156 Youngs Avenue Riverhead, New York 11901 631.369.8237
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Reginald Farr Coordinator Associates LI Pine Barrens
Society Richard Amper Group for the
East End Bob De Luca North Fork
Environmental Council Mark Haubner Defend H2O Kevin Mc Allister Open Space
Council Karen Blumer Michael Madigan Riverhead
Neighborhood Preservation Coalition Phil Barbato Seatuck
Environmental John Turner Long Island
Sierra Club Charles Brevington Audubon Society Patricia Aitken Greater
Calverton Civic Toqui Terchun George Bartunek Janice Sherer Greater Jamesport Civic Patrick Derenze Northville
Beach Civic Linda Prizer Kathy McGraw Sound Park
Heights Civic Michael Foley Wading River
Civic Sid Bail Barbara Blass Angela De Vito Christy Hawkins John McAuliff Doug Rosenbrock Rose Sanders |
21September 2020
Yvette Aguiar, Supervisor
Members of the Town Board
Town of Riverhead
200 Howell Avenue
Riverhead, New York 11901
Dear Supervisor Aguiar and Members of the Town
Board,
Section IX of the contract
between the Town and Calverton Aviation and Technology (CAT) provides that
either side can walk away from the deal as of one year after the end of the due
diligence period (May 20, 2020) if the 8-lot subdivision map was not filed with
the Suffolk County Clerk by that date. As that map has not been filed, the Town should seize this opportunity to put an end to this
transaction.
On November 17, 2019, the Community Development Agency
(CDA) approved Resolution 2018-10 designating CAT, a newly formed LLC,
qualified and eligible to purchase and redevelop EPCAL. Board members Hubbard, Giglio, and Wooten
voted yes and Supervisor Jens-Smith and Kent voted no. During the extensive public hearings, the
community repeatedly expressed concerns about the lack of concrete development
plans, CAT’s failure to produce the required financial documentation, as well
as the integrity of the purchasers; their comments were well founded. The
Town’s subsequent actions were unreasonable, unverified, and not supported by
any substantive evidence.
The Town adopted rules and procedures
for designating a person, firm or corporation qualified and eligible pursuant
to Article 15 of the General Municipal Law on June 6, 2017, by CDA Resolution
#10. In relevant part, the criteria are
whether the entity: (1) has experience with development, construction,
management and financing of similar projects to the one being proposed; (2) has
demonstrated the financial ability to finance the acquisition and development
of the specific project it has proposed, along with among other things,
presentation for review of business plans and economic analysis of the proposed
project; and (3) has demonstrated integrity and responsibility upon appropriate
investigation by the Town Attorney.
As CAT did not and does not meet any
of these criteria, the Resolution finding them qualified and eligible was a
patent mistake, and before a court is asked to do so, this Board should vacate
it and set it aside as arbitrary and capricious, without a rational basis, and
not supported by substantial evidence.
Evaluating the
Town’s actions against the operative criteria, we find:
First, CAT Has No Experience in Projects Involving Aerospace and Related Technologies
Triple Five,
CAT’s 75% partner, has absolutely no experience whatsoever in developing,
constructing, and managing aerospace businesses and related technology
businesses. Simply put, they are essentially retail and entertainment mall
developers. Triple Five stripped Luminati (CAT’s 25% partner) of all voting
rights and managerial functions, and with the apparent disappearance altogether
of Daniel Preston, Luminati’s principal, CAT lost even the pretense of
expertise in aeronautics. With Preston being long gone in disgrace, we have
seen no sign whatsoever of the other people CAT introduced during the qualified
and eligible hearing as being interested in doing business at EPCAL. More than
two years later CAT has introduced a new entity, Arieli Capital, as its new
unvetted partner for a yet to be revealed development plan. Clearly, CAT neither then nor now has the
required experience necessary to have been found qualified and eligible.
Second, CAT Has Failed to
Provide Evidence of Its Financial Ability and Has Never Provided a Specific
Project for the Property
In violation of its own rules, the Town failed to obtain primary
evidence of CAT’s financial ability to develop the property according to a
specific plan. CAT provided letters about Triple Five’s financial status but no
certified corporate financial statements or financial commitments of
participating lenders. Instead, it has hidden behind its status as a
non-publicly traded entity to refuse access to its primary financial
information. Yet, the Town had an obligation under its own rules to
obtain such information and it failed to do so. It took the word of third
parties rather than obtaining direct evidence of financial ability.
