BY Ellen Keohane
Attorney General Andrew M. Cuomo filed a lawsuit on June 9th against the developers of the Rector Square Condominium in Battery Park City. The suit alleges that YL Rector Street, LLC and its principal, Yair Levy, depleted the building’s reserve fund, leaving just $70 for repairs and necessary improvements.
According to the attorney general’s office, Levy misused the money slated for the fund for “personal and general business expenses, including making credit card payments and writing checks to himself and relatives.” Based on city laws and regulations related to condo conversions, the reserve fund should have held approximately $7.4 million, the office said. The lawsuit was filed in State Supreme Court in Manhattan.
“It is unconscionable that the developer pocketed a fund established to protect residents,” said Cuomo in a statement. The suit calls for “restitution, damages and penalties” from the developers. In addition, it seeks to prohibit Levy from selling real estate in New York State in the future.
“The unit owners are gratified to have that kind of support behind them,” said attorney Marc Held of the Brooklyn firm Lazarowitz and Manganillo, on Monday about the suit. Held represents 45 Rector Square condo owners who filed a $100 million civil lawsuit in November against Levy and other parties involved in the condo renovation. A decision is still pending in that case.
“Yair Levy and YL Rector Street LLC are deeply disappointed that the Attorney General has decided to commit its resources to this proceeding,” said a spokesperson for Yair Levy and YL Rector Street LLC in a statement. “We categorically deny the allegations made by the Attorney General, but reserve further comment until we conclude our review of the claims made.”
Levy purchased the 23-story building at 225 Rector Pl. in 2005 and later started converting a number of units into condos. However, he eventually abandoned the renovations, leaving residents in an unfinished building. Last winter, residents told the Downtown Express the building had lost heat and hot water for several days because bills were unpaid. Earlier this year, the State Supreme Court granted Anglo Irish Bank the right to foreclose on the property after Levy defaulted on the $165 million mortgage. The 304-unit building, which first opened in 1986, is home to both rent-protected tenants and condo owners. The property also includes a parking garage and commercial space.
“I am extremely encouraged that the Attorney General has filed a lawsuit against the developer of 225 Rector St., whose residents have been subjected to a string of broken promises and constant uncertainty over the future of their homes,” said Assembly Speaker Sheldon Silver in a statement. “This lawsuit by the Attorney General will help put the condo back on sound financial footing and return to residents the value of their investments and the peace of mind that was taken from them,” he added.
