Eric Schneiderman and 306 West 48th Street

Attorney General Eric Schneiderman has begun to issue subpoenas in an investigation into the collapse of the Sorrento New York, a 43-story luxury condominium tower where a group of Irish investors allege their deposit funds were misappropriated by the developers, The Real Deal has learned.

The probe centers on whether developers, which include Esplanade Capital’s Jay Eisenstadt, and brothers Kevin and Donal O’Sullivan of Time Square Construction and Navillus Contracting, respectively, improperly co-mingled $17.1 million of deposit funds with operating money at the tower, which is at 306 West 48th Street, before a bulk purchase deal with Ireland-based Sorrento Asset Management, fell apart in 2009, according to sources familiar with the case…. [more]

PB Capital, the American subsidiary of Deutsche Postbank, was granted a receiver last month to oversee Sorrento New York, a stalled 43-story condominium and extended-stay hotel that is the subject of an $84 million foreclosure suit. The Ismael Levya-designed tower, at 306 West 48th Street, was developed by Manhattan-based Esplanade Capital led by Jay Eisenstadt and David Scharf. Investors Donald and Kevin O‘Sullivan were named as the guarantors of $84 million in loans for the newly constructed project, which was scheduled to include extended-stay housing under the BridgeStreet Worldwide hotel brand…. [more]