Brooklyn, NY – Prospect Heights Apartments Turn Into an Ugly Legal Fight

Brooklyn, NY – The Hello Living condo project in Brooklyn was marketed as an urban utopia, a collection of low-rise apartments designed for young families without large inheritances or bonuses.

Eli Karp, the developer of the Hello Living apartments, is being sued by investors. He claims they want him to default so they can buy the buildings cheaply.

More than three dozen of them closed on apartments, enticed by the modern designs set among the brick walk-ups of Prospect Heights and by amenities like a pool, a gym and a children’s playroom that have all become the standard in higher-priced buildings. One resident called his building a “luxury urban kibbutz” where residents have a baby-sitting co-op and watch “Lost” episodes in the screening room.

The first sign that something was not right came last fall, when fliers appeared outside one open house saying, “Buyers Beware” and “Buying an Apartment in This Building Will Likely Get You Sued.” Lawyers started calling people who had already made down payments to issue the same warning, and at least two people discovered that their banks had withdrawn their loan commitments.

Then the lawsuits arrived, and even some families who had already closed and moved in found themselves on the defense.

“For most of us, this is our first purchase, and it’s most of our life savings,” said Jennifer DiFiglia, who has a contract with her husband on a $525,000 two-bedroom. Her deposit remains tied up in litigation, and if she cannot close, she could lose thousands of dollars in legal fees and tax penalties for withdrawing retirement money. “This isn’t a building filled with people working at hedge funds,” she added.

They have become collateral victims in a vicious fight that is equal parts old Brooklyn and 21st-century real estate, a battle among a 34-year-old developer, his mentor from Borough Park and a two wealthy Austrian investors.

The developer, Eli Karp, is being sued by the others, who accuse him of stealing money from the project and selling apartments without permission. Mr. Karp has fired back, saying that they were simply unhappy with the prices and the pace of sales, and were angry because he would not agree to let the properties fall into foreclosure so that they could buy them for “below-market prices,” according to an affidavit.

The case has traveled from the Manhattan courts through a rabbinical court and now to the Brooklyn courts. The fight has grown so contentious that a judge, Justice Charles E. Ramos of State Supreme Court in Manhattan, reprimanded both sides, saying, “You’re constantly jumping all over each other, and you have clients that will bury their heads in the sand and let these properties go up in smoke.”

The roots of the dispute go back to Borough Park, where Mr. Karp said he took a keen interest in a neighbor, the “big shot” businessman Solomon Obstfeld, who works at a financial advisory firm on Central Park South. He tutored Mr. Obstfeld’s son and marveled at his chauffeured cars, his collection of watches worth more than $100,000 apiece and his tales about his business battles.

He said that Mr. Obstfeld, who is now 54, was not just a role model. “He was my best friend,” Mr. Karp said while seated in an overstuffed office chair in one of his completed buildings on Pacific Street. “I looked up to him.”

Read the full story at The NY Times