Concerns Continue For 25,000 Residents In 11,000-Unit Manhattan Apartment Complex As Foreclosure Action On $3B Mortgage Is Filed

In New York City, The New York Times reports:

• The lenders at Stuyvesant Town and Peter Cooper Village are expected to begin an uncontested foreclosure action [] against the owner of Manhattan’s largest residential complex, according to bankers and real estate executives. CWCapital, the company that is overseeing the complex on behalf of the owners of $3 billion in mortgages, plans to file the action in State Supreme Court in Manhattan, they said. The owner, a partnership of Tishman Speyer Properties and BlackRock Realty, announced last month that it would turn over the property after defaulting on a $16 million loan payment, rather than wage a battle for control.

• The foreclosure action is unlikely to immediately affect the 25,000 residents of the two sister complexes overlooking the East River, between 14th and 23rd Streets. But it marks the beginning of what promises to be a lengthy process in which the lenders will take control of the 80-acre complex and run it for an unspecified period before selling it to a new owner.

• Still, tenants of the 110 buildings are concerned that services and maintenance could deteriorate over time. “It is unfortunate that we find ourselves in this position,” said Daniel R. Garodnick, a city councilman and lifelong resident. He added: “Anything that moves this process toward an orderly restructuring will be in the tenants’ interest. We most certainly don’t want anyone gumming up the works.”(1)

For more, see Worry at Stuyvesant Town as Foreclosure Draws Near.

For story updates, see:

• Reuters: Lender's agent forecloses on Stuyvesant Town: The trustees for the holders of securitized senior mortgages on Stuyvesant Town/Peter Cooper Village in Manhattan have moved to foreclose after the owner of the apartment complex failed to make the monthly installments on the $3 billion loan (action filed in federal court in Manhattan).
• New York Post: LeFrak, Ross unfazed by StuyTown suit: New York real estate mogul Richard LeFrak says he and billionaire investor Wilbur Ross are still interested in buying Stuyvesant Town-Peter Cooper Village, despite moves by lenders to foreclose on the apartment complex. [...] Ross told The Post he supports a foreclosure sale, saying it will simplify the sale process.

(1) Reportedly, the Stuyvesant Town foreclosure would come only weeks after a state judge ordered the foreclosure sale of Riverton Houses, a middle-class complex in Harlem. And analysts predict that more complexes bought with enormous loans during the real estate boom will also default. At Riverton, which like Stuyvesant Town was built by Metropolitan Life Insurance in the 1940s, the owner reportedly defaulted on a $225 million mortgage. On behalf of mortgage holders, loan servicer CW Capital will have to pay a transfer tax of an estimated $100 million on the Stuyvesant Town foreclosure when it does take possession of the property, the story states.

Rain Clouds Hover Over Big NYC Landlords, Tenants, Bondholders, Housing Agency After State High Court Ruling Declaring Stuy Town Rent Hikes Illegal

In New York City, The New York Times reports:

• Tenants and landlords spent much of [last] Thursday struggling to figure out what the state high court’s ruling on the future of Stuyvesant Town and Peter Cooper Village meant for all types of New Yorkers.(1) Real estate moguls feared the news would cripple their industry, and tenants worried about their rents.

• Despite the lack of clarity, the ruling by the New York Court of Appeals had an immediate chilling effect on real estate in New York: Landlords questioned whether they could raise rents, and some even went so far as to cancel plans to buy more apartments in buildings with tax subsidies.

***

• While tenant groups who had spent the last several years fighting the owners of Stuyvesant Town welcomed the news, they also recognized that the ruling may complicate and extend how long it takes for current or past tenants to receive rent rebates. They also feared that conditions would deteriorate as owners deferred maintenance and repairs.

***

• The problem extends beyond Stuyvesant Town to buildings in the Bronx, Brooklyn and Queens. “They’re not the only landlords who did this,” said Daniel Alpert, managing partner of Westwood Capital, a New York investment bank that was part of a tenants’ bid for Stuyvesant Town in 2006.

***

• Government agencies scrambled to figure out how they would carry out changes the ruling would require. The state housing agency, the Division of Housing and Community Renewal, could be inundated with petitions from tens of thousands of tenants claiming they had been overcharged by landlords receiving tax breaks, as well as from landlords disputing the claims.

For more, see Stuyvesant Town Ruling Worries Tenants and Landlords Alike.

For the ruling, see Roberts v. Tishman Speyer Properties, L.P.

See also:

• Bloomberg: Bondholders Face Losses After New York’s Stuyvesant Town Ruling,
• Gothamist: Still Lots More Legal Wrangling In Store for Stuy Town.

(1) Stuyvesant Town and Peter Cooper Village are a combined 56-building, 11,000-unit apartment complex in Manhattan.

NY AG: Watch Out For Scammers Targeting NYC Tenant-Beneficiaries Of Recent $69M Stuyvesant Town/Peter Cooper Village Rent Rebate Settlement

From the Office of the New York Attorney General:

• Attorney General Eric T. Schneiderman [] issued an open letter to tenants of Stuyvesant Town and Peter Cooper Village in Manhattan warning them of a possible scam related to a recently announced multi-million rent-rebate settlement. Last week, several tenants reported receiving what appear to be scam calls about the settlement, and in which they were asked to provide personal information. The Attorney General warned residents about providing information to unknown callers and encouraged tenants to contact his office with information that may assist the investigation.

***

• On December 11, New York City Councilmember Daniel Garodnick reached out to the Attorney General’s office to report that several tenants of the complexes had received telephone calls from individuals claiming to be the claims administrator of the Settlement. The callers attempted to solicit personal information from the tenants on the pretext that this information is required for the tenants to recover on the Settlement. The Attorney General’s office determined that these calls were not from the Settlement claims administrator or anybody else legitimately affiliated with the Settlement. Instead, the calls were a scam apparently designed to deceive tenants of the complexes into disclosing highly personal information to fraudsters who will use this information for their own personal gain.
  
