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[Editor's Note: At 5:55 p.m. on August 17 and at 8:15 a.m. on August 18, 2010, this story was edited for style, content and accuracy.]
In a Lakewood, NJ shopping center, the forgotten victims of real estate investor Eliyahu Weinstein are still waiting for justice.
Located on Route 9 south near the Lakewood border with Toms River, Seagull Square remains a checkerboard of leased and vacant retail spaces.
For years, the shopping center has remained half empty - and only half profitable.
One of its owners is unlikely to step foot on the premises anytime soon.
Last week, agents for the Federal Bureau of Investigation (FBI) arrested real estate investor Eliyahu Weinstein at his Lakewood home and led him off in handcuffs to jail.
Weinstein's arrest comes in the wake of a court victory by British real estate magnate Berish Berger. Berger alleged in 2009 court papers that Weinstein forged checks and other documents to defraud Berger out of $36.5 million.
Last week, the United States Court of Appeals for the Third Circuit in Philadelphia, PA overturned a 2007 summary judgment granted by a district court judge and found in favor of Berger, who sued Weinstein; Ravinder Chawla; 2040 Market Associates, LP; JFK Blvd Acquisition; UBS Real Estate Securities, Inc.; Mark Sahaya, also known as Mark Stephens, doing business as Mark Stephens Co.; Pine Projects, LLC; and World Acquisition Partners Corp.
In media reports and court papers, Berger asserted that he based his business dealings with Weinstein on trust.
That trust was misplaced - not just by Berger, but by a growing list of other investors alleging they, too, were victimized by Weinstein and his partners.
In papers posted online by the Asbury Park Press, the FBI charged that Weinstein targeted investors living in Orthodox Jewish communities in New Jersey, New York, Florida, California and overseas. After arranging to meet his victims, Weinstein falsely represented to them that a business entity he either controlled or owned could purchase a particular parcel of real estate.
Weinstein allegedly told his victims that a third party was prepared to buy or rent the property, ensuring a profit on the investment in a short time. Since Weinstein usually did not possess a deed to the property, he told his victims it was owned through a limited liability corporation (LLC), eliminating the need to file one.
Weinstein told his victims they could invest in a share of the LLC.
He reportedly told the same lie over and over to multiple victims.
The FBI charged that Weinstein fraudulently altered checks for small amounts to increase the size of his victims' investment for much larger amounts. Weinstein used the fraudulently-altered checks to convince other victims to invest in his schemes.
Weinstein also drew up fraudulent leases that misrepresented the properties as having tenants that paid rental income. In many cases, there was no tenant and no rental income at all.
The FBI also charged that Weinstein hid material information from his victims that dramatically reduced the value of their investment.
Retail tenants leasing space in Seagull Square, a Lakewood shopping center owned by Weinstein and other investors that included a member of the Lakewood Township Committee and a member of the Lakewood Board of Education, made the same allegations.
Like Berger, retail tenants sued Weinstein and other investors that they claimed defrauded them.
Unlike Berger, all retail tenants did not continue to pursue recovery of their financial loss in court.
The only remaining member of a class action lawsuit filed against owners and managers of Seagull Square that includes Weinstein, is retail advocate Lynn Celli, now disabled and unable to work.
Celli told a reporter that her nightmare began in 2002, the year she signed a lease with Seagull Square. Celli invested over $300,000 in an ice cream parlor she opened in a neighborhood that at the time had none.
According to Celli, managers for the shopping center told her there would be a new anchor store to replace Stop and Shop supermarket, which vacated its space in 2001. She said the leasing agent for Seagull Square did not disclose that Stop and Shop continued to lease its space there, preventing any other anchor store from taking its place.
Stop and Shop relocated in the former ShopRite supermarket space in Tri-City shopping center of Toms River, less than a mile away from Seagull Square in Lakewood.
Although all retail tenants were required to pay a monthly fee for security and maintenance, Celli said the shopping center manager and owner failed to provide either.
A reporter observed that shopping center parking lot lights were not turned on every night, light bulbs were not installed or changed in darkened areas of the property where vagrants slept on abandoned furniture, snow was not always plowed from the parking lot, and the parking lot macadam was not repaired for months after huge potholes became huge sinkholes on it.
