The Real Deal New York

Castellan sues ex-exec for allegedly buying property for himself

Judge issues restraining order blocking sale of 97 Second Avenue

February 28, 2014 03:48PM
By David Jones

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97 Second Avenue (center)

97 Second Avenue (center)

Castellan Holdings, a Manhattan-based real estate investment firm, is set to square off against a former executive on March 6 in Manhattan Supreme Court – this, after a judge issued a temporary restraining order to block a deal the exec negotiated to buy an East Village walk-up building for himself.

Judge Donna Mills issued a restraining order that blocks the sale of 97 Second Avenue until she determines whether the property must be sold to Castellan.

Castellan, led by managing principal Paul Salib, claims in its Feb. 26 lawsuit that Paulius Skema, its former vice president of operations, negotiated a deal to buy the building at 97 Second Avenue for a firm that he personally controls. Salib alleges Skema began to put the deal together while he was still an employee of Castellan.

Skema, who worked with Castellan from 2011 until this month, found out that the building, owned by a Bayside, N.Y.-based firm called 97 Second Avenue Building Corp., was being marketed through a Long Island-based broker named Raphael Toledano, according to the complaint. The filing alleges he then proceeded to enter negotiations to buy the property.

“Upon information and belief, Skema determined that the premises was a prime real estate investment property for resale at a profit and, instead of negotiating to purchase the premises on behalf of Castellan, Skema decided to acquire the premises for his own interest and account through an entity that he controlled,” Salib said in a sworn affidavit dated Feb. 25.

Toledano, a broker at Weissman Realty Group, in Lawrence, N.Y., was not immediately available. Toledano was named as a defendant in the suit, but the brokerage was not mentioned. Adam Leitman Bailey, whose firm is representing Castellan, declined to comment. Attorney Lynn Okin, who represents the landlord on behalf of Okin Edelman, did not return calls.

According to PropertyShark, the six story building, owned by an investor named Douglas Pratt, has 10 residential apartments and a 2,600 square foot retail space that currently houses a laundromat. Pratt did not return calls.

Castellan, which opened in 2008, claims it has closed 39 transactions worth about $160 million since then. As previously reported, Castellan reached an agreement with New York State regulators amid claims that it demanded to see the passports and proof of citizenship of Spanish speaking tenants at its buildings, and evicted those who did not comply.

The firm owns 49 buildings in Brooklyn, Washington Heights, Harlem and the South Bronx.

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