by Daniel Geiger
Attorney Stephen Meister is claiming an $11 million fraud at a building his client Isaac Chetrit is trying to acquire.
Chetrit, a cousin of the prominent Manhattan real estate investor Joe Chetrit, purchased the mortgage on 315 West 35th Street last year for $10.75 million. The property, a roughly 60,000 s/f office building, is owned by Aaron Chitrik, who had bought the building with plans to convert it into residential condos but fell into default.
Since buying the debt, Chetrit has tried unsuccessfully to foreclose.
According to Meister, when Chetrit filed the paperwork in June 2010 that recorded his ownership of the mortgage, a seemingly small error was made. The entity that Chetrit used to purchase the note, Mazel 315 West 35 LLC, was misspelled and incorrectly recorded as Mazal 315 W35 LLC.
Ironically, Chetrit had selected Mazel from the Hebrew phrase mazel tov, which means good luck and, incidentally can be spelled either mazel or mazal.
The correct name was later restored during that summer but the gaff caused repercussions. First, Chetrit’s efforts to continue a foreclosure suit on the property, which were begun by the previous holder of the mortgage, an entity called WCRT Seller LLC, were denied in New York State Supreme Court because of confusion stemming from the misspelling.
Then later that year, a lawyer by the name of Jonathan Lefkowitz submitted a letter to the judge in the foreclosure case announcing an incredible claim. Mazal 315 W35 LLC was in fact a legitimate company he claimed that not only existed but was the true and rightful owner of 315 West 35th Street.
Dumbfounded, Meister looked at the filings that detailed the mortgage’s transfer of ownership and said he was amazed to find that someone had printed out the document that recorded Chetrit’s purchase of the mortgage and where the original spelling mistake was made and rerecorded it.
315 West 35th Street’s mortgage had been transferred back into hands of Mazal, the company that had only existed as a spelling error. Only now, in the documents, the name Yoseph Levin was penciled in as a principal, an inclusion that created the impression that it in fact was a real LLC that existed independently of Chetrit. To pull off the incredible switcheroo, Meister claims someone had literally taken the mortgage documents from the city’s online real estate database ACRIS, printed them out, altered them by adding Levin’s name and then resubmitted them to be recorded by the state. Because the names so closely resembled one another, the document didn’t arouse the suspicion of state authorities.
If what Meister is alleging is true, the name change would be an act of fraud.
“It’s as if you bought a house and your lawyer made a mistake spelling your name and then someone with that name showed up and claimed that the house was theirs,” Meister said.
Reached by phone in his office, Jonathan Lefkowitz was unwilling to discuss any of the details of how Mazal came into being, who Yoseph Levin is, or why the company has any rightful claim of ownership over the mortgage for 315 West 35th Street. Lefkowitz put Real Estate Weekly in touch with Benjamin Herbst, a man who says that he has been working with Aaron Chitrik to restructure his debts on 315 West 35th Street. Herbst also answered the telephone at the office of Stuart Davis, an attorney that Chitrik hired to represent him in the foreclosure case at 315 West 35th Street. Herbst claimed that Mazal was no spelling error.
“Mazal was a legitimate partnership between Aaron Chitrik and Isaac Chetrit,” Herbst said.
According to Herbst, Mazal was a company formed jointly by Chitrik and Chetrit to amicably recapitalize the property. Herbst claims that Chetrit abruptly reneged on the partnership during the summer and only then filed to have the name changed to Mazel, a new company that didn’t include Chitrik as a partner. Herbst says the name change was therefore essentially a strong-arm tactic to wrench control of the mortgage away from Chitrik and then force him out of the property through the foreclosure action. Herbst said that Chitrik moved to put the mortgage back in the hands of Mazal by rerecording the documents only to restore the original ownership structure.
Herbst however was unable to provide any documents proving that Chetrit had formed Mazal as a partnership with Chitrik.
“It was really a handshake agreement,” Herbst said.
There is also key evidence that runs counter Herbst’s story, namely that the limited liability company for Mazal was created in November of 2010, months after the mortgage for 315 West 35th Street was acquired. The LLC for Mazel, Chetrit’s ownership vehicle, meanwhile was formed in June according to state records, a timeframe that correlates with his purchase of the loan and would seem to strongly suggest that Mazal was nothing more than a spelling error.
Herbst dismissed the fact that the LLC for Mazal was arranged in November for an acquisition in June as a mere technicality.
“LLCs are routinely formed after a purchase is made,” Herbst said, a contention that several attorneys and real estate experts contacted by REW disagreed with.
“What they are saying is an outright lie,” Meister countered.
A lawyer not involved in the case but familiar with its details described Chitrik’s formation of Mazal as an effort to seize on the spelling mistake and create confusion over who truly owns the mortgage of 315 West 35th Street. The person said that Chitrik’s motives could include stalling Chetrit’s foreclosure efforts or creating enough hurdles to induce Chetrit to pay him to walk away from the property.
Herbst insisted that Chitrik was the one being bamboozled.