Rector Square unit owners sue Levy, Shvo, Cooper Square for $100 million
November 20, 2009 03:00PM By David Jones
From left: Yair Levy, Michael Shvo, and Rector Square at 225 Rector Place
According to the suit filed yesterday in New York State Supreme Court, Levy, the owner of YL Real Estate Developers, defaulted on the mortgage loan with Anglo Irish Bank, failed to complete construction of the building, converted reserve funds for his own use and failed to make PILOT payments to the Battery Park City Authority.
The plaintiffs claim the sponsor and broker misrepresented the quality of the building to potential purchasers.
"Instead of a building of their dreams they bought into a building of nightmares," said Marc Held, attorney for the unit owners.
Levy also allegedly sold a block of 15 apartments to an Italian university for use as dorm rooms for exchange students and rented out apartments to Marriott for use as extended-stay hotels, violating local zoning laws.
Shvo, whose firm sold units in the building, is accused of false advertising and misrepresenting the amenities, renovations to the building, construction schedule and otherwise acting in bad faith with the owners who bought more than 45 units in the building.
Cooper Square, whose firm managed the building, is accused of spending money from the building's reserve and working fund for other purposes; taking management fees out of the building's operating account; co-mingling security deposits and move-in deposits with the building account and failure to monitor the use of these various accounts.
Levy, Shvo and Cooper Square officials were not immediately available for comment.
Rector Square, a 304-unit building at 225 Rector Place, became one of the biggest conversion disasters in the history of New York, after Levy defaulted on $165 million in mortgage loans by Anglo Irish Bank and Fortress Investment Group. About 230 units were unsold and several dozen apartments were occupied by affordable housing tenants.
Levy originally purchased the former rental building, known as Parc Place, from Related Cos. in 2005, under a deal that included Columbus Park, another Related rental at 101 West 87th Street.
In January, The Real Deal first reported a mysterious shut down of the Rector Square sales office and noted that construction at the property has ceased.
Anglo Irish filed suit to foreclose and eventually hired veteran trust attorney Michael Miller to take over as receiver. Miller has since hired Related to take over as managing agent of the building, and Anglo Irish is expected to put the building on the auction block.
Levy, in an affidavit filed earlier this year, said that Cooper Square withdrew $300,000 in PILOT funds designated for Battery Park City Authority and used the money to cover its own management funds. State and local regulators began an investigation into the Rector Square reserve fund, as spending reserve fund money is a criminal offense under New York City law.
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Comments
Anonymous
Cooper Square are thieves who should be locked up. Ask what they did to the Citylights building in Long island City, Queens.
Comment #1 Posted By: Anonymous 11/20/09
Anonymous
No wonder Shvo went into hiding!
Comment #2 Posted By: Anonymous 11/20/09
Anonymous
Madoff cellies, soon to be.
Comment #3 Posted By: Anonymous 11/20/09
Anonymous
I don't know if they are going to win but this is going surely going to be very expensive to defend against, not to mention reputationally damaging. If these guys have money, and I were close to them, I would recommend a settlement. And a quick one.
Comment #4 Posted By: Anonymous 11/20/09
Anonymous
Its time for a reply of the Nightline episode about Shvo - with YL as a special guest star - seems like ancient history now. is it on youtube?
Comment #5 Posted By: Anonymous 11/20/09
Anonymous
What's outside your window?
Comment #6 Posted By: Anonymous 11/20/09
Anonymous
what is the bank going to do with this building? When is the big write-off coming? back to rent stabilized status?
Comment #7 Posted By: Anonymous 11/20/09
Anonymous
Is he trying to ruin the Levy name. What a desperate fool!
Comment #8 Posted By: Anonymous 11/20/09
Anonymous
Shvo. What a joke. I hope he's reading this...for now you will taste Satans tongue as it pulls you back to where you have come from. I heard Shvo had an illicit affair with a camel in Dubai...and that he's wanted by the authorities there too...
Comment #9 Posted By: Anonymous 11/21/09
Anonymous
Yair Levy will never be seen or heard from in New York City real estate ever again.
Comment #10 Posted By: Anonymous 11/21/09
Anonymous
Is Shvo still laughing like he is in the photo?
Comment #11 Posted By: Anonymous 11/21/09
Anonymous
so many haters here to hate the fallen means you are just as fallen to enjoy troubles of others puts you right in the same bag
Comment #12 Posted By: Anonymous 11/21/09
#15
Yea 15 your so smart with your words you want to tell me that these idiots are right from what they did to people who put there hard earned bonuses in these units and savings for yrs!!!! you freak!. YOUR ANOTHER CROOK AS WELL IT LOOKS LIKE THE COMMENTS HURT YOU! HUH, YOU WANT TO REPLY, GO AHEAD SO I CAN KICK SOME KNOWLEDGE TO YOU.
Comment #13 Posted By: #15 11/21/09
Anonymous
he got hurt because he is the son inlaw.
Comment #14 Posted By: Anonymous 11/22/09
#11
He wont be heard of in NY period. He fled to Fla cause they cant take your permanent house away there.
Comment #15 Posted By: #11 11/22/09
Anonymous
If one of the Unit Owners from 225 Rector is reading this I would like to get into contact with you. I reside in a building that has some similiar issues regarding some of the same parties. Both the sponsors and management companies are guilty of misdealings, in my opinion, but it's not going to be easy to prove. Maybe we have different pieces of the same puzzle.
Comment #16 Posted By: Anonymous 11/22/09
Anonymous
19 and 20 - aren't you parties to the same lawsuit? May I suggest the owners set up a website to coordinate all the complaints..
Comment #17 Posted By: Anonymous 11/23/09
Anonymous
16, his soninlaw? please, he made his own bad decisions.
Comment #18 Posted By: Anonymous 11/23/09
Anonymous
number 18, why not contact the attorney, Marc Held?
Comment #19 Posted By: Anonymous 11/24/09
Anonymous
#10 - NO WAY - no self-respecting camel would go near Shvo...
Comment #20 Posted By: Anonymous 11/24/09
Anonymous
Cooper Square again! city lights building,..,.,ummmm how nice.,,..,
Comment #21 Posted By: Anonymous 12/13/09
Anonymous
who is the law firm representing the tenants at 225 rector...
Comment #22 Posted By: Anonymous 01/11/10