Attorney General James Secures More Than $700,000 from Private Equity Firm That Abandoned Hudson Yards Condo Building 

NEW YORK – New York Attorney General Letitia James today secured relief for homeowners at the 441 West 37th Street Condominium in Hudson Yards, Manhattan, after an Office of the Attorney General (OAG) investigation found that a private equity firm failed to fulfill its legal responsibilities after taking control of the building’s condominium sponsor. SME Capital Ventures (SME Capital) took control of the company that developed the condominium in October 2023 after winning a foreclosure auction on a defaulted loan. However, OAG found that the firm later denied owning the company and refused to pay the building's bills, maintain required safety inspections, or turn over control of the building to homeowners, all while collecting rent on unsold units in the building. As a result of OAG’s investigation, SME Capital and its affiliates, 441 W 37 SME, LLC and West 37th ST, LLC, must pay more than $700,000 to cover the building's unpaid bills, safety violations, and penalties, and will surrender control of the building’s board of directors to the homeowners. 

"Private equity firms do not get to pick and choose which laws apply to them," said Attorney General James. "When this company took control of a Manhattan condo building, it took on real legal responsibilities to the homeowners who lived there. For two years, SME Capital dodged those duties while still collecting rent checks. My office will keep holding these firms accountable when they put profits over of New Yorkers' safety." 

The 441 West 37th Street Condominium is a nine-unit residential building in Hudson Yards. In 2020, shortly after units first went on sale, Levi Balkany, the building’s developer and initial condo sponsor, took out a $3 million loan from SME Capital, a New York City private investment firm that specializes in acquiring distressed real estate debt and equity. Mr. Balkany pledged his ownership stake in the building as collateral. When Mr. Balkany defaulted on the $3 million loan in 2023, SME Capital obtained the collateral at a foreclosure auction where it was the only bidder, making the private equity firm the full owner of Mr. Balkany’s sponsor company and putting it in charge of the building. 

The OAG launched an investigation in 2024 after building residents lodged complaints alleging sponsor mismanagement and repeated failures by the sponsor to pay amounts due to the condominium. The OAG found that despite winning the auction, SME Capital refused to acknowledge that it owned the sponsor company or accept the responsibilities that came with it. The private equity firm stopped paying the building's monthly fees, letting the unpaid balance grow to more than $523,000. It also let the building's occupancy permit lapse, failed to notify the state that it had taken over the sponsor company as required by law, and never handed control of the building's board over to the actual homeowners. 

As a result, the individual homeowners were forced to pay out of their own pockets twice to renew the building's temporary certificate of occupancy and keep it legally allowed to operate. The owners spent $15,824 to renew the permit, most recently in June 2025. In addition, the building was cited by the New York City Fire Department (FDNY) for failing to file required paperwork on its fire safety systems, and by other city agencies for additional health and safety problems, totaling nearly $140,000 in unpaid fines. 

Homeowners were also shut out of decisions about their own building. Under the initial offering plan, the developer was supposed to hand control of the building's board over to the actual homeowners once enough units were sold, but that never happened, and the board never even held a required meeting. That left residents with no say over repairs or how the building was run. Meanwhile, the fire safety problems went unresolved, leaving residents to live with a serious safety risk while the fines kept adding up, and the building's lack of a permanent occupancy permit made it harder for owners to sell or refinance their homes. 

Despite neglecting its financial and operational responsibilities to the building — and explicitly misrepresenting to OAG and residents that it had no ownership stake in the building — SME Capital continued to reap the financial benefits of ownership. The firm actively retained multiple real estate brokers to try to sell the remaining condos. Ultimately, SME Capital elected to lease the unsold units, renting out the penthouse for $12,000 a month and another unit for $10,000 a month. It also retained a management company to collect rent and common charges from residents. 

The OAG investigation determined that SME Capital violated the Martin Act, the state law that regulates the sale of condominiums and requires sponsors to keep the public informed and follow through on their obligations to homeowners. The OAG also found the companies violated state laws prohibiting repeated illegal business conduct. 

Under the terms of the settlement, SME Capital must pay more than $523,000 in overdue building fees, reimburse homeowners for the costs they incurred renewing the building's temporary certificate of occupancy, and obtain a permanent certificate of occupancy. The firm must also repair and certify the building's fire suppression system and pay all outstanding municipal fines and taxes associated with the building, totaling at least $139,918. In addition, SME Capital must update the condominium's offering plan to reflect the change in ownership, formally turn over control of the condominium board to homeowners, and pay a $54,000 penalty. 

This matter was handled by Senior Enforcement Counsel Nicholas J. Minella of the Real Estate Finance Bureau, under the supervision of Chief of Enforcement Louis M. Solomon and Bureau Chief Jacqueline Dischell. The Real Estate Finance Bureau is part of the Division for Social Justice, which is overseen by First Deputy Attorney General Meghan Faux.