The Real Deal New York

Judge reinstates order banning Africa Israel from condo sales

Setback for developer as probe into dealings at 15 Broad Street continues

April 18, 2014 11:15AM
By David Jones

  • Print
15-broad

From left: 15 Broad Street, Shaya Boymelgreen and Eric Schneiderman

A state Supreme Court judge fully restored an earlier restraining order against Africa Israel, the co-developer at 15 Broad Street, the luxury condominium in Lower Manhattan that is the subject of an investigation by state Attorney General Eric Schneiderman.

The attorney general filed suit in February to temporarily bar Africa Israel and co-developer Jeshayahu “Shaya” Boymelgreen from co-op and condo sales in New York. The complaint came amid allegations that the developers failed to obtain a permanent certificate of occupancy at the property and spent millions of dollars that had been set aside in a reserve fund to cover the costs of required repairs.

Judge Debra James on Tuesday rejected a bid by Africa Israel to lift the ban. The judge also left intact the remainder of the restraining order, which will force the developer to relinquish control of the condo board to the unit owners. The ruling also means the pair must hand over thousands of financial documents to the AG’s office, following assertions that Africa Israel has secretly maintained control of the building, years after selling out the 382-unit complex.

“Africa Israel respectfully disagrees with the court’s ruling and looks forward to receiving a complete written decision and will consider all legal options to seek further review of the ruling,” the developer said in an emailed statement. “At all times, Africa Israel has cooperated with the attorney general’s investigation and will continue to do so. We are confident that such an investigation will reveal that Africa Israel has complied with all its obligations under the Martin Act.”

Africa Israel in court documents argued that it has made every effort to cooperate in the investigation, but that the attorney general is making overly broad demands regarding the handover of documents. The developer also asked that the AG be responsible for the cost of producing those documents. In addition, Africa Israel argued that it gave up control over the building to Boymelgreen years ago and should not be held accountable as a company beyond that particular property.

Africa Israel has developed a number of luxury properties in New York and other U.S. cities, including the Apthorp condo conversion on the Upper West Side, which was a joint project with developer Maurice Mann. The owners lost operational control of that property to Area Property Partners, a mezzanine lender on the project.

A written order from the judge had not yet been released at press time.

“I hope and expect that the court will see that Africa Israel has been consistently involved in this project and that, among other things, control of the board will be turned over to the unit owner board members so that they can control governance of the building,” said attorney Steve Sladkus, co-chair of the real estate department at Wolf Haldenstein, which represents the unit owners at the building.

MENU