NEW YORK (Legal Newsline) - New York Attorney General Andrew Cuomo announced on Wednesday that he has filed a lawsuit against a group of developers for allegedly violating New York's Martin Act.
YL Rector Street LLC and its principal, Yair Levy, the developers of Rector Square Condominium in Battery Park City, are charged with defrauding residents out of nearly $7.4 million. The company is alleged to have used money for personal use from a reserve fund that was in place to protect the health and safety of residents.
"It is unconscionable that the developer pocketed a fund established to protect residents," Cuomo said.
"Today's lawsuit sends a clear message to property developers that deception and fraud will not be tolerated. Purchasers and tenants are entitled to full and honest disclosure and must be able to rely on all representations made to them."
A conversion plan for the Rector Square Condominium project was filed with the Attorney General's Office in 2007. Under state law and the AG's condo regulations, a reserve fund of approximately $7.4 million was required to be set up by the developers. The developers allegedly took the money for personal use.
Cuomo claims that although condo tenants were assured that the reserve fund would be available for possible repairs, improvements and replacements, all the money except for $70 was taken.
In addition to restitution, Cuomo's lawsuit seeks to bar the developer from future sites in the state. The lawsuit charges Levy and YL Rector Street with performing fraudulent conduct in connection with the sale of real estate securities and Executive Law 63(12) for persistent fraud and illegality in the conduct of a business.