CAT has also failed to provide a specified project for
development of the property along with business plans and economic
analysis of the project. To this day, CAT has not provided
details about its intended development plan; what they offer is long on vague
ideas and pretty power points but short on specifics. This became painfully
obvious during the Town’s attempts to obtain permits from State and County
Agencies which are required for approval of the 8-lot subdivision at EPCAL. The
Town has received three Notices of Incomplete Application (NOIA) from these
agencies in large part due to lack of sufficient information about the
development plan for the property—details that are required for necessary
review by the Agencies.
In sum, CAT has never demonstrated the ability to finance the
acquisition and development of EPCAL, and it has never provided a specific
development plan for the land it seeks to purchase at EPCAL.
Third, CAT Has Not Demonstrated Integrity and Responsibility
The third criterion is a demonstration of the purchaser’s integrity and responsibility based upon appropriate investigation by the Town Attorney. To date, there is no evidence of any such investigation having been done notwithstanding multiple red flags from the inception of dealings with CAT. Throughout this process both Triple Five and Daniel Preston have both demonstrated an alarming lack of integrity.
As for Triple Five, first consider
their treatment of Daniel Preston. They used him to get the sweetheart deal he
had in his Letter of Intent (LOI) to purchase 1643+/- acres at EPCAL for just
$40 million, and then with alarming alacrity, they dispatched him to oblivion
when it became expedient to do so during the qualified and eligible process. In
fact, when the notion was floated that perhaps CAT should make a new offer of
its own, rather than using Preston’s LOI, they refused to do so and said they
would walk from the deal if they had to start over. They had struck gold and
they knew it.
Most astonishingly, during the
qualified and eligible hearing Triple Five Chairman, Nader Ghermezian,
blatantly offered the Town 2.5 million dollars toward maintenance and
improvement of Riverhead-owned parks, provided the vote approving CAT be
unanimous. People of integrity don’t
offer such inducements—some might call them bribes--to influence town
officials’ votes.
And the patronizing arrogance toward
Riverhead by the purchaser was on full display when Nader Ghermezian responded
to critical questions and comments by shouting to the Board, “You have to hug
us. You have to kiss us” because other areas are “begging” us to come there.
Also, in the middle of the qualified
and eligible process, Nader Ghermezian and Stuart Bienenstock, Director of
CAT’s Business Development, invited Jodi Giglio to attend a meeting in New York
City on March 13, 2018, accompanied by her “friend” and former director of the
Riverhead CDA, Chris Kempner. Having held that position for approximately 10
years, Ms. Kempner had intimate knowledge of all aspects of the EPCAL
site. No one on the Town Board knew of
this meeting until after it had occurred, and amazingly, Ms. Giglio, a strident
opponent of this deal, returned from the meeting a vocal and spirited advocate.
Shortly after this meeting Ms. Kempner, a realtor, received a $60,000
commission in connection with another real estate deal in which she represented
Triple Five. Are these the actions of a
purchaser of integrity?
While these things were happening in
plain view, perhaps what was most egregiously undiscovered by the Town Attorney
in assessing CAT’s integrity was the fact that Stuart
Bienenstock, CAT’s representative during the qualified and eligible hearing,
had had a $1.3 million judgment entered against him and a partner in Essex
County Superior Court in July 2016 based on intentional fraud.
In a February 24, 2019 article in the Riverhead Local, it was reported a trial court had found that during a real estate closing in September 2012 — a period when Bienenstock was not working for Triple Five — he had produced a forged mortgage satisfaction document. The court found it highly likely that Bienenstock had forged the document himself, and it concluded that he and his partner intentionally defrauded the buyer by providing this forged satisfaction document at the closing and knowingly conveying title that remained encumbered by a large mortgage lien.
This same individual was Triple Five’s primary representative to
the Town!
But this was not an isolated incident involving Triple Five or
its employees. There was questionable
financing of the American Dream Mall in New Jersey, charges by Canada’s tax
authority of tax fraud by the Ghermezians as reported in The Star (Nov. 15,
2019), and charges of bribery in Las Vegas reported in “Power of Triple Five”
by The Las Vegas Sun (May 16, 2006).
In addition, it has been reported that Daniel Preston, a
principal in CAT, has engaged in wrongful and fraudulent conduct to defraud
creditors. He was fired by his former aerospace company, Atair, for alleged
fraud according to a lawsuit filed in 2009.
