As New York real estate scams go, this one was not staggeringly lucrative, but it gets bonus points for creativity and audacity. It was a scam made possible by the fact that, for years, the Lindenwood Village (Section D) co-op in Howard Beach, Queens, was run like a personal fiefdom by the board’s vice president, Ellen Buonpastore.
“Because no one did anything, Ellen stepped up and did everything” was how Howard Weber, then the board’s attorney, justified Buonpastore’s running of the 146-unit co-op, also known as the Dorchester I and II, and located in two six-story buildings not far from John F. Kennedy International Airport.
Buonpastore’s right-hand woman was the co-op’s office manager, Joan Ujazdowski. They were a formidable duo. When Howard Thompson, muckraking host of WPIX-TV’s Help Me, Howard show, paid a visit to Lindenwood Village to investigate delays in an elevator repair job, he was shouted out of the lobby by the two women. Ujazdowski advised him, in unambiguous Anglo-Saxon language, to “Go f**k yourself! Get outta my face! Get outta my face! Get outta my face! You’re a piece of garbage!”
But her mouth, it turns out, wasn’t the only unclean thing about Joan Ujazdowski. In April of 2014, the co-op’s accountant, Bill Artuso, called an emergency board meeting because he had discovered a dirty little discrepancy in the books: for the past two years and four months, someone in the co-op had been buying gift cards from Staples, Barneys, Home Depot, and other stores – to the tune of $88,000. Why? A little digging by Artuso revealed that Ujazdowski had been using co-op funds to buy the cards. No one is quite sure if she bought them for herself or gave them away as gifts.
With the exposure of the scam, years of acrimony within the co-op had finally reached the flashpoint. Before examining the explosion and its aftermath, though, we should take a brief look at the history that led to the blowup. It is a textbook example of just how wrong things can go when a co-op or condo is self-managed – or, to be blunt, self-mis-managed.
The Gloves Come Off
Eliot Tokar, a doctor of alternative medicine, arrived at Lindenwood Village in 1995 and was elected to the board in 2012. He soon hit it off with a like-minded board member named Naro Dzidzovic. “It seemed clear that things were not being managed in a reasonable way,” says Tokar, who had previous experience serving on the boards of non-profit organizations and food cooperatives. “What I found was that this board was in chaos. Virtually all decisions were being made by one person – the vice president – and then rubber-stamped by her political allies on the board. In essence, everything happened on the order of this individual, who was authoritarian, belligerent, and bullying. The main thing was that no information was given to me and Naro because we were unwilling to rubber-stamp things.”
Even so, the two allies soon learned that the board had avoided maintenance increases over the years by engaging in deficit spending, then refinancing the underlying mortgage when money ran low. The repair reserve fund had been wiped out. To make matters worse, the property was not in good physical condition, and the co-op’s staff was under lax supervision.
“The place wasn’t being maintained,” Tokar says. “The staff wasn’t being managed – they were being being paid enormous amounts of extra money to do work beyond their job descriptions,” and were not doing their required work.
Eventually Tokar and Dzidzovic began to hear from other disaffected shareholders. As the 2013 board election approached, they slipped flyers under apartment doors urging other “concerned shareholders” to show up for a meeting at a nearby apartment complex to address “years of overspending and abuse” by the board. More than a dozen shareholders showed up, and two of them agreed to run for the board along with Tokar. (Dzidzovic was in the middle of a three-year term.)
The flyers inspired a sharp rebuke from Weber. In a memo to the board and all shareholders, dated February 13, 2013 and posted on every floor of the co-op, the attorney wrote. “While Shareholders are certainly free (and encouraged) to discuss the issues and candidates for upcoming elections, they are not to distribute flyers under doors, post documents in hallways and in other ways create a nuisance for Shareholders.” Failure to comply, Weber added, would result in “fines and other penalties,” including “removal from office, the Board, or even from running for office.”
The concerned shareholders had hired the attorney David J. Baron to explore their legal rights. The day after Weber’s letter went out, Baron fired off a scathing response, decrying Weber’s effort to restrain free speech by preventing shareholders from campaigning for the board. “So,” Baron asked rhetorically, “the Board can distribute propaganda but anyone opposed to Board policy cannot?”
The gloves were officially off. Now the brawling could begin in earnest.
When Tokar and his two fellow concerned shareholders won election to the board, joining Dzidzovic to form a four-person bloc on the nine-member board, they encountered “obstructionist” actions by Buonpastore and her loyalists, including the refusal to share any financial records with the minority faction. This led the minority group to file a lawsuit to gain “full and unfettered” access to the corporation’s financial records. Buonpastore eventually filed a defamation of character lawsuit against three board members and two shareholders, but it was thrown out of court. (Buonpastore declined a request to be interviewed for this article.)
It was in March 2014 that the Help Me, Howard TV crew showed up to investigate why an elevator repair job had dragged on for five months, leaving some elderly and wheelchair-bound residents stranded inside their apartments.
In late April, with legal costs mounting and vitriol at a boil, Artuso called the first of several emergency meetings to discuss Ujazdowski’s theft of the $88,000. “At the third meeting,” Tokar says, “[attorney Weber] told us we shouldn’t go to the insurance company or the cops. Instead, we should sign a confidential agreement between the board and the office manager that would allow her to make restitution gradually over five years – with no interest payments – and we would not release the information to the shareholders.”
