The Real Deal New York

Amalgamated sues former Helmsley-Spear prez, alleging fraudulent asset transfers

Bank seeks to collect on bad Yonkers appraisal

March 19, 2012 06:00PM
By David Jones

86 Main Street in Yonkers

Amalgamated Bank has filed suit alleging Helmsley-Spear fraudulently transferred real estate assets to its former president, Lynn Schneider, in order to avoid collecting on a $2.3 million judgment against the company.

Amalgamated was awarded the judgment after Helmsley-Spear failed to respond to a 2009 suit by the bank charging breach of contract and negligence for the appraisal of a six-story office building in Yonkers. 

Amalgamated, in a March 14 lawsuit filed in New York state Supreme Court, claims that it was approached in 2006 for a $13 million mortgage for the building at 86 Main Street in Yonkers and retained Helmsley-Spear for the appraisal.

The property was appraised for $12.2 million and Helmsley-Spear made a loan for $9.78 million, which is 80 percent of the appraised value. The borrower defaulted on the loan in May 2008, and handed over the property under a deed-in-lieu of foreclosure. By June 2009, Amalgamated commenced a non-judicial foreclosure proceeding.

Amalgamated alleged that the appraisal was made negligently, as it did not meet industry standards and failed to account for proper vacancy rate, rental income and had other inconsistencies. The $2.3 million judgment was awarded after Helmsley-Spear failed to respond to the complaint.

Amalgamated said that when trying to enforce the judgment, it discovered that in 2007 Helmsley-Spear transferred nearly all of the company’s assets and thousands of dollars in cash either to Schneider, through her consulting firm, Schneider & Schneider, or to a subsidiary firm, Helmsley-Spear of Illinois.

According to the suit, some of the assets included property management agreements for 1385 Broadway, 567 Seventh Avenue, 350 West 31st Street and other buildings. The transfers also included insurance, disability and 401(k) policies.

Helmsley-Spear was for many years one of the most powerful real estate companies in the world. The firm was led by Harry and Leona Helmsley, and the Schneider family, led by investor Irving Schneider, were partners at the firm. After Harry Helmsley’s death in 1997, Leona Helmsley took control of the business, but lost out to the Schneider family after years of legal entanglements.

The Schneider family sold Helmsley-Spear to developer Kent Swig in 2007, after these alleged transactions took place, and he still owns the firm.

“This suit does not involve the current owners of Helmsley-Spear and has no impact on the ongoing operations of Helmsley-Spear,” a spokesperson for Swig and Helmsley-Spear said.

Herrick Feinstein attorney William Fried, representing Schneider, denied the allegations. “Based on my initial review we do not believe it has any merit and we will vigorously defend it.”

Amalgamated officials did not return calls seeking comment.

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