Overlooked amid the Trump administration’s steady beat of stunning news — ICE actions, the Greenland takeover threat, the Venezuela incursion — is a steady beat of actions targeting criminals.
Unfortunately, these criminals are being targeted not for arrest and prosecution, but for clemency and pardons. They are all white-collar crooks, some convicted of duping mom-and-pop investors.
These crimes often involve real estate schemes, where smooth-talking businessmen (they’re always men, it seems) round up money to invest in properties offering robust returns.
Instead, they spend the money to support a high-flying lifestyle involving fancy cars, luxury travel, Rolex watches and expensive restaurants. Creating an image of success allows them to raise more money from new and repeat victims before it all unravels.
In recent years, another kind of real estate fraud has been popping up. In this scheme, the victims are not unsophisticated investors — or investors who are just smart enough to think they cannot be fooled.
Instead, they are lenders and government-sponsored entities such as Fannie and Freddie. This kind of fraud has kept The Real Deal’s Keith Larsen busy for the past two years.
My question is, why is President Donald Trump letting any of these people out of their sentences? And he’s not waiting until the waning days of his term, like he did last time.
Trump seems immune to the normal rules of politics. The fact that one serial fraudster he pardoned in 2021 went right back to committing crimes hasn’t slowed the president’s pardon operation. Nor have stories about victims of criminals he’s freed.
In the latest example, Trump erased Brooklyn developer Jacob Deutsch’s five-year prison term, fine and related penalties.
Deutsch and cousin Aron ran this scheme for years, forging documents to inflate property values and then borrowing against them.
Deutsch forged signatures on leases and filled empty apartments with furniture and clothing so visiting lenders would think they were occupied. He even doctored utility bills and fabricated bank deposits to show rental income.
Trump let Jacob but not Aron Deutsch off the hook. Recently the president did the same for the Long Island-based leader of a major fraud but not any of his accomplices. The Department of Justice said its own prosecutors in the latter case had trumped up the charges, but if that’s true, shouldn’t the president have wiped out all of the resulting convictions?
Trump haters probably think he’s selling pardons, but that seems illogical given that he’s already found safe ways to amass at least $1.4 billion during his presidency.
Something else is going on here. At some point it’s going to come out.
What we’re thinking about: L+M Development Partners and SMJ Development plan 2,035 apartments to replace the current 209 homes at 1754 Fulton Street and 53 Utica Avenue in Bedford-Stuyvesant, Crain’s reported. Part of the site is city-owned, so HPD is involved.
The publication didn’t mention City Council member Chi Ossé, who is poised to negotiate the rezoning. Ossé believes in adding supply, so chances are this will go through despite any ill will between him and the mayor, who just chased him out of a congressional race. Send your thoughts to eengquist@therealdeal.com.
A thing we’ve learned: Some years ago, the public advocate began fact-checking its “worst landlords list” before publishing it, to avoid embarrassing mistakes. That practice must have fallen by the wayside, because 35th on its new list is Ariel Belen, who is not a landlord at all — he’s a retired judge who served 18 years on the bench.
Belen was named a receiver for two troubled Bronx buildings: 214 East 168th Street and 1235 Morris Avenue. It took me three minutes on ACRIS to trace the buildings to Isaac Kassirer, who bought buildings at prices later rendered unsupportable by the 2019 rent law. Sabal Capital owned the debt on those two buildings.
Joseph Cafiero, No. 4 on the “‘worst landlords” list, called me Wednesday to say he, too, is a receiver. Also on the list are Peter Fine and David Kramer, who have been tapped repeatedly by HPD as reliable operators of affordable housing.
Elsewhere…
TRD’s Lilah Burke looked at Summit Properties’ Tel Aviv Stock Exchange disclosures for more information on its winning bid to buy a 5,141-unit, mostly rent-stabilized portfolio. But one number I’m curious about is how much it will raise from TASE investors, given that it’s already borrowing $338.5 million from Flagstar Bank for the $451.3 million purchase.
It appears possible that Summit will close without putting much of its own money into the deal, which always makes a buyer look smart if its plan works out — and makes the banks and bondholders look foolish if it doesn’t.
Summit is paying 5.25 percent interest on the Flagstar loan. That’s $17.8 million a year for the first two years. It will have to pay higher interest for the TASE debt. For the sake of argument, let’s say it bonds out the remaining $112.8 million at 8 percent interest — that’s $9 million a year. It predicts net operating income of $36 million. Subtract $27 million in debt service. Even if its NOI doesn’t account for $6 million a year in planned capital expenditures, it looks like Summit could clear $3 million a year without putting anything down.
The Mamdani administration had said Summit was paying too much to be able to maintain the buildings and also pay back its loans. Now it has the blueprint for how Summit intends to do exactly that.
Closing time
Residential: The top residential deal recorded Thursday was $10.6 million for a 3,700-square-foot condominium unit at 3 Morton Square in the West Village. Glenn Davis, Alex Andrejko, and Shaun Anders with Serhant had the listing.
Commercial: The top commercial deal recorded was $43.7 million for a 16,123-square-foot commercial property at 90 Wooster Street in SoHo. JSRE Acquisitions paid $48.5 million in 2013.
New to the Market: The highest price for a residential property hitting the market was $11.75 million for a 4,042-square-foot condominium unit at 257 West 17th Street in Chelsea. Kirk Rundhaug, Sean Johnson, and Jordan Christensen at Compass have the listing.
Breaking Ground: The largest new building permit filed was for a proposed 62,705-square-foot, 94-unit residential building at 469 Troy Avenue in Prospect Lefferts Gardens. Leandro Dickson filed the permit on behalf of Yonah Grunhut with the Grun Group.
— Matthew Elo