Acropolis Gardens (Photo: Queens Post)
Nov. 1, 2018 By Tara Law
A long-troubled Astoria co-op is on the brink of foreclosure, and residents say that the property’s management company has squandered millions of dollars that should have gone toward the upkeep of the buildings.
Acropolis Gardens, a 618-unit, 16-building cooperative on Ditmars Boulevard stretching from 33rd to 34th streets, is $45 million in debt, with its management company and co-op board facing allegations of corruption and rampant mismanagement, according to a lawsuit filed by co-op shareholders in June.
The development has also defaulted on its mortgage, and a judge has recently appointed a “receiver” following a foreclosure action taken in early October by Wells Fargo, the mortgage holder. The receiver, a type of independent body, will oversee the “rents, property and income” from the building, according to court records.
The co-op owners allege in their shareholder lawsuit that Metropolitan Pacific Properties, the company that manages the buildings, has left the cooperative “on the brink of insolvency,” bouncing checks to employees and vendors, failing to repair hundreds of violations, and even using funds for their own purposes, according to court documents.
The co-op owners, who also blame the co-op board for allowing such mismanagement to persist, aim to recover millions of dollars from the management company and the board alleging that shareholder money has been stolen and wasted.
“For well over a decade… defendants have used [Acropolis Gardens] as their ATM machine— looting millions of dollars from the Cooperative for their own purposes while leaving [the development] struggling to pay its bills…” part of the lawsuit says.
The root of the problem, the lawsuit alleges, is that the CEO of Metropolitan Pacific Properties, Steve Osman, has repeatedly refinanced the cooperative’s mortgage since he began managing the property in 2009.
The debt ballooned from $12.5 million in 2013 to $45 million in 2017 following a series of refinancings, which were approved by the co-op board. The board apparently made these decisions in private, since it allegedly stopped holding shareholder meetings in 2010.
Moreover, the suit alleges that funds in the Acropolis Gardens’ account were used to line Osman and his team’s pockets instead of making essential repairs at the buildings.
Osman allegedly transferred a total of $220,000 of cooperative funds to his mother, and also made more than $10,000 worth of American Express payments on behalf of his sister, the court documents allege.
The alleged misappropriation of funds has led to uncomfortable and even hazardous living conditions at the buildings, with leaky roofs, crumbling facades, and rats and trash in common areas just part of daily living at the gardens, according to an affidavit signed by more than 70 tenants.
The complex, additionally, had more than 200 open violations for hazardous conditions as of April 2017, according to the lawsuit.
Osman and Metropolitan Pacific Properties did not respond to a request for comment by press time. However, Osman told the Daily News that the allegations in the lawsuit were not true and that he is working on a plan to get the building out of its money problems “in less than a month.”
Council Member Costa Constantinides said that he hopes that the receiver will be able to review the co-op’s books and get the organization’s finances back in line.
He views the judge’s decision to appoint a receiver as a positive step, but said it is shameful and unfair to residents that the matter has gotten to this point.
“Residents deserve to know why they have been brought to this point, how their homes were allowed to deteriorate, and who is at fault,” Constantinides noted in a statement as part of the case.
The council member said his office has received countless complaints about mismanagement at the Acropolis Gardens over the years.
In 2015, for instance, Con Edison shut off the gas line for the buildings for about six months, citing problems with the piping system involving “unauthorized, improper hookups that violate building codes.”
Constantinides is now calling for the district attorney’s office and the state attorney general’s office to investigate the board and its management company.
“It’s time for there to be some peace of mind for residents,” he said.
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38 Comments
ask for a copy of the property condition assessment that was done back in 2010.
In Jackson Heights back in the late 80’s, the Queensboro corporation was taking the money from the monthly maintenances which was supposed to pay the property tax and lining their own pockets. Dead to rights, no question about it, found guilty of stealing over $700,000 in a court of law. Wanna know the sentence? Fine of $50,000 plus community service.
So while I sympathize with hopes that Osman will goto the big house over this, he’ll likely skate away, paying only a fraction of what he stolen. Hopefully the hardworking folks who invested in the Acropolis will see some of their stolen money returned and hopefully justice will come in another, more satisfying form.
I have heard horror stories about the Acropolis for years. Last month a local realtor showed me a rental apartment in one of the buildings. It was overheated, at least 100 sticky degrees. It stank. Pregnant cockroaches scurried behind the room deodorizer on the window sill as we opened the door to the unit. In the kitchen, at least 10 cockroaches swarmed all over the the door of the fridge. Where there are 10 there are thousands. These were the smaller German cockroaches, the breed that really infests. I am sure their larger chunky American waterbug counterparts were hiding around too. It was disgusting. The hallways were shabby and the place looks like a stereotypical public project, which is not to say there are not very nice projects out there, because there are. It is a question of maintenance, which is not being done in some of these buildings. Big NO to the realtor. If I was showing apartments, I would never consider showing one in the Acropolis.
Is closing of Sandwich Bar in any way related to that?
It was pretty decent restaurant with good business but closed abruptly on November 1.
If what the lawsuit alleges is correct, little Stevie baby will be spending a good amount of time behind bars very soon. Maybe Debbie can rent out half the cell from him?