Tokar was the lone dissenter when a majority of the board members present voted, 4-to-1, to sign the deal, accepting an initial payment of $60,000, to be followed by monthly payments of $400 for the next five years. Feeling it was the board’s fiduciary duty to reveal the theft to shareholders and have authorities look into it, Tokar approached the Queens district attorney, who looked into the matter but determined that the board’s settlement precluded prosecution.
Nonetheless, Tokar says, the episode “reignited people’s understanding of how deep and serious the problems were.” In fact, the problems were very deep, very serious, and very far from over.
Poison In the Air
After many more months of acrimony, threats, stonewalling, and lawsuits, the concerned shareholders finally won an order from the State Supreme Court to hold a new election in December 2014. Amid all this gloom, a ray of sunshine appeared. After Ujazdowski was fired, Buonpastore hired Jennifer Terman as office manager in July 2014. It would prove to be an inspired choice.
One of the first things Terman learned was that the co-op’s computer had crashed months earlier, and no one had been keeping track of maintenance payments – or non-payments. So she undertook the tedious task of entering hundreds of maintenance deposit slips into the co-op’s new computer. The early days were crazy, according to Terman. “All the records were missing. It was a complete disaster.”
Almost comically, the new computer followed suit and crashed in September. But this time Artuso, the co-op’s accountant, had the files backed up, so there was no replay of the earlier disaster. Which begs the question: why weren’t the earlier records backed up?
As Terman toiled to piece the co-op’s books together, it was impossible for her to miss the poison in the air. “I knew there was a lot of bitterness, a lot of animosity,” she says. “It was too much for one person to manage. We needed a management company.”
In the December election, the concerned shareholders won eight of the board’s nine seats, and Tokar was elected president. Now the serious house-cleaning could begin.
Up from the Ashes
The new board’s first two hires were the lawyer Mark Hankin, a partner in Hankin & Mazel, and the accountant Carl Cesarano, of Cesarano & Khan. The new professionals were in for some unpleasant surprises. “For instance,” says Hankin, “we had to figure out why over a period of six years, a group of 20 or 30 people didn’t pay maintenance.” But that wasn’t even the tip of the tip of the iceberg.
“They had an in-house bookkeeper and manager,” says Cesarano. “The internal controls were extremely weak because there was no supervision of duties, or checks and balances.”
Cesarano also discovered that his predecessor, Artuso, was paid on a monthly basis, and he’d received $49,000 over the previous three years – more than double his agreed-upon rate. Artuso says the extra compensation was for extra work he did discovering and unraveling Ujazdowski’s theft. Artuso has refused to hand over certain financial records to Cesarano, claiming the previous board still owes him more than $8,000. Hankin, the board’s new attorney, calls Artuso’s actions “unethical,” and he’s working to force Artuso to hand over the records.
The CPA uncovered more problems. “I looked at the annual financial statements from 2009 through 2014,” Cesarano says. “In 2009, there was a budget surplus, and every year after that there were six-figure deficits. It’s ridiculous.” The co-op’s spending history was also, as he puts it, “a little illogical.” For instance, the co-op refinanced its mortgage in 2013 – for $5 million at a 4.25 percent interest rate – in order to repair leaky roofs and complete mandated Local Law 11 exterior work. But in that year alone, Cesarano discovered, the co-op spent $743,000 repairing “interior leaks.” To call this a “little” illogical is more than a little generous.
In May, the co-op finally moved beyond self-management when it hired Metro Management Development. Terman, the long-suffering office manager, is thrilled to be working with an established management company. “Now, with Metro, they have a system,” she says. “Every week I make sure the maintenance checks are right, then I give them to Joe Doren, the managing agent, and he pays the bills. It’s definitely better. There’s more structure. The staff are hard workers, but before they would do what they wanted to do when they wanted to do it. Now there’s a schedule; things are organized.”
“There are things we helped turn around,” says Doren, whose full title is director of property management. “We streamlined the billing and organized it better. We got the buildings cleaner and shinier than they were. The staff gives us input now, and new ideas. They’re happier.”
Adds Tokar: “What Metro helped us do was refine our bookkeeping and accounting, enforce the union contract, prioritize capital spending, and figure out how much things should cost and how much we should pay.” The board also set out to collect arrears and discovered, to Tokar’s surprise, that most people were “quite willing” to pay what they owed. So far, more than $14,000 has been collected.
The turnaround, considering the years of turmoil that preceded it, has been astonishingly swift. In its first year, the board cut expenses, reduced the deficit by two-thirds, collected arrears, paid vendors, systematized bookkeeping, and started rebuilding the repair reserve fund, which as of early December was $47,000. And they did it not by raising maintenance or imposing an assessment, but rather, according to Tokar, “by not wasting money and by spending money intelligently and at market value. We brought this co-op into the real world. That’s the bottom line.”
In the end, this is not a story about a real estate scam. It’s a story about the perils of self-management, a system that works well in certain buildings but which, if mishandled as it was at Lindenwood Village, could lead to chaos.
“When you don’t have professionals running the show, things can get hairy,” says Cesarano, the CPA. “If you’re doing self-management, you’d better have structure. If you don’t, you can have financial disaster, and that’s what happened here. This is a story about when self-management runs amok. Things got crazy here. The inmates took over the asylum.”