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FILED: ROCKLAND COUNTY CLERK 12/21/2021 03:13 PM INDEX NO. 034885/2021
NYSCEF DOC. NO. 109 RECEIVED NYSCEF: 12/21/2021
Exhibit A
(Immediately Follows This Page)
FILED: KINGS
ROCKLAND COUNTY COUNTY CLERK CLERK 06/08/2021
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034885/2021
NYSCEF DOC. NO. 1
109 RECEIVED NYSCEF: 06/08/2021
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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF KINGS
----------------------------------------------------------------------X Index No.:
ELI KARP, HELLO NOSTRAND LLC, Date of Purchase:
271 LENOX LLC, AND
HELLO FLATBUSH LLC, SUMMONS
Plaintiffs, Plaintiffs designate
KINGS
-against- County as a place of trial
MADISON REALTY CAPITAL, L.P., The basis of venue is
JOSHUA B. ZEGEN, MARK GORMLEY, plaintiff Eli Karp’s
1580 NOSTRAND AVENUE LLC, residency and the location
1357 FLATBUSH AVENUE 1 LLC, of the real property
BROOKLYN THREE LLC,
MRC RE HOLDINS II LLC,
271 LENOX LENDER LLC, and
FULTON STREET LENDER LLC,
Defendants.
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To the above-named Defendants:
YOU ARE HEREBY SUMMONED to answer the complaint in this action and to
serve a copy of your answer, or, if the complaint is not served with this summons, to serve
of this notice of appearance, on the Plaintiff’s Attorney(s) within 20 days after the service
of this summons exclusive of the day of service (or within 30 days after the service is
complete if this summons is not personally delivered to you within the State of New York);
and in case of your failure to appear of answer, judgment will be taken against you by
default for the relief demanded herein.
Dated: New York, New York
June 8, 2021
Law Offices of Victor A. Worms
By:________________________
Victor A. Worms
Attorneys for Plaintiffs
48 Wall Street, Suite 1100
New York, New York 10005
(212) 374-9590
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Defendants Addresses:
MADISON REALTY CAPITAL, L.P.,
520 Madison Avenue, Suite 3501
New York, New York 10022
JOSHUA B. ZEGEN
c/o Madison Realty Capital, L.P.
520 Madison Avenue, Suite 3501
New York, New York 10022
MARK GORMLEY
c/o Madison Realty Capital, L.P.
520 Madison Avenue, Suite 3501
New York, New York 10022.
1580 NOSTRAND AVENUE LLC
c/o Madison Realty Capital, L.P.
520 Madison Avenue, Suite 3501
New York, New York 10022
1357 FLATBUSH AVENUE 1 LLC
c/o Madison Realty Capital, L.P.
520 Madison Avenue, Suite 3501
New York, New York 10022
BROOKLYN THREE LLC
c/o Madison Realty Capital, L.P.
520 Madison Avenue, Suite 3501
New York, New York 10022
MRC RE HOLDINS II LLC
c/o Madison Realty Capital, L.P.
520 Madison Avenue, Suite 3501
New York, New York 10022
271 LENOX LENDER LLC
c/o Madison Realty Capital, L.P.
520 Madison Avenue, Suite 3501
New York, New York 10022
FULTON STREET LENDER LLC
c/o Madison Realty Capital, L.P.
520 Madison Avenue, Suite 3501
New York, New York 10022
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SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF KINGS
--------------------------------------------------------------X
ELI KARP, HELLO NOSTRAND LLC, Index No.
271 LENOX LLC, and
HELLO FLATBUSH LLC,
Plaintiffs, VERIFIED COMPLAINT
JURY TRIAL DEMANDED
-against-
MADISON REALTY CAPITAL, L.P.,
JOSHUA B. ZEGEN, MARK GORMLEY,
1580 NOSTRAND AVENUE, LLC,
1357 FLATBUSH AVENUE 1 LLC,
BROOKLYN THREE LLC,
MRC RE HOLDINS II LLC,
271 LENOX LENDER LLC, and
FULTON STREET LENDER LLC,
Defendants,
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The plaintiffs, Eli Karp, Hello Nostrand LLC (“Hello Nostrand”), 271 Lenox LLC (“271
Lenox”), and Hello Flatbush LLC (“Hello Flatbush”), by their attorneys, Law Offices of Victor
A. Worms, for their complaint against the defendants state and allege the following:
THE PARTIES
1. Plaintiff Eli Karp is a real estate developer operating in the State of New York,
predominately in the County of Kings. Plaintiff Karp is the principal of plaintiffs Hello
Nostrand, 271 Lenox, and Hello Flatbush and he has years of successful projects behind him as a
real estate developer, and is a resident of the State of New York, County of Kings.