I don’t know if we’re reading the same thing but to me it appears these are civil matters not criminal matters
Steve Osman will look great in his new attire: black/white striped jumpsuit. Maybe he will share a cell with Debbie Vasquez, board ‘president.’
Q: How can you tell if Steve Osman is lying:
A: Find out if he is breathing.
Hopefully it gets knocked down, and a nice new luxury complex gets built. section 8 housing is 1/3 of the buildings. At night its amazing what u see coming out of the buildings especially up by 21 avenue.
I highly doubt Acropolis will foreclose. It consists of 16 buildings, 618 units located on Ditmars blvd right by train station which is worth at least $150 to $200mill. Even the $45 mill debt plus the couple million in back taxes/fines and probably $10 to $15 million needed for necessary repairs (approx. $60mill) is still not that big of a deal. On the low end, that would put Acropolis at a 40% debt to equity ratio which is low. However, like someone mentioned in another comment, the refinancing will most likely be done at a high rate and the maintenance fees will definitely increase.
ALWAYS check CURRENT financials before buying a co-op. This type of theft happens very often. ALWAYS have a lawyer do a thorough check plus you must also research all public records regarding debt, outstanding violations/complaints, pending repairs or upgrades and of course the management company. Always remember that when you buy a coop, you are trusting someone else to pay the bills and properly manage your hard earned investment.
As a coop owner from a different development, I find this very scary and disturbing. I hope they lock up the people responsible for “mismanaging” the money and make the owners whole again.
I always thought the awful smell came from the Greek place on ditmarts
Some mornings there is a rotten fish smell mixed with cleaning solution as I walk by that area. The smell is a lot worse in the summer.
The walls are closing in on Osman!
The management and board are corrupt and have been stealing for years. Hopefully they’re held responsible for this theft and fraud.
The fact that this theft has been going on this long is insane.
Will coop owners lose their shares once the building is foreclosed?
Do they need to move out once it’s happened?
I’m curious as a coop owner from different place live in Astoria.
If the bank forcloses on a co-op building then the individual owner’s equity gets whipped out, meaning you will technically become a tenant of the bank or the new owner(s). However, that rarely happens.
Coop Owner,
Yes the coop owners lose their shares/ownership in the case of foreclosure.
It is up to the new owner to either rent you the apartment at an agreed upon price or evict.
This is the worst case scenario that doesn’t happen very often but you have to be very careful when buying a coop. Always have a lawyer check current financials and management history. In your case, it’s best to attend board meetings and stay on top of your management company.
The length of time this complex has been in trouble is far longer than the article states. As far back as the 1990s, the mortgage holder at the time, a Japanese Bank, nearly seized the property. At that time, Constandtinides predecessor, Mr. Vallone, worked to ensure that they had a roof over their heads. This is a property to avoid. Good luck to those in it now.
Some bank will bail them out at a ridiculously high rate and full control of management but the individual monthly maintenance fees will skyrocket.
A lot of good people live there. This is absolutely horrible!
Why all the thumbs down???
alot of junkies live there too.
Go towards 21 avenue after 11 pm you’ll see what comes in and out of those buildings
Unfortunately many coop mortgages have strict terms that allow the bank to call the loan in case of a pending foreclosure. Hopefully, the city/state government can get involved to prevent this from happening.
LOCK THEM UP!!!
Let me get this straight!!!
– in 2013 Acropolis had $12.5 mill in debt.
– in 2017 Acropolis’s debt jumped to $45 million because of new mortgages they took out which should of left them with $32.5 million minus banking fees, repairs, fines = at least $20-$25 mill.
– in 2018 a $13,000 loan repayment check BOUNCED?
WHERE IS THE MONEY????
It is rather fishy. Hopefully the bulk of the re-fi went to new elevators, roofs, waterproofing, plumbing, electric. In an 18 building, 600+ unit development I can easily see how tens of millions could be spent on deferred maintenance items.
If they stole, they should go directly to jail.
Unless something criminal was done by them the co-op board members are typically insured against personal liability by the co-ops insurance policy.
Hopefully this ends well for the shareholders though I’m certain that their monthly payments are about to balloon way up. There is nothing that the politicians can do right now other than help put pressure on the DA to put the fear of jail time on anyone the DA can link to embezzlement or other criminal activity.
there are no elevators in these buildings at all I use to live there they are walk-up apartments.
Money went to Steve Osman, Metropolitan and Co-op board
This place is a mess. Its dirty on the outside and always smells like garbage, curry, onions, fried enchiladas or animal waste when you pass by. Its awful!
And dead fish from the Greek place on ditmarts
If you are a fellow shareholder and want to help us take back out board- please reach out to FREEDOMING@PROTONMAIL.COM
Wow! Steve Osman, Metropolitan Pacific Properties and the Co-op board need to go to jail ASAP! My biggest question – where did the extra $32.5 million go????
“The debt ballooned from $12.5 million in 2013 to $45 million in 2017 which was approved by the co-op board in private.” WTF?????
Check Osman’s account in Bermuda
Or better yet – his mother’s bank account in the Bahamas.