Africa Israel appeals ban on its condo sales
Developer looking to reverse court decision that upheld temporary bar on firm
Lawyers for Israel-based developer Africa Israel filed an appeal against a court decision that upheld a temporary ban engaging in condo sales. The ban is part of an ongoing investigation by New York Attorney General Eric Schneiderman.
Supreme Court Justice Debra James in April upheld a temporary restraining order on Africa Israel and co-developer Jeshayahu ‘Shaya’ Boymelgreen after the AG launched a probe into the finances of 15 Broad Street, the 382-unit condo tower that is marketed under the name Downtown by Starck.
The Attorney General in February alleged that Boymelgreen and Africa Israel continued to maintain control over the property more than five years after selling out sales, and failed to obtain a permanent certificate of occupancy due to continued construction defects. The suit claimed that the developers also misappropriated nearly $10 million dollars in an escrow fund set aside to fix the defects and obstructed the investigation Schneiderman launched after unit owners complained of the defects.
Africa Israel briefly won a partial reprieve on the restraining order, but James later upheld the original ruling, forcing the developers to hand over control of the condo board to unit owners earlier this month.
In a May 29 affirmation related to Africa Israel’s appeal of the ban, the firm’s attorneys stated that “… The court failed to consider and address a crucial and, for the AI parent companies, dispositive aspect of the AI entities’ motion – that even if the NYAG was entitled to injunctive relief, it was not entitled to such relief against the AI parent companies, which did not sponsor the condominium’s offering plan.”
The Attorney General’s lawsuit names 15 Broad Street, the sponsor entity that controls the building, as well as Boymelgreen and Pinchas Cohen, who was president of Africa Israel USA at the time the condo was under development. The suit also names AI Properties and Developments (USA) Corp. and AI Holdings (USA) Corp. and Boymelgreen Family, the name of Boymelgreen’s development company.
Lev Leviev is the CEO of parent company Africa Israel.
Officials at the AG’s office were not immediately available for comment. Africa Israel officials were not immediately available for comment.
Attorney Andrew Weltcheck, who is not involved in the suit and had no prior knowledge of the litigation, said it may be difficult for Africa Israel to win the appeal.
“In the normal condominium offering plan the responsible parties are the sponsor and the controlling principals,” said Weltcheck. “If there is a parent it suggests that is a company that has an ownership interest in the subsidiary.
“It doesn’t sound necessarily illogical that if there’s another company that has an ownership interest in that sponsor that it isn’t responsible.”