AG forces Sheffield57 to suspend sales
May 14, 2009 04:05PM By David Jones
Sheffield57 developer Kent Swig was forced to halt sales after state regulators notified the sponsor that the offering plan at the troubled West Side condominium had expired, according to three sources familiar with the decision.
Swig will not be able to sell any apartments until Attorney General Andrew Cuomo approves a 19th amendment to the offering plan, which legal sources say is required to update prospective buyers about any material changes in the operation of a condo or co-op conversion. A spokesperson for the attorney general's office did not return calls for comment.
On Sept. 9 of last year, Swig issued an 18th amendment, but that amendment only updated unit prices at the building, and the Martin Act, which regulates conversions in New York State, says that pricing-only amendments do not extend the expiration of the offering plan.
About three months earlier, Sheffield57 issued the 17th amendment, which included information about the reserve fund balance, working capital fund, certificate of occupancy, number of units sold and construction schedule at the building.
The decision by the attorney general comes at a critical time for Sheffield57, which sources say has millions of dollars in mezzanine debt coming due this month, and is actively trying to refinance the building. Analysts say that with less than half of the building's projected 587 apartments sold, lenders will be reluctant to finance a building with so many fundamental challenges.
"It really hinders the ability of anyone to refinance unless they're able to put up a tremendous amount of their own equity," said Dan Fasulo, managing director of research at Real Capital Analytics. "The situation just gets that much more complicated."
As previously reported by The Real Deal, the sponsor is facing a lawsuit by condo unit owners who allege Swig failed to pay 20 months of common charges totaling $5.5 million. In addition, title insurance companies have been unwilling to do business at the building, as unpaid contractors have slapped mechanic's liens on hundreds of apartments in the building.
Attorney Robert Braverman, who represents the plaintiffs and 70 other members of the Sheffield Owners Association, met with the attorney general's office earlier this month to complain about construction and the lack of financial disclosure at the building, and said he was not surprised by the suspension order. He added that owners are negotiating a deal that could settle the lawsuit.
"We are working on an agreement with the sponsor that in the event they get refinancing [the building] would get all of the unpaid common charges," Braverman said.
Courtney Puckett, a receptionist at the Sheffield57 sales office, confirmed that sales were suspended due to the attorney general order, and added that the sponsor hoped to resolve the issue in a couple of weeks with a new amendment.
A spokesperson for the sponsor was more guarded.
"The sales office at Sheffield57 is open," a spokesperson for Swig said in a statement. When asked specifically about sales being suspended, the spokesperson said "We'll have no further comment."
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Comments
Anonymous
Death by a thousand cuts for Kent Swig
Comment #1 Posted By: Anonymous 05/14/09
Anonymous
Manhattan House is next.
Comment #2 Posted By: Anonymous 05/14/09
Anonymous
Sheffield is a great place in a great location with wonderful apartments. Manhattan House on the other hand is none of those things. I am surprised Manhattan House wasn't first.
Comment #3 Posted By: Anonymous 05/14/09
Anonymous
All of this stuff will blow over and Swig will come back for part deux. He is smart and he has cash. He will be fine.
Comment #4 Posted By: Anonymous 05/14/09
Get Real
#3 are you referring to Sheffield England?
Comment #5 Posted By: Get Real 05/14/09
4 Real
#4 are you referring to Swig's next life?
Comment #6 Posted By: 4 Real 05/14/09
Anonymous
"millions of dollars in mezzanine debt coming due this month, and is actively trying to refinance the building." Uh-oh
Comment #7 Posted By: Anonymous 05/14/09
Kenneth Swinger
everythings gonna be alright i have tons of cash available (yeah right!)
Comment #8 Posted By: Kenneth Swinger 05/14/09
Anonymous
everything is fine, is fine, everything is fine. every one is against me. I'm a good guy why are they doing this to me. King of the condos, King Kent...... Please let me wake up and let it be 2005 again. I promise not to overextend myself. What a schmuck I am. What a Putz. Steve pull up PULL UP DAMIT!!!
Comment #9 Posted By: Anonymous 05/14/09
Anonymous
number 4 What do you mean all this stuff. Swig did not file an amendment on time. Why do think that is the case. Is he incompetent or does not want the AG to find out how much trouble he is in??
Comment #10 Posted By: Anonymous 05/14/09
Anonymous
It was my understanding the the AG would not allow a new ammendment because Swig's books are way behind the required schedule of accounting. Wonder why that is?
Comment #11 Posted By: Anonymous 05/14/09
Anonymous
Just wait and see, Swig will come out on top. The guy is very smart, extremely well connected, surrounds himself with good people and is a well-liked menche. Can't blame him for the collapse of the credit markets - the fact that he sold as many apartments as he did is commendable - best sales job in NYC from 2007-08 as far as I am concerned. No one has sold more condo units than Swig at Sheffield.
