Politically-Influenced Receivership Appointments That Suck Cash Out Of Buildings In F'closure Origin Of Latest Stench Emanating From NY Court System

In New York City, The New York Times reports:

• In 2009, a judge in Manhattan had a lucrative appointment to hand out: oversight of a diamond district building that was drifting into foreclosure. Nearly 600 people in Manhattan had been approved for such work. But the job went to a lawyer named Mark D. Lebow, who is the husband of Patricia E. Harris, Mayor Michael R. Bloomberg’s most trusted aide. Since then, Mr. Lebow has earned $352,000 in fees, more than $5,000 a week, according to court records.



• The foreclosure crisis has caused a surge in the number of court-appointed receivers for distressed properties in New York, and politically connected lawyers are benefiting. Yet even as the fees mount, totaling millions of dollars, it remains unclear why judges are selecting some of these lawyers, and whether the fees are being well spent.



• The court system in New York State has long been criticized for fostering a system of patronage appointments that enriches lawyers and others with ties to influential politicians. Court officials defend the process of selecting receivers for distressed properties, saying judges are looking for people who they know have done good work.

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• When a building goes into foreclosure, a judge appoints a lawyer as a receiver who acts a property’s temporary landlord during the process. Receivers are entitled to fees that typically amount to 5 percent of a property’s revenues. Judges can award less than 5 percent, but usually do not.



• The court-appointed lawyers in turn usually hire property managers and other lawyers to assist in overseeing the properties. The receivers do not pay out of their own pockets for the costs of the property managers and other lawyers. That money comes from the properties’ revenues.



• “This is why mortgagees hate foreclosures,” said Harold Shultz, a senior fellow at the Citizens Housing and Planning Council, a nonprofit research group. “During this process all these people are sucking money out of the building.”

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• Perhaps the most profitable recent receivership went in 2009 to a retired judge, Seymour Boyers, 84. He was paid $760,000, or roughly $7,800 a week, to oversee the case of the sprawling Riverton apartments in Harlem. Mr. Boyers has specialized in medical malpractice and product liability while in private practice. Members of his law firm donated $1,000 to the campaign of the judge, Richard F. Braun, who appointed him as a receiver.



• A court spokesman, David Bookstaver, said Justice Braun was not aware of the campaign contributions. Mr. Boyers “is a highly respected former jurist with outstanding credentials," Mr. Bookstaver said. At Riverton, the state’s housing division ordered rent reductions during Mr. Boyers’s tenure because repairs were not completed. Mr. Boyers said he was not aware of the request for repairs, which he said were sent to the property manager, until months after they were issued.(1)

For the story, see Politically Tied Lawyers Win Jobs Handling Foreclosures in the City.

(1) For other ripoffs having some connection to the NYC court system, see:

• NYC Controller Urges All Brooklyn Residents To "Make Out A Will ASAP!" To Avoid Risk Of Getting Fleeced By Public Administrator's Office,
• NYC Controller: Bronx Public Admisistrator's Office Plays Fast & Loose With Dead People's Property,
• Retired NY Judge Reportedly Left Homeless & Broke By Guardianship Process.