Flat out of cash, Bellmarc Realty has resorted to issuing IOUs to agents demanding commission payments.
The so-called promissory notes are being distributed in the form of bad checks that brokerage founder Neil Binder is telling agents not to cash, at least until the firm becomes liquid, sources told The Real Deal. But even if Bellmarc does wrestle its way back into the black, compensating its dwindling number of agents are just one of the firm’s obligations.
By June 30, the once-heralded firm will shutter its last remaining office, at 936 Broadway in the Flatiron District, after its landlord there sued for nonpayment.
In addition to losing their office, Bellmarc agents were recently denied access to their OLR accounts, and over the weekend the firm’s website was down for more than 36 hours, setting off a wave of speculation about the future of the company.
Meanwhile, New York’s Department of State confirmed that it has launched an investigation into Binder and Bellmarc. A spokesperson for the DOS declined to comment on the nature of the inquiry.
Through a spokesperson, Binder declined to comment on the future of Bellmarc, but he confirmed the distribution of promissory notes to agents.
“Bellmarc is awaiting receipt of outstanding funds on commissions receivable, to address commission obligations,” the spokesperson said in an email.
Bellmarc, which Binder launched in 1979, once had close to 600 agents and a lucrative franchise deal with national brokerage Coldwell Banker. But its been rocked over the past two years by a series of lawsuits — more than two dozen as per TRD‘s count– by Binder’s former partners, agents, and lenders.
This spring, Capital One bank asked a Suffolk County judge to appoint a receiver in its attempt to collect nearly $580,000 from Bellmarc.
Most recently, Bellmarc filed a lawsuit against Emblem Health Inc., demanding the insurer reinstate coverage after it “wrongfully terminated” the brokerage’s health insurance coverage.
According to the suit, an Emblem representative told Bellmarc the brokerage owed some $34,000 in payments for coverage in April, May and June; Bellmarc claimed in the suit to have delivered an $11,348 check to cover April.
Binder’s spokesperson said Monday that Emblem had since reinstated Bellmarc’s coverage.
But by Binder’s own admission, the firm has run out of money.
“It’s just not liquid now,” he recently told one agent, according to a recording of the conversation obtained by TRD. Asked by the agent why he was distributing bad checks, Binder said: “It is deemed a ‘demand note,’ which means at the time the money comes in, we’ll advise you that the funds are available.”
In the recording, Binder further explained that he wanted agents to have evidence of how much Bellmarc owes them, so that the brokerage can satisfy its obligations once it is able to do so.
“Money is coming in on a somewhat regular basis,” he said in the recording. Priorities include employee health insurance policies, payroll and commissions, in that order, he said.
As of Monday afternoon, the windows at Bellmarc’s office at 936 Broadway were papered over.
Just days earlier, workers could be seen entering and exiting with office equipment. The door handle at the entrance dangled, broken. Two former agents left the office shortly after 5 p.m. clutching termination notices – which are required to switch their broker licenses from Bellmarc to another brokerage.
“It’s been chaos the last couple of weeks,” one of the agents told TRD, speaking on condition of anonymity. “People were not getting paid. Checks were bouncing.” The agent said things got even worse after a former manager, Staci Reed, quit a few weeks ago. “Everyone saw it fall apart,” the agent said.
In a June 24 email to Bellmarc’s agents, Binder said he’d spoken to OLR about letting brokers continue to access the listings portal. “This will be on a agent payment basis,” he wrote, according to a copy of the email obtained by TRD. He also said that he’d made temporary arrangements for agents to use a conference room at a city law firm on an as-needed basis, following the closure of the Flatiron office.
In April, the landlord at 936 Broadway, Great Neck-based First Sterling Corp., filed a complaint against Austin St. Associates Inc., which does business as Bellmarc Realty, alleging the tenant owed more than $202,000 in unpaid rent.
Attorneys representing First Sterling declined to comment.
The financial worries have led to a mass exodus of agents. As of June 23, there were just 25 agents left on Bellmarc’s website, but it was unclear whether that list was accurate.
“I am done with Bellmarc,” one agent told TRD when reached by phone.
“It’s a terrible feeling knowing you have put in months of work and then you must worry if you will be paid. It’s the reason I left,” a former full-time employee wrote in a May 2016 review on the recruiting website Glassdoor. Another former employee complained that senior management “publicly bullied” staff.
But is this the end for Bellmarc?
On June 19, Binder insisted the brokerage was staying in the game. A “transitional office” was being set up at his $12,000-a-month rental apartment on East 90th Street. “The company will be looking for a new location and intends to move to that facility by the end of the summer,” he wrote.