Brach hit with subpoena at Spencer Street
September 22, 2009 03:30PM By David Jones
Mendel Brach
Developer Mendel Brach was served with a subpoena last week to collect on a $10.9 million judgment after he allegedly failed to complete necessary repairs and obtain a certificate of occupancy at his troubled Spencer Street condominium project in the Bedford-Stuyvesant section of Brooklyn.
Attorney General Andrew Cuomo filed suit in July alleging that Brach, starting in 2003, fraudulently sold condominium units to the general public after obtaining a zoning variance for religious studies. The suit also alleges the 72-unit development is saddled with $8.9 million in construction defects, including leaks, mold, unsound walls and electrical problems.
"Because the condominiums cannot obtain certificates of occupancy, the purchasers cannot legally sell, rent, or refinance their units," said Assistant AG Lewis Polishook, in the suit.
Brach originally developed the development as four, nine-story buildings, located at 191, 195, 197 and 201 Spencer Street in 2001. He submitted plans to the city Department of Buildings in 2002 that stated the buildings would have educational housing facilities, which would allow him to get a zoning variance for the nine-story building, instead of the neighborhood legal limit of five stories.
The suit alleges that Brach sold all of the 72 units and failed to put the funds in escrow, post a bond or provide a letter of credit, so he could obtain a certificate of occupancy. The suit says that Brach was required to issue amendments to the offering plan that noted the failure to disclose the construction defects, failure to obtain a certificate of occupancy and a failure to comply with zoning regulations.
The lawsuit seeks to permanently bar Brach from selling condos or other securities in New York State.
"We all closed in 2004 and we've all been paying our mortgages on what is a valueless property, if the city chooses not to issue a certificate of occupancy," said Sara Monestime, a unit owner at the Spencer Street condos.
In a statement released by Brach's attorney, Andrew Weltchek, the developer says he has worked with the AG and unit owners for several years and has spent more than $1 million help investigate and repair flaws in the building.
"Recently, I consented to judgments on behalf of the attorney general and the unit owners for the buildings," he said. "I will continue to do everything in my power to help the attorney general and the unit owners bring the buildings up to the highest standards possible."
Attorney Adam Leitman Bailey won the $10.9 million judgment for the homeowners, but Brach has told city officials that he cannot afford the repairs needed at the building, and DOB officials told the unit owners that they would have to finance the repairs themselves.
City Council member Leticia James, who represents the next door district of Clinton Hill and Ft. Greene, says the homeowners have been jerked around by the buildings department and other city and state agencies for years, but is pushing to get a zoning variance that would make the building legal.
"You have an unscrupulous developer that has flouted the law and continued to get permits for other buildings," James said. "No one wanted to admit fault, and no one has yet admitted fault."
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Comments
Anonymous
disgusting. too bad it's only a cash penalty and no jail time. slum lords need to learn a lesson.
Comment #1 Posted By: Anonymous 09/22/09
Anonymous
Oy a Brach!
Comment #2 Posted By: Anonymous 09/23/09
Anonymous
Oh really? So sure that something criminal was done? MOST educated readers know how the media can distort a story... don't wish it on my worst enemies...
Comment #3 Posted By: Anonymous 09/24/09
Anonymous
A couple of points... - The DOB seems just as guilty - if not more - causing this mess to happen... - This guy was incessantly hounded by NIMBY's hell bent on milking him dry... too bad the money can't go where it needs to
Comment #4 Posted By: Anonymous 09/24/09
Anonymous
Brach is a decent fella - he's just the fall-guy here and taking all the media ***t.
Comment #5 Posted By: Anonymous 09/24/09
Anonymous
from an OWNERS own words - comment from Brownstoner.com: "...the DOB revoked the temp C of O saying they 'missed' several important issues (none of which our very qualified home inspector picked up. Nor did our electrician)." ..."I will say that our condo (as are the others) is beautiful inside. I know the Brownstoner community feels differently about the outside. We LOVE our home. We worked HARD for it. You would never know that there was anything wrong with it. I work in Constuction & there is nothing wrong with the quality."
Comment #6 Posted By: Anonymous 09/24/09
Anonymous
#4 - 7 You are so full of it -
Comment #7 Posted By: Anonymous 09/24/09
Anonymous
#8 - have an axe to grind?
Comment #8 Posted By: Anonymous 09/25/09
Anonymous
Long live Bailey!!!!
Comment #9 Posted By: Anonymous 09/25/09
Anonymous
Does he know it's not Halloween?
Comment #10 Posted By: Anonymous 09/26/09
Anonymous
As a resident in the buildings, I must clarify that in no way could it be said that this judgement was "won" by Adam Bailey. Both Adam Bailey and The AG have said for years that such a judgement was worthless while they lead the residents down one false path towards a back room deal with Brach after another. Brach played Bailey and The AG like fiddle and only when it was perfectly clear that their approach was a failure, did the AG secure the judgement against Brach. The residents are now $1 million in the hole to legal fees and Brach has had all the time he needed to hide his money. The real question now is will the AG do the right thing and make up for their mistakes by helping the residents get money from Brach to fix the buildings before the foreclosures start to pile up and all is lost? PS. Brach is a "decent fella" only in the Crooked Developers' Hall of Fame
Comment #11 Posted By: Anonymous 09/26/09
Anonymous
I am also a resident in the building and a member of the Board of Directors. We won a 10.9 million dollar judgment. Now Bailey's firm has served an informational subpoena a few days ago and now will go after the developer's assets. It is now time to collect. All money will be traced from every dollar of profits from the sales. This may take a long time but all is in order to get paid. If you really are a resident in the building should you not be supporting our efforts to collect the money or do you really think the blame game will do anything for us.
Comment #12 Posted By: Anonymous 09/29/09
Anonymous
No blame there. Just statement of fact. The AG "won" the confession of judgment, not Bailey. Bailey has done some great work, but give credit where credit is due. If you are truly a member of the board as you state, you have to be aware of the fact that we desperately need the AG's help if we are to secure any money from this judgment in time to avert disaster. I suspect you may be the same person who stated "Brach is a decent fellow" - trying to make it look like the board members are not on the same page. Nice try. Fun with anonymous blogging.
Comment #13 Posted By: Anonymous 09/30/09
Anonymous
Brach has no money period. No money to hide. No money for us to get. Just plain stupid to waste resources on that avenue instead of fighting for what we really need get done.
Comment #14 Posted By: Anonymous 10/08/09
Anonymous
Could someone post the link to the case that was won by the tenants, thank you
Comment #15 Posted By: Anonymous 10/23/09