The Real Deal New York

Africa Israel asks New York court to lift selling ban on firm

Developer currently barred from residential condominium and co-op business

March 26, 2014 02:15PM
By David Jones

3 People Viewed

From left: Eric Schneiderman and

From left: Eric Schneiderman and Shaya Boymelgreen

Africa Israel asked a Manhattan Supreme Court judge yesterday to modify or vacate a temporary restraining order amid a probe by state Attorney General Eric Schneiderman into the finances of Downtown by Phillippe Starck, the luxury condo building in Lower Manhattan.

The restraining order, issued in February, bans the Israel-based real estate conglomerate from selling condos and co-ops in New York state. Lawyers for Africa Israel claim that the AG overstepped his bounds by holding the developer’s parent company accountable for the alleged activities at the property.

“The NYAG’s opposition glaringly omits any allegation specific to any of the AI parent companies — again it simply alleges that being owners of the sponsor, by default, must subject the AI parent companies to the same remedies under the Martin Act,” attorneys Aaron Abraham and Michael Wood wrote in a legal memorandum.

Africa Israel, along with Brooklyn developer Shaya Boymelgreen, were hit with the temporary ban after Schneiderman’s office filed suit in February alleging the pair have failed to obtain a permanent certificate of occupancy years after selling out the 382 residential units. The AG also claims the two stonewalled the investigation into the 15 Broad Street complex and illegally maintained control over the condo board.

In addition, the Attorney General alleges that the developers depleted more than $9 million from an escrow fund set up to cover construction expenses at the property, before the multi-million failure of Liberty Pointe Bank, where Shaya Boymelgreen was chairman.

Africa Israel, a major international developer that converted the Apthorp at 390 West End Avenue from a luxury rental to condos, has argued that it handed over control over 15 Broad Street to Boymelgreen’s firm, and that the sponsors, Boymelgreen and Pinchas Cohen — the former chief executive of AI when the property was developed — are ultimately responsible for the condo.

Court documents show that Cohen was president of Africa Israel in the U.S. when he signed those documents.

The Real Deal also obtained documents filed in a civil suit by unit owners at 15 Broad against Africa Israel and the sponsors, that show Damien Stein — current president of Africa Israel’s New York subsidiary and president of the 15 Broad board — sent an email in 2009 naming himself and three other board members at the condo who were working for Africa Israel at the time. Those board members replaced representatives from Boymelgreen, who resigned from the 15 Broad board.

In court documents, Africa Israel has denied any involvement in the marketing or sale of units at the building. And the developer won a partial victory earlier this month when a judge blocked the handover of board control to the unit owners.

But Steven Sladkus, attorney for the unit owners at 15 Broad, says that Africa Israel is running the condo and disputes any attempt to minimize the firm’s involvement.

“Africa Israel’s attempt to disclaim responsibility as the sponsor is not only irresponsible, but is contrary to the facts and to their own actions.”

Africa Israel did not return calls made on Tuesday requesting comment. A spokesperson for the Attorney General’s office declined to comment.

The court is expected to rule on the motion by April 15, according to sources familiar with the case.

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