  The Roberts v. Tishman Speyer case was settled on November 30th and will result in nearly $69 million being returned to tenants overcharged for rent between 2003 and 2011. The case was initially filed in 2007 by Stuyvesant Town residents against Tishman Speyer and Met Life, the former owner of the East Village building complex, claiming that units had been illegally deregulated while the development was receiving a J-51 tax abatement. The state’s top court, ruled in favor of the tenants in October 2009 and a settlement was reached this fall. The case involved the status of 4,311 apartments and will impact approximately 22,000 current and former residents.

For the New York AG press release, see A.G. Schneiderman Warns Against Stuyvesant Town Settlement Scam (Tenants Should Beware of Scam Calls Asking For Private Information; A.G. Schneiderman: Be Careful of Scammers Preying On Tenants).

Brooklyn Man Gets 9 To 18 Years For Running Real Estate Title Hijacking Racket; Defendant Used Backdated Forged Deeds, Other Paperwork In Effort To Swipe Ownership Of Property

From the Office of the Kings County, New York District Attorney:

• Brooklyn District Attorney Ken Thompson [] announced that a Brooklyn man was sentenced to nine to 18 years in prison for stealing three Brooklyn properties by forging deeds, pretending to be an attorney and selling, or attempting to sell, them to buyers. He sold one empty lot twice and received bids on another home in excess of $1 million.
  
  District Attorney Thompson said, “This defendant shamefully stole houses and other property from their rightful owners by using forged documents, engaging in deceit and committing outright fraud. He did so solely to exploit the lucrative real estate market in Brooklyn. And now he will spend many years in prison where scammers like him belong.”
  
  The District Attorney identified the defendant as Carl Smith, 50, of Lafayette Avenue in Brooklyn. He was sentenced [] by Brooklyn Supreme Court Justice Alexander Jeong to an indeterminate term of nine to 18 years in prison following his conviction on May 23, 2016 after a jury trial of two counts of second-degree grand larceny, two counts of third-degree grand larceny, two counts of first-degree offering a false instrument for filing, one count of second-degree criminal possession of a forged instrument and unlawful practice of law. The defendant, who has numerous prior felony convictions, was facing mandatory prison time for the conviction.
  
  The District Attorney said that, according to testimony at trial, in February 2011, the defendant stole 45 Lewis Avenue, a lot in Bedford-Stuyvesant, by filing a backdated deed containing the forged signature of a man who bought the lot in 1999. Having been granted ownership of the property, the defendant sold it twice: in March 2011 to the owner of an adjacent laundromat for $12,000 and in April 2011 to another man for $11,000.
  
  The evidence further showed that the defendant stole 139 Vanderbilt Avenue, a three-story brownstone in Fort Greene. The house was purchased in 1982 by Dolores Teel, who died in 2001, with the home passing on to her family members. Around April 2011, the defendant filed a deed, backdated prior to Teel’s death and bearing her forged signature, to gain ownership of the house. He received several bids from potential buyers, some exceeding $1 million, but was not able to produce a valid title to complete the sale.
  
  Around October 2012, according to testimony, the defendant negotiated a deal to sell 64 Hart Street, a multi-family home in Bedford-Stuyvesant, by falsely representing himself to be the owner’s attorney and presenting documents containing her forged signature. The property was purchased in 1975 by Mary Brown and was inherited by her daughter when she died in 1994. An investor the defendant was negotiating with paid him over $20,000 for the deed and related fees after the investor was provided with fraudulent contract of sale and deed.
  
  The jury additionally heard evidence about an uncharged larceny in which the defendant stole 543 Lexington Avenue, a two-story home in Bedford-Stuyvesant. He did that around May 2003 by, again, forging and backdating a deed. The defendant then sold that home to an associate, bringing eviction proceedings against the rightful owner, Jerome Farrell, who lived there until his death in February 2015.
  
  The defendant was indicted and arrested in 2013 and was later charged in a separate 2014 indictment in relation to the Lewis Avenue property.

Source: Brooklyn Man Sentenced to up to 18 Years in Prison for Stealing Three Properties in Bedford-Stuyvesant and Fort Greene (Forged Deeds, Acted as an Attorney and Took in over $43,000; Tried Selling another Brownstone for over $1 Million).

Brooklyn Civic Group Campaigns To Raise Awareness Of Deed Theft Rackets Targeting Local Homeowners

In Brooklyn, New York, DNAinfo New York reports:

• Neighborhood homeowners are coming together this March to raise awareness about deed theft and property fraud in the community.
  
  The Brownstoners of Bedford-Stuyvesant, a civic group aimed at revitalizing the neighborhood, is hosting the event “We Are Our Neighbor’s Keeper” to help educate locals on an issue many say is rampant in the area.
  
  “This is happening way too often and way too easily,” said Brownstoners’ president Lynette Lewis-Rogers.
  
  “It’s frustrating, but we’re hearing from different sources that it is very, very widespread, particularly throughout Bed-Stuy,
  
  “We know they’re in demand, our beautiful brownstones. They’re very desirable, and if you’re not willing to sell, the next thing is for people to be under-handed about it.”
  
  Many affected residents lose their homes after reaching out for assistance, Lewis-Rogers added.
  
  Those facing foreclosure or looking to refinance their property sometimes come across scammers and later find out they signed over the deed to their homes, according to experts.
  
  The March 19 panel was created out of a concern to help residents pass down their properties through generations, Lewis-Rogers said.
  
  It follows a January event from the Brownstoners of Bedford-Stuyvesant in which they discussed the same topic with elected officials and representatives from the State Attorney General, the Brooklyn District Attorney’s Office and the Bedford-Stuyvesant Real Estate Board.

For more, see Panel To Address Deed Theft and Property Fraud in Bed-Stuy.

