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Schneiderman Probe into Prominent Real Estate Developer Finally Settled   

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Early last week, Eric Schneiderman New York’s Attorney General, said that they had finally settled the investigation of Shaya Boymelgreen

Early last week, Eric Schneiderman New York’s Attorney General, said that they had finally settled the investigation of Shaya Boymelgreen.  A renowned real estate developer, Boymelgreen has been under investigation since 2013 for building violations, construction problems and failure to complete promised repairs for his clients, in lawsuits dating back to 2007. Boymelgreen, now 65, emigrated from Israel to the U.S. in 1969.  

According to the New York Times, he began working in asbestos reduction and progressed in to real estate projects and sometime in 2000 formed a partnership with Lev Leviev, the Israeli billionaire and chairman of Africa-Israel.  Boymelgreen formed a joint venture with Africa Israel Holdings USA Corp (AI Properties) for ownership of 15 Broad Street in New York City, 20 Pine Street in New York City and 85 Adams Street in Brooklyn.

The 15 Broad Street property received tax exemptions for converting the property to residential use.  AI sold the units and collected $420,000 in tax breaks, but after the recession, the repairs were abandoned by the group and failed to attain a certificate of occupancy.  Also in the 20 Pine Street property, the unit owners awaiting certificate of occupancy until 2014.  

As for the Brooklyn property at 85 Adams Street, there were allegations of construction defects and violations of Fire Code requirements, under the New York City Building Code. In January, AI Holdings LLC surrendered control over the board of the buildings, and agreed to pay $2 million to New York City Affordable Housing Fund, to compensate for improper receipt of tax benefits.   Also under the settlement, Africa Israel agreed to pay the Attorney General $250,000 to cover the costs of its investigation.

Boymelgreen also acquired three more properties. They include, Newswalk, a 137 unit condo in Prospect Heights Brooklyn, which required an additional $8 million from condo owners to attain a CO.

The Attorney General is given power, under the New York Martin Act,  to enforce Real Estate developers’ legal obligations and promises, including completion of construction projects and procurement of a permanent certificate of occupancy.   Further, developers are required to maintain an escrow account with funds sufficient to attain the COO.  

Mr. Boymelgreen is now barred in New York from the sale of securities, including condos, for two years. He will be permanently barred from selling apartments in New York, if he fails to cooperate. Mr. Boymelgreen has settled for an unknown amount with the condo boards for properties at 15 Broad and 20 Pine Street. The building at 85 Adams, as well as two other buildings, are entrusting mediation to close this case. 

In a press release Attorney General Schneiderman said, “Today’s settlement is a warning to property developers in New York State. Those who collect the enormous profits that flow from offering real estate securities in New York will not be allowed to shirk their obligations to purchasers and the public.  My office will not allow developers to walk away from their promises.”

By:  Lisa Meltzer

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