Here are a few of the fruits of mismanagement. Leaky ceilings. No hot water. Asbestos exposure. Ballooning debt. Rising monthly maintenance. Misappropriated funds. And the maraschino on the sundae: foreclosure.
These problems have led Michael Leifer, a shareholder at 618-unit Acropolis Gardens in Astoria, Queens, to bring a derivative shareholder suit against the co-op board and longtime property manager Steve Osman, alleging that Osman misappropriated millions of dollars over the years and board members were complicit in those actions, the Real Deal reports.
The first annual shareholders’ meeting in eight years was scheduled for Nov. 19, and it comes after a Wells Fargo-managed trust moved to foreclose on the property when a loan repayment bounced in July. A Wells Fargo-recommended receiver was appointed last month to audit the co-op’s financials and take over its property management.
But in a move that would replace the court-appointed receiver, the current board members are seeking to refinance yet again, with a $52 million loan provided by a private lender at a 9 percent interest rate – more than double the current rate, according to court filings. Somebody stop them before they borrow again!
Leifer, who does not currently hold a seat on the co-op board, is trying to do just that. He filed a motion in federal court this month seeking to block the board from securing the new loan. From 2012 to 2017, the co-op board refinanced the property four times – quadrupling its debt to $45 million, records show. During the same period, residents faced a 34 percent increase in maintenance payments. In March of this year, it increased another 8.5 percent. Leifer’s suit also alleges that millions of dollars in maintenance fees remain unpaid by multiple defendants in the suit. Meanwhile, Leifer’s complaint claims, the co-op board paid $220,000 to Osman’s 89-year-old mother, which the manager insists is repayment for a cash advance.
“It is self dealing, there’s millions of dollars missing,” says Stephen Meister, Leifer’s attorney. “The entire board is illegitimate and needs to be replaced so the co-op can get back on its feet.”
Thinking of buying a co-op or condo? Already bought, and not sure how co-op/condo life and rules work? Learn all about purchasing a place and living in your new community. It's not like renting, and its not like owning a house. What's it like?