Saturday, October 14, 2017

The Tangled Web ...

Readers of the blog might remember my curiosity about 657-665 Fifth, the former Frost furniture warehouse buildings, where development construction has been stalled for 2 1/2 years.  The property was bought by developer Cheskel Strulowitz in 2013, for $8.5 M, and the mixed retail/residential project was described as "a game-changer" for the neighborhood.  Frankly I became a little obsessed with this SWO, and decided I was spending too much time thinking about the site.  Still, right after its two-year "anniversary," I've recently discovered, The Real Deal reported that a group of investors who put up the money for a $20M property deal had accused Strulowitz of operating a Ponzi scheme that cost them $90M in damages.

“In order to deceive the individual plaintiffs, the individual defendants employed numerous scam tactics in the style of Bernie Madoff,” the suit claims.
Strulowitz, whose name is sometimes spelled Chaskiel Strulovich, has been operating in Brooklyn real estate for over a decade, often with his brother Moses Strulowitz. Together, they own a portfolio of at least 180 apartments in 12 buildings throughout the borough. One of Strulowitz’s bigger projects, a planned makeover of an industrial building at 665 Fifth Avenue in Park Slope, for which the developer paid $8.5 million, is one of the properties bought with the investors' funds.

A Real Deal story yesterday revealed more Strulowitz/Strulovich trouble. The landlord/property developer is facing foreclosure on a portion of a 31 property portfolio in Brooklyn.

Maverick Real Estate Partners, which in March launched a $75 million private equity fund focused on acquiring distressed debt, purchased about $40 million worth of loans from Signature Bank in May backed by the 31 properties Strulowitz owns across Brooklyn, records filed in Brooklyn Supreme Court show.
Just a few days after acquiring the loans, Maverick sent Strulowitz notices informing him that the loans were in default, and the lender was requiring the balances to be immediately paid in full, court records show.
According to foreclosure documents Maverick’s attorneys filed earlier this week, Strulowitz went into default on the loans, in part, because he claimed to be the sole owner of the properties, but his own court filings say he owned less than 56 percent.

According to the Real Deal article, the properties facing foreclosure include several bought with the money of the investors accusing Strulowitz of the Ponzi scheme.  I'm not adept at exploring court records, and don't know if 657-665 is one of the properties facing foreclosure.  Will update if I can find out more on this.

Earlier: And the Game Changer?

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