The Real Deal New York

One Madison Park gets interim receiver

April 16, 2010 06:33PM
By David Jones

A state Supreme Court judge has named veteran real estate attorney Jonathan Newman as interim receiver of the controversial One Madison Park condominium, which is currently facing a foreclosure lawsuit by iStar Financial.

Newman, a partner at Newman Ferrara, was granted limited rights to oversee the project, including the collection of common charges and sales proceeds, however Judge James Yates allowed lead developer, Ira Shapiro, to continue sales at the 23 East 22nd Street property, at least until a number of legal issues are sorted out.

Yesterday’s move represents a partial victory for Shapiro, the president of Slazer Enterprises, who was facing allegations of forgery by his development partner Marc Jacobs and claims by the lender that millions of dollars in borrowed money was unaccounted for.

“It’s an extremely limited receivership order and the borrower is going to be able to stay in control of sales,” said Steven Meister, attorney for Shapiro. “This job is going to sell and Ira’s going to remain involved.”

The order allows Newman to collect sales proceeds and common charges, to inspect all financial records, to retain a managing agent and hire a consultant to advise him on the necessary construction needed to complete the project. The order is similar to the 2009 receivership at Rector Square, a Battery Park City condominium conversion developed by Yair Levy.

“Now the issue is, what’s the scope of the authority going to be,” said attorney Matthew Parrott, who represents Istar Financial.

The key difference in this project, however, is that sales at the 69-unit property are being allowed to continue during the receivership, at least until the judge hears further evidence.

“What it means is the doorman is not walking out,” said attorney Ann Salisbury, of Guzov Olsink, who represented nearly a dozen buyers who got their money refunded at the property and at least one current owner. “It just sort of holds things as a status quo.”

One reason for the difference is the bank is facing its own set of allegations that it engaged in certain acts that may have contributed to the building’s downfall.

Istar filed suit to foreclose at One Madison Park earlier this year alleging that Shapiro and co-developer Marc Jacobs defaulted on more than $199 million in mortgage loans, and also borrowed millions of dollars from various friends and business associates in return for pledging stakes in individual apartments.

As The Real Deal previously reported, the lender alleged that more than $30 million in loan proceeds remains unaccounted for. Meanwhile, the Rockland County district attorney is investigating claims by Jacobs that Shapiro helped forge the signature of Jacobs and his wife on loan documents. Jacobs has since broken off from Shapiro and hired separate counsel.

Lawrence McCarron, attorney for Jacobs, said his client was pleased that the ruling will allow sales to move forward in an orderly fashion.

”We feel very comfortable with the supervision of the receiver that sale of the units can be managed successfully,” he said.

Lawyers for Shapiro alleged in court documents that iStar submitted forged mortgage documents to the New York City Department of Finance. Lawyers for the lender denied those allegations in court documents.

Lawyers for numerous buyers told The Real Deal that the bank refused to allow Shapiro to release deposit money from escrow during the fall of 2009 even though the developer had already gone into default. Istar claims that Shapiro entered into several deals to sell apartments at prices below the agreed upon strike price and then transferred title to these apartments without the lender’s permission. 

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