The Real Deal New York

Judge tells Boymelgreen to hand over 15 Broad Street records

Landlord the subject of Attorney General probe into FiDi condo development

September 23, 2014 05:00PM
By David Jones

15-broad

15 Broad Street and Jeshayahu Boymelgreen

A Manhattan Supreme Court judge yesterday denied a last-ditch effort by Jeshayahu Boymelgreen to avoid handing over financial records as part of a state investigation into the development of 15 Broad Street in the Financial District.

Boymelgreen asked the court to block an earlier order to turn over financial records to Attorney General Eric Schneiderman. According to court documents filed Sept. 3, the developer was also seeking to reduce the amount of money required to fund a $470,000 escrow account to make repairs at the condo — known as Downtown by Starck — which Boymelgreen jointly developed with Africa Israel.

Justice Debra James, however, rejected the requests in a decision released yesterday, saying the developers failed to follow state procedural grounds for their argument.

“The arguments of the movants that they are not jointly and severally responsible for maintaining the escrow account at $470,000 and that the directive that movants disclose certain financial information be stayed likewise lacks merit,” she wrote in the decision released yesterday.

Steven Sladkus, attorney for unit owners at the condo, said they were pleased by the decision.

“We’re glad to see that the courts are rejecting Boymelgreen’s arguments why he shouldn’t be required to maintain an escrow account as security for the sponsor to obtain a permanent certificate of occupancy for 15 Broad, as was set forth in the very offering he participated in with Africa Israel,” Sladkus said in a statement. “Accountability is one step closer to the light at the end of the tunnel.”

Schneiderman filed suit against Boymelgreen and Africa Israel in February alleging the developers failed to obtain a permanent certificate of occupancy due to massive construction defects at the 382-unit tower, despite selling all of the available apartments by 2008, generating about $360 million in revenue.

Schneiderman alleged that the developers drained more than $9 million from an escrow fund designed to help complete the repairs and get the certificate, which officials say is necessary to obtain clear title and allow unit owners to refinance or sell their units.

As part of the February court order, the developers were temporarily banned from marketing or selling condos or co-ops anywhere in the state, pending the conclusion of the probe. They were also forced to hand over control of the condo board to unit owners.

Assistant Attorney General Erica Rossi, in a Sept. 15 court filing, said the AG will seek a contempt order against the developers for failure to comply with several requests in the investigation. She stated that Boymelgreen has deposited no money into the escrow fund, while Africa Israel has deposited half of the required $470,000.

Brian Itzkowitz, an attorney representing Boymelgreen, did not return calls or emails. AFI-USA, the New York-based unit of Africa Israel, declined to comment. A spokesperson for Schneiderman’s office declined to comment.

In an unrelated case tied to a Tribeca condominium, Boymelgreen claimed that he faced $50 million in judgments.

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