Tuesday, June 21, 2011

Foreclosure Cronyism in NYC

NYT has the story:

In 2009, a judge in Manhattan had a lucrative appointment to hand out: oversight of a diamond district building that was drifting into foreclosure.

Nearly 600 people in Manhattan had been approved for such work. But the job went to a lawyer named Mark D. Lebow, who is the husband of Patricia E. Harris, Mayor Michael R. Bloomberg’s most trusted aide.

Since then, Mr. Lebow has earned $352,000 in fees, more than $5,000 a week, according to court records.

The foreclosure crisis has caused a surge in the number of court-appointed receivers for distressed properties in New York, and politically connected lawyers are benefiting...

Dominick Calderoni, a law partner of State Senator Jeffrey D. Klein, a Bronx Democrat, was handed six receiverships. William C. Thompson Sr., the father of William C. Thompson Jr., the former city comptroller and mayoral candidate, got six. Gregory C. Soumas, a member of the city’s Board of Elections, received two, though he said one property went into bankruptcy, ending his involvement.

When a building goes into foreclosure, a judge appoints a lawyer as a receiver who acts a property’s temporary landlord during the process. Receivers are entitled to fees that typically amount to 5 percent of a property’s revenues. Judges can award less than 5 percent, but usually do not...

Mr. Lebow is not overseeing the building himself. A management company and another lawyer were hired to handle the building’s day-to-day affairs. Yet Mr. Lebow estimated in court papers that he devoted about 30 percent of his time to the building. His compensation, he wrote, roughly equaled his regular billing rate of $650 an hour...

One full-time building employee said he had never seen Mr. Lebow there...

Perhaps the most profitable recent receivership went in 2009 to a retired judge, Seymour Boyers, 84. He was paid $760,000, or roughly $7,800 a week, to oversee the case of the sprawling Riverton apartments in Harlem. Mr. Boyers has specialized in medical malpractice and product liability while in private practice. Members of his law firm donated $1,000 to the campaign of the judge, Richard F. Braun, who appointed him as a receiver.

A court spokesman, David Bookstaver, said Justice Braun was not aware of the campaign contributions. Mr. Boyers “is a highly respected former jurist with outstanding credentials," Mr. Bookstaver said. At Riverton, the state’s housing division ordered rent reductions during Mr. Boyers’s tenure because repairs were not completed.

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