Squadron Calls on City, State to Sue Former Rivington House Owner

Sen. Squadron attended a media event outside Rivington House earlier this year.

Sen. Squadron attended a media event outside Rivington House earlier this year.

We made mention this morning of a somewhat vague report in the Daily News noting that State Sen. Daniel Squadron is calling on the city to sue the Allure Group in connection with the Rivington House debacle. The senator is now out with a fuller explanation.

The Allure Group, of course, sold the former nursing home to luxury condo developers for $116 million after the city lifted deed restrictions on the property. Mayor de Blasio has said the city was misled by Allure Group executives about their intentions.

Squadron has made available a letter he wrote to New York State Attorney General Eric Schneiderman and Zachary Carter, New York City’s corporation counsel. In the letter, dated yesterday, Squadron said, “I write to ask you to investigate the events surrounding the sale of Rivington House for possible violations of the False Claims Act, at the State and City levels.”

The False Claims Act gives city and state officials the ability to file civil enforcement actions against parties that have defrauded the government. The act provides for the rcovery of damages, penalties and attorneys’ fees from those found to have made false claims, including against any entity that, “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay or transmit money or property to the state or a local government, or conspires to do the same” or “knowingly makes, uses. or causes to be made or used, a false record or statement to conceal, avoid, or decrease, directly or indirectly, an obligation to pay or transmit money or property to the city.”

Squadron wants city and state lawyers to look at whether false claims were, in fact, made by representatives of the Allure Group. He is also asking them to look into whether Allure Group concealed the May 2015 agreement to sell the property. Allure paid $16 million to lift the deed restrictions. If the sales price had been known, the firm would have been required to pay more to the city.

In a statement, Squadron said, “The closure of Rivington House… stunned the community and highlighted major flaws in the process that governs deed restrictions… The role of government is to protect the public interest and to be transparent; but that role is undermined if government is misled, as may have been the case at Rivington House. But, it is also vital that we hold those who violate the public trust accountable.”

Schneiderman has been investigating the Rivington House matter but hasn’t indicated whether criminal charges will be filed.

Photo courtesy: Council member Margaret Chin.

Photo courtesy: Council member Margaret Chin.

In other Rivington House-related news, Mayor de Blasio signed legislation today sponsored by City Council member Margaret Chin and Manhattan Borough President Gale Brewer meant to reform the way the city deals with deed restrictions.

The legislation requires the city to establish an online database of properties with deed restrictions, to notify local elected officials and community boards of any request to remove deed restrictions and to set up more stringent procedures for evaluating those requests. The new law also requires the mayor to personally sign off on all deed removal requests.

In a statement, Chin said:

Our city is not a playground for powerful real estate interests. Every transaction that involves properties set aside for the good of the people of our City, such as Rivington House, needs to be subject to the greatest amount of public input, transparency, and accountability as possible. Our legislation… achieves that goal. Today we are united with a simple message: No more Rivington Houses, not on this Mayor’s, or any other Mayor’s watch. I am proud to join Borough President Brewer and Speaker Mark-Viverito in solidarity with the Lower East Side residents who woke up one morning to find a cherished, community asset taken from them.

The mayor’s office this past fall released new guidelines for dealing with deed changes and amended those guidelines following a City Council hearing on the Chin/Brewer bill.