Riverside Abstract’s dedication to client service may have gone too far

Jeremy Piven opened with a joke.

“Do I sound bitter?” he asked the crowd. “Because I am. Because I am in New Jersey opening up for a guy named Shmueli on the beach.” 

Piven, the actor best known for playing the always-hustling entertainment agent Ari Gold in HBO’s “Entourage,” was performing a standup set at “Guy’s Night,” a 2022 networking event in Deal, New Jersey, that also featured singer Shmueli Ungar and was sponsored by Brooklyn title insurance agency Riverside Abstract.

Gold personified the do-anything-you-can hustle culture that saturated Hollywood — and real estate. He never turned off his phone, never stopped working and moved mountains for his clients. 

Piven’s character would have liked Riverside Abstract’s unofficial motto: “Do whatever it takes.” 

Shaul Greenwald, its CEO, started his workdays at 7 a.m and kept at it until midnight. At least once, he held a meeting at his home at 11 p.m. He didn’t play golf or exercise, and he spent most of his time outside of work with his family or studying Talmud, Greenwald said in interviews. He was dutiful.

And it seemed to pay off. 

In just over a decade, Riverside became one of the largest title insurers in the tri-state area, closing on $1.6 billion in sales volume in the five boroughs in 2018, according to TRD’s research, which looked only at transactions worth $1 million or more.

Buyers and sellers need title insurance, but it is usually an afterthought, a legal necessity to ensure that a property owner has a clear title and transactions close smoothly. Title agencies act as middlemen between buyers and lenders and large insurers that underwrite policies.

Embracing the rise and grind, Riverside didn’t just sell title insurance. 

“We don’t look at ourselves as a title agent,” said David Berney, Riverside Abstract’s director of sales, in an interview posted on Riverside’s website. “We try to be the resource for our clients for anything they need.” 

Riverside branched out to cost segregation, 1031 exchange administration, LLC formation and even events.

“My creative side comes out a lot,” Greenwald said about why they kept spinning off companies.

The strategy soon became a problem.

Between 2018 and 2020, the government says, Riverside provided title insurance for closings in two separate mortgage fraud schemes now under scrutiny by the Department of Justice and the Federal Housing Finance Agency.

The DOJ says that when tri-state investors Boruch Drillman and Aron Puretz bought a Michigan office building for $43 million and flipped it to themselves for $70 million through a straw buyer before obtaining a $45 million loan based on the second deal, Riverside provided the closings, for the seller on the first deal and lender on the second. Puretz and Drillman have both pleaded guilty to wire fraud and could go to prison for up to five years. 

Their clients needed other services, and Riverside allegedly provided them.

Drillman and Puretz had to show their lender, JPMorgan, that they were capitalized in order to obtain the loan. They turned to a firm tied to Riverside, which allegedly provided a $30 million one-week bridge loan, according to a source familiar with the matter. Having the bridge loan money in their accounts was a key part of Drillman and Puretz’s scheme to induce JPMorgan to provide its loan, according to court filings provided by the Department of Justice. 

Riverside has not been charged with any wrongdoing, but the widening fraud investigation has been bad for business, and partners, clients and regulators are now looking more closely at how the business operated all along. 

The scramble

Greenwald studied at the Beth Medrash Govoha yeshiva in Lakewood, New Jersey, and got a job leading sales and marketing for a consumer products company in Queens. 

He married and had four kids. When he was in his 30s, with kid No. 5 on the way, he sold his house in Rockland County, moved to Brooklyn and enrolled in law school. 

“I had a drive to do something else,” Greenwald said in an interview with the Title Report. “I felt that I could use my creative talents and experiences to challenge myself to grow and be more productive in other areas.” During law school, Greenwald worked with a title agency, which gave him the idea to help start his own title firm in 2006.

People thought he was crazy, Greenwald confessed in an interview posted on YouTube. He was grinding “24/6” — avoiding work on Shabbat — and genuinely working 18-hour days.

