NEW YORK CITY-In a judgment by a New York State Supreme Court on June 29, developer Yair Levy and his company YL Rector Street, LLC have been permanently banned from selling apartments in New York State, and have been ordered to pay considerable penalties and restitution for illegal and fraudulent business practices.
The decision enjoins Levy and YL Rector Street, LLC from engaging in any business activity related to the offer, sale or advertising of securities, which includes condominium and co-operative apartments, according to the judgment. In addition, the judgment also includes a $7.4 million restitution to the Rector Square Condominium for defrauding residents and homebuyers here.
According to a press statement from the Office of the New York Attorney General last month, the Supreme Court of the State of New York found that Levy and company defrauded the purchasers and tenants of the Battery Park City condo by emptying the condominium’s reserve fund, and by failing to make payments in lieu of taxes (PILOT) to the Battery Park City Authority, a public benefit corporation of the state. The reserve fund included monies to help protect the health and safety of the building’s residents.
The investigation--initiated in 2010 by the Attorney General’s office--revealed that Levy spent the residents’ reserve fund on his personal and general business expenses. He then abandoned the property without heat or hot water in the winter of 2008, according the statement.
Describing the judgment as a “very strong” and “forceful decision,” a spokeswoman for the Attorney General’s office tells GlobeSt.com that while the decision is not a landmark judgment, it is the first time in several years where a developer has been banned from practicing in the state. And in a prepared statement, Attorney General Eric T. Schneiderman says the state of New York has “no tolerance for the kind of fraud perpetrated” by Levy. “With today’s judgment, Yair Levy is out of business, and tenants and homebuyers in New York are more secure without this predator in the marketplace,” he says.
Marc Held Esq., of Lazarowitz & Manganillo LLP, Brooklyn, NY, who represented the residents of the condominium in the case, says in a statement e-mailed to GlobeSt.com, that the unit owners have previously faced extraordinarily difficult and unprecedented living conditions and financial challenges in a condominium conversion that was supposed to be their “dream” home. “The Office of the Attorney General has now taken extraordinary action against the Sponsor, Yair Levy, by banning the sponsor,” Held says. “It is the hope and expectation that Mr. Levy will improve the finances of the condominium by making restitution to the unit owners.”
Levy has also been ordered to pay an additional $360,000 in civil penalties to the state for his illegal and fraudulent business practices, and the state was awarded another $4,000 in discretionary allowances from Levy and his company, the court ordered.
In their answer, Levy and his company denied the AG’s claims. Rex Whitehorn, Esq., of Rex Whitehorn & Associates, P.C., Great Neck, NY, attorney on behalf of Levy, did not return a phone call to GlobeSt.com in-time for deadline.
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