By JEREMY OLSHAN
Co-ops are often Contradictory Operations.
On one hand, co-ops are mini-municipalities; they have citizens (shareholders),
governments (boards of directors), constitutions (offering plans), taxes (maintenance
fees), regular elections, and debt.
On the other hand, co-ops are for-profit corporations; they have major
stockholders (sponsors) and inequities (one apartment does not equal one vote).
At their best, co-ops are democratic communities. At their worst, they
can become totalitarian states.
For several years, a group of homeowners at Anita Terrace, a 559-unit
co-operative apartment in Rego Park, has been struggling to wrest control of the co-op
board from Visutton Associates (the sponsor), who they claim have, among other offences,
allowed the building to deteriorate to an unsafe condition. The sponsor currently owns 40
percent of the apartments in the building, those which have yet to be sold.
"The sponsor has already made his money on the co-op," said
Abram Gin, president of the Anita Homeowners Association. "So now he is going to let
it fall to pieces."
Gin, a Russian immigrant who at one time owned dozens of buildings in
Manhattan and the Bronx, rallied the support of homeowners throughout the complex. So in
1997, when the elections for Board of Directors were held, the homeowners association was
able to win four out of the seven seats.
But rather than abdicate control of the co-op board, the sponsor, Peter
Mesos and his partner Leonard Zangas, chose to take the Homeowners Association to court.
Mesos protested the co-ops original offering plan, which
stipulated that after the first five years, regardless of how many of the apartments had
been sold, he would only be able to vote for three of the seven board members. Mesos
called the stipulation "unfair."
"It was outrageous," said Paul Appel, attorney for the
Homeowners Association. "The offering plan restricted his vote, but he has played all
kinds of games to try and get around this fact."
Judge Charles Thomas ruled in favor of the homeowners association
at State Supreme Court in January of 1998, and ordered a new election to be held within 10
days. The sponsors attorneys were able to delay this election, and have twice
appealed Thomas decision. Over a year later, the election has yet to occur.
Gin contends that while this matter is being delayed in the courts,
life-threatening conditions have developed in the complex. The Homeowners Association
commissioned an architectural firm to study the three Anita buildings and they were
greatly disturbed by the results.
When an architectural firm inspected Anita
Terrace, they found that the conditions in the parking garage posed a "clear and
Having thoroughly studied the structural integrity of portions of
the co-op, architects at the Manhattan firm of Kagan Stewart Robotham concluded that
"a danger exists to the life, health and safety of the residents of the building. The
basic problem is that maintenance has been neglected for many years as evidenced by the
The two greatest problems, according to the report, were the water
tower, and the parking garage, both of which pose urgent, life-threatening risks.
So the Homeowners Association turned to newly elected Assemblyman
Michael Cohen, who promptly contacted the citys Department of Buildings (DOB).
Soon after the DOB inspected the site, the water tower was removed, and
the parking garage was condemned. This meant that all of the homeowners who had paid for a
parking spot in the building were now forced onto the street.
Damage Control, Part II
Peter Mesos, the principal sponsor, claims that while there are
problems in the building they were not severe, and certainly did not warrant its
"Mr. Gin is a real troublemaker," said Mesos. "Everyone
knew there were problems in the garage, but he got an engineer to write a biased report
just to try and strong arm me."
Mesos went on to argue that Gins intentions were less than noble.
"He has a personal vendetta against me," said Mesos. "He has stirred up a
lot of problems in this building and he will probably eventually get control of it."
Several tenants in the building agree.
"Mr. Gin has caused pain and suffering to numerous tenants who now
have nowhere to park," said one tenant, who spoke on the condition of anonymity.
"The garage was not a danger, it didnt have to be this way."
Gin, with the help of Assemblyman Cohen, has arranged with the
Department of Sanitation to indefinitely suspend alternate side parking rules around the
building until the garage is repaired.
At the same time, a battle of the newsletters has ensued between the
Homeowners Association and the buildings management. Mesos distributed newspaper
clippings about Gins real estate dealings in the late 1980s and early 1990s, and his
subsequent declaration of bankruptcy.
To members of the homeowners association, this is little more than
petty muckraking. "Abram [Gin] was never convicted, or indicted," said Howard
Schwartz, treasurer of the Homeowners Association. "He was investigated by the IRS
and the FBI, but he came out as clean as a whistle."
To fight fire with fire, Schwartz and Gin reprinted positive articles
from the New York Times and other papers about Gins past in the Homeowner
But many involved believe these personal attacks to be detracting
attention from the safety of the residents and insuring that the homeowners are able to
hold a fair election.
"The issue is not Mr. Gins infidelity, lack of
trustworthiness, or alleged fraudulent activities," said Assemblyman Cohen. "The
issue here is that a clear and present danger exists at Anita Terrace."
Officials At Bat
Concerned for the welfare of the people of Anita Terrace, and that the
sponsor may have engaged in criminal activity with regard to refinancing the co-ops
mortgage, Assemblyman Cohen called on State Attorney General Eliot Spitzer to act in the
"An additional $4 million of the sponsors debt was added
onto the co-ops mortgage, using the entire building, not just the unsold shares as
collateral." Cohen told Spitzer.
Cohen set up a meeting between the Anita Terrace Homeowners Association
and the Attorney General, whose office is currently investigating the matter.
A new election is scheduled for March 29, at which time both sides are
confident that the homeowners will take control of the board of directors. Gin says that
once this occurs, they will pursue additional legal action against the sponsor to
recuperate some of damage that has been done to the co-op.
Mesos on the other hand, believes that Gin has his own personal agenda,
and will control the co-op board like puppets.
The Homeowners Association calls this charge "ridiculous,"
and said that there is no co-op détat in the works.
The Homeowners Association plans to obtain proxies from 200
shareholders, ensuring that their candidates win seats on the board.
Before You Fly The Co-op
While the case of Anita Terrace is an extreme example, problems between
co-op shareholders and the sponsors are all too common in Queens and elsewhere.
"The sponsor in too many situations, even when he is nominally not
supposed to, still remains in control," said Appel.
One of the biggest problems, say Co-op experts, is that would be
homeowners do not carefully study the co-ops prospectus, said Joel Zand, a co-op
attorney who will soon launch "co-oplaw.com," an informational web site devoted
to co-op issues.
Anita homeowners couldnt agree more. "I spoke to someone who
just moved in a few weeks ago," said Howard Schwartz. "Nobody ever told him what
was going on here, and that there was litigation pending."
Assemblyman Cohen says he is considering legislation to better protect
the rights of co-op owners, in particular to equalize the taxes they pay with that of