Scammer, Awaiting Sentence, Rebuilds
by Paul Bass | Mar 27, 2014 3:17 pm
Posted to: Housing, Legal Writes, Newhallville
The confessed mastermind of a massive mortgage-fraud ring has started amassing a new poverty real-estate empire—before he even goes to prison.
The mastermind is a once-and-future megalandlord named Menachem Joseph “Yossi” Levitin. Levitin has been buying dozens of often destroyed homes in areas like Newhallville and the Hill, in some cases with money from out of state and abroad. The neighborhoods have been ravaged by white-collar crimes like those to which Levitin has pleaded guilty.
Meanwhile, Levitin awaits sentencing on federal criminal charges that carry penalties of up to 30 years in jail and $20 million in fines for helping arrange to bilk lenders out of $10 million while leaving a trail of rundown New Haven properties.
The feds arrested Levitin on those charges in 2010, portraying him as the mastermind of a far-flung fraud ring. At the time, Levitin, in his early 20s, had built up an empire of slum properties, butting heads sometimes with neighbors and city inspectors aghast at the properties’ conditions. The government moved to take control of 51 of his properties that he had bought with illicit proceeds from the sale of 40 other properties. Levitin pleaded guilty to the charges in 2012.
But he hasn’t been sentenced yet. The government has repeatedly rescheduled the sentencing date. Meanwhile, it has sent a string of Levitin’s co-conspirators to prison. In cases like this the government often gets a top participant in a conspiracy to agree to testify against his co-conspirators in return for leniency, holding off on his sentencing until it learns how successful the other prosecutions turn out with his help. So Levitin is widely believed to be cooperating with the government.
Often, though—in the cases of, say, a crooked lawyer—the government demands that the guilty party not participate in the same business in which he had crooked dealings. Levitin, on the other hand, has built up his real-estate company again, often on the same marginal blocks where he and other confessed or convicted scammers drained millions of dollars out of rundown homes by pocketing fraudulently obtained mortgages. Click here, here and here for stories describing how that worked, and the impact the scam had on neighborhoods.
New Haven land-record searches and cross-checks with the state’s business-records database reveal at least 27 properties in town purchased since Levitin’s arrest by limited-liability corporations (LLCs)—for which Levitin serves as registered agent and/or a partner. In all cases his Levitin Management firm manages the properties.
Those LLCs have names like New Holdings LLC, LMV Properties, Titico LLC, Aleph LLC, New Haven Investment Group, and Moshe LLC. Levitin’s partners include investors from Sharon, Mass., and a Jerusalem-based bar owner named Lior Moshe. (Authorities shut down a Moshe-owned bar for 21 days for serving minors alcohol without checking their IDs; municipal Judge Sharon Lary Bavli, in denying an appeal of the fine, stated, “The officer was doing an act of hesed [kindness] when he didn’t close it for 30 days,” according to a translation of her decision.)
In some cases Levitin’s companies bought the properties and then immediately flipped them at a profit to another buyer, according to land records.
Levitin, reached by phone, said he didn’t want to make any comments about why he has re-amassed real-estate holdings since his arrest. The Independent failed to obtain a comment on the subject before this story’s publication from the federal probation department. A spokesman for the U.S. Attorney’s Office had no comment.
“There is no legal prohibition against anyone buying or selling property or managing property, whether they’re convicted of a crime or not,” said Levitin’s attorney, Willie Dow.
One redeveloper active on the same streets of Newhallville, Jim Paley of the not-for-profit Neighborhood Housing Services, called Levitin’s return to the neighborhood “a cross between hubris and chutzpah.”
“I am very suspect and concerned when someone with a track record like his” returns to the same areas in the same business, said Paley. He recalled watching a building across from his agency’s refurbished Sherman Avenue headquarters decay until after the feds took it over from Levitin’s Solo Investments LLC.
Stan Twardy, a former U.S. attorney who now works as a criminal-defense attorney, said lawyers and doctors often forfeit their licenses for a while as a part of these kinds of prosecutions, but purchasing and managing property is a different matter. It doesn’t require a license that can be suspended by, say, a bar association.
The feds will often allow a defendant in a white-collar case to continue earning a living, by legal means, while in negotiations over a sentence Twardy said. And the defendant can use that work to his advantage.
“If I were his lawyer,” Twardy remarked, “I would say, ‘He was remiss in what he did. He’s been out there doing these deals in the community to pay off the victims of his wrongdoing.’”
