State Attorney General Cuomo has told the developers of the financially-troubled One Madison Park condo to offer refunds to any buyers that have not closed on their apartments

State Attorney General Andrew Cuomo’s office, which regulates the sale of condominiums in New York, has told the developers of the financially-troubled One Madison Park condominium to offer refunds to any buyers that have not closed on their apartments, The Real Deal has learned. Cuomo’s office forced the rescission offers after senior lender iStar Financial filed last month to foreclose on developers Ira Shapiro and Marc Jacobs for allegedly defaulting on five months of interest payments, pledging apartments without the bank’s permission and allowing the building loan to fall out of balance by $63.6 million, according to court documents and legal sources. Such a move would require the developers to refund deposits on more than 40 percent of the 69-unit tower at 23 East 22nd Street, as half of the units are under contract and a dozen of those contracts have closed, according to Department of Finance records.
“[The AG stated its] position to the sponsor that it should offer rescission to those in contract,” said a NYS regulatory source familiar with the case. [more]

One Madison Park faces legal trouble including a suit by former Yankees/Nets Chairman Harvey Schiller

The developers at One Madison Park are facing millions of dollars in additional lawsuits for alleged loan defaults and refusing to release down payments to buyers as well as a judgment for unpaid rent at the property’s off-site sales office.

In November, former Yankees/Nets Chairman Harvey Schiller and his wife Marcia filed a $1.5 million fraud suit in New York State Supreme Court against the developers, Ira Shapiro and Marc Jacobs’ (not the designer) who operate under the name New City, N.Y.-based Slazer Enterprises, alleging they collected multiple deposits on the same apartment to keep in good standing with lenders.

The couple alleges that it signed an agreement in July 2007 to buy apartments 45A and 45B in the building for $7.15 million, and put a 10 percent deposit into an escrow account controlled by the law firm Goldberg Weprin Finkel Goldstein.

They claim that in January 2009, the developers got another party to bid on the apartment and promised to refund the Schiller’s deposit and pay them $850,000 to terminate the contract. Additionally, they allege the sponsor took a deposit on the apartment from the new purchaser, but refused to refund the money. [more]