The problems with the Lubavitch

Brooklyn Swindle Of Lubavitch by a Lubavitch
April 30, 2008, 12:41 pm
Filed under: Uncategorized | Tags: , , ,
Category: News & Opinion (Specific) Topic: Warfare and Conflict: Israel-Palestine
Source: New York Daily News
Published: April 28, 2008 Author: WILLIAM SHERMAN
For Education and Discussion Only. Not for Commercial Use.

New York Daily News

Builder flees & 40 Hasidic families face eviction in Brooklyn swindle


Sunday, April 27th 2008, 4:00 AM
‘Where can we go?’ asks Jakov Osdoba. He and wife, Miriam – along with their
seven kids – are facing eviction from 770 Lefferts Ave. (below)

‘Where can we go?’ asks Jakov Osdoba. He and wife, Miriam – along with their
seven kids – are facing eviction from 770 Lefferts Ave. (below)

More than 40 Brooklyn families face eviction and foreclosure on condos they
bought from a developer who pulled off a massive swindle and then fled the

The families, all Hasidim from Crown Heights, paid developer Eliyahu Ezagui
– one of their own – for the apartments before they were built at two sites:
770 Lefferts Ave. and 613 East New York Ave.

“We trusted him, we thought we knew him, he told us he had the blessing of
the grand rabbi. We had contracts, so we gave him the money,” said Jeff
Minsky, who lives at 613 with his wife and six children.

Ezagui, 47, did not give the buyers deeds when construction was completed in
what is the single biggest local case of subprime mortgage fraud on record.

Instead, Ezagui deeded 64 apartments to himself, his father, his mother, his
wife and two business associates.

The Ezagui group then used the deeds to take out more than $15 million in
owner-occupied mortgages from 15 lenders, including Ameriquest Mortgage Co.,
Olympia Funding and Chase.

Mortgage payments have not been made and the real apartment owners have
received foreclosure notices.

“I had every intention of transferring the deeds to the investors, but the
project didn’t work out,” said Ezagui, now living in Jerusalem with his
wife, Reina, and four children.

In a telephone interview, Ezagui said he obtained the mortgages, including
13 in his mother’s name, to pay off more than $3.3million in loans he took
out to finance construction of the two buildings.

When he couldn’t sell all theapartments immediately, he said, he took out
more loans and mortgages to continue financing the project.

“I hurt my parents, my family and I destroyed everything,” said Ezagui. “I
was stuck and it hurts and I feel sorry for those people.”

Ezagui said he was a trusted man in the close-knit Crown Heights community.
Apartment buyers interviewed agreed and said because of that trust, they had
no lawyers when they signed their purchase agreements.

“We were stupid. We should have had lawyers. We know that now, but we
believed him,” Minsky said.

Ezagui portrayed himself as a devout man and played on the religious
sensitivities of the apartment purchasers, all members of the Lubavitcher

For example, the late Lubavitcher leader, Grand Rebbe Menachem Schneerson,
is thought by many followers to be the Messiah. Ezagui named his building’s
corporation Chaisom Inc. Chaisom, which means “live here,” is also Mosiach –
Hebrew for Messiah – spelled backward.

And the addresses he chose, 770 and 613, have religious significance: 770
Eastern Parkway is Lubavitcher world headquarters; 613 is the number of laws
God gave Moses.

Over the years, the apartment buyers learned Ezagui had a life outside Crown
Heights. He owned a house in Miami, where his wife and children lived, and
was chief executive of 12 corporations, records show.

“He was living the Hollywood life down there when he wasn’t here – big car,
fancy clothes, the works,” Minsky said.

Apartment owners began moving into the buildings in 2000. The foreclosure
notices started to show up in 2007.

Jakov Osdoba, a teacher and rabbi who lives at 770 Lefferts with his wife
and seven children, said he paid Ezagui $100,000 about 10 years ago “because
he said he would help me so I could have a home and raise a family.”

“Then we moved in and when I asked Ezagui for the deed, he was evasive. He
said, ‘Give me time, I have to work things out,'” Osdoba said.

On Jan. 18, Osdoba received a foreclosure letter stating that Ezagui’s
mother, Freha, had defaulted on a $277,824 mortgage taken on his apartment.

“I was shocked. I never met Freha Ezagui,” Osdoba said. “I haven’t told my
children what’s going on. I don’t have the money to pay this mortgage. Where
can we go?”

Schneur Hertzel, married with five children, paid $100,000 for his
three-bedroom condo at 770 Lefferts. Somehow Freha Ezagui obtained a
$370,000 mortgage on the premises.

“No appraiser ever came here, nobody rang the bell,” said Hertzel, a

As word of the pending foreclosures heated up in the community last summer,
Ezagui abruptly left for Israel.

“I’m bankrupt,” said Ezagui. “I would come back [to the U.S] if I could
straighten this out.”

David Frankel, Ezagui’s lawyer and a vice president of Chaisom, denied all
liability for himself. He said he was at the mortgage closings, but claimed
he did not draw up the original purchase contracts.

Ezagui said Frankel did draw up the contracts, knew of the multiple
mortgages and handled the closings.

Last year, more than 20 apartment owners hired lawyer Robert Tolchin to
fight foreclosure and press claims against the lenders and the Ezaguis.

“Ezagui was running a Ponzi scheme,” Tolchin said. “The real apartment
owners are left holding the bag.”

As was true nationally, the swirl of easy mortgage cash found in the Ezagui
case occurred with little government oversight.

Fourteen months ago, lawyer Marshall Schiff detailed the scheme in a
three-page letter to Kenneth DeMario, head of the state attorney general’s
Real Estate Financing Bureau. Schiff asked the state to intervene.

There was no investigation. According to Tolchin, DeMario said his bureau
had no investigators to do the work.

Last week, a spokesman for the state attorney general told the Daily News
that prosecutors are looking into the matter.

“Adding it all up, the banks, brokers, the lack of regulation, and trusting
buyers – it was the perfect storm for a swindle,” Tolchin said.


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