After Celli and 11 other retail tenants filed a class action lawsuit against the owners and managers of the shopping center for fraud and misrepresentation, crimes against them and their customers increased there.
In 2004, Celli reported to police she was threatened and raped as she emptied trash behind her store after closing for the night.
Several months later, another woman visiting the shopping center while many businesses were open was abducted and raped as well.
That same year, owners of a Chinese takeout restaurant in Seagull Square reported that thieves broke into the store after closing and made off with an undisclosed amount of money.
During a meeting of the Lakewood Township Committee, Township Attorney Steven Secare publicly stated that nothing could be done to stop residents of a Toms River group home from terrorizing Seagull Square retailers.
Secare did not disclose that he represented the Lakewood owners of the group home.
Celli closed her business in Seagull Square on August 31, 2004. She told a reporter she had no other choice; she was liable for the safety of her employees and she could not even ensure her own.
Retail tenants alleged that shopping center owners and managers did nothing to protect them, even though they paid a maintenance fee for lighting and security.
Committeemen continued to tell retailers they could do nothing about the problems because the shopping center was private property.
The terror escalated in 2004 and continued the following year.
Seagull Square management informed retail tenants in writing that their stores could contain asbestos, including a free-standing fast food restaurant not built by shopping center developers.
Management told the retailers they were responsible for removal of the asbestos in the leased storefronts, but reversed that position after retail tenants provided government documents that proved there was no asbestos used in the construction of shopping center buildings.
Shopping center management also contacted utility companies that serviced some retail tenants. Management asked that the retail business accounts instead be put in the shopping center's name. Retail tenants told reporters they became aware of the deception after they no longer received their monthly utility bills.
Management, which did not pay the bills, claimed its actions were "a mistake."
Utility companies did not explain why they did as the shopping center management requested without the permission or knowledge of retail tenants affected by the action.
When Celli and other tenants of Seagull Square filed a class action lawsuit, local media covered the news. According to legal documents obtained through discovery that Celli showed a reporter, the same owners of Seagull Square bought and sold the shopping center through a succession of holding companies.
In Spring 2005, a press release announced that a group of investors had purchased Seagull Square shopping center for $10.7 million and financed the acquisition with a $9 million mortgage on the 97,522-square-foot property.
GMH Capital Partners of Newtown Square, PA represented Fair Oaks LLC in negotiating the deal, while Zev Lesser of Lakewood represented purchaser Ocean Realty 101 LLC, according to the press release. However, a deed of ownership filed with the Ocean County Clerk listed only the name of Lakewood real estate developer Eliyahu Weinstein.
Weinstein referred a reporter to shopping center manager Simcha Shain for comment, but did not disclose that Shain was also an owner.
Shain and Weinstein are partners in Pine Projects LLC, which manages the affordable housing development where Committeeman Menashe Miller and his family live.
In 2006, Miller reported on his state-required financial disclosure that he owned several rental properties assessed at almost $1 million. Township vitals also reported that Miller claimed each of the properties was his primary residence.
As a member of the Lakewood Board of Education from April 2004-7, Shain was also required to disclose all sources of income. He included his investment of more than $2,000 in Seagull Square on a 2006 state-required ethics disclosure, but not on the deed filed with the county clerk.
In early 2006, Mayor Marc (Meir) Lichtenstein announced to retail tenants that he was the new manager of Seagull Square, which Shain had managed after Weinstein took title to the property.
In response to a reporter's question, Lichtenstein denied he was an investor in Seagull Square or that he was related to Weinstein through marriage.
The owners and managers of Seagull Square eventually settled with all but one of the retail tenants that filed a class action lawsuit against them.
Celli pursued her legal claim against the owners and managers of Seagull Square.
Like Berger, Celli was unsuccessful in her initial attempt to prove allegations of fraud and misrepresentation against Weinstein and other defendants.
Unlike Berger, she could not afford to appeal the decision.
In her legal papers, Celli charged that the owners and managers of Seagull Square had not lived up to the terms of her 7-year lease, as well as the spirit of good faith and fair dealing implied by their business agreement.
Owners and managers of Seagull Square countersued Celli for unpaid rent on the remaining five years of her lease.
In a decision dated June 9, 2006, state Superior Court Judge Vincent J. Grasso, sitting in Toms River, ruled that neither party had proven their case.
