Tessler Loses EB-5 Suit Over Bronx Proton Therapy Center

Yitzchak Tessler with 390 Concord Ave, Judge, Lawsuit

Yitzchak Tessler at 390 Concord Ave (NCM-US, Google Maps, iStock)

Both an arbitrator and a judge have inflicted losses on Yitzchak Tessler in a lawsuit filed by investors in one of his projects, but the developer isn’t giving up that easily.

After first challenging an arbitrator’s decision that his company owes $8.5 million to EB-5 investors who lent money to its pharmaceutical manufacturing center in the Bronx, but say they have never been repaid, Tessler is now going into action. appealed the ruling of a New York Supreme Court judge upholding the arbitrator’s statement. position.

The accident began in 2012, when the diamond wholesaler-turning developer sought investors for a 10,000-square-foot facility at 390 Concord Avenue in the Mott Haven neighborhood of the neighborhood that would be used for “advanced PET radiopharmaceutical manufacturing and distribution networks.”

The investors made two loans to a Tessler entity, one for $2 million and another for $4 million. Under the loan documents, the lawsuit required Tessler to repay the principal within five years, along with interest.

But the investors say they never received a dime.

The dispute is the latest in a long list of real estate lawsuits related to the EB-5 program, which allows investors to put $500,000 into a U.S. company in exchange for a green card. The program, heavily used by real estate developers in New York City after the recession, became a magnet for fraud and abuse.

In this case, the foreign investors in the Bronx project sued Tessler and the case went to arbitration. In April, an arbitrator ruled in favor of the investors, holding Tessler Developments liable for guaranteeing the loans.

Tessler’s company disputed the ruling, claiming it had not received a full hearing to show its side, including whether the interest rates on the loans should be 1.5 percent or 4.5 percent.

“We believe that the arbitrator was incorrect and his steadfast refusal to hold a hearing justifies both the reversal of the arbitrator’s ruling and the interim suspension of execution of the award,” said Morrison Cohen’s David Ross, who represented Tessler, in a statement to the real deal

Ross added that he is engaged in settlement talks and “hopes they lead to a resolution of the matter.”

On June 3, a New York Supreme Court judge sided with the arbitrator and ruled in favor of the investors, awarding them $8.5 million. The judge said that “it is normally preferable to hold a hearing and hear witnesses in an arbitration”, but added that “failure to do so here does not violate the rights of defendants.”

Tessler’s attorney on Friday appealed the judge’s ruling, claiming in a court document that the enforcement of the verdict “contains the risk of the plaintiffs going bankrupt.”

The claim that an $8.5 million judgment could somehow bankrupt an entity associated with one of the most prolific developers of luxury condominiums in the city seemed remarkable, but it may have been a mistake. .

On Monday, Christoph Heisenberg of Heisenberg & Heisenberg, the law firm that represents the EB-5 investors, filed a motion against Ross’ request to delay the execution of the money sentence, citing a 2018 analysis of the real deal that valued Tessler’s real estate portfolio at $945 million.

Hours later, Ross filed a motion asking the court to withdraw the earlier claim that the verdict could lead to the risk of a bankruptcy filing.

Tessler made his fortune in the diamond business before moving into real estate. His firm made a name for itself in the late 1990s converting apartments, including at 66 Leonard Street in Tribeca and later at 150 Nassau Street in the financial district. In 2015, his company built a 33-story luxury condo at 172 Madison Avenue in Midtown.

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