Comment #12 Posted By: Anonymous 05/14/09
Anonymous
can't blame him for the collapse of the credit markets. But certainly can blame him for hiring incompetent personnel, not paying his bills, not finishing the bldg, not communicating with buyers, etc etc
Comment #13 Posted By: Anonymous 05/14/09
Anonymous
the owners are also pissed off because they found out their 2 story pool and health club dosent exist. it will be a health club smaller than the original one.....i believe that is called FRAUD!
Comment #14 Posted By: Anonymous 05/15/09
Anonymous
#20....i think they made those matrix movies:)
Comment #15 Posted By: Anonymous 05/15/09
Anonymous
the Kirschenbaum brothers are a couple of "hot shot" real estate executives Kent hired in 05 to help get his residential business off the ground. Greg Kirschenbaum spent his first 6 months of employment cold calling sheffield tenants to make sure they actually lived in the apt.
Comment #16 Posted By: Anonymous 05/15/09
Anonymous
if he had fired them a year ago and hired someone with even a modicum of actual experience and common sense, he would have had a fighting chance. Oh well.
Comment #17 Posted By: Anonymous 05/15/09
Anonymous
Lets not forget that one of the Kirshenbaum Bros. is a dis-barred lawyer, who is in charge of operations. @ Sheffield 57.
Comment #18 Posted By: Anonymous 05/15/09
Anonymous
i think it is hilarious that Swig pegged his residential success to those 2 crooks and YL the egomaniac. he should have stuck with office.
Comment #19 Posted By: Anonymous 05/15/09
Anonymous
owners were cheated . Swig belongs in jail. Yair Levy has a foot in jail already with 225 Rector.
Comment #20 Posted By: Anonymous 05/15/09
Anonymous
I don't know both brothers, but Steven is one of the best gentlemen in the entire real estate community and shame on anyone anonymously insinuating otherwise. A finer man I have not met.
Comment #21 Posted By: Anonymous 05/15/09
Anonymous
#28 - "a finer man I have not met". Have you spent your life in a maximum security prison ward, thus making this guy the finest gentleman you have come across?
Comment #22 Posted By: Anonymous 05/15/09
Anonymous
SK is a stand-up gentleman, a guy that you want on your side, and a brilliant real estate mind with decades of experience. I'd take him on my team in a heartbeat. No doubt that those throwing stones are doing so under the cowardly cape of anonymousness because they are too small to stand behind their words. Don't give these internet terrorists a second thought Steve...
Comment #23 Posted By: Anonymous 05/15/09
Anonymous
Thanks Greg. Appreciate the kind words bro
Comment #24 Posted By: Anonymous 05/15/09
Anonymous
Rumor has it that Greg Kirschenbaum has been interviewing at Duane Reade for a cashier job...
Comment #25 Posted By: Anonymous 05/16/09
Anonymous
they sold all these units at the Sheffield57 based on lies. Where's the new health club ?
Comment #26 Posted By: Anonymous 05/16/09
Anonymous
Where's the driveway?
Comment #27 Posted By: Anonymous 05/16/09
Anonymous
I don't know both brothers, but Steven is one of the best gentlemen in the entire real estate community and shame on anyone anonymously insinuating otherwise. A finer man I have not met.
Comment #28 Posted By: Anonymous 05/16/09
tgramy
How about the rooftop restaurant???
Comment #29 Posted By: tgramy 05/16/09
Anonymous
#40 If he is disbarred then how could he be Swis attorney, that sounds ridiculous! who in there right mind hires a disbarred attorney?
Comment #30 Posted By: Anonymous 05/16/09
Anonymous
March 23, 2006 In the Matter of Steven A. Kirschenbaum , an attorney and counselor-at-law: (admitted as Steven Allan Kirschenbaum) Respondent disbarred and his name stricken from the roll of attorneys and counselors-at-law in the State of New York, effective the date hereof. Opinion Per Curiam. All concur. Before: Buckley, P.J., Mazzarelli, Saxe, Nardelli, Williams, JJ. Motion Nos. M-1125, M-1969
Comment #31 Posted By: Anonymous 05/16/09
Anonymous
www.nycourts.gov/reporter/motions/2006/2006_64297.htm
Comment #32 Posted By: Anonymous 05/16/09
Ed Johnson
Steven A. Kirschenbaum is executive vice president and chief administrative officer for Swig Equities...He is not Swig's attorney!!! Swig needed someone to run interference...So, for his fraudulent Sheffield57 project, why not hire a real criminal to be the front man.
Comment #33 Posted By: Ed Johnson 05/16/09
Anonymous
45 how would you know he's a family man ? your basically admitting your an employee of the building or paid to post ,
Comment #34 Posted By: Anonymous 05/16/09
Anonymous
He is a disbarred attorney,he did terrible things to win this award...this has nothing to do with Karma...just the plain truth coming to the surface.
