side tenement buildings on West 92nd Street, which were sold after iStar filed to foreclose on them. Plans had called for building on top of the existing properties.
Levy later lost Park Columbus at 101 West 87th Street, which he originally bought from Related Cos., in a tandem deal with Rector Square. Levy threw that building into bankruptcy on the eve of a foreclosure auction, but the property was eventually auctioned off and won by Fisher Brothers, BlackRock and a California fund.