2. Plaintiff Hello Nostrand is a New York limited liability company that operates as a
real estate developer in the State of New York, County of Kings with an address at all relevant
times at 33 35th Street, Suite B-613, Brooklyn, New York 11232.
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3. Plaintiff 271 Lenox is a New York limited liability company that operates as a real
estate developer in the State of New York, County of Kings with an address at all relevant times
at 33 35th Street, Suite B-613, Brooklyn, New York 11232.
4. Plaintiff Hello Flatbush is a New York limited liability company that operates as a real
estate developer in the State of New York, County of Kings with an address at all relevant times
at 33 35th Street, Suite B-613, Brooklyn, New York 11232.
5. Defendant Madison Realty Capital, L.P. (“Madison Capital”) is, upon information
and belief, a limited liability partnership formed under the laws of the State of Delaware, with a
principal place of business located at 520 Madison Avenue, Suite 3501, New York, New York
10022. Upon information and belief, defendant Madison Capital is authorized to conduct
business in the State of New York.
6. Defendant Joshua B. Zegen is, upon information and belief, a resident of the State of
New York and is the principal of defendant Madison Capital. Upon information and belief,
defendant Zegen is the managing principal and co-founder of defendant Madison Capital.
7. Defendant Mark Gormley is, upon information and belief, a resident of the State of
New York and is a director of defendant Madison Capital.
8. Defendant 1580 Nostrand Ave LLC (“1580 Nostrand Ave”) is, upon information and
belief, a limited liability company formed under the laws of the State of Delaware, with a
principal place of business at c/o Madison Realty Capital, L.P., 520 Madison Avenue, Suite 3501
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New York, New York 10022. Upon information and belief, defendant 1580 Nostrand Ave is
authorized to conduct business in the State of New York. Defendant 1580 Nostrand Ave, upon
information and belief, is a shell company formed and wholly owned by defendant Madison
Capital for the sole purpose of acquiring the loans at issue in this action and furthering the bad
faith and predatory lending practices of the defendants as set forth below.
9. Defendant 1357 Flatbush Avenue 1 LLC (“1357 Flatbush Avenue”) is, upon
information and belief, a limited liability company formed under the laws of the State of
Delaware, with a principal place of business at c/o Madison Realty Capital, L.P., 520 Madison
Avenue, Suite 3501 New York, New York 10022. Upon information and belief, defendant 1357
Flatbush Avenue is authorized to conduct business in the State of New York. Defendant 1357
Flatbush Avenue, upon information and belief, is a shell company formed and wholly owned by
defendant Madison Capital for the sole purpose of acquiring the loans at issue in this action and
furthering the bad faith and predatory lending practices of the defendants as set forth below.
10. Defendant Brooklyn Three LLC (“Brooklyn Three”) is, upon information and belief,
a limited liability company formed under the laws of the State of Delaware, with a principal
place of business at c/o Madison Realty Capital, L.P., 520 Madison Avenue, Suite 3501 New
York, New York 10022. Upon information and belief, defendant Brooklyn Three is authorized
to conduct business in the State of New York. Defendant Brooklyn Three, upon information and
belief, is a shell company formed and wholly owned by defendant Madison Capital for the sole
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purpose of acquiring the loans at issue in this action and furthering the bad faith and predatory
lending practices of the defendants as set forth below.
11. Defendant MRC RE Holdings II LLC (“MRC RE Holdings”) is, upon information
and belief, a limited liability company formed under the laws of the State of Delaware, with a
principal place of business at c/o Madison Realty Capital, L.P., 520 Madison Avenue, Suite 3501
New York, New York 10022. Upon information and belief, defendant MRC RE Holdings is
authorized to conduct business in the State of New York. Defendant MRC RE Holdings, upon
information and belief, is a shell company formed and wholly owned by defendant Madison
Capital for the sole purpose of acquiring the loans at issue in this action and furthering the bad
faith and predatory lending practices of the defendants as set forth below.