Hedge Fund Operator Sues Loan Servicer To Jam Foreclosure Action On $3B Mortgage Secured By 11,000-Unit NYC Apartment Complex

In New York City, The Wall Street Journal reports:

• Hedge-fund investor David Tepper has stepped into the battle over the fate of Peter Cooper Village and Stuyvesant Town, the giant New York City apartment complex involved in one of the largest commercial-real-estate failures. Earlier this week, Mr. Tepper, who runs hedge-fund firm Appaloosa Management, filed a complaint seeking to hold up the foreclosure action launched by the so-called special servicer representing investors who own the $3 billion first mortgage on the property. That mortgage was packaged into commercial mortgage-backed securities that were sold to various investors such as Mr. Tepper's firm.

• In court papers filed with a federal court in New York, Appaloosa alleges that the servicer, CW Capital, has "irreconcilable conflicts of interest" because it owns some of the junior commercial mortgage-backed security, or CMBS, debt, among other alleged conflicts.

***

• Mr. Tepper, who says he owns more than $750 million of the CMBS debt, is among the largest investors in the debt. [...] Mr. Tepper's lawsuit is a sign the imbroglio over the future of Stuyvesant Town figures to become even more heated.

***

• In the lawsuit, Appaloosa says CW Capital shouldn't have moved to foreclose on the complex while earning fees. The complaint says a foreclosure could cost as much as $200 million in transfer taxes, which would be paid by the investors who own the CMBS bonds. Those expenses could have been avoided had the property gone into bankruptcy, the suit says. "The key is, the servicer has to practice its fiduciary duty" to CMBS investors, Mr. Tepper said. "Why did they go into foreclosure? Why are they taking all these excess costs?"

For the story, see Tepper Enters Contest Over Apartment Complex (requires paid subscription; if no subscription, try here, then click link for the story).

See also: The New York Observer: 'Tranche Warfare' Finally Breaks Out at Stuy Town as Billionaire Hedge Funder Goes to Court:

• [Mr. Tepper's] Appaloosa said in court papers that it bought a giant $750 million of the mortgage, a substantial piece of which was junior tranches, which would be among the earliest to be wiped out if the property is sold for less than the $3 billion initial price tag on the mortgage. "CWCapital has recklessly and imprudently exposed the Appaloosa Intervenors—and other Certificateholders—to wholly avoidable losses, risks, and injuries," the filing said.

Go here for Appaloosa's Memorandum of Law on its Motion to Intervene in the Stuyvesant Town foreclosure action.

City Concerned About Effect On Tenants From Unwinding $5.4B Purchase Of 11,000+ Unit Apartment Complexes Gone Bad

In New York City, The New York Times reports:

• Three years ago, the sale of the 110 red-brick apartment buildings at Stuyvesant Town and Peter Cooper Village in Manhattan represented the most expensive American real estate deal in history.(1) Now the buyers are running out of time and money. Jerry I. and Rob Speyer and their partner, BlackRock Realty, who paid $5.4 billion for the quiet middle-class redoubt near the East River, have seen the property lose more than half of its value, and the income from rent — down 25 percent from its peak — covers less than half of their debt payments. Real estate analysts say they expect that by December, the partnership will run out of an additional $890 million set aside for apartment renovations, landscaping and interest payments, and that the owners are at “high risk” of default on $4.4 billion in loans.(2)

***

• Stuyvesant Town and Peter Cooper Village are in trouble. City officials have been monitoring the looming crisis and how it might affect a complex that has served as an oasis of affordability in Manhattan for middle-class New Yorkers. Some 6,875 of the 11,227 apartments at the complexes are rent regulated. “We are absolutely keeping an eye on it,” said Rafael E. Cestero, the city’s housing commissioner. “It’s an iconic complex.” Referring to the people who were part of the original real estate transaction, he went on, “Those folks are going to take their lumps. We are looking at how we can ensure that the rent-stabilized units and the families that live there and families that could live there in the future could be insulated from the unwinding of this deal.”(3)(4)

For the story, see Buyers of Huge Manhattan Complex Face Default Risk.

(1) The residential complex, the largest of its kind in New York City, covers approximately 80 acres, or a full 10 city blocks, between First Avenue and Avenue C, and 14th Street and 23rd Street, and consists of 110 apartment buildings comprising 11,200 units, which house at least 20,000 people.

(2) The purchase of Stuyvesant Town and Peter Cooper Village was one of the more scrutinized of its deals in recent years, the story states. The winning bid presumed the partnership could increase profits by renovating and deregulating apartments, but the owners have been unable to quickly convert apartments to market rates.

(3) “Residents are increasingly concerned that the maintenance of the buildings is slipping, even as they are getting hit with a flurry of potential charges for major capital improvements,” said Daniel R. Garodnick, a city councilman who lives in Peter Cooper Village.

(4) The underwater landlords in this story have gone to the New York Court of Appeals (the state's highest court) to appeal a recent state intermediate appellate court ruling that could result in them having to pay more than $200 million to repay the tenants in these complexes for illegal rent increases over the last four years in connection with improperly deregulating more than 3,000 apartments while receiving special property tax breaks from the city. See:

• The New York Times: Big Landlord Found to Have Wrongly Raised Rents,
• The New York Times: New York Landlords Fight as Rent Refunds Loom.
• For the appellate court ruling, see Roberts v Tishman Speyer Props., L.P., 2009 NY Slip Op 01595 [62 AD3d 71] (March 5, 2009).

Focus Shifts To Special Servicer As Overleveraged Landlord Of 11,000 Unit NYC Apartment Complex Readies To "Mail In The Keys"

In New York City, Crain's New York Business reports:

• In the coming weeks, control of Stuyvesant Town/Peter Cooper Village will pass from one of New York's most glamorous and powerful real estate families to a company that most people have never heard of, a major player in an industry that few even know exists. [...] Stepping into the breach will be CW Capital, a special servicer. Such companies work out troubled-property loans to salvage whatever it can for lenders.

***

• CW Capital will need all of its skills to sort out the wreckage left by the implosion of the largest single residential real estate purchase in history. Lenders who have lost billions of dollars as the property's value shriveled by more than half are jockeying to reclaim what's left of their doomed investments. Meanwhile, prospective buyers are circling, tenants are demanding that services be maintained and that they get a seat in the negotiations, and politicians are vowing to protect the complex's rent-regulated status. “Figuring out the future [of Stuy Town] won't be a simple process, and it won't necessarily be a fast process,” says Dan Garodnick, a City Council member who lives in the complex.(1)

For more, see Picking up pieces at Stuyvesant Town (Special servicer will lead the lenders).

