Isaac Hager recently lost his stakes in two high-profile properties to bankruptcy sales, but that could be the least of his concerns.
The Brooklyn developer has been accused of fraudulently transferring $7.2 million from an entity affiliated with a bankrupt Williamsburg hotel project to shield the money from the property’s creditors, a trustee for the creditors alleges.
In a complaint filed in federal court, the trustee, Nat Wasserstein of Lindenwood Associates, alleges the “transfers were made with the actual intent to hinder, delay or defraud the debtor’s creditors.”
The lawsuit comes after Hager’s Cornell Realty lost control of the development site at 159 Broadway in a bankruptcy sale to senior lender Madison Realty Capital, who closed on the Williamsburg property in November.
Cornell Realty bought the development — a prime location next to the historic Williamsburgh Savings Bank building and across the street from Peter Luger Steakhouse — for $26.3 million in 2017 and filed plans for a 26-story project with a 235-key hotel, condos and a bar and restaurant.
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In 2019, Madison Realty Capital provided about $28 million in loans on the property, with Eli Tabak’s Bluestone Group kicking in a $3.5 million mezzanine loan. Work on the project got underway, but Bluestone initiated a UCC foreclosure on the equity interests in the property shortly after the onset of the pandemic the following year. Madison initiated a foreclosure on its senior debt around the same time.
Just before the UCC foreclosure auction was supposed to take place in December 2020, the property entity filed for bankruptcy, temporarily delaying the foreclosure and giving the debtor a chance to restructure.
The bankruptcy lasted for more than two years in a White Plains courthouse until Madison’s plan was approved this summer.
Wasserstein claims that Hager’s alleged fraudulent transfers occurred between 2017 and 2021, mostly prior to the bankruptcy filing. But the complaint alleges that the debtor entity was either insolvent at the time of the transfers or was forced to become insolvent as a result of them. The trustee is also suing several contractors at the property.
Hager’s legal team has not yet filed a response to the allegations. Hager did not return a request to comment, nor did an attorney for the trustee.
The complaint offers few details about how Hager allegedly transferred the money out of the property entity, but it did name the entities that allegedly received the funds.
Most of them are connected to Hager’s interests in Brooklyn and Manhattan, including 206 Kent Avenue, a retail and office development in Williamsburg; 255 West 34th Street, a planned 33-story, 330-room hotel near Penn Station, 428 Wythe, a six-story mixed use building in Williamsburg, and 730 Lorimer, a small rental building in Williamsburg.
A prominent dealmaker in Brooklyn, Hager is the grandson of the late Rabbi Mordechai Hager, longtime leader of the Viznitz, one of the largest Hasidic sects.
In addition to the 159 Broadway project, Hager recently lost control of the Tillary Hotel, a residential and hotel property in Downtown Brooklyn, to lender Ohana Real Estate.
In more positive news, Hager and Daryl Hagler, a nursing home investor, recently paid $43 million for a Crown Heights site where Bruce Eichner’s Continuum Company once planned 1,500 apartments.