A web of lawsuits have been woven around an allegedly crooked rabbi accused of forging paperwork to steal a whole building.According to court records and knowledgeable sources, Benjamin Herbst and cohorts have been the focus of a number of real estate lawsuits similar to the one Real Estate Weekly reported last week he is involved in at the midtown office building 315 West 35th Street.
The court cases and lawyers involved in them accuse Herbst and his associates of taking part in a number of schemes in which they have forged documents and signatures in order to gain title to properties they do not own and also leverage money against them.
“It’s like the Leonardo DiCaprio movie Catch Me If You Can, but instead of just forging checks this guy forges deeds,” said attorney Stephen Meister, who is involved in one of the lawsuits.Last week, Real Estate Weekly reported that 315 West 35th Street, an office building in Manhattan, had fallen victim to such a scam.
In that situation, the real estate investor Isaac Chetrit had purchased the distressed debt on the asset for $10.75 million in the summer of 2010. But when Chetrit tried to proceed with a foreclosure against the owner of the property, a man named Aaron Chitrik, he found that the title to the mortgage had been recorded to an imposter company with a similarly spelled name to the corporation Chetrit has used to buy the note.
According to Stephen Meister, who is Chetrit’s attorney and is a well-known real estate lawyer in Manhattan who has handled several prominent lawsuits, Chitrik along with Herbst and two lawyers who are involved with Herbst, Jon Lefkowitz and Stuart Davis, masterminded a plan in which they forged a new mortgage title in the name of their imposter company and then recorded it, fraudulently seizing control of the debt. Their actions have stalled Chetrit’s ability to proceed with the foreclosure on the property.
In a conversation with Real Estate Weekly last week, Herbst vehemently denied the allegations, stating that he had transferred the mortgage into the similarly named venture but that it was a voluntary partnership between Chitrik and Chetrit that he had helped arrange to resolve the property’s financial problems. Herbst, however, could not demonstrate proof that Chetrit and Chitrik had agreed to work together.
“What they are saying is an outright lie,” Meister countered.It appears that this isn’t the first time Herbst has been involved in these types of activities, court records show.In 1999, Herbst committed similar alleged misconduct at a property where he was living in Borough Park, Brooklyn that his wife, Rhoda Herbst, had defaulted on.
A New Jersey based real estate investment company called Providence Properties purchased the building, which had been owned by Rhoda, in 1999 for about $400,000 with plans to flip it after vacating the property.
According to these court records, Herbst created an imposter company also named Providence but based in Borough Park and proceeded to transfer the property, 5001 17th Avenue, into his son Richard’s control.
As was allegedly done at 315 West 35th Street, Herbst appeared to print out the deed, alter the document to reflect that Providence was the company he created in Borough Park, not the Providence based in New Jersey, and then filed it with the state authorities. Stuart Davis, acting as Herbst’s attorney in the case, then made formal requests with the Sherriff of Kings Country, who had been called to evict the Herbsts, to cease such actions, claiming that the issues had been ameliorated.
Herbst then structured a complicated transaction in which he drew roughly $600,000 of loans against the home using a company he created called Ay One.
In the end, the court ordered Herbst to hand back the property. Herbst wound up keeping 5001 17th Avenue in return for paying off Providence.
In another incident in 2006, Herbst helped a man by the name of Barry Chaimovitz set up a 1031 exchange for properties owned by Chaimovitz’s family and that Barry Chaimovitz had a minority interest in.
Herbst appeared to arrange a deal in which the funds would be directed into a building in Detroit being sold by a man named Mayer Goldberger. Yet the transaction was never completed.
According to court documents and Roy Martin, a lawyer who represented the Chaimovitz family in a subsequent lawsuit, Herbst transferred the roughly $1.8 million in proceeds from the Chaimovitz property into his own entity, Ay One. From there, he and Goldberger took the funds.
In a conversation with REW, Herbst insisted that nothing out of the ordinary had happened and that he had taken control of the money only because the 1031 exchange had been cancelled midstream in the negotiations.
Herbst’s explanation didn’t appear to correlate with court testimony and records, which show that the funds were originally destined for an account held by Madison Exchange, a recognized 1031 intermediary. The money had only been allowed to pass into Ay One because Herbst had appeared to improperly alter the check.
During the Chaimovitz case, Herbst was reluctant to release financial information relating to the deal and was jailed for a total of 15 days on two separate occasions for contempt of court.
Eventually, he and Goldberger, who are both members of Brooklyn’s Orthodox Jewish community and are said to be associates, returned the money to the Chaimovitz family and the case was settled.
Last year, Goldberger was indicted for an unrelated multimillion dollar mortgage fraud on Long Island.
In yet another more recent case, Herbst appears to have improperly transferred ownership of a vacant home next to his house in Brooklyn into his possession. He then began construction to integrate the two structures without the necessary city approvals to conduct the work.
The Department of Buildings has since ordered Herbst to stop the project, which he has complied with. The neighboring property was severely damaged however and Martin is representing the owner of the home in a suit against Herbst for over a million dollars in restitution.
It is at least the third case where Martin has represented plaintiffs against Herbst.
Herbst again denied that he had committed any wrongdoing. “Watch for further developments on that issue,” Herbst wrote REW regarding that case, which has yet to be decided.
“I stand up for the downtrodden,” Herbst said in a conversation with REW. “I do right by people. I save people’s lives and businesses.”
Herbst said that accusations of misconduct were inevitable for a person like him because he is involved in working out distressed real estate deals where often the negotiations can turn acrimonious and lead to false or exaggerated charges against him.
“I’m a rabbi and I have taken a vow of poverty,” Herbst said, insisting that he had no desire for profit and no motive to commit fraud.
For Roy Martin and Steve Meister however, the facts are clear.
“The court cases speak for themselves,” Martin told REW. “What I don’t understand is why the authorities have not moved to do something about this.”