(1) According to the story, one problem facing the servicer is dealing with the affected scores of investors around the world who now find themselves trapped in a giant maze of often competing interests. Like most big real estate deals of the boom years, the debt that helped finance the $5.4 billion Stuy Town deal was reportedly diced up and sold to a variety of investors, each with different rights, depending on the risk incurred.

A touchier problem will be figuring out how much rent can be charged and what rebates are due tenants, following last year's court ruling that the former landlord had illegally jacked up rents on roughly 4,000 units, the story states (see Walls Closing In On Beleaguered Owners Of 11,000 Unit NYC Apartment Complex As State High Court Hammers Landlord For Illegal Rent Increases).

Go here for other posts on the Stuyvesant Town / Peter Cooper Village predatory equity implosion.

Brooklyn Man Gets Bagged For Allegedly Using Forged Deeds, Imposters To Swipe Title To Six Homes; Targeted Properties Either Appeared Abandoned Or Belonged To Deceased Homeowners; Local DA Urges Real Estate Owners To Register w/ Citywide Alert System As Protective Measure Against Title Hijackings

In Brooklyn, New York, DNA Info (NYC) reports:

• A Crown Heights man has been indicted for trying to steal six homes in Central Brooklyn using fake deeds — and imposters to pretend to be their owners, prosecutors say.
  
  Aderibigbe Ogundiran, 36, is accused of targeting properties that appeared abandoned or whose owners had died, illegally scooping up deeds in Fort Greene, Bedford-Stuyvesant, Crown Heights and East New York according to the Brooklyn District Attorney’s office.
  
  The investigation of Ogundiran began in 2015 when the occupant of 176 Washington Park — a five-story 19th Century mansion located directly across from Fort Greene Park — received a notice to vacate the home that had belonged to her brother, who died in 2011.
  
  Prosecutors said Ogundiran took control of the home using an imposter who posed as the deceased man to create a deed. He then transferred ownership of the mansion to a corporation he controlled, prosecutors say.
  
  Ogundiran repeated that process at five other Brooklyn properties, sometimes filing fake documentation granting him or his corporations power of attorney at a home. Using those methods, Ogundiran took control of three properties in Bedford-Stuyvesant including a three-story building at 1424 Fulton St. and two small houses at 42 and 49 Albany Ave; a three-story brownstone in Crown Heights at 123 Albany Ave.; and a two-story brick house at 1024 Hendrix St. in East New York.
  
  Acting District Attorney Gonzalez said fraud like this is “inviting to thieves” to due the “escalating real estate values in Brooklyn.”
  
  “We vow to continue to vigilantly prosecute scam artists such as this defendant, but at the same time I would urge homeowners to protect themselves by registering with the Automated City Register Information System (ACRIS) so that they are automatically informed of changes made to documents associated with their property,” he said in a statement.
  
  Ogundiran was arraigned Tuesday [May 9] on 64 counts including forgery, scheme to defraud, identity theft, grand larceny and criminal impersonation, prosecutors said. He is being held on $200,000 bond or $100,000 bail and is set to return to court June 7. He faces up to 25 years in prison if convicted.

Source: Man Used Imposters of Dead Homeowners to Fake Deeds in Brooklyn, DA Says.

For the Brooklyn District Attorney press release, see Brooklyn Man Indicted for Deed Fraud in Connection With Six Properties, Including Landmarked Residence in Fort Greene (Also Attempted to Steal Properties in Crown Heights, Bedford-Stuyvesant and East New York, Scheme Mostly Targeted Homes of Deceased Owners).

11,000+ Unit NYC Apartment Complex Defaults; City Lawmakers Concerned About Possible Neighborhood Fallout; Appraisers Say $5.4B Property Now Worth $2B

In New York City, Reuters reports:

• The joint venture led by Tishman Speyer and BlackRock Inc that owns New York City's vast Stuyvesant Town/Peter Cooper Village apartment complex on Friday said it missed making its full loan payment, moving the deal one step closer toward possible foreclosure. Credit agencies had warned that the joint venture, has seen the complex's value collapse by more than half since buying it for $5.4 billion in 2006, would likely default as it burned through reserves during a court battle over whether it could deregulate rents and raise them to market prices as swiftly as planned.

***

• The payment lapse could set in motion a foreclosure process, but many experts said that is unlikely -- at least in the near term, given the anemic real estate market. The property is now valued at $2 billion or less, according to appraisers, so a swift foreclosure would mean lenders could lose even more money.

***

• City Council Speaker Christine Quinn and Councilman Daniel Garodnick, who lives in the complex, said they were concerned about any negative impact on the community.

For more, see Huge NYC apartment complex misses loan payment.

See also, New York Post: StuyTown default worries 25,000 tenants (New York real estate giant Tishman Speyer yesterday missed a $16 million mortgage payment for Stuyvesant Town-Peter Cooper Village, raising questions about the future of the 80-acre property and its 25,000 residents).

Go here for other posts on the Stuyvesant Town / Peter Cooper Village fiasco.

Landlord To Deed Over Title To 11,000 Rental Units As Attempt To Restructure $4.4B Debt On $1.8B Complex Fails; Equity Held By Pensions Appears Doomed

In New York City, The Wall Street Journal reports:

• A group led by Tishman Speyer Properties has decided to give up the sprawling Peter Cooper Village and Stuyvesant Town apartment complex in Manhattan to its creditors in the collapse of one of the most high-profile deals of the real-estate boom. The decision comes after the venture between Tishman and BlackRock Inc. defaulted on the $4.4 billion debt used to help finance the deal. The venture acquired the 56-building, 11,000-unit property for $5.4 billion in 2006—the most ever paid for a single residential property in the U.S. The venture had been struggling for months to restructure the debt but capitulated facing a massive debt load and a weak New York City economy that has undercut rents and demand for high-priced apartments.(1)

***

• By some accounts, Stuyvesant Town is only valued at $1.8 billion now, less than half the purchase price. By that measure, all the equity investors—including the California Public Employees' Retirement System, a Florida pension fund and the Church of England—and many of the debtholders, including Government of Singapore Investment Corp., or GIC, and Hartford Financial Services Group, are in danger of seeing most, if not all, of their investments wiped out.(2)

For more, see Tishman Venture Gives Up Stuyvesant Project (High-Profile Purchase of Manhattan Complex Collapses Under Debt Mountain).