12. Defendant 271 Lenox Lender, LLC (“271 Lenox Lender”) is, upon information and
belief, a limited liability company formed under the laws of New York, with a principal place of
business at c/o Madison Realty Capital, L.P., 520 Madison Avenue, Suite 3501 New York, New
York 10022. Upon information and belief, defendant 271 Lenox Lender is authorized to conduct
business in the State of New York. Defendant 271 Lenox Lender, upon information and belief,
is a shell company formed and wholly owned by defendant Madison Capital for the sole purpose
of acquiring the loans at issue in this action and furthering the bad faith and predatory lending
practices of the defendants as set forth below.
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13. Defendant Fulton Street Lender LLC (“Fulton Street Lender”) is, upon information
and belief, a limited liability company formed under the laws of the State of New York, with a
principal place of business at c/o Madison Realty Capital, L.P., 520 Madison Avenue, Suite 3501
New York, New York 10022. Upon information and belief, defendant Fulton Street Lender is
authorized to conduct business in the State of New York. Defendant Fulton Street Lender, upon
information and belief, is a shell company formed and wholly owned by defendant Madison
Capital for the sole purpose of acquiring the loans at issue in this action and furthering the bad
faith and predatory lending practices of the defendants as set forth below.
JURISDICTION AND VENUE
14. Jurisdiction and venue are proper in this court based upon the residency of the
plaintiffs and the subject real properties are located in the County of Kings, and all of the
material events giving rise to this action occurred in the County of Kings.
THE NATURE OF THE ACTION
15. This is an action by the plaintiffs against the defendants for fraud, breach of contract,
and breach of the covenant of good faith and fair dealings for predatory lending practices by
defendant Madison Capital, operating in concert, and through defendants Zegen and Gormley, to
manufacture defaults by the plaintiffs on loans which defendant Madison Capital and its shell
companies are lenders as part of a fraudulent scheme which the Attorney General of the State of
New York has described has “a predatory ‘loan to own’ business model.”
16. The “loan to own” predatory business model of defendant Madison Capitals as
defined by the Attorney General of the State of New York, involves making loans on
unaffordable terms which the defendants expect to result in defaults and then to commence
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foreclosure proceedings so that the defendants can acquire the properties, at foreclosure sales,
which were offered as security for those loans.
17. In this case, the defendants actively engaged in alleged fraudulent activities designed
to manufacture defaults by the plaintiffs on their loans, which were owned by defendant Madison
Capital and it shell companies, so that the defendants could charge the plaintiffs millions of
dollars in default interest at the default interest rate of 24% on those loans and to force the
plaintiffs into forbearance agreements as part of the defendants’ fraudulent business model of
“loan to own.”
18. In an Assurance of Discontinuance entitled In the Matter of Investigation of LETITIA
JAMES, Attorney General of the State of New York, of Madison Realty Capital Advisors, LLC,
Respondent, Attorney General of The State of New York, Consumer Frauds And Protection
Bureau, Assurance No. # 20-067, the New York Attorney General stated that the “Respondent . .
. aided and abetted conduct in violation of Executive Law § 63(12) and General Business Law
(“GBL”) Article 22-A, §§ 349-350.”
19. In a press release which was issued by the New York Attorney General on December
15, 2020, which was subtitled, in part, “AG James’ Investigation Found Private Equity Lender
Madison Realty Capital To Have Aided and Abetted Notorious Landlord by Lending More Than
$100 Million,” the Attorney General stated that “’Madison Realty Capital aided one of our city’s
worst landlords in his unlawful scheme. . . .”
FACTUAL BACKGROUND
I. The Loan To Own Predatory Business Model of Defendant Madison
Capital As Described By The Attorney General Of The State of New York
20. On May 17, 2017, in a bankruptcy proceeding entitled In Re: East Village
Properties, et. al., debtor, United States Bankruptcy Court, Southern District of New York, Case
No. 17-22453, the Attorney General of the State of New York submitted “Objection of The New
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York Attorney General As A Party In Interest To the Final Consent Order (I) Authorizing And
Directing Use Of Cash Collateral Pursuant To 11 U.S.C. § 363(c) (II) Granting Adequate
Protection Pursuant To 11 U.S.C. § 361, And (III) Granting Related Relief” (hereinafter referred
to as the “Objection”). (A copy of the Objection by the Attorney General of the State of New
York is annexed hereto as Exhibit “A”).
