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Self-Dealing Broker on Board Leads to Lawsuit at Queens Co-op

Forest Hills, Queens

Co-op Suits
Jan. 30, 2018

Co-op boards wield immense power. And since all power carries the potential for abuse, a new state law requires co-op boards to produce an annual list of all contracts in which board members had a financial interest

The makers of that law might have been thinking about the Gardens at Forest Hills, a 368-unit co-op in Queens. Board president Belal Mohd, a real-estate broker and owner of Superior Services Realty, has listed and brokered the sale of more than 60 apartments in the co-op over the past decade, according to shareholders who reviewed public records. Furthermore, several shareholders claim, the board has been quicker to reject buyers who were trying to purchase a unit listed by someone other than Mohd. 

Those complaints – along with disputes over the last board election – have led shareholders to file a lawsuit against the board in state Supreme Court, the New York Times reports. The lawsuit seeks to nullify the previous election, force Mohd off the board, and require the current board to divulge the full shareholder contact list, along with meeting minutes and financial information

The shareholders behind the lawsuit have learned a hard lesson: because there is no agency responsible for regulating co-op and condo board behavior, there is little recourse for shareholders if they believe a board is misbehaving – other than to take on the significant expense and time required to file a lawsuit. 

Some boards prohibit brokers from serving, and others require that brokers on boards recuse themselves from decisions related to their listings, says attorney Aaron Shmulewitz, a partner at Belkin Burden Wenig & Goldman. Their reasoning, he says, is obvious: “A bad person can take advantage of the system.” 

In the end, there may be only one sure-fire remedy for shareholders who believe their board is guilty of conflicts of interest or other misdeeds: vote them out. But it’s never easy. “Democracy is hard work,” cautions Mary Ann Rothman, executive director of the Council of New York Cooperatives and Condominiums. “You have to attend meetings, vote in elections, and consider serving on the board.”

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