(1) According to the story, the property's owners signaled they would be unable to reach a deal with lenders and instead decided to allow creditors to proceed with what amounts to an orderly deed-in-lieu of foreclosure, which means a borrower voluntarily gives the property back to lenders to avoid a foreclosure proceeding.

(2) According to this story, Calpers, the giant California public employees’ pension fund which bought a $500 million stake in the property, has written off its investment. So has Calsters, a California pension fund that invested $100 million, as has a Florida pension fund that put $250 million into the deal.

Brooklyn DA Collars NYPD Officer For Allegedly Being Both Cop & Robber; Accused Of Filing Forged Deed In Attempt To Hijack Title To Bed-Stuy Brownstone From Dead Owner's Heirs That Sat Vacant, Neglected For Many Years

In the Bedford-Stuyvesant section of Brooklyn, the New York Post reports:

• A veteran NYPD cop who claimed she was a victim of deed fraud is now facing the very same charges after an investigation found she tried to steal a vacant ​Brooklyn townhouse, authorities said Monday.
  
  Blanche O’Neal’s alleged housing scheme fell apart in April, when she called the Sheriff’s Office to complain that someone had transferred the deed to her home at 23A Vernon Avenue ​in Bedford-Stuyvesant ​to a corporate entity without her permission, authorities said.
  
  That’s because the home’s rightful owners, the family of deceased Lillian Hudson, were trying to sell the property to someone else when they discovered it was in O’Neal’s name, according to the Brooklyn DA’s Office.
  
  After the Sheriff’s Office launched an investigation, O’Neal allegedly claimed she had purchased the dilapidated property for $10,000 from Hudson’s nephew and filed the deed in her name in 2012, the city’s Department of Finance said.
  
  She also tried to claim she was given the home as part of a $5 million judgment she won in a 2008 civil lawsuit filed against Hudson for a slip-and-fall outside the residence.
  
  But sources said that suit was dismissed altogether – and that O’Neal never received any windfall.
  
  The 45-year-old cop, who works at the 83rd precinct in Bushwick and lives down the block at 4 Vernon Ave., was indicted on charges of second-degree grand larceny, offering a false instrument for filing and criminal possession of a forged instrument.
  
  She’s also charged with perjury after testifying before a grand jury in an unrelated burglary case that the home belonged to her.
  
  Her lawyer, Edward Harold King, pleaded not gui​​lty on her behalf at her arraignment Monday in Brooklyn Supreme Court. O’Neal was released on her own recognizance and faces up to 15 years in prison. “Bottom line is, she is not guilty,” King told reporters outside the courtroom.
  
  Brooklyn DA Ken Thompson called the allegations against O’Neal even “more disturbing” because she’s a police officer.
  
  “This defendant allegedly stole a house from its rightful owner with the stroke of a pen, apparently hoping no one would notice,” he said. “But her brazen actions have unraveled and she will now be held accountable.”

Source: Veteran cop tried to steal vacant Brooklyn townhouse, DA says.

For the Brooklyn District Attorney press release, see New York City Police Officer Indicted for Stealing Townhouse; Allegedly Transferred Title to Bedford-Stuyvesant Property to Herself:

• The District Attorney said that, according to the indictment, on September 12, 2012, the defendant, who is an NYPD officer assigned to the 83rd precinct, executed a deed that stated that she bought the property, 23A Vernon Avenue, from the nephew of the deceased homeowner, Lillian Hudson, who died in 1993. The nephew and three other relatives inherited the property, though it sat vacant and neglected for many years.

After Spending 30 Days In Jail Under Civil Order For Failing To Provide Accounting For Money Held In Estate Account, Attorney Gets Thrown Back In Jail, This Time Indicted For Alleged Theft Of Over $500K He Earlier Failed To Account For

In Brooklyn, New York, the New York Daily News reports:

• A Queens lawyer who spent 30 days in jail under a civil order for digging into the estate of the late Judge John Phillips was thrown back behind bars [] after Brooklyn prosecutors indicted him for the same crime.
  
  When the legendary Bedford-Stuyvesant Slave Theater and an adjacent lot sold at auction for $2.2 million in 2012, the executor of the estate Samuel Boykin and Frank Racano were to report to a surrogates court judge where the money would go.
  
  After several unanswered requests, the judge removed Boykin as the executor and held them both in contempt of court.
  
  In March, the Daily News reported, Racano was brought into Brooklyn Civil Supreme Court by city sheriffs where he admitted to selfishly writing over 300 checks to himself from the estate’s escrow account to pay bills.
  
  “The money disappeared, the account whittled down to $100 last year May,” said Assistant District Attorney Frank Dutis in court.
  
  Racano stole $587,160.56, prosecutors said. The judge sentenced Racano to 30 days in jail and gave him a $1,000 fine.
  
  With Racano’s admission in civil court, prosecutors indicted him for one-count of second-degree grand larceny. “We will now hold him accountable for these shameful criminal acts,” said Brooklyn District Attorney Ken Thompson.
  
  Racano’s attorney Sam Karliner entered a plea of not guilty on his behalf. If convicted, Racano faces up to 15 years in prison.
  
  Brooklyn Supreme Court Justice Danny Chun set bail at $250,000 cash or bond and ordered a bail sufficiency hearing.
  
  Phillips, who was known as the “Kung Fu Judge” for his martial arts skills, suffered from Alzheimer's and died in the troubled Prospect Park Residence in 2008 when they failed to give him a diabetic diet and a room with heat. He was 83.

