The Legal Beat

HNA Loses Property To SL Green; Monsey Attorney Convicted Of Defrauding Bank of $1.4 Million; Briefs

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HNA Ordered To Transfer Property To SL Green; Town In Talks With SL Green

The saga and legal battle related to ownership of the HNA Palisades Training Center on Route 9W in Palisades took another turn this week. SL Green, the New York-based REIT, has a judgment against HNA Group and has been seeking to collect it by forcing HNA Group to transfer its interest in the HNA Training Center in partial satisfaction of the $185 million it is owed. SL Green was successful in the Southern District of New York and secured an order compelling HNA to transfer the property.

HNA Group appealed and ask the federal court for a stay of the order pending an appeal. The District Court denied the stay, and HNA sought relief at the Second Circuit Court of Appeals.

Last week, Orangetown Town Supervisor Teresa Kenny reported that the town, “heard from our attorney that HNA lost its most recent appeal in the Federal Court and that we are, once again, expecting HNA will be legally forced to transfer title to SL Green.”  Kenny also reported that the Town was scheduled to have a call last Friday with SL Green and its outside counsel and will hopefully know more after the call.

The Town continued to move forward with its condemnation case and last week adopted “Determinations and Findings of Fact” under the EDPL (Eminent Domain Procedure Law).  The law required the Town to adopt those findings within 90 days of the close of the public hearing held in April.

It is unclear what will happen next. When SL Green acquires the deed, it will be free to sell the property to a buyer of its choice.

“We have been told that SL Green has been in touch with REVEIL attorneys and is willing to move forward with them if they can provide proof of ability to finance the purchase,” said Kenny. “If they cannot, SL Green is free to move on to whomever they want to sell to.”

Of course, the Town can still pursue eminent domain regardless of the transfer of the property from HNA to SL Green.

Monsey Attorney Convicted Of Defrauding Bank of $1.4 Million

A federal jury found Monsey resident Mendel Zilberberg, 65, guilty of conspiracy to commit bank fraud, which carries a maximum sentence of 30 years in prison; bank fraud, conspiracy to make false statements to a bank, which carries a maximum sentence of five years in prison; making false statement to a bank, which carries a maximum sentence of 30 years in prison; and misapplying bank funds, which carries a maximum sentence of 30 years in prison.

The former bank director, who is also an attorney, conspired to steal $1.4 million through a fraudulent loan to a fake borrower at a time when the bank was in a “tenuous” state, according to Damian Williams, the United States Attorney for the Southern District of New York.

The Park Avenue Bank failed and was closed by regulators in 2010.

Also, the former president of the bank, Charles Antonucci Sr. of Woodside, New York was found guilty in 2015 of a massive fraud scheme involving self-dealing, bank bribery, and embezzlement of bank funds.

“Mendel Zilberberg, while working as a practicing lawyer and serving as a director of Park Avenue Bank, ignored his duties and took advantage of the bank, viewing it as the object of his fraud scheme,” said Williams. “Far from helping the bank through a tenuous moment in its existence, Zilberberg was focused on squeezing money out of it for himself, on the basis of lies. The bank collapsed just months after Zilberberg defrauded it.”

Sentencing is scheduled for Nov. 29 before U.S. District Judge George B. Daniels.

In or about 2009, Zilbergerg conspired with Aron Fried and others to obtain a fraudulent loan from Park Avenue Bank, according to the indictment. Knowing that the conspirators would not be able to obtain the loan directly, the conspirators recruited a straw borrower to make the loan application. The straw borrower applied for a $1.4 million loan from the bank on the basis of numerous lies directed by Zilberberg and his co-conspirators.

Zilberberg used his privileged position at the bank to ensure that the loan was processed promptly, prosecutors said. Based on the false representations made to the bank and his involvement in the loan approval process, the bank issued a $1.4 million loan to the straw borrower, which was quickly disbursed to the defendants through multiple bank accounts and transfers.

In total, Zilberberg received more than $500,000 of the proceeds. The remainder of the loan was split between Fried and another conspirator. The straw borrower received nothing from the loan. The loan ultimately defaulted, resulting in a loss of over $1 million.

On November 15, 2022, Fried pled guilty to conspiracy to commit bank fraud. On April 10, 2023, Judge Daniels sentenced Fried to one year and one day in prison.

Williams praised the outstanding investigative work of the Federal Bureau of Investigation and the Federal Deposit Insurance Corporation, Office of the Inspector General.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit. Assistant U.S. Attorneys Dina McLeod, Daniel G. Nessim, and Kimberly Ravener, with the assistance of Paralegal Specialist Joseph Carbone, are in charge of the prosecution.

Ramapo Settles Civil Rights Lawsuit With Up To $3 Million To Developer Over Corruption

The Ramapo Town Board has approved a mediated legal settlement of up to $3 million with a developer who accused town officials of corruption in a 2019 federal civil rights lawsuit.

Connectivity Systems LLC developer Solomon Menche’s lawsuit accused the Ramapo supervisor’s chief of staff, Mona Montal, and other town officials of manipulating land-use decisions against his mixed-use proposal. The plan, Hearthstone Village, is located off Route 59 in the Remsen Avenue-Treetop Lane neighborhood.

Specht and other board members voted last week to settle the legal action, based on a federal mediator’s recommendations. U.S. District Court Judge Cathy Seibel signed off on the agreement.

Ramapo Supervisor Michael Specht had called the lawsuit frivolous when Menche filed it in 2019.

Town officials have said they had strong defenses but settled to steer clear of costly fees or the possibility of losing in court. Menche’s lawsuit sought $25 million.

Menche will again present his development plan to the Ramapo Town Board. And the town planning staff will exercise their best efforts to review, in good faith, and determine whether the plaintiff’s proposed building heights for Hearthstone are likely to be approved by the land-use boards, according to the settlement.

Menche’s Connectivity Systems LLC, which accused the town of bad faith and violations of the developer’s constitutional rights, sought at least $25 million to compensate for losses and damages. The lawsuit names the town, Planning Board, Zoning Board of Appeals, Building Department, and Department of Public Works.

The project met with fierce opposition from residents with the Committee for the Preservation of Treetop/Grove/Augusta Neighborhood.

Menche’s lawsuit said other projects received comparable variances and accommodations that were denied to Connectivity. The developer requested a variance to construct 56 residential units above commercial stores in three buildings on 6.5 acres. The zoning allowed a maximum of 53 units and a minimum of 48. A fourth building would be commercial.

Going forward, Menche could receive millions of dollars in credits toward permits for the Hearthstone project and other development projects he has pending in Ramapo.