Defrauded Crown Heights residents fight for their homes

Fraudulent developer claiming to have the Lubavitcher Rebbe's blessing escapes to Israel.

By MICHAL LANDO, THE JERUSALEM POST, NEW YORK
crown heights 224.88 (photo credit: Courtesy)
crown heights 224.88
(photo credit: Courtesy)
Close to 50 families are facing eviction and foreclosure on Brooklyn condominiums they bought from a fraudulent developer who claimed to have the Lubavitcher Rebbe's blessing and then fled to Israel. The families, all Lubavitch Hassidim, paid Lubavitch developer Eliyahu Ezagui up front for apartments he was offering to build at a "good deal" in the city's Crown Heights neighborhood, home to the Lubavitch headquarters. They were swindled with false promises, and now, a decade later, the families are worried they will end up on the street. Ezagui offered the apartments at $100,000-$150,000 if buyers agreed to pay the fee up front. Meanwhile, Ezagui became entrapped in a self-made mess, taking out mortgage after mortgage and never handing over the deeds to the apartments. Instead, he deeded 64 apartments to members of his family, including his parents and his wife, and used that money to take out $15 million in owner-occupied mortgages from 15 lenders, as first reported in the New York Daily News. "He took advantage multiple times of people letting their guard down," said lawyer Robert Tolchin, who was hired by close to 20 of the families to fight foreclosure and press charges against Ezagui and the lenders. "They thought they were dealing with someone they could trust. They thought he was building the Rebbe's shchuna [neighborhood]." Ezagui was given a bracha by the late Rebbe Menachem Mendel Schneerson for a development he built shortly after the Crown Heights riots and gained the trust of members in this tight-knit community. The addresses of the developments - 770 Lefferts Ave. and 613 East New York Ave. - both have symbolic meaning. One marks the Lubavitch headquarters, and the other the number of laws Jews must observe. "I had every intention of transferring the deeds to the investors, but the project didn't work out," Ezagui told the Daily News. He is now living in Jerusalem with his wife, Reina, and four children. "I was stuck and it hurts, and I feel sorry for those people." According to Ezagui, he obtained the mortgages, including 13 in his mother's name, to pay off more than $3.3m. in loans he took out to finance construction of the two buildings. "Now he has a good life in Israel, and we are miserable," said Jeff Minsky, who bought two apartments at 613 and lives there with his wife and six children. Minsky was told that if he paid the full price of an apartment up front, it would be sold to him for $110,000. With an up-front payment of $20,000, the cost of an apartment was $190,000, said Minsky. He bought two apartments, paying in full for one and $20,000 on the other. "He has a history of doing this before," said Minsky. "He did the same thing with my brother, and the price was good then." Families began to move into the buildings in 2000, and last year the foreclosure notices started coming. Many were hesitant to take the case outside the community and brought it to a local beit din. The rabbis demanded that Ezagui hand over the deeds. "Every time, he had a different story," said Minsky. In reality, Ezagui didn't have the deeds, because they were in the names of members of his family, said Tolchin. "Because of what he's done, he can't give the purchasers their apartments, but gives them the keys," said Tolchin. For years, Ezagui juggled the situation. He had a slew of mortgages he needed to pay, and to do so, he took out new ones. As the property values increased, he refinanced. The banks were ready to hand over mortgage cash with little oversight. "The bank sticks its head in the sand, because they get a higher percent loan, and a big profit for the bank," said Tolchin. "The loan officer gets a bonus, and the fat cats high up get another feather in their cap." But at a certain point, property values stopped increasing and Ezagui couldn't get new mortgages. About one year ago, as pressure mounted, Ezagui escaped to Florida. Then eight months ago, he fled to Israel. Fifty foreclosure cases are currently in court. "He'll tell you the market was going up and up, he kept taking money and things got away from him," said Tolchin. "Did he set out to steal from people? That would be harsh - but he set out to do incredibly risky deals with other people's money without telling them the risk they were taking."