Source: Queens lawyer who spent 30 days in jail for raiding late judge's estate thrown back behind bars.

For the Brooklyn District Attorney press release, see Attorney Indicted for Stealing Almost $600,000 From the Estate of Deceased New York City Civil Court Judge (Stolen Funds Include Proceeds from Sale of Historic Slave Theater in Bedford-Stuyvesant).

Bed-Stuy 'Holy' War Breaks Out Between Excommunicated Christian Elder, Church Leaders Over Alleged $630K Home Equity Refinance Ripoff That Victimized Hapless Senior

In Bedford Stuyvesant, Brooklyn, DNAinfo.com New York reports:

• A retired Brooklyn accountant is suing his former Christian church and its leaders for giving him the holy heave-ho in front of the entire congregation.
  
  Patson Agard claims in a lawsuit that during a Sunday service on Feb. 12, officials at Good Tidings Gospel Chapel excommunicated him and wrongfully accused him of some serious sinning.
  
  The lawsuit, filed Sept. 12 in Brooklyn Supreme Court, says church elders Theophilus Cato, Daril Neverson and Lloyd Allwood got up on a dais and told congregants that Agard swindled elderly church-goer Dorothy Jordan out of her home. The elders allegedly claimed he "prepared a deed without [Jordan's] knowledge" and pocketed $630,000 by refinancing her home and forging checks in her name.
  
  A congregant at the 275-member Bedford-Stuyvesant church since 1960, Agard says he became an elder in 1984 and "has always enjoyed a good reputation for honesty and uprightness of character." But after making their damning statements, the elders "stripped him of his position as elder and his membership in the church, in the presence of the plaintiff, his family and other worshippers in an effort to maximize his humiliation," the lawsuit says.
  
  Less than a week later, the elders allegedly badmouthed Agard in a letter to a dozen branches of Good Tidings Gospel Chapel with thousands of congregants, telling them he had a "serious breach of conduct," the lawsuit says.
  
  Agard, a retired MTA accountant from East New York, says Jordan first accused him of being a "crook" on Jan. 28 and then went to the other elders. He denies the allegations in the lawsuit and says his reputation was slandered by Jordan and the other elders who "acted with actual malice."
  
  There have been no criminal or civil cases filed against Agard, according to court records.
  
  He is suing Jordan, Cato, Neverson and Allgood for an undisclosed amount of money. Agard's lawyer did not respond to a request for comment. Jordan declined to discuss the lawsuit, but said "I didn't tell no lie on him." "I had him come in here helping me, but he helped himself," she said. "He refused to admit that he was wrong."

For the story, see Church-Goer Sues After Getting Excommunicated During Service.

See also, New York Post: Church’s ‘home theft’ holy war.

Attorney Gets 1 To 3 Years In State Prison For Siphoning Off Nearly $600K In Real Property Sale Proceeds From Estate Of Deceased Brooklyn Judge

From the Office of the Kings County, New York District Attorney:

• Acting Brooklyn District Attorney Eric Gonzalez today [April 20] announced that a Howard Beach attorney was sentenced to one to three years in state prison following his guilty plea earlier this year to second-degree grand larceny for siphoning off approximately $600,000 from an estate that he was hired to represent and using the funds for his personal expenses.
  
  Acting District Attorney Gonzalez said, “This defendant disregarded his duty to his client, stealing nearly all of the proceeds due to the estate of the beloved Hon. Judge Phillips, including from the sale of the historic Slave Theater. He’s now been held accountable for his brazen theft and shameful conduct.”
  
  The Acting District Attorney said that the defendant, Frank Racano, 54, of Howard Beach, Queens, was sentenced today by Brooklyn Supreme Court Justice Danny Chun to one to three years in prison and required to sign a judgment order or restitution for $587,160.56 payable to the estate of John Phillips, at the request of the District Attorney’s Office. Racano pleaded guilty to second-degree grand larceny in January.
  
  The Acting District Attorney said that between February 2013 and May 2015, the defendant stole approximately $587,160.56 from the estate of New York City Civil Court Judge John L. Phillips, Jr., who died unmarried, childless and without a will on February 16, 2008.
  
  The Acting District Attorney said that, according to the investigation, on January 16, 2009, Samuel Boykin, a nephew by marriage, successfully petitioned the Kings County Surrogate to be appointed administrator of the estate.
  
  In early 2010, Boykin hired Racano, a licensed attorney, to assist in the sale of the estate’s real estate holdings, which included the Slave Theater, located at 1215-1217 Fulton Street in Bedford-Stuyvesant and 10 Halsey Street, a vacant lot behind the theater. In 2012, the properties went into contract for a total of $2.2 million and the buyer paid the estate a down payment of $220,000. That check, payable to “Frank Racano, as attorney,” was deposited into the defendant’s attorney trust checking account.
  
  Kings County Surrogate Diana Johnson approved the sale of the properties on December 19, 2012. On February 25, 2013, at the closing for the properties, the buyer’s attorney paid closing expenses and taxes that were owed on the property. The net proceeds of the sale, $517,339.65, were paid to the estate in two checks payable to “Frank Racano, as attorney.”
  
  Racano deposited those two checks into his trust account, thus the total proceeds from the sale of the properties credited to the estate should have been $737,339.65. Between February 2013 and May 2015, Racano paid estate expenditures for tax assistance and other services totaling $150,179.09. During this same period, he wrote and cashed over 300 checks to himself in amounts ranging from $45 to $7,500, without authorization from the estate or the Court and completely depleted the account, stealing a total of $587,160.56.(1)

Source: Attorney Sentenced to State Prison for Stealing Almost $600,000 From the Estate of Deceased New York City Civil Court Judge (Stolen Funds Include Proceeds from Sale of Historic Slave Theater in Bedford-Stuyvesant).

----------------------------

(1) In New York, the Lawyers' Fund for Client Protection was created to provide a source of, at least partial, reimbursement to clients who have suffered monetary losses at the hands of dishonest lawyers licensed and practicing in the state.

