Zaccaros fight partners in $30M Soho foreclosure

By Adam Pincus | March 12, 2009 01:48PM

Real estate investor John Zaccaro, husband of vice presidential candidate Geraldine Ferraro, and their son are battling partners in a Soho mixed-use development that is in danger of having its $29.8 million mortgage foreclosed on, according to a new lawsuit filed in Manhattan State Supreme Court.

In court papers filed Tuesday, Zaccaro and his son John Zaccaro Jr. claim their two partners in the real estate endeavor, Alexander Abrams and Eldon Scott, are being remiss in not fighting the foreclosure at 420 Broome Street, at Lafayette Street. Furthermore, Abrams and Scott will not permit the partnership to hire an attorney because they fear they will be subject to personal guarantee provisions, the suit says.

Abrams and Scott have “put their personal interests above those of” the partnership, the Zaccaros say in the filing. The Zaccaros are suing for a declaratory judgment, a ruling that would allow them to hire an attorney to challenge the foreclosure.

The Zaccaros declined to comment, and Abrams and Scott could not be reached for comment.

In 1985, the elder Zaccaro pleaded guilty to a charge that he fraudulently obtained financing for a real estate deal worth millions of dollars, and was sentenced to community service.

The Zaccaros entered into a partnership with Abrams and Scott to redevelop the seven-story warehouse building on Broome Street into a 10-story commercial and live-work space, the court papers say. The partnership, 420 Broome Street Development, bought the building in February 2006 for $20.5 million, city property records show.

The Zacarros and Abrams and Scott obtained the loan through a fund affiliated with investment management firm BlackRock the same month, and the note was then bundled into a collateralized debt obligation called Carbon Capital II Real Estate. Carbon Capital II filed to foreclose on the mortgage on February 23, the court papers indicate. A spokesman for BlackRock declined to comment.

The lender included so-called carve-out guarantees in the loan document that will make the borrowers financially responsible in the form of limited guarantees if they fight the foreclosure in bad faith or cause delays, the filing says.

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