"There was no evidence of any pressure exerted on Ms. Celli," Grasso wrote in his decision. "Regrettably, the business venture of Kringles (Frozen Delites) did not succeed and a substantial investment was lost. These factors did not, in the court's view, create a scenario of bad faith or unfair dealings in this commercial transaction. The court does not find there is clear and convincing evidence to find that the defendant-landlord and/or its' agents committed common-law fraud against the plaintiff."
Grasso dismissed the countersuit against Celli. He said in his decision that no evidence was presented to show that the shopping center had asked Celli for rent due after she vacated the premises. The judge also said no representative testified on behalf of the shopping center to prove that efforts had been made to find another tenant to occupy Celli's space in order to mitigate damages resulting from loss of her rent.
On a visit to Seagull Square shortly after Grasso issued his decision, a reporter noted that Celli's retail space remained dark, although the Kringles store name had not been taken down. Many other retail spaces in the L-shaped shopping center were also vacant. Some store names of former tenants had also not been taken down.
Three years later, little has changed.
On a return visit in August 2010, the same reporter counted 11 leased store fronts, including a free-standing fast food restaurant, and 7 vacant store fronts - including the former Stop and Shop supermarket.
Celli's former retail space has not been repainted or prepared for any new tenant to take its place.
That does not mean the shopping center's manager has not made renovations to the property based on charges made by Celli in her lawsuit.
In front and in the rear of each retail space, management has installed bright lights, but no privacy fence to block out their glare from residents of an Orthodox development that recently began undergoing buildout on the adjoining site.
A reporter noted that homeowners and tenants now living in the development had attached dark plastic bunting on the residential side of an 8-foot-high chain link fence separating the commercial shopping center and residential homes.
Full-size yellow school buses formerly stored on a portion of the shopping center parking lot in past years were not observed on the reporter's return visit in 2010. However, township zoning now permits a used car business to operate on the parking lot of a Route 9 shopping center near Seagull Square that Weinstein and other investors also own.
Weinstein is reportedly a former used car salesman.
With Weinstein's arrest, his misfortune could become the township's misfortune since Lakewood revenues are generated in large part by the collection of property taxes - which Weinstein and his partners, current and former township officials, may no longer be able to afford following a court-ordered payback of millions received through fraud and misrepresentation.
Berger's legal victory may have laid the basis for a successful appeal by Celli and other Seagull Square retail tenants that made the same charge as Berger against Weinstein and his partners.
On August 15, Celli maintained that anyone can be victimized.
"I believed that when someone I did business with gave me their word, they would keep it," she told a reporter for NJ News & Views. "Obviously, that wasn't the case. Everybody doesn't follow the rule of law."
Unlike Celli, who had a written lease, Berger invested in Weinstein's projects based solely on the Lakewood investor's word and the recommendation of clergy in the Orthodox community that benefited from Weinstein's charitable donations.
"The face of any criminal may not be who you expect," Celli said. "I never expected that some of the business people who were my landlord were also the same government officials that told me they could do nothing to ensure the public's safety at a commercial shopping center."
For years, Celli advocated in behalf of a proposed retail Lemon Law that she asserted would have protected small business owners leasing space in shopping centers throughout New Jersey.
Lobbyists representing an association of shopping center owners worked to block passage of the proposed legislation, sponsored by Senator Robert Singer, a member of the Lakewood Township Committee, and Assemblymen Ronald Dancer and Joseph Malone.
All three legislators are Republicans representing the 30th Legislative District, which includes Lakewood.
Singer is running for re-election to the Lakewood Township Committee.
At the July 2010 meeting of the Lakewood Industrial Commission, Steven Reinman, township Executive Director of Economic Development, confirmed he was engaged in discussions with the same association of shopping center owners that opposed Singer's retail Lemon Law in order to bring more retail businesses to Lakewood.
If Reinman is successful, retail tenants that enter into lease agreements in those shopping centers will continue to risk their investment, according to Celli.
"Many people believe that just because there are laws in place to protect them, government will enforce those laws," Celli told NJ News & Views. "People are always testing the boundaries of what the law can or cannot do to stop them from breaking it through their business dealings. Anyone can be victimized, no matter how well they do their homework."
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Another great job of investigating the facts of this case. No where else has the reporting of this scheme has any of the details of what has taken place.
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