According to their website, typical losses reimbursed by the Lawyers' Fund include the theft of estate and trust assets, escrow deposits in real property transactions, settlements in personal injury litigation, debt collection receipts, money embezzled in investment transactions with law clients, and unearned fees paid in advance to lawyers who falsely promise their legal services.

Perhaps the best of all the attorney ripoff reimbursement funds in the U.S. in terms of its payout limits, the Fund places a $400,000 maximum limit, per law client loss, on awards from the Fund, fixed by regulation of the Fund's Trustees. There is no aggregate maximum on awards involving one lawyer.

For similar "attorney ripoff reimbursement funds" that sometimes help cover the financial mess created by the dishonest conduct of lawyers licensed in other states and Canada, see:

• Directory Of Lawyers' Funds For Client Protection (February 2017) (includes Canadian recovery funds, courtesy of the American Bar Association);
• Check the USA Client Protection Funds Map;
• Check the Canada Client Protection Funds Map.

Maps available courtesy of The National Client Protection Organization, Inc.

Two NYC Real Estate Brokers Who Have Held Seminars Warning Homeowners About Rampant Title Hijacking Rackets Now Count Themselves As Victims; Say No One Is Safe Until City Does More To Protect Property Owners

In Bedford-Stuyvesant, Brooklyn, DNAInfo (New York) reports:

• Local real estate brokers who've hosted a series of panel discussions warning residents of property fraud happening in their neighborhood have themselves become victims to the crime, they say.
  
  Brokers Richard Flateau, founder of Flateau Realty Corp., and Gloria Sandiford say they received a notification from the city last week alerting them that the empty mixed-use building at 1424 Fulton St. they own had a new power of attorney, but the signature on the document authorizing the change wasn't theirs, they said.
  
  The document filed on Nov. 8 lists Elganto Management Inc., an entity with a similar name to their Elganto LLC that owns the building but is unknown to both owners, as the power of attorney over the property, alongside a forged signature of Flateau's, they said. The authorization would allow the entity to act as owners of the property.
  
  Then when they went to the building on Nov. 12, they discovered the locks had been changed.
  
  "It was forged and it all happened very rapidly," Flateau said. "I've done a bunch of seminars and public meetings about property fraud, so it's kind of ironic...it's surreal. It's hard to fathom, but it's very real. I'm a victim of it."
  
  Last year, both Flateau and Sandiford participated in an educational panel raising awareness about the issue as residents complained of rampant occurrences in the area. But now that they've become victims themselves, they said that no one was safe until the city did more to protect owners.
  
  "The system is so broken that people without the wherewithal to follow up and do the necessary follow through are being taken advantage of," said Sandiford, who also serves as president for the Bedford-Stuyvesant Real Estate Board.
  
  "This is an atrocity that is happening. I've heard people telling me that their building was stolen and they just had to walk away because it bankrupted them."
  
  Flateau and Sandiford own the Fulton Street building under Elganto LLC, according to city documents. The brokers had planned to renovate the building to turn it into offices on the ground floor and apartments on the upper levels, when they recently started seeing strange things happening, they said.
  
  "It's been a build up of things because two weeks ago, we noticed the company's label was ripped off the mailbox," Sandiford said, adding that the mailbox lock had also been changed.
  
  According to Department of State records, the fraudsters under the Elganto Management Inc. name had registered the business corporation on Nov. 7, just a day before filing the change in attorney of power at the Fulton Street property.
  
  Then over the weekend, they noticed the padlocks to the building had been changed, a skylight inside had been broken into, and their belongings were rifled through, Sandiford said.
  
  Flateau immediately reached out to the city's Sheriff's office, which deals with property actions, as well as local elected officials and a lawyer for the next steps in getting the power of attorney revoked. They're still waiting to hear back from the Sheriff's office, they said.
  
  "We need to appeal to our city to create a better system, this is the bottom line," Sandiford said. "What happens to someone who isn't connected, that falls through the cracks?"
  
  Sandiford and Flateau recommended that all property owners register with the Automated City Register Information System, or ACRIS, which will alert them to any new documents filed on their properties.

Source: Real Estate Brokers Fall Prey to Fraud They've Warned People About.

Giant California Public Employees Pension Plan Feeling Backlash For Its Role In Predatory Equity Real Estate Investments

The Wall Street Journal reports:

• Calpers(1) took a hit last year when its investment in Manhattan's Peter Cooper Village and Stuyvesant Town apartment complex collapsed. But Stuyvesant Town wasn't the huge pension fund's only foray into real-estate investments that involved ousting low-rent tenants. The California Public Employees' Retirement System has partnered with firms that have bought and converted rent-regulated buildings in East Palo Alto, Calif., and in other New York City neighborhoods, including Harlem and Manhattan's Upper East Side.

• Some deals have led to losses; at least one has paid off. But whatever the investment result, the conversion of low-rent properties to market-rent apartments—and ejection of some tenants in the process—is raising concerns within and beyond Calpers about its role in these deals.(2)

***

• Calpers, which manages about $200 billion in retirees' money and other benefits for public employees, prides itself on taking a leadership role in promoting socially responsible investing. Some detractors say deals that involve ousting tenants conflicts with that mission.

For more, see Backlash Hits Calpers Property Deals.

(1) The California Public Employees' Retirement System (CalPERS) is an agency in the California executive branch that manages pension and health benefits for more than 1.6 million California public employees, retirees, and their families.

(2) According to the story, in these types of real-estate deals, which detractors call "predatory equity," investors borrow funds to buy the buildings and then try to make money by getting the buildings to operate more profitably, primarily by raising rents. Rent-regulated units generally can be raised to the market rate after a tenant moves out, as long as the landlord makes sufficient improvements to the apartment. But waiting for apartments to become vacant may not be profitable for investors who do these types of deals, given interest due on the money borrowed to buy the building. Tenants in rent regulated apartments typically are automatically entitled to renewal leases upon the expiration of their current leases, which means that, as long as they are making their rent payments, they can remain in possession of their units indefinitely. So owners often try to move out a number of tenants quickly, for example by trying to identify tenants occupying the apartments illegally.

