Co-op on the Chopping Block
At first, Anita Terrace co-op owners just wanted management to fix their leaky pipes and drafty windows. But when raw sewage began leaking into their apartments and city officials condemned their parking garage, a scrappy bunch of rebellious owners sought control of their 559-apartment complex in Rego Park, Queens.
They won, and in 1999, took over Anita Terrace's management. It seemed like success, but four long years later, the situation for the homeowners is markedly worse. The co-op is in bankruptcy court, its three 15-story towers need $15.5 million in repairs, and a federal judge is threatening to auction Anita Terrace to the highest bidder unless the co-op is able to make certain payments.
What makes the co-op owners maddest is that they haven't told their side of the story in court yet. They say fraudulent mismanagement by the co-op's developer, ViSutton Associates, which converted Anita Terrace to co-ops in 1991, caused the project's financial woes.
One reason the co-op chose bankruptcy was to argue its case in court. But unless federal bankruptcy judge Carla Craig hears their claimsa hearing is scheduled for this ThursdayAnita Terrace's owners could lose their apartments. "People live in fear here," says the charismatic leader of the homeowners, Abram Gin. "The sword is hanging."
Leading a homeowner fight is the third act in the life of Ukrainian-reared Gin, who built a name citywide as an immigrant success story just a few years after he came to New York knowing no English in 1974. By 1989, he had built a $350 million real estate business, Artha Management, with more than 6,000 apartments in northern Manhattan and the Bronx. But his sudden success turned sour, when Artha ran into what Gin calls "cash problems" and was forced into bankruptcy in 1990.
Gin went to Russia for several years before returning to New York and moving into Anita Terrace in 1995. With his development experience, he led the homeowners' efforts to gain control of the co-op. Their current fight is a chance for Gin to win redemption.
Dissatisfied shareholders led by Gin took over the Anita Terrace board in 1999. They couldn't balance the books because of ViSutton's mismanagement, they say. The co-op board has accused ViSutton of adding $4 million in unrelated debt to its mortgage, and improperly depleting a reserve repair fund. They blame ViSutton for the loss of hundreds of thousands of dollars in income after the garage was condemned.
Not so, says ViSutton, arguing that the financial problems occurred after they gave up control. "When the homeowners group took over, the co-op was solvent," says Marc Luxemburg, ViSutton's attorney. He also says that the $4 million refinancing was an "accounting transaction" that didn't hurt the co-op's bottom line.
One local politician who has studied the case backs the homeowners. Local assemblyman Michael Cohen, who represented Anita Terrace until recent redistricting, calls ViSutton "the bad guy here."
As they watched their co-op come apart financially, these nascent activists unsuccessfully looked for help locally. First they hired attorney Michael Reich, right-hand man to Queens Democratic Party leader Tom Manton. According to Gin, Reich attended a few meetings, and then he billed the homeowners $80,000even though his office didn't produce a single brief. Says Reich, "I believe we handled the case appropriately."
The co-op owners also say that Attorney General Eliot Spitzer turned his back on them. The AG's office, which is charged with regulating co-ops in New York, investigated ViSutton's $4 million refinancing, but concluded in 1999 that there was "no actionable misconduct."
As the years slide by, with Anita Terrace mired in bankruptcy, its 2,000 residents worry that the whole complex is past the point of no returnits debt continues to increase, repairs are pressing, and a recent study concluded that toxic molds are a serious health hazard.
And now Judge Craig has signaled she may not even hear the homeowners' allegations. Although a bankruptcy trustee in June charged ViSutton and its mortgage lender with fraud, unjust enrichment, and breach of contract, the judge is currently entertaining motions arguing that the co-op's finances are so precarious it should move immediately to Chapter 7 liquidation.
That possibility terrifies Bernadette Pereira, who panics at the thought of seeing her apartment auctioned. Says the mother of two, "It's the only thing I have!"
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