The upstart firm did not have a large staff or high operating costs like other more established title agencies, and when the financial crisis hurt other agencies, he grew.

“We actually were growing our staff and sales while others were downsizing,” said Greenwald.

Yoel Zagelbaum, a former patent attorney at Ropes & Gray, founded Riverside Abstract in 2007. 

In 2009, Greenwald joined Riverside as a partner. 

Greenwald was the yin to Zagelbaum’s yang. He oversaw the core of the business, while Zagelbaum handled client relationships.

The firm took off. 

In 2013 and 2014, Riverside closed on $10 billion worth of transactions. By 2015, the firm was one of the 10 largest title agencies in New York and New Jersey, with over 70 employees, of whom 12 were attorneys, and licenses in 34 states. It eventually had offices in Brooklyn and Valley Stream, New York, Lakewood and Montvale, New Jersey, and Texas.

Riverside celebrated its success.

More than 1,000 people attended its holiday party at a loft in Chelsea in 2015, including millennial landlord Raphael Toledano, who showed up in a pinstripe three-piece black suit. The buffet had sashimi and a carving station and stretched over a city block, one blogger claimed.

“We don’t look at ourselves as a title agent. We try to be the resource for our clients for anything they need.”
David Berney, Riverside Abstract’s director of sales

“If their party throwing abilities are equal to their actual business services you’ll be in good hands,” she wrote.

“All they needed was a few strippers,” a developer attendee quipped to TRD back in 2016.  

“We really look at it two-fold,” Zagelbaum said at the time. “It’s a thank-you to our clients, and a thank-you to people we work with, a way to show our appreciation and celebrate another year.”

Most of Riverside’s relationships came from the close-knit Orthodox Jewish communities in New York and New Jersey. Clients for either title or escrow services included Yoel Goldman’s All Year Holdings, Shaya Prager’s Opal Holdings, Toby Moskovits’ Heritage Equity Partners, Chaim Miller and Joel Schreiber, property and court records show. 

Riverside’s niche was the noninstitutional guys — the Brooklyn or Lakewood machers backed by wealthy families or community members who were becoming powerhouses in their own right. Goldman’s All Year had a real estate portfolio valued at over $1 billion just in Brooklyn by 2019.

Already, Riverside faced some allegations that it failed to scrutinize its deals. In 2017, the firm was sued over a fraudulent home sale in Clinton Hill for which Riverside provided closing services, okaying the deal despite the fact that one of the owners had died more than two decades before. 

In 2017, a client brought a lawsuit against Riverside 1031 and Shaul Greenwald for transferring over $800,000 in funds to an identity thief. An expert report commissioned by the client blamed Riverside’s lack of internal controls.

Problem solver

The firm had trouble gaining business outside the community. One New York City developer explained that hiring a title agent comes down to trust. Can you trust these guys in case something bad happens? The developer, who requested anonymity, said he wasn’t sure if Riverside was sophisticated enough to earn that trust.

He said Riverside seemed like “yeshiva guys playing with big real estate.”

Riverside looked to build trust. Relationships were everything to the founders, and they tried to help their clients in any way possible. 

“My nature is very service-oriented and giving, and I generally like to help my clients in whatever way I can help them,” said Greenwald in a deposition.

Riverside helped clients raise equity for their deals, according to a source familiar with the firm. Greenwald’s side venture Good Light Funding lent about $3 million to All Year Holdings in the summer of 2020 as the firm faced foreclosures, according to an affidavit. (Goldman was ultimately banned from raising money in Israel’s capital markets for five years.)

The firm embraced its reputation as a problem solver for tricky deals. 

Its ability to find “deals for clients, introducing clients to the right equity sources, partners, lenders, service providers or whatever else they need” sets it apart, said Berney, Riverside’s sales director.

Riverside cross-sold services among its web of affiliates. 