Comment #35 Posted By: Anonymous 05/16/09
Anonymous
Madoff was a "family man" too. That comment does not work....
Comment #36 Posted By: Anonymous 05/16/09
Anonymous
Steve is only part of the issue. Only an incompetent like swig would have a dis-barred attorney as his face to the public. As they say if you "lie"with dogs you will get flees. Swig is NOT a good guy. He is a guy who did many illegal things be the AG is coming for him. They are slow but when their hammer falls it is hard to survive. Good luck mr. Kent. You are gone and soon will be forgotten. And you shills. It is crumbling around you. However, Nero also fiddled when his empire burned
Comment #37 Posted By: Anonymous 05/16/09
Anonymous
Swig isn't a good guy - he's a great guy. Which is why he has built a terrific reputation and has many many devoted friends who will support him through tough times. There is a reason he is one of the most well liked and well respected developers in the industry. This is something a few troubled internet commenters cannot understand. Watch Kent make it through this on top.
Comment #38 Posted By: Anonymous 05/16/09
Anonymous
#50... The top is correct....Top bunk in his cell at the Fed...
Comment #39 Posted By: Anonymous 05/16/09
Anonymous
Why is Kent a well respected developer? All of his projects are failures - 25 Broad, 201 w 92nd, Sheffield. His dubious actions make his lenders sue him, the tenants sue him, owners sue him, contractors sue him. He is just like Madoff who rode the wave in the good times and now his fraud is catching up to him. Kent is next on Andrew Cuomo's list...
Comment #40 Posted By: Anonymous 05/17/09
Anonymous
Swig is an equitable man. He has broken committments to renters, buyers, employees, contractors, and sales brokers alike.
Comment #41 Posted By: Anonymous 05/17/09
Anonymous
,,,and, of course, lenders.
Comment #42 Posted By: Anonymous 05/17/09
Anonymous
The next step will be the AG and the state regulators creating an Audit, just like they did @ Rector Street, to find out about all the common charges, and the possible co-mingeling of funds. It is time to show, just what kind of a business was run in here, and where the money was spent. No bank will touch this place with a ten foot pole, the AG has been hearing problems about this building for years, since Swig acquired it, and now it will be under a microscope. The sharks will wait until they can get it @ foreclosure, maybe @ 60% off...if they choose to inherit all of the problems that go along with ownership, and there are many, too numerous to list here. Swig needs a clean-up committee, just for all of the lawsuits he created, and there are so many of them.
Comment #43 Posted By: Anonymous 05/17/09
Tenants of "The Sheffield"
Good night & goodbye ...Kent,Steve and Greg...
Comment #44 Posted By: Tenants of "The Sheffield" 05/17/09
Anonymous
#57 - "cowardly anonymous postings" - this coming from an anonymous poster. It's ok, we all know it's Steve K.
Comment #45 Posted By: Anonymous 05/17/09
Tenants of "The Sheffield"
Tenants of "The Sheffield" Good night & goodbye ...Kent,Steve and Greg...
Comment #46 Posted By: Tenants of "The Sheffield" 05/17/09
Anonymous
i'm an owner, and i know management has been completely evasive about this whole situation, and i know swig has been even worse, but what's likely to happen if swig is forced out (which at this point seems pretty likely)? i'd bet management would most likely improve but what would happen with the pending construction in the rest of the building?
Comment #47 Posted By: Anonymous 05/17/09
Anonymous
#62 with Swig (managing partner) , Levy and the bums out, its possible that you may see a lender come in.
Comment #48 Posted By: Anonymous 05/18/09
Anonymous
The lenders will eventually sue, and Swig will be gone, along with mgt. The building will probably go into recievership until another lender comes along. We may have trouble paying for doormen and security during this period, but the lights and water will stay on. There will be a new red herring, and a new offering plan, with a construction schedule etc. That is what we want. I hope it will not take too long, because we all want to see the building finished.
Comment #49 Posted By: Anonymous 05/18/09
Anonymous
What this building needs is a real managing agent, like it always had, before it was "under occupation" by Swig.
Comment #50 Posted By: Anonymous 05/18/09
Anonymous
Bring back Adam Rose and his pro staff....
Comment #51 Posted By: Anonymous 05/18/09
Anonymous
The word is that Swif will rise with a refinance. I hope he gets it soon
Comment #52 Posted By: Anonymous 05/19/09
Anonymous
How much longer do we have to wait..everyones lives are on hold,,this is not the building we bought into..we want to see the ameneties we were promised. The outside garden area looks abandoned, and is very depressing/and slum-like. Does anyone know if we can get our money refunded, so we can move somewhere else?
Comment #53 Posted By: Anonymous 05/20/09
Anonymous
#65 - call Kirschenbaum at Swig Equities and ask.
Comment #54 Posted By: Anonymous 05/20/09