Attorney General Eric T. Schneiderman today announced a settlement agreement that bars developers Joseph Scarpinito and Shiraz Sanjana, and five affiliated entities they own and operate, from offering or selling securities, including condo and coop sales, in or from New York State.
The agreement is the result of an investigation by the Attorney General’s Real Estate Finance Bureau into allegations of fraud by the developers of the Mirada, an eight-story Harlem condominium. The agreement further provides for binding arbitration with the condo purchasers for alleged construction defects, and requires the developers to pay $500,000 in penalties and fines to New York State.
The investigation began after purchasers of apartments at the Mirada complained to the Attorney General about water leaks and other serious construction defects in the 161 East 110th Street tower.
The Attorney General found that Scarpinito and Sanjana, acting through their lawyer, Harold L. Gruber, Esq., allegedly concealed their involvement in the development by filing false documents with the Real Estate Finance Bureau. In the filings, the developers named Scarpinito’s elderly mother as the project developer and did not disclose their own involvement, thereby avoiding the requirement that they disclose Scarpinito’s prior federal felony conviction for bank fraud in the condominium offering plan, which is filed with the Real Estate Finance Bureau.
“Our laws protect purchasers of real estate securities, including condominiums and co-operatives, by requiring sellers to make important disclosures to investors,” Attorney General Schneiderman said. “The identities and business backgrounds of the people who make or take part in developing and selling a condo is a material fact that a purchaser has a legal right to know. There is one set of rules for everyone, and my office will protect the rights of purchasers and punish unscrupulous developers.”
The Attorney General brought a special proceeding pursuant to General Business Law section 354 in the Supreme Court, New York County, and received a court order last year. Under that order, pending the outcome of the investigation, Scarpinito and Sanjana were required to deposit $200,000 in an escrow account, to secure the developers’ obligations to the 67 condo buyers, before obtaining a permanent certificate of occupancy.
Click here for more information about the case. Today’s agreement with Scarpinito and Sanjana completes the Attorney General’s investigation.
Under the settlement agreement, Scarpinito is permanently barred from the securities industry and Sanjana is barred for sixteen months. They are required to submit to binding arbitration with the board of managers of the Mirada concerning the alleged construction defects, as well as disputes with the board concerning unpaid rent and common charges, and to pay any amount the arbitrator awards to the condominium’s board. Scarpinito and Sanjana, and the entities under their control, must pay $500,000 in civil penalties, costs, and fees to New York state.
A copy of the Assurance of Discontinuance can be viewed here.
The investigation was handled by Assistant Attorney General Serwat Farooq, Deputy Chief Andrew H. Meier, Special Counsel Jeffrey R. Rendin, and Bureau Chief Erica F. Buckley, all of the Real Estate Finance Bureau as well as Executive Deputy Attorney General for Economic Justice Karla G. Sanchez. Assistant Attorney General ChinHo Cheng and Bureau Chief Gary Fishman, of the Criminal Enforcement and Financial Crimes Bureau, also assisted in the investigation. The Division of Criminal Justice is led by Executive Deputy Attorney General Kelly Donovan.