Courts roundup: Croman v. Besen, Madison Realty contract suit, investors sue Strulovitch

Croman, Besen trade suits over large property management contract: Real estate investor Steven Croman, who leads Centennial Properties NY, filed a lawsuit Friday in New York State Supreme Court alleging he signed a bad property management contract with Michael Besen’s property management firm New York City Management because Besen had a secret financial relationship with Croman’s then-real estate attorney.
This suit follows a complaint Besen filed in August 2022 that alleged Croman had not made his monthly management contract payments, and owed at least $748,000 in back fees.
In the new suit, Croman alleges Besen had an improper financial relationship with the later disgraced and disbarred real estate attorney Mitchell Kossoff, and that relationship, the complaint says, brought financial harm to Croman.

The alleged harm followed from an apparently deep conflict of interest on the part of Kossoff, who was Croman’s attorney while Croman negotiated a multi-million dollar settlement agreement with the New York State Attorney General over allegations including fraud and harassment. Part of that settlement, finalized in December 2017, required Croman to hand over property management of more than 100 properties to an independent, third-party manager. Croman in March 2018 chose Besen’s firm New York City Management, but unknown to Croman, the complaint says, Besen had been providing Kossoff unsecured loans that would later total some $1 million while Kossoff was negotiating on behalf of Croman.

An example of the harm, According to the complaint, was the property management agreement that Kossoff negotiated included elements that were unusual and beneficial to Besen, including a flat rate for management services instead of a percentage of the rents.

Court filings are the positions of one party and are not necessarily accurate or complete.

The attorney for Besen, Jose Gershman of Rich, Intelisano & Katz, said in an email that, “Mr. Croman’s lawsuit is his attempt to respond to a lawsuit filed in August 2022 by New York City Management, Mr. Besen’s property management firm, against Mr. Croman for his failure to pay the monthly management fees he has owed since August 2021 and reimburse it for expenses.”
Croman suit LINK
Besen suit LINK

Madison Realty alleges buyer did not close on $8.6M Carroll Gardens purchase: Madison Realty Capital alleges Joseph Safdie signed a contract to buy 321 and 323 Court Street in Carroll Gardens, Brooklyn, in August 2022 for $8.6 million, but did not close, claiming Madison had altered leases in contravention of the purchase and sale agreement. Madison denies it made such changes. Safdie in November filed major renovation plans for the two buildings. According to the complaint, “On or about August 11, 2022, Plaintiff, as seller, and Defendant, as purchaser, entered into the PSA for the sale of the Property by Plaintiff to Defendant for $8,600,000.00. Simultaneously with the execution of the PSA, Defendant was obligated to and delivered a down payment to the designated escrow agent in the amount of $430,000.00 (the “Down Payment”). Pursuant to the express terms of the PSA, the closing on the sale was to occur on or about seventy-five days after the effective date of the PSA, i.e., by October 25, 2022. On or about October 25, 2022, Plaintiff advised Defendant, including by letter of the same date, that Plaintiff was ready, willing, and able to close on the sale of the Property pursuant to the PSA and scheduled a time of the essence closing on November 23, 2022. In response, Defendant refused to close in accordance with the terms of the PSA on November 23, 2022, or otherwise. Instead, Defendant alleged, including by letter dated November 17, 2022, that Plaintiff had amended, extended, and/or modified certain leases to the Property in violation of the PSA and that, therefore, it was Plaintiff that was not ready, willing and able to close. 12. Defendant’s position was pure pretext. Plaintiff did not amend, extend, and/or modify any leases to the Property in violation of the PSA. Plaintiff so advised Defendant, including by responsive letter also dated November 17, 2022.” LINK

15 additional Israeli investors claim Yechezkel Strulovitch duped them: The complaint filed in Manhattan state court alleges property owner and developer Yechezkel Strulovitch took funds totaling $4.65 million from 15 Israeli investors in exchange for ownership stakes in dozens of properties including 284 Sumpter Street, 296 Cooper Street, 599-603 Willoughby Avenue, 741 Lexington Avenue, 1098 Bushwick Avenue, 1104 Bushwick Avenue, 1642 58th St, 361-381 Stagg Street, 193-199 Morgan Ave, 420-426 Tompkins Ave, 227 Halsey St, 783-791 Knickerbocker Avenue. The complaint mirrors an earlier complaint filed September 20, 2022 by the same attorney representing six plaintiffs, also against Strulovitch, 158047/2022.
The new complaint alleges, “Defendant Yechezkel Strulovitch (“Mr. Strulovitch”), using an agent, (deceased non-party Yechiel Oberlander (“Mr. Oberlander”), solicited several million dollars of investment funds from the Plaintiffs in exchange for which he agreed to provide them with 3.5-5 percent ownership stake in his properties, and to update the deeds accordingly. In one of the investment schemes, Mr. Strulovitch also agreed to pay Plaintiffs an 18% return on their investment. Mr. Strulovitch took Plaintiffs’ investment funds and defrauded the Plaintiffs into believing he had performed his obligations under their agreements, whereas in reality, Mr. Strulovitch did not perform any of his obligations.”
LINK

Direct link to the property’s ACRIS page and link to DOB NOW portal.