The Real Deal New York

Strulowitz hit with $90M suit over alleged Brooklyn fraud scheme

Israeli investors claim their partners used "Madoff-style" scam tactics in 40-building purchase
By Chava Gourarie | April 18, 2017 05:00PM

A group of investors who put up $20 million in a Brooklyn real estate deal are accusing landlord Cheskel Strulowitz of a Ponzi scheme that cost them $90 million in damages.

The investors — including Jacob and Benjamin Schonberg, Binyomin Halpern and Raphael Elkaim, all of Israel — claim that their Brooklyn partners, led by Strulowitz, used the $20 million to acquire about 20 properties throughout the borough, and then borrowed against those assets many times their value to purchase additional properties on their own.

“In order to deceive the individual plaintiffs, the individual defendants employed numerous scam tactics in the style of Bernie Madoff,” the suit claims.

Strulowitz, whose name is sometimes spelled Chaskiel Strulovich, has been operating in Brooklyn real estate for over a decade, often with his brother Moses Strulowitz. Together, they own a portfolio of at least 180 apartments in 12 buildings throughout the borough. One of Strulowitz’s bigger projects, a planned makeover of an industrial building at 665 Fifth Avenue in Park Slope, for which the developer paid $8.5 million, is one of the properties bought with the investors’ funds.

The partnership between the parties began with a single property in 2012, the suit claims, when Yechiel Oberlander, an Israeli working with Strulowitz, approached the four community members with a proposition to invest $250,000 in a two-family home at 908 Bergen Street. According to the suit, Oberlander told the investors the purchase price was $425,000, but the actual purchase price was $200,000, records show.

This pattern continued, the suit claims, with Strulowitz and Oberlander feeding Schonberg and the others misinformation about their growing portfolio, while maintaining just enough cash flow from the smaller properties to keep the investors in the game.

In the meantime, the Brooklyn partners were borrowing against the investors’ portfolio and to fund the purchase of about 20 additional properties they kept hidden from the investors. For example, the Strulowitz-Schonberg operation bought a three-unit building through an LLC at 106 Kingston Avenue for $410,000 in 2012, then borrowed $800,000 against it in 2013, records show. Another LLC bought a four-unit residential building at 618 Lafayette Avenue for $670,000 in 2013 and borrowed $1.2 million against it several months later. Through the LLC that acquired the Fifth Avenue property, Strulowitz borrowed $2.5 million for a separate property.

The investors are asking for no less than $90 million to recoup their losses and get their share in the properties purchased with the proceeds from their investment. Those properties include a $6.5 million community facility at 1217 Bedford Avenue and a $1.2 million vacant lot at 1266 Pacific Street, both purchased in 2015, along with mostly one-to-four unit buildings, according to the suit.

The plaintiffs are represented by the law firm Oved & Oved. Strulowitz did not reply to requests for comment.