And on February 27, 2018, Riverhead Local reported on Preston’s misdeeds
in an article headlined, “His Past Full of Outrageous Claims and Broken Deals,
Luminati’s Daniel Preston is Coming for Riverhead.” He did not disappoint: he failed to comply
with the terms of his runway use agreement with the Town resulting in
termination of the agreement.
The actions of CAT’s principals throughout this process, and the
real estate fraud committed by its representative Bienenstock clearly
demonstrate that CAT lacks the integrity to have been found qualified and
eligible.
After rational evaluation of the Town’s criteria for finding an
entity qualified and eligible, you, the current Members of the Board have a
responsibility to reassess this situation objectively, acknowledge that the
prior Board egregiously misapplied those criteria and correct that
mistake. Ask yourselves, do you really
think CAT is qualified and eligible to purchase and develop EPCAL.
It is in the best interest of the community for you to exercise your option to terminate this deal with CAT as provided for in Section IX of the contract. You have a fiduciary duty that obligates you to act solely in the interest of your constituents. Proceeding to closing would violate that duty in light of the copious evidence that CAT is now in grave financial difficulty.
Specifically, the projects CAT relied upon as evidence of
financial ability have come under severe financial strain. Multiple media sources report that CAT’s
parent, Triple Five, is: delinquent under its $1.4 billion mortgage for its
Mall of America in Minnesota and has sought state and federal financial
assistance; owes contractors millions of dollars on its American Dream project
in New Jersey and contractors’ liens have been filed; and failed to provide
audited financial statements in connection with the American Dream Mall.
Article XIII of the Town’s Contract with CAT provides that
purchaser represents it has the financial ability to complete development of
the project. Article XXIII allows the Town “from time to time” to request
‘further assurances’ of CAT’s ability to perform. Repeated requests have been
ignored. Evidence of CAT’s ability to perform is not a matter of “courtesy” as
its legal counsel now maintains—but is required under the Urban Renewal Law and
the Town’s own regulations promulgated thereunder.
The suggestion in CAT’s latest letter dated Mary 26, 2020, that
the Town must “believe in” CAT and now its new associate, Arieli Capital, so
“investment will flow” does not inspire trust or confidence and is not a
substitute for required and proper financial documentation.
Finally, undoubtedly CAT will try to convince you that the
Town’s actions are the root cause for the delinquent filing of the subdivision
with Suffolk County. To the contrary,
the notices from the involved permitting agencies make it abundantly clear that
the delay is primarily due to CAT’s failure to provide a specific development
plan for EPCAL. On September 17, 2019, the New York
State Department of Environmental Conservation (DEC) issued a “Letter of
Incomplete Application” which rejected the Town’s submission because, among
other defects, (1) information necessary to issue a wild Scenic and Recreation
Rivers (WSRR) Permit for the subdivision and to make findings pursuant to SEQR
as previously detailed was not provided, (2)
the Town’s position was “contrary to the letter and spirit of SEQR” and
(3) the Town’s submission lacked “sufficient detail.” Suffolk County Department of Health (SCDOH)
has also rejected the Town’s submissions relating to the proposed subdivision
for similar deficiencies. And as
recently as July 20, 2020, the DEC again rejected the Town’s submissions as
defective and incomplete. Why? Because CAT’s development plan is essentially
unknown so these
agencies do not have sufficient
information to issue the necessary permits.
Without the permits, the Town could not timely file the subdivision with
the County.
In a May 26, 2020 letter, CAT’s counsel announced that a new, unvetted developer is “currently working” on a plan of development—years after the eligible and qualified hearing when a detailed development plan was required—underscoring why the Town lacks authority to convey the property for a wholly unknown project. The Town and CDA do not have authority to dispose of a taxpayer asset where they must speculate on the intended development or public benefit. Such an action is contrary to the General Municipal Law, the Town’s own requirements under the Urban Renewal Law, and the Riverhead Town Code.
It is unconscionable, irresponsible
and illegal for the Town to continue to ignore these unequivocal lawful
requirements. Should the Town and CDA
continue to ignore these mandates when they have a legitimate way under the
contract to get out of this predicament, EPCAL Watch will seek judicial intervention
and appropriate relief.
Respectfully,
EPCAL WATCH COALITION
Reginald Farr, Coordinator
156 Young’s Avenue, Riverhead, New
York 11901
631.369.8237
cc: Robert
Kozakiewicz, Esq.
Frank Isler, Esq.
Richard
Ehlers, Esq.
Town of Riverhead Planning
Board
Town of Riverhead Community
Development Agency
Suffolk County Planning Commissioner
