Order issued against Wall Street condo developers

NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman announced a court order on Friday against two property developers for allegedly engaging in fraud related to the offering of condo units in a Wall Street development.

Africa Israel Investments Ltd., certain Africa Israel affiliates and Jeshayahu Boymelgreen, a condo developer, allegedly failed to place money in escrow, failed to fulfill their obligation of completing construction of condo units and refused to relinquish control of the property to its rightful owners. The court order temporarily bars the defendants from offering securities, including coops and condos, in the state of New York.

"This fraud on homebuyers, conducted literally on Wall Street, is emblematic of the very worst conduct by property developers," Schneiderman said. "Homebuyers at the Downtown Condominium were deprived of the most fundamental aspects of homeownership - a completed home and control of their property."

Africa Israel and Boymelgreen sold the landmarked portion of the Downtown Condominium to CS Wall Street LLC, a shell entity that left the landmark unit vacant. In 2002, Africa Israel and Boymelgreen sold all the units in a public offering that made them at least $360 million. Subsequently, the defendants allegedly abandoned efforts to complete the renovation of the property, failed to procure the legally-required permanent certificate of occupancy for unit owners and refused to relinquish control of the property to individuals who bought and reside in the units.

The court order requires the developers to deposit $470,000 that allegedly should have been held in escrow into a court supervised account and compels Boymelgreen to testify before the court about the development and sale of units at the Downtown Condominium.