21. The bankruptcy proceeding was “part of an ongoing property flipping scheme . . .
[by] an inexperienced and unscrupulous landlord named Raphael Toledano (“Toledano”) . . .
using financing provided by Madison Capital (“Madison”).” (Footnote omitted). (See
Objection, ¶ 1).
22. As explained by the Attorney General in the Objection, defendant Madison Capital
had loaned over $124 million to Toledano to purchase a portfolio of rent-stabilized apartments in
the East Village of New York City.
23. Based upon the terms of the loans which were made by defendant Madison Capital,
“Toledano was destined to default (as he did less than 10 months after purchase) when a reserve
fund covering initial interest payments ran out.” (See Objection, ¶ 7).1
24. In fact, “[a]fter Toledano defaulted by missing the interest payment due on July 1,
2016, his interest rate on all these loans jumped to Madison’s default interest rate of 24%.” Id.
25. In more fully describing defendant Madison Capital’s predatory loan to own business
model, the Attorney General in the Objection stated, in relevant part, the following:
Madison is a private equity firm that has developed a reputation for high-cost
equity-based loans, made based on the value of the collateral but without regard to
the ability of the borrower to repay the loan terms. See Mark Maurer, ‘Friend to
Some, Foe to Others,’ The Real Deal (Sept. 1, 2016), available at
https://therealdeal.com/issues_articles/friend-to-some-foe-to-others/. . . .
1
As will be demonstrated below, one of the techniques that defendant Madison Capital uses to manufacture defaults
on loans which it owns is to ensure that the interest reserve funds run out before the loans mature.
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Madison’s willingness to take over properties in default, as it is seeking to do
through these bankruptcy proceedings, is consistent with reports that Madison
engages in predatory ‘loan to own’ deals with unaffordable terms that it expects to
result in a foreclosure and property acquisition. See Mark Maurer, ‘Friend to
Some, Foe to Others,’ The Real Deal (Sept. 1, 2016), available at
https://therealdeal.com/issues_articles/friend-to-some-foe-to-others/. According to
this real estate industry news report, ‘limited liability companies affiliated with
Madison filed at least 50 foreclosure proceedings on more than 70 New York City
properties since 2012.’ See id. . . .
Other lenders recognize that this is Madison’s business model. Signature Bank,
for example, has engaged in numerous transactions with Madison, including by
purchasing a $70 million share of Madison’s debt on the East Village Portfolio.
According to internal documents provided to the NYAG, Signature agreed to
accept Madison’s loan to Toledano as collateral for its own $70 million loan to
Madison, in part because Signature recognized that Madison ‘would have no
problem foreclosing and or owning’ the Portfolio when the loan to Toledano
entered into default. See Signature Bank Loan Data File, Email from Joseph
Fingerman to Brian Twomey (April 27, 2016, 3:35 PM), attached as Ladov Decl.
Exhibit 3. (See Objection, ¶¶ 27, 31 & 32).
26. The defendants, in furtherance of defendant Madison Capital’s business model of
predatory “loan to own” lending practices have defrauded the plaintiffs, causing them millions in
damages as more fully set forth below.
27. Further, the fraudulent conduct of the defendants was morally outrageous and
reprehensible and exhibited wanton dishonesty for which punitive damages should be imposed
upon the defendants to deter them from engaging in such fraudulent conduct in the future.
II. The Hello Nostrand Project And The Loan
28. Plaintiff Hello Nostrand is the owner and developer of a real estate project consisting
of 209 luxury residential rental units, 15,000 square feet of community space, 134 parking spots,
and 50 storage units located at 1580 Nostrand Avenue, Brooklyn, New York (the “Nostrand
Project”).
29. On or about December 6, 2017, Plaintiff Hello Nostrand and non-party Prophet
Mortgage Opportunities LP (hereinafter alternatively the “Original Lender” or “Prophet
Mortgage”) entered into a loan agreement that would provide Plaintiff Hello Nostrand with
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financing for the construction of the Nostrand Project (the “Loan”), consistent with a letter of
intent dated October 31, 2017.
30. The Loan was for the sum of $63,000,000.00 and was trifurcated into a senior,
project, and building loan components, during the period of December 6, 2017 to March 6, 2020
(the “Term”).
