Bronx Clash

A Contractor's Commission Payment Sparks Probe

In its glory days, Alex & Henry's restaurant in the Bronx, on Courtlandt Avenue near East 161st Street, was close enough to Yankee Stadium that Joe Dimaggio made it his regular watering hole after games in the 1940s. The old dining hall was also a short walk from the borough's courtrooms, and, after the restaurant closed its doors a few years ago, this made it an ideal choice for a Bronx legal services organization seeking new office space.

Bronx Defenders Inc., a nonprofit group established after former mayor Giuliani demanded alternatives to the Legal Aid Society, with which he was feuding, moved into the former restaurant in 2001, spending more than $1.6 million on renovations. Today the restaurant's neon signs still hang outside, while inside the former eatery has been transformed. The dining rooms have been converted into a light and airy space with brightly colored walls, glass brick, and large skylights, and open work space for its attorneys and investigators as well as the defendants and their families seeking legal assistance. The renovation, however, has also spawned a bitter battle between the legal services group and its former contractor, a builder called Ivy Walk Construction.

The feud is several notches above the usual finger-pointing and charges of shoddy work and unpaid bills between client and contractor. Contractor Eric Wright, president of Ivy Walk, has alleged misspending by the legal group and brought his charges to several city agencies, including the city's Office of Criminal Justice, which funds the organization, and the city comptroller's office, which oversees its contracts.

Disputed territory: the old Alex & Henry's restaurant, now a renovated legal services office
photo: Tania Savayan
Disputed territory: the old Alex & Henry's restaurant, now a renovated legal services office

For their part, Bronx Defenders and its executive director, Robin Steinberg, have countered with a $22 million lawsuit against Wright, charging him with breach of contract, interference with the group's city funding, and—as evidence of the harshness of the argument—even slander. The suit, filed in October, claims that Wright brought his allegations to reporters and city officials in an effort to "pressure [Bronx Defenders] into paying [Wright] additional money."

Both sides of the dispute, however, agree on one disturbing matter that has now become the subject of a city investigation: Prior to starting the project, Wright paid $20,000 to a lawyer who was the co-founder of Bronx Defenders and who, acting as a private attorney for the group, was overseeing its move to new offices.

Wright provided two canceled checks to investigators, showing he paid the money to the firm of Hoffman & Arshack—whose principal, Daniel Arshack, founded the legal services organization along with Steinberg and served as its managing attorney until 1999 when he returned to private practice. The payments, one for $5000 and a second for $15,000, were made shortly after Wright signed a contract, drawn up by Arshack for the group, to take on the renovation, initially estimated at $1 million.

According to Wright, after he was selected for the job, he offered a commission to a former contracting colleague who had referred him to Arshack. That offer was declined, said Wright. Subsequently, at a December 2000 meeting with Arshack at an Upper West Side restaurant to discuss the project, Arshack raised the issue. "Arshack said, 'I understand you are offering a commission. I'd like to have that,' " said Wright. The builder said he was surprised at the request, but agreed to pay it. "This was the guy standing between me and my first seven-figure contract," he said.

Wright said the total amount of the commission requested by Arshack was $25,000, but that the last $5000 was never paid because of the ensuing dispute between Ivy Walk and Bronx Defenders. "Arshack started getting very aggressive about getting the last $5000," said Wright.

Asked by the Voice about the issue, Arshack initially refused to acknowledge the payments. "What is the issue in that regard?" he said several times. Told that copies of canceled checks showed the payments to his law firm, he defended the arrangement. "Of course we received it," he said. "It was paid to us under an agreement for what we did. It was a finder's fee." Pressed about why he would be entitled to a fee for having selected a contractor for his group's renovation project, Arshack said: "The contractor was inclined to pay it."

Steinberg said she didn't learn about the payments until several months later. "I was surprised when Dan told me about it," she said. "I don't have a favorable feeling about Dan taking that money." She added: "It seemed like a lot of money to get for an introduction."

Steinberg said Arshack was paid separately by Bronx Defenders for his assistance on the project, which included negotiating contracts with both Wright and the landlord. She also said Arshack had never pushed her to hire Wright's firm for the project. "If Ivy Walk paid money to someone in an effort to influence us, they will have to answer for that. Mr. Arshack never tried to influence me in regard to the contractor," she said.

Still, Steinberg acknowledged that "the appearances of it aren't great. I can see why people would raise questions about it."

That is exactly what the office of City Comptroller William Thompson did after Wright brought his story to officials there. The comptroller referred the payments to Arshack and other issues stemming from the project to the city's Department of Investigation.

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