Levitin’s is but one of a slew of similar operations participating in a new gold rush in New Haven’s low-income neighborhoods. Middlemen like Levitin are snapping up dozens and dozens of properties from banks or other lenders or from foreclosure sales, properties that often already were dragging down entire blocks after being destroyed by scammers or otherwise negligent absentee landlords. The middleman often finds investors—recently from New York, Venezuela, Israel, and Florida, among other locations. The middleman sets up a separate LLC for each property or a group of properties; that limits liability if aggrieved parties try to sue them. The middleman is often a partner in the LLC, and almost always serves as the property manager.
Some of these companies have worked generally well with code inspectors and other government officials and fixed up some properties; others have repeatedly been cited for endangering public safety or bilking investors through Ponzi scheming. Click here and here and here to read about some of that.
The two most visible and growing companies are Pike International and Mandy Management, which have become among the largest property owners/managers in New Haven. (Read about them here, here, and here.) Pike has shifted some of its focus to upscale development downtown and in neighborhoods like Prospect Hill.
A review of Levitin’s post-arrest transactions and visits to 10 of his properties, nine of them in Newhallville, turned up no evidence of illegal activity. Interviews with tenants produced the kinds of reviews common to these fast-growing outfits that amass more property than they can sometimes keep up with: Complaints about having to push and push for repairs, which eventually get made, but often poorly or barely adequately.
“He’s a great negotiator; they do the worst job ever” making repairs, said one tenant, who pointed to half-completed work and spoke of how the multifamily building “leaks like a sieve.” (The tenant asked to remain anonymous.) The tenant said contractors hired by Levitin start jobs, do them part-way, then leave.
“Property management is widely recognized to be a very difficult enterprise. Unjustified complaints and dissatisfaction are the norm, not the exception,” attorney Dow said.
“I’m on my way out,” said Amina Moye, who rents from Levitin at 84 Hazel St. “I’m doing paperwork as we speak.” Moye, who is on disability and said her rent is subsidized by federal Section 8 program, said she continually complained throughout the winter about the landlord’s failure to clear or sand over ice, making it dangerous for her to walk.
That house (at left in photo) is next door to 88 Hazel (at right), a property that remains ravaged and uninhabitable after the feds prosecuted a mortgage-fraud scammer who owned it. That house was the prey of a second mortgage-fraud ring that the feds busted alongside Levitin’s; click here to read about that.
Another landlord building a business in the neighborhood, Levi Yudkin of Waterbury, happened to be present on the block of Hazel Street as Moye spoke. Yudkin’s LSJ Properties bought a house across the street from Levitin and is fixing it up. Wednesday a crew was bringing in new furniture. Yudkin’s just getting started in town; he has houses nearby on Brewster and Newhall streets. Many more abandoned properties in New Haven’s struggling neighborhoods beckon.
Miriam Benson contributed translation for this article.
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I dont understand. Do these slumlords and LLC’s rent these hovels out to people and what are the rents like. Please explain. Do they make money by flipping houses or what?? I have been to Newhall and Rossette Sts. where you need a pitbulll and kevlar.
Wait, I thought the NHI didn’t name names of people even accused of crimes, unless they got both sides of the story?
Here it seems Mr. Levitin doesn’t want to talk, and yet Mr. Bass has put out a full hit piece on him.
[Editor: He pleaded guilty! That is the first criterion for us—we’re not just relying on the state’s accusation. Secondly, his lawyer did speak to us and give us his side. Thirdly we went out and investigated the case ourselves, not just now, but repeatedly in the past, confirming much of the information. Fourth, a number of his co-conspirators pleaded guilty. We didn’t get two sides of the story. We got five.
[But the very fact of a guilty plea in and of itself is plenty enough for us to feel comfortable naming names. Finally, the man still owns lots of property. People rent from him. Government is responsible for regulating him. These are matters of public interest, with an important need to know.]
The city may not be able to prevent Levitin from buying houses, but LCI can create a steep financial disincentive by daily visiting and fining him for each and every violation.
The State of Connecticut finances these slumlords by giving them Section 8 money. If it wasn’t for Section 8 these guys would be flipping burgers on Whalley Ave. Attorney Willie Dow says that “property management is widely recognized to be a very difficult enterprise”??? How difficult could it be if the State of Connecticut is paying above market rents to the slumlords who manage the properties. It only becomes difficult when you have to decide whether to pay for a party for 25 of your best friends or pay for repairs on some slum house in a crime ridden neighborhood that the New Haven cops, and the all powerful Federal Government, are afraid to enter. Prosecuting mortgage fraud is a piece of cake sitting in the safety of your FBI fortress between State Street and Orange Street reviewing mortgage documents. When are you going to get out of your office and out on the streets and prosecute violent crime in the Hill GMAN?