New Haven Independent

An attorney from the office of Attorney General Richard Blumenthal, as well as the attorney for a charity shortchanged by the deal, made the case before Judge Jack Keyes (pictured) in New Haven Probate Court Thursday.

The attorneys were detailing the logic behind a settlement agreement that addresses Brancati and business partner Mark Perez’s involvement in the questionable sale of an elderly East Rock widow’s estate. The sale raised questions about how lawyers handle estates, how insiders get deals on property, and how a charity and a fund for “crippled children” got shortchanged in the process.

The agreement is the first major step to settling a controversy — first reported here — over the handling of the estate of the late Margaret Amrich of 18 Cottage St. The elderly widow’s will dictated that the proceeds of her estate go toward a “crippled children’s” fund at the Community Foundation for Greater New Haven. Her estate’s executor, Attorney Gabriel Cusanelli, sold the property to his own business partners for only $250,000. His partners turned around and resold the house for $368,000 — a $118,000 profit.

The settlement agreement, signed by all parties in the case — Brancati, Perez, and the office of Blumenthal, who launched an investigation into the deal to defend the interests of the non-profit agency — was the subject of the hearing Thursday. Keyes said he expected to issue a decision in the next few days.

Further action on another major question—the propriety of the sale—remains to be settled.

“Time Was Of The Essence”

Attorney Irving Schloss, who took over as administrator of the estate after Cusanelli resigned at Blumenthal’s request, told the judge how he investigated how much the charity had been ripped off by the estate sale. To reach his conclusion, he hired an appraiser to look back at the home’s value when it was sold to Brancati and Perez for $250,000. That price indeed appeared to be “fair market value,” he said - at least at the time the bid was issued.

Schloss explained that the broker, Robert Sacco, got three bids on the property, all in the $250,000 range. Brancati (pictured) and Perez were chosen, explained Schloss, because they were the only ones who said they had ready financing - plus, they had made a note that “time was of the essence.”

Once they got the OK from the seller, Brancati and Perez no longer seemed in such a rush to pay for the home.

By Schloss’ account, Brancati and Perez agreed to buy the home on Oct. 31, 2005, but lingered for the good part of six months - while illegally occupying the building - before actually paying for the house. Not until Cusanelli filed to evict the pair did they finally close on the home on April 12, 2006.

Finding that the sale price was legitimate at the time it was agreed upon, Schloss found Perez and Brancati should only pay for the interest on the money during those months of delay. Assistant Attorney General Karen Gano said her office independently reached the same conclusion.

What about the architect who lived a few doors down and said he would have paid $350,000 for the home? That neighbor didn’t issue a bid on the home, because he was told it had already sold. When the building lingered around while Brancati and Perez delayed closing, the broker didn’t have the architect’s name or phone number, so the neighbor was out of luck.

Gano and Schloss tallied the money lost over the delay and came to $15,000.

So how did the business duo end up making $118,000 on flipping the home?

“Our appraiser thought the buyer paid too much,” said Schloss. Plus, “significant repair” was done to the building, he said. Schloss declined to detail the cost of the rehab.

Building permits—filed a year past due, only after news reports noted no permits were on file - give an estimate of how much work was done. The construction work, which entailed “sheetrock, paint, hardwood floors, removal of oil tank, repair roof,” tallied to only $10,000.

Gano said she believed the renovations “would significantly increase the sale price” of the home. Her office looked at whether more than $15,000 might be owed to the estate, but the investigation hit an “evidentiary roadblock” in that pursuit, she said.

Should Have Told The Judge

While all parties seemed pleased with the $15,000 settlement, questions did remain over the propriety of the sale. At the time he authorized the sale of the home, Cusanelli was joined in a business partnership with Brancati and Perez through the PCB Ventures LLC. The LLC was dissolved before the home was officially closed on in April.

While Gano said the partnership was no longer “active” - it had been formed for the sole purposes of an unrelated land deal in May 2005 - Cusanelli should have been open about his relationships to the buyers, she said. Cusanelli had also taken on Perez as a client, serving as an agent for service to form the Maritime Consulting LLC, she noted.

Given that history, Cusanelli “certainly” had an “ethical responsibility” to tell the Probate Court of his relationships with the buyers before making the sale, said Gano.

“It would have been prudent and proper” to openly state those relationships, agreed Schloss. The attorney hinted that Cusanelli may face further action because of the impropriety of the sale. Cusanelli “is dealing with that in another forum,” said Schloss.

What forum? Schloss said he believed the matter would be addressed by the Connecticut Bar Association. “We still have a pending issue that may result in more funds coming our way,” he said.

Cusanelli’s attorney, Eugene Riccio, declined to comment on any other pending cases against his client. He said he was pleased to hear the attorney general’s office had found the sale to be at fair market value, “after having my client dragged through the streets for having given the house away.”

Brancati did not return phone calls requesting comment. Perez could not be reached. Their attorney, Robert Cox, declined comment.

Read previous Independent coverage of the Cottage Street sale here:

• “‘Crippled Children’ Shortchanged?”
• “AG Investigating Cottage St. Deal”
• “City: Deal Was ‘Not Honest’”
• “No Permits On File For 18 Cottage St.”
• “Insiders Paid $250K; He Would Have Paid $350K”
• “Ginsberg: We Never OK’d Insider Sale”
• “Blumenthal Objects to Cottage St. Ledger”
• Keyes, Blumenthal Go After 18 Cottage Profits
• Brancati Agrees To Give Back $15K