“There are plenty of times where a new client makes more sense to come under 1031 and do business in that sense and eventually becomes a title insurance client and vice versa,” Zagelbaum said in a deposition.

The affiliates operated closely together. Executives bounced between Riverside 1031 and Riverside Abstract. The companies had offices on the same floor in a Lakewood office building, according to lawsuits.

A different kind of party

In 2017, title insurance had a reckoning.

Title insurance had been a commodity business. Winning business was a game of who you knew and what you could do for them.

But the state of New York was concerned that “marketing expenses” — Yankees games, Billy Joel tickets and parties — were being passed on to customers, driving up costs across the board. The state investigated Riverside’s marketing expenses and requested itemized descriptions of gifts given to current or potential clients, according to Crain’s.

New York’s Department of Financial Services cracked down. Title insurers lost the ability to wine and dine their clients.

Buyers generally bring the title insurer to a deal, but lenders or attorneys can also make that recommendation, according to Daniel Berman, a real estate attorney at Kramer Levin.

“The attorneys are the ones who see how the title companies perform,” said Berman. “I know who is good. I know who gets on the phone with me and is available.”

Riverside needed to cultivate these relationships.

It seemed to turn client services up a notch, this time minus the holiday bashes.

The party was elsewhere, anyway.

Low interest rates had created cause for celebration among certain fast-moving investors who could buy up buildings and quickly flip them to score larger loans before refinancing or selling.

Drillman and Puretz were among them. 

Their transactions relied on the buyers showing their lender that they had a clean title to the property, even though they were flipping buildings between parties with very close ties. The crux of the DOJ’s allegations is that Drillman and Puretz committed mortgage fraud by engaging in a deal that was not at arm’s length, tricking the lender into believing the higher sale price was legitimate.

Riverside made it possible for them to have that crucial clean title.

The company, which has yet to respond to requests for comment, could argue that it got duped while doing its job — supplying title insurance.

To be sure, legal experts are unsure if title companies are required to tell a lender about a flip. But it is certainly good practice, because if a property’s value is inflated, a lender’s lien could end up worthless. 

Yet Riverside went further. The company also provided closing services for the lender, according to the DOJ. Lenders use title insurance to ensure they have a lien on the property in the event of a sale, and Riverside appeared never to inform the lender about the first sale, according to the DOJ.

In the aftermath, Fannie Mae, which buys mortgages from private lenders, has stopped closing deals that involve Riverside. Real estate operators and attorneys have grown concerned about working with Riverside, sources and court filings claim, and employees have left the company. One of Riverside’s subsidiaries changed its name in an attempt to distance itself.

For Riverside, the investigation is more than bad press. It spells the end of a business strategy that made the firm a case study in success for 15 years. The goal of title insurance, dating back to its inception in the 1800s, has been to prevent fraud. As Riverside built loyalty through nonstop creative dealmaking, it failed to do even this.

In February, the company explored selling all of its assets to Avery Eisenreich, a nursing home owner. A source close to Riverside says that deal fell apart; there is no sign that it went through.

The clientele’s confidence in Riverside is dwindling anyway. One investor wants it to return over $1.6 million held in a Riverside escrow account because of the recent scrutiny and possible sale, according to a lawsuit. Riverside has yet to respond to the suit. The Troy, Michigan, property at the center of the Drillman-Puretz dealings was sold in a foreclosure auction for $21 million, one-third of its debt, wiping out the lender or any outside investor remaining in the deal. 

In an email to employees this year about the pending sale to Eisenreich, Greenwald and Zagelbaum acknowledged “rumors” that the firm had been banned from Freddie and Fannie. 

This “inflicted immediate harm to Riverside’s reputation and, consequently, its business,” they wrote.

The muted tone had little in common with the party Piven headlined or the zeal from Greenwald’s 2021 interview: “Our clients are young, aggressive, they’re traveling, working hard, hustling,” Greenwald said then.

Without them, the company that would do anything for its clients has little left to do.