The Real Deal New York

One Mad. builders losing control of building

By David Jones | April 30, 2010 06:56PM

alternate textOne Madison Park, Ira Shapiro (top) and Jonathan Newman (bottom)

A state Supreme Court judge handed a victory to iStar Financial today by granting full authority to the interim receiver at the One Madison Park condominium, which is going through foreclosure proceedings.

Judge James Yates ordered that attorney Jonathan Newman, who was appointed interim receiver earlier this month, be granted the authority to oversee the completion of One Madison Park.

The move represents a significant setback to lead developer Ira Shapiro, who urged the judge to allow him to remain in control over the project, which descended into a bitter split with his development partner Marc Jacobs, and an investigation by the Rockland County District Attorney. 

“They’re no longer in control of the process,” said Matthew Parrott, attorney for iStar. “The custody and control of the building is in possession of Mr. Newman.”

A written order is expected to be issued Monday, Parrott said. 

Burton Dorfman, the attorney for Shapiro, praised the judge’s ruling, and noted that the developer will still be involved with marketing and completing the 69-unit building in consultation with the receiver. 

Lawyers said that sales will not resume until Attorney General Andrew Cuomo’s office lifts the ban he imposed more than a month ago. On March 12, Cuomo ordered the developers to refund money to buyers after iStar filed to foreclose and dozens of lawsuits were filed claiming that the developers defaulted on tens of millions of dollars in personal loans used to fund overhead costs at the condo. 

The loans lead to widespread chaos at the 23 East 22nd Street project, as multiple people throughout the tri-state area filed suit alleging the developers offered to pay hundreds of thousands of dollars if they flipped apartments to higher paying buyers. 

In addition, the developers borrowed a total of $40 million from various individuals in return for pledges that they would get a sponsor-owned apartment if the developers defaulted. As previously reported by The Real Deal, a number of individuals were offered the same apartment in return for the personal loans.  

Newman and officials from the AG’s office were not immediately available for comment. Lawrence McCarron, attorney for Jacobs, was not immediately available.

Comments are closed.