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FILED: NEW YORK COUNTY CLERK 06/02/2023 05:50 PM INDEX NO. 151261/2023
NYSCEF DOC. NO. 28 RECEIVED NYSCEF: 06/02/2023
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NEW YORK
- - - - - - - - - - - --------------- - - __________ X
BOARD OF MANAGERS OF THE 610 PARK :
AVENUE CONDOMINIUM,
Plaintiff,
v.
16EF APARTMENT, LLC, MARA
DOE"
ENTERPRISES, AND "JOHN No. 1
DOE"
through "JOHN No. 15, the true name of
said defendants being unknown to plaintiff, the
Index Nos. 151261/23
parties intended to be those persons having or
an interests in the mortgaged premises (Kahn, J.)
claiming
as described in the complaint by virtue of being
tenants, or occupants, or judgment-creditors, or
lienors of any type of nature in all or part of
said premises.
Defendants.
And
Banc of California, N.A.,
Proposed Intervenor
Plaintiff
AFFIDAVIT OF GREGORY A. ELLIS
I, Gregory A. Ellis, declare as follows:
l. I am of counsel at the law firm Winston & Strawn LLP and counsel for Proposed
Intervenor Plaintiff Banc of California, N.A. ("Banc"). I am a member in good standing of the
State Bar of California. I am making this declaration based on my personal knowledge of the facts
set forth below and, if called as a witness, could and would