Brooklyn Navy Yard fires development firm linked to bribery scheme

Mar.March 11, 2011 06:52 PM
Admiral’s Row at the Brooklyn Navy Yard

The non-profit Brooklyn Navy Yard Development removed PA Associates as a designated developer on its high-profile Admiral’s Row project a day after one of the firm’s founders was charged in a $1 million federal bribery investigation.

The quasi-governmental entity today “terminated the designation of PA Admirals Row LLC as the developer of the Admiral’s Row site,” the corporation said in a statement to The Real Deal. PA Admirals Row LLC is an affiliate of Midtown-based PA Associates, which was approved as the developer to partner with grocery chain ShopRite on the $60 million project to build a grocery store.

Yesterday federal prosecutors charged Aaron Malinsky, a principal and founder of PA Associates, of funneling $472,500 in bribes to State Senator Carl Kruger. Kruger, who along with five others was also charged in the alleged five-year conspiracy, was accused of taking official action to help Malinsky in several real estate ventures in Brooklyn. The Brooklyn Navy Yard project was not mentioned as one of those projects.

An attorney for Malinsky, Scott Mollen, a partner with law firm Herrick, Feinstein, said in a statement, “There is a vast difference between making mere allegations and proving a case at trial. We will present a vigorous defense in court, rather than inappropriately trying the case in the media.”

PA Associates and grocery store ShopRite were selected last April to build a 55,000-square-foot supermarket on the six-acre site within the Brooklyn Navy Yard. The project is expected to break ground in 2012. ShopRite did not respond to a call for comment.

The project will continue forward, “with public review of the site plan expected to begin in the coming weeks,” the Navy Yard statement said.

Brooklyn City Council member Letitia James, who represents the neighborhood of Fort Greene that borders the Navy Yard, said a new developer would be named. Yet she had been assured that the new selection would not delay the project, “which is much needed in the neighborhood.”

There was additional fallout from the bribery allegations as well. The city’s Economic Development Corporation, which manages development at city-owned property, said it would look into two projects — at Mill Basin and City Point — both where Malinsky was involved.

“We don’t believe there have been any improper actions on any of our projects,” Julie Wood, a vice president at EDC, said in a statement. “However, out of an abundance of caution, we are reviewing the projects involving people implicated in the case or mentioned in court papers to make sure this is true.”

And in an effort to confront the expected public backlash to the investigation, Mollen said Malinsky will step down from PA Developers, which is an affiliate of his company, the arm that was actually developing the Brooklyn Navy Yard site.

“To address public concerns, provide all reasonable cooperation with public agencies, and devote sufficient time to clearing his name and protecting his outstanding reputation, Aaron Malinsky is seeking to withdraw from management and ownership of PA Developers, as well as its entities involved in public projects,” Mollen, said. “He has already begun discussions toward that goal.”

And a public company made moves to distance itself from Malinsky’s alleged illegal activities. Acadia Realty Trust, a real estate investment trust that has partnered frequently with PA Associates on projects such as City Point, a retail development in Downtown Brooklyn, issued a statement saying it was unaware of any wrongdoing.

“Acadia has no knowledge of any improper or illegal activities related to those projects,” the statement said. “Although Acadia was unaware of any investigation, it is its longstanding policy to cooperate fully if asked for assistance by authorities.”

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