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.