31. The senior loan component (the “Senior Loan”) was in the sum of $17,730,000.00.
The Senior Loan was governed by a loan agreement (the “Senior Loan Agreement”) and a
corresponding promissory note (the “Senior Loan Note”), both of which are dated December 6,
2017.
32. The project loan component (the “Project Loan”) was in the sum of $5,500,000.00.
The Project Loan was governed by a loan agreement (the “Project Loan Agreement”) and a
corresponding promissory note (the “Project Loan Note”), both of which are dated December 6,
2017.
33. The building loan component (the “Building Loan”) was in the sum of
$39,770,000.00 and was governed by a loan agreement (the “Building Loan Agreement”) and a
corresponding promissory note (the “Building Loan Note”), both of which are dated December
6, 2017.
34. Each of the three loan agreements and the corresponding notes for the Loan provided
for interest on all amounts loaned at an interest rate of LIBOR (not less than 1.25%) plus the
LIBOR spread (8.25%).
35. To secure the notes, plaintiff Hello Nostrand executed a series of additional
documents, including (i) a Senior Loan Mortgage, Assignment of Leases and Rents, Security
Agreement and Fixture Filing dated December 6, 2017 and a Consolidation, Extension and
Modification of Senior Loan Mortgage, Assignment of Leases and Rents, Security Agreement
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and Fixture filing dated December 6, 2017 (the “Senior Mortgage”), which consolidated
Borrower’s pre-existing indebtedness under certain prior notes; (ii) a Project Loan Mortgage,
Assignment of Leases and Rents, Security Agreement and Fixture filing dated December 6, 2017
(the “Project Mortgage”); and (iii) a Building Loan Mortgage Assignment of Leases and Rents
Security Agreement and Fixture Filing dated December 6, 2017 (the “Building Mortgage”).
36. In addition, the notes were further secured by a Non-Recourse Carve-out Guaranty
(the “Guaranty”) by plaintiff Karp, dated December 6, 2017, which imposed liability upon him
for the obligations of plaintiff Hello Nostrand under the Loan Documents, including the Loan.
A. The Relevant Provisions of The Loan Documents
37. Pursuant to the terms of the Loan Documents, plaintiff Hello Nostrand was to make
monthly interest-only payments to the Lender on the first calendar date of each month (the
“Payment Date”), from December 6, 217 through and including the maturity date of March 6,
2020.2
38. The Loan Documents, namely the Senior Loan Agreement, Project Loan Agreement,
and Building Loan Agreement, required the Lender, prior to the Loan’s closing date of
December 6, 2017, to establish a payment reserve account (the “Payment Reserve Account”), for
the purpose of holding funds to be used to pay the monthly installment payments due on the
Loan.
39. Pursuant to the Loan Documents, the Payment Reserve Account was to be funded
with payment holdback proceeds from the Loan in the sum of $4,882,127.82 (the “Payment
Holdback Proceeds”), corresponding to the estimated sum of all interest payments due under the
Senior Loan Note, the Project Loan Note, and the Building Loan Note for the Term.
2
Lender was defined as Prophet Mortgage Opportunities LP in the Loan Documents. As such, the terms “Lender”
and “Original Lender” shall be used interchangeably as appropriate but in each instance the reference shall be to
Prophet Mortgage.
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40. The Loan Documents required the Lender to automatically disburse, on behalf of
plaintiff Hello Nostrand, funds on deposit in the Payment Reserve Account as necessary to make
the monthly installment payments due under the notes. Further, the Loan Documents required
the Lender to fund and disburse portions of the Payment Holdback Proceeds into the Payment
Reserve Account on plaintiff Hello Nostrand’s behalf, to ensure that the balance of funds in the
Payment Reserve Account remained equal to the minimum payment reserve balance of
$1,500,000.00 (the “Minimum Payment Reserve Balance”).
41. Moreover, pursuant to the Loan Documents, if the Lender determined that the funds
in the Payment Reserve Account were insufficient to fund the remaining monthly installment
payments at any point in time during the Term, plaintiff Hello Nostrand was to deposit funds into
the Payment Reserve Account sufficient to satisfy the remaining monthly installment payments
through the remaining Term.
