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Bellmarc agents flee firm as legal woes mount
Exodus follows claim that co-founder Neil Binder used firm's funds as his "personal piggy bank"
More than 25 agents from Coldwell Banker Bellmarc Group have decamped to other firms amid fallout from allegations that co-founder Neil Binder embezzled money from the brokerage.
The majority of the agents who migrated to other brokerages came from Bellmarc’s office at 681 Lexington Avenue after Bellmarc was evicted in August for non-payment of rent, The Real Deal has learned.
In the past few weeks, 15 agents have joined Halstead Property’s Park Avenue office, including top producer Geri Epstein and a team lead by Leslie Penny and Harriet Botwinick. Another 10 agents have moved to David Schlamm’s City Connections Realty, including husband-and-wife team Hy and Myrna Rosen.
The shakeup comes just two months after Binder was sued by his business partners, Larry Friedman and Anthony DeGrotta, for allegedly embezzling hundreds of thousands of dollars from the brokerage. On August 26, the firm, which is a franchisee of national brokerage Coldwell Banker, was evicted from its Lexington Avenue office, according to court documents. Soon after, Coldwell Banker – which claims it is owed more than $270,000 – asked the judge in the case to appoint a temporary receiver to oversee Coldwell Banker The Bellmarc Group’s operations pending the outcome of the litigation.
According to court documents, the dispute between Binder, Friedman and DeGrotta gained steam last winter as the brokerage faced financial constraints and was struggling to pay its franchise dues to Coldwell Banker. In their suit, Friedman and DeGrotta alleged Binder used the company as his “personal piggy bank.”
Bellmarc, co-founded by Binder in 1979, acquired A.C. Lawrence from Friedman and DeGrotta in 2012. The combined Bellmarc Group became a Coldwell Banker franchise last summer, marking the second time the San Francisco-based brokerage tried to break into the New York City market. Coldwell Banker Hunt Kennedy shuttered in 2009, at the height of the downturn.
As of May, Coldwell Banker The Bellmarc Group had 519 agents, slightly higher than 511 in 2013, according to The Real Deal’s annual brokerage ranking. The firm had 81 listings this year, versus 115 last year, according to TRD research, based on data from the OLR listing portal.
In an affidavit, Binder said the brokerage had run into a “serious negative cash position.” In fact, during a February 2014 meeting with the president of Coldwell Banker, Binder expressed his intention to sell the business.
Binder did not immediately return a call seeking comment.
But in his affidavit, Binder characterized the suit by Friedman and DeGrotta as a “premeditated action and ‘slap’ style suit” designed to give his partners control of A.C. Lawrence. “This lawsuit is also an attempt to cover up their own malfeasance and improper actions,” he said, including “suspicious or unauthorized” payments by Friedman and DeGrotta.
Meanwhile, on September 10, Coldwell Banker asked Judge Saliann Scarpulla to appoint a temporary receiver to oversee the New York City business “so as to preserve [its] value while this litigation is pending.” In court documents, the company said that Coldwell Banker The Bellmarc Group owed more than $276,545 in franchise payments as of August 26.
“As Franchisees have not cured these material defaults, despite notice, Coldwell Banker is entitled to notice termination of the Franchise Agreements and to pursue its collection and enforcement remedies.” A lawyer for Coldwell Banker didn’t immediately return a call seeking comment.
William Hummell, an attorney for Friedman and DeGrotta, said as far as he knows, Coldwell Banker has not terminated the franchise agreement. “The parties are discussing possible settlement among themselves,” he added.
The new City Connections group includes the Rosens, as well as Adolfo Brenes, Nicolas Bustamante, Janis Cooke, Susie Gomez, Richard Mulholland, Tama Robertson, Eva Posner and Vanessa Palka.
The Halstead group includes Epstein, Penny and Botwinick along with Marcia Gershon, Neil Gallo, Richard Topp, Leslie Bettison, Greta Elias, Seth Price, James Lake, Kim Cowal, Joe Irving and Arnie Roiutman.
John Wollberg, who heads up Halstead’s Park Avenue office, said it was “highly unusual” to hire such a large group in “one fell swoop.” But, he said, “This was a unique opportunity. We seized it.”
“I’m still getting telephone calls each week from someone else who wants to sit and talk with me,” he said.