Tenants often maintain they resided legally and were harassed or intimidated by new owners in hopes of getting them to leave voluntarily. Other times, owners have looked for possible ambiguities in rent-control laws that might justify a rent increase, tenants say. Sometimes, lower-income and non-English-speaking tenants are reluctant to challenge these abrupt increases in court, say affordable-housing advocates.

Signing Over Deed & Handing Over Keys To Distressed NYC Rental Complex Not As Easy As It Sounds; Proposed Transfer Estimated To Cost $90M In Fees

In New York City, Bloomberg reports:

• Tishman Speyer Properties LP and BlackRock Inc. haven’t handed Manhattan’s biggest apartment complex to creditors as they pledged two weeks ago, in part because of questions over payment of about $90 million in taxes. The companies said Jan. 25 they would cede control of Stuyvesant Town-Peter Cooper Village to lenders after missing a payment on the $3 billion mortgage.

• Even in foreclosure, any property transfer in Manhattan requires payment of city and state taxes, and Tishman is negotiating with CWCapital, the special servicer for the senior debt, over who must pay them, said Rafael Cestero, New York City’s commissioner of Housing Preservation and Development. “The reality is they can’t just turn back the keys,” Cestero said in an interview. “There are some impediments.”

• Under New York law, the party that owns the property and is getting rid of it must pay the taxes on the transfer, according to Owen Stone, a spokesman for the New York City Department of Finance. Otherwise, the burden shifts to the receiver of the property, he said. “CW doesn’t want to pay the $100 million so they’re going to have to negotiate this,” said Cestero, estimating the taxes. “They have not initiated foreclosure proceedings.” Transfer taxes for the city and the state equal 3.025 percent of the “consideration,” or the price of the real property, said Joshua Stein, a partner in the real estate practice group of law firm Latham & Watkins LLP in New York.

For more, see Stuyvesant Town Ownership Hinges on $90 Million Tax.

11,000-Unit NYC Housing Complex Becomes "Pawn In A Financial Chess Game" As 1st Mtg Holder Sues To Stop Next Week's 2nd Mortgagee's Foreclosure Sale

In New York City, Crain's New York Business reports:

• Hedge fund honcho William Ackman’s plan to takeover Stuyvesant Town/Peter Cooper Village hit a major snag Wednesday afternoon. Bank of America and U.S. Bancorp, trustees for the senior lenders of the giant residential complex sued to block his plan to foreclose on the 110-building property(1) next week.

• Last week, Mr. Ackman, through a joint venture of his firm, Pershing Square Capital Management, and Winthrop Realty Trust snapped up a $300 million mezzanine loan, a key piece of the complex’s debt that stands between the owner’s equity and the first mortgage. They bought their stake for a mere $45 million, or 15 cents on the dollar. With that in hand they quickly scheduled a foreclosure auction for Aug 25, which they hoped to win.

• Wednesday’s suit, which was filed in New York State Supreme Court in Manhattan,(2) said Pershing and Winthrop violate the terms of the inter-creditor agreement for the property, which outlines how the loan will be paid by all the different creditors. The suit says that Pershing and Winthrop will file for bankruptcy once they take control of the property and will seek to avoid paying the mortgage.(3)

For more, see Banks sue to block Stuy Town foreclosure (BofA and U.S. Bancorp race to court to block an auction of the sprawling 110-building Manhattan residential complex, that had been set for Aug. 25).

See also The New York Times: Opening Legal Salvos in Stuyvesant Town Battle:

• Dan Garodnick, a city councilman who grew up and lives in Peter Cooper Village, said that he was disappointed but not surprised that the complexes were being treated as a “pawn in a financial chess game.”

For story update, see Court suspends Stuy Town foreclosure (On Sept. 2, Pershing Square Capital Management, Winthrop Realty Services and creditors will come together to haggle over the 110-building complex).

(1) The property consists of over 11,000 apartments and sits on about 80 acres of land. Reportedly, the current owner bought the complexes for a record-breaking $5.4 billion in 2006.

(2) The case is Bank of America Corp. v. PSW NYC LLC, 10-651293, New York State Supreme Court in Manhattan (New York County).

(3) With all this multi-million dollar jockeying around going on to snatch ownership of this complex, which on of these financiers does a tenant call to get a toilet unclogged?

Loan Servicer Cries Foul; Says Its Being Squeezed By Hedge Fund's Attempt To Jam Foreclosure Suit On 11,000 Unit Complex

In New York City, the New York Post reports:

• The company that controls troubled Manhattan apartment complex Stuyvesant Town-Peter Cooper Village told hedge fund Appaloosa to back off [], saying the New Jersey bondholder has no right to try to scuttle the property's foreclosure proceedings.

• In a brief filed with Manhattan federal court, CW Capital -- which represents holders of the $3 billion defaulted mortgage -- argued that the hedge fund must gain the support of 25 percent of bondholders to have a say in the foreclosure.

• CW also accused Appaloosa of trying to hold up the foreclosure to "maintain its stream of payments" on its bonds, which were bought "at a steep discount" when it was clear foreclosure was coming.(1) Late last month, David Tepper's hedge fund filed a motion to stop recent foreclosure proceedings on StuyTown, saying the move would hurt its investment.

Source: CW Capital: Back off, Appaloosa.

For the follow-up to this story, see The New York Observer: Hedge Fund to Special Servicer: Stop the ‘Revisionist History’ On Stuy Town:

• The hedge fund angrying up the waters in Stuyvesant Town's foreclosure has filed a testy response in federal court to the firm controlling the 11,200-unit property, complete with colorful legal vituperation.

(1) Until the foreclosure process is completed, the loan servicer is typically required to continue coughing up monthly payments to the investors in the mortgage backed securities, despite the fact that it no longer collects the mortgage payments from the complex's defaulting landlord. The longer the foreclosure process drags out, the longer the loan servicer gets squeezed.