A.G. Schneiderman Files $1.3 Million Lawsuit Against Real Estate Developer For Selling Defective Condos
Lawsuit Seeks $1.3 Million in Restitution Plus $85,000 in Civil Penalties for Defrauded Purchasers
Lawsuit Also Seeks Permanently To Ban Condo Developer From Selling Apartments In NY
New York – Attorney General Eric T. Schneiderman filed a lawsuit today in Kings County against Yitzchok Schwartz and his company Maspeth Plaza LLC for constructing a building rife with construction defects and failing to disclose those defects to potential purchasers. After purchasing their units, owners at the 57-59 Maspeth Avenue Condominium were subjected to a leaking roof, poorly constructed windows and doors, lack of fireproofing in certain areas, and poor workmanship throughout the development among other defects. As part of the lawsuit, Attorney General Schneiderman is seeking $1.3 million in restitution for condominium unit owners, $85,000 in penalties to the state, and seeks to obtain an order permanently barring the developer from offering securities for sale in the State of New York.
“Condominium purchasers were defrauded by a developer who chose to cut corners at the expense of people’s safety,” said Attorney General Schneiderman. “Purchasers have a right to full and accurate information about what they are purchasing, and should be able to rely on the representations contained in an offering plan when making a significant investment. We are seeking restitution for the purchasers who were ripped off, in addition to strong penalties for the developer who defrauded them.”
The Attorney General’s investigation confirmed that from 2006 to 2008, Schwartz, through his company Maspeth, developed and sold 17 newly-constructed condominium units with vast construction defects and deficiencies. As mandated by state law, the developer submitted an offering plan to the Attorney General’s Real Estate Finance Bureau. The law requires that a prospective purchaser be furnished with all the necessary information to make a reasoned decision about whether to purchase a condo or a coop, including any defects or deficiencies in a unit. Schwartz repeatedly concealed and misrepresented the true conditions of the building in each of the 17 sales. The offering plan submitted to each purchaser represented and promised a condominium built according to all building codes, but in reality, owners were stuck with units with defective windows, roofs, doors and flooring.
In January 2011, the unit owners conducted an evaluation of the construction deficiencies. The engineering report estimated that the owners were owed close to $1.3 million dollars in repair costs to bring the building in line with what was promised in the developer’s offering plan. In addition to seeking restitution for the unit owners, the Attorney General’s lawsuit is seeking $85,000 to be paid in penalties to the state and to permanently enjoin the developer from selling securities in the state.
The case is being handled by Assistant Attorney General Jensen Ambachen and Chief of Real Estate Finance Enforcement Jeffrey R. Rendin, under the supervision of Bureau Chief Marissa Piesman and Executive Deputy Attorney General for Economic Justice Karla Sanchez.