Sale of Bialystoker Building Under Review; AG Says Board “Failed to Discharge Its Duties”

The Lo-Down has learned that the state Attorney General’s office is reviewing a proposed sale of the former Bialystoker Nursing Home building and that a settlement agreement has been reached with board members who were under investigation for their management of the historic organization.

The financially troubled home, located at 228 East Broadway, was shuttered in 2011 after 80 years serving the senior population of the Lower East Side. At the time, Ira Meister, who was then board president, came under fire for a transaction some called a “sweetheart deal,” his acquisition of an office building owned by the nursing home. Meister, a real estate developer and property manager, purchased the neighboring building for $1.5 million.

In September, Attorney General Eric Schneiderman dropped his investigation of the matter after Meister agreed to return the building, 232 East Broadway, to the Bialystoker Center organization. He and another board member, Aaron Shmulewitz, also agreed to pay the center a total of more than $300,000. Under the terms of the agreement, Meister is permanently barred from serving on the board of any not-for-profit organization registered in New York. Shmulewitz can’t serve on any non-profit board for five years.

The transfer of the office building to Meister was reviewed by the Attorney General’s Charities Bureau and some of the investigation’s findings were included within the agreement, which is called an “Assurance of Discontinuance.”  When the board determined in 2009 that the nursing home was no longer viable and that closure was the only option, the two-story building was the first place they looked for immediate financial relief.  Two appraisals put a value on the property between $2.94- and $3.1 million.

But in the spring of 2010, as the real estate market slumped, the board made a decision to sell the property to Mesiter for $1.5 million. The Attorney General’s report stated, “The board did not engage in any efforts to sell the 232 East Broadway property to, or to obtain bids on the property from, anyone other than Meister.” Aaron Shmulewitz, an attorney, represented both the buyer and the seller, collecting $1500 each from the nursing home and from Meister’s real estate firm. Meister’s company profited around $270,000 from renting the building during the last few years (the Educational Alliance used the facility while its main building on East Broadway was being renovated). The Charities Bureau concluded,“The board failed to discharge its duties,” and, “Meister and Shmulewitz failed properly to administer the Bialystoker Center’s charitable assets.”

While the agreement indicated board members “neither admit nor deny” the facts and conclusions in the Attorney General’s investigation, they agreed to the following:

• Meister will transfer the deed for 232 East Broadway back to the Bialystoker Center.
• Meister will pay approximately $230,000 to the center (the amount his firm made by leasing the building).
• Meister’s company will forgive loans made to the Bialystoker Center in the amount of about $43,000.
• When the property is sold by the Bialystoker Center, the $1.5 million Meister paid for the office building will be returned.
• Shmulewitz will pay $11,500 to the center, including the $1,500 he charged in legal fees.
• Both men resigned from the board, although Shmulewitz is permitted to continue representing the center in the sale of its property (Meister stepped down as president in August and was replaced by Barry Winston).

The agreement states that the Charities Bureau has been presented with “a draft petition for the sale of the (Bialystoker Center’s) assets,” including 232 East Broadway, the main building at 228 East Broadway and a third parcel, where the Dora Cohen Memorial Park now sits. We have contacted several members of the board, including Meister and Shmulewitz, seeking comment about the settlement agreement and details about the new prospective owner of the property. They have either declined interviews or not replied to our phone messages. While the Attorney General is reviewing the purchase offer (a routine procedure any time a non-profit group sells real estate), a judge will ultimately be required to sign off on the deal.

A preservation group, Friends of the Lower East Side, led a lengthy battle to declare the 1929 Bialystoker Nursing Home building a city landmark. Their efforts, aided by City Council member Margaret Chin, were successful in the spring of 2013. The designation protects the building facade. Any new property owner would be free to renovate the interior and to build on the parcels where the office building and park are now situated.

In 2012, board members said the sale of the property would help pay off creditors, as well as pay back wages and pension benefits to the nursing home’s former workers. At the time, they said, the home owed more than $13 million.  Any funds remaining after the debts are paid would need to be used for a charitable purpose similar to that of the Bialystoker Center. The Attorney General will oversee that process, as well as the sale of the property.

One other note from the agreement related to the Bialystoker’s original role — that of a Jewish burial society. It states that following the sale of the property, the board will be responsible for “identifying the unused cemetery plots owned by the Bialystoker Center and affirming its intent to transfer these plots back to the cemeteries at which they are located for their original purchase price.”