42. The Loan Documents also provided that, an “Event of Default” included a default by
plaintiff Hello Nostrand in the performance of any provision of any note or mortgage or any
other Loan Documents, or a breach or failure to satisfy any term, provision, or condition under
any note, mortgage, or Loan Documents, with the specified grace period having expired without
the default having been cured. As to non-payments of interest on the Loan, the Loan Documents
specified a five (5) day grace period following written notice from the Lender to cure the Event
of Default.
43. According to the Loan Documents, if an Event of Default occurred and was
continuing, the Lender had certain remedies, including withholding loan advances; accelerating
the debt; and terminating its commitments under the Loan. Further, according to the Loan
Documents, upon the occurrence of an Event of Default, any amounts deposited into or
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remaining in the Payment Reserve Account could be withdrawn by the Lender and applied in
any manner as the Lender elected in its discretion.
44. In addition, the notes provided that upon the occurrence and continuance of an Event
of Default under the Loan, the entire outstanding indebtedness would become due and payable
and would bear interest at a rate of 24% per annum (the “Default Rate”)
B. The Purchase of The Loan By Defendant Madison Capital
45. On or about June 7, 2019, defendant Madison Capital purchased the Loan from the
Original Lender.3 In connection therewith, the Original Lender assigned the Loan Documents,
including the Senior Mortgage, the Project Mortgage, the Building Mortgage, the Senior Note,
the Project Note, the Building Note, and the Guaranty to defendant Madison Capital, through its
alter ego, defendant1580 Nostrand Ave.
46. Accordingly, defendant Madison Capital through defendant1580 Nostrand Ave
assumed all obligations of the Original Lender pursuant to the Loan Documents.
C. The Defendants’ Scheme to Frustrate Plaintiffs’ Ability to Complete
The Nostrand Project and To Manufacture a Default Under the Loan
47. Following defendant Madison Capital’s purchase of the Loan, plaintiff Karp, on
behalf of plaintiff Hello Nostrand, communicated with defendant Madison Capital through
defendants Zegen and Gormley on at least three separate occasions in June 2019, requesting a
meeting to discuss the Loan and to secure a loan advance.
48. On July 1, 2019, plaintiff Karp, on behalf of plaintiff Hello Nostrand, met with
defendants Zegen and Gormley at defendant Madison Capital’s offices.
49. During that meeting, defendants Zegen and Gormley, acting on behalf of defendants
Madison Capital and 1580 Nostrand Ave, represented to plaintiff Karp that they would assist him
3
As discussed below, defendant Madison Capital engaged in double dealing and alleged fraudulent activities when
it purchased the Loan from Prophet Mortgage.
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and plaintiff Hello Nostrand with completing the Nostrand Project, would work with them to
upsize the Loan, and would provide them with the requested loan advance.
50. During that meeting, defendants Zegen and Gormley, acting on behalf of defendants
Madison Capital and 1580 Nostrand Ave, further represented to plaintiff Karp that they would
draw from the Loan’s Payment Reserve Account to satisfy the monthly installment payments on
the Loan (as the Original Lender had done) and that plaintiff Hello Nostrand would not need to
add any additional funds to the Payment Reserve Account until the Loan was upsized.
51. These representations by defendants Zegen and Gormley were false and fraudulent in
that they had no intention of working with plaintiffs Karp and Hello Nostrand to upsize the Loan
or with assisting them with completing the Nostrand Project.
52. Instead, defendants Zegen and Gormley intended to engage in a fraudulent scheme of
delaying the funding of the Nostrand Project to prevent its timely completion to manufacture an
alleged default by plaintiff Hello Nostrand on the Loan; to trigger millions of dollars in default
interests at the default interest rate of 24%; and ultimately to obtain ownership of the Property
with the commencement of a foreclosure proceeding.
53. Plaintiff Karp was not aware that the representations of defendants Zegen and
Gormley at the meeting on July 1, 2019 were false and fraudulent and that the representations
that defendants Madison Capital and 1580 Nostrand Ave would timely fund the Nostrand Project
and upsize the Loan were part of a fraudulent scheme designed to manufacture an alleged default
by plaintiff Hello Nostrand on the Loan, and to permit defendants Madison Capital and 1580
Nostrand Ave to charge millions of dollars in default interest at the default interest rate of 24%
on the Loan.
54. Therefore, plaintiffs Karp believed that these representations were true, and he relied
upon them to his detriment.
13