The Real Deal New York

Menachem Stark helped sink Chicago bank: suit

January 13, 2014 09:09AM

Slain developer Menachem Stark’s inability to pay back a loan secured by a 74-unit Williamsburg
 rental property were among the bad bets that caused a Chicago bank to go into bankruptcy, according to a lawsuit.

Stark and partner Israel Perlmutter — who has since gone into hiding, according to published reports — took a loan of about $1.5 million from Chicago-based Broadway Bank in December 2007 that was secured by the building at 100 South 4th Street, according to the suit, filed in Chicago federal court by the Federal Deposit Insurance Corporation in 2012.

But when Stark and Perlmutter defaulted on the first mortgage, the bank lost its chance of getting repaid, according to the suit, seen by the New York Post.

Stark and Perlmutter also took a $6.2 million construction loan from Broadway Bank in 2007 to build the Bedford Lofts in South Williamsburg, even though “they were highly illiquid and unable to pay the loan,” the suit says, citing financial statements.

Last week, a subsidiary of lender Deutsche Bank, acting as a trustee for a defaulted $29 million loan on 100 South 4th Street, filed an application for “interim emergency relief,” in Manhattan 
bankruptcy court, as The Real Deal reported.  [NYP]  – Hiten Samtani

  • Chuck

    Joel Kestenbaum from Fortis property purchased the mortgage on 212 -218 N 9th St Brooklyn NY from Broadway Bank, The property was further transferred on 08/16/2013 to a new Corporation named FPG 218 NORTH 9th PROPERTYLLC. C/O FORTIS PROPERTY GROUP LLC 45 Main Street Brooklyn NY 11201 Joel Kestenbaum is notarized as the President / Owner by a Notary named Shem Tov Mayer on 05/05/12 Notary# 01MA5069188 NYS Kings County . Joel Kestenbaum purchased the Mortgage on the building owned by Israel Perlmutter & Menachem Stark. King County Block 2313: Lot# 5 and lot # 7 . The Mortgage was defaulted on and the bank who made the loan National Bank was subsequently shut down by the FDIC . Joel Kestenbaum purchased the failed loan from the FDIC and as a first mortgage holder wants to own the property that is worth over $50 million and didn’t want any fights or court battles with Permutter or Stark in the foreclosing process, Rumors are that Kestenbaum was in a bad arguments with them Stark who was murdered and his partner Perlmutter regarding this property prior to Starks murder. Rumors out there is that Joel Kestenbaum is being questioned by authorities regarding Stark Murder.

    • Avi Kramer

      We’re reading an article about the south 4 st. Building, and all of the sudden Garry Shlesinger (AKA Chuck) comments about a lot on noth 9th st., could anyone explain this? And so could anyone explain me why Kestenbaum isn’t busy with Shlesingers wrongdoings at Parcare health center which ran a medical center without a legal certificate of occupancy, and Schlesinger is busy slandering Kestenbaum, perhaps there are people who have time as a more valuable thing and others thing time is meant to waste.

    • nycr

      why would the biggest family in the community want any harm done to their own? Joel is a businessman not a thug…

      • Businessman not a thug? The Hasidic Slumlord and his pals are not morally superior men. These people are greedy,shady criminal types who prey on “the Goyim” for whom they have little regard or respect. Bottom line: if you can avoid doing so, do not rent an apartment from a Hasidic Landlord.

  • Kris

    Can anyone tell me what’s to come for the people who live at 100 S 4th St? Sounds like this management company is out of money and foreclosure is imminent. What happens to us?

    • Brian Geary

      I am sorry for you all, but don’t look to Stark’s “community” for help. They don’t seem to think he did anything wrong.

      • nycr

        its probably another year away , they will stop renewing leases and a receiver will take over the building and another management company the bank hires will start to manage it. that management company will decide to either vacate the building or let it keep making money until its sold at auction. once its sold at auction the new owner will then take over control and issue leases or a vacate order for the no lease tenants.
        dont break anything while this process is happening they will use it as an excuse to vacate the apartment.
        that building has been in receivership at lease twice since 2007

  • Deborah Beaudoin-Zaki

    Perhaps if he knew the lending institutions and courts were closing in on him he arranged his oun death to protect his family from bankruptsy and financial doom. Did he have life insurance and did he put aside millions for his family’s future with money from loans? All issues must be explored. Either way or for any reason: This is horrific for the widow and enormous number of children to support. I was widowed with just two children and it was very hard. She will need kindness and support from her community for many years.

    • Jeff Putterman

      Very interesting speculation. But I’m not sure it matches the facts as they’ve been reported re: the murder itself.

    • nycr

      its definitely a rumor floating around . their community does investment insurance plans on the elder and affluent members all the time, so its not far fetched thinking.

  • jonthan

    This is a stupid article. First off I am sure he was not the cause of the banks downfall. ALL banks are responsible for they’re lending analysis. They felt it was a good gamble so they lend money on what they feel is right. You do not blame a developer/ investor for asking the bank to lend him money, he did not extort the bank and force them to lend. ALL these banks are more corrupt and do things so illegal that made our housing market crash. developers are here for money they are not a charity organization, this a business. This man probably did bad dealings with other investors who are shady obviously and he had the bad end of the stick. simple as that. everyone is looking at things and talking about irrelevant issues that are personal, not business

  • ShlobotNick

    With all his financial woes, BK and obviously bad credit, how was he approved for all the millions of dollars in loans?

    • Brian Geary

      Yeah, really interesting, considering if a minority needs a small loan to start a business or buy a house, he often has a hard time getting it or doesn’t get it at all. But t his guy was able to get more than $50 million, despite a history of not paying loans off.

  • Jeff Putterman

    Did they defraud this bank, or was the management of the bank too busy stealing for themselves to notice?

  • Larry Commercial Mortgage

    Why was a Chicago based bank lending on properties in Brooklyn? There are a lot of banks and finance companies in the NYC market that lend on viable projects. Oh, that’s why…