Wednesday, April 15, 2015

TriBeCa Developer Settles with AG's Office over Unregistered Real Estate Securities

By Rodney F. Tonkovic, J.D.

New York Attorney General Eric Schneiderman has announced that his office reached a settlement with a real estate developer for failing to register numerous real estate investments. The settlement was reached with 39 Lispenard Project, LLC and its former principal, architect Peter Moore, who were charged with failing to register syndications under the Martin Act. The AG's office found that Moore solicited and offered syndications in 39 Lispenard Project, LLC to members of the public without making the necessary filings. Under the Martin Act, syndications and the offer of condominium units require the filing of prospectuses, which must be provided to investors and purchasers before they decide to invest or buy a condominium unit (In the Matter of the Investigation of 39 Lispenard Project, LLC, AOD No. 15-050, April 12, 2015).

Background. According to the complaint, 39 Lispenard acted as an unregistered syndicator of securities with regard to two buildings in TriBeCa, New York, NY. 39 Lispenard acted as an unregistered sponsor of realty in the offering and sale of condominium units in those buildings without filing an offering plan as required under New York law. According to the office's press release, Moore blatantly procured investors in an unregistered syndication, hiring a prominent real estate firm in order to reach a wide audience. At the time, Moore swore that the building was vacant, but there were tenants who were slated to be evicted several months later; Moore was required to deliver a vacant building.

Sanctions. Moore agreed to a six-month bar from offering or selling securities in the New York, in addition to making the required syndication filings with the AG's office. Moore also agreed to conduct his business affairs legally in the future, and if he should violate any term of the settlement agreement, he will be barred from offering or selling securities permanently. Moore will also pay a fine of $50,000.

Schneiderman remarked that “promoters of real estate investments need to follow the rules and if they don’t, they will be held accountable." Moore, he said, will face "permanent consequences" if he fails to follow the Martin Act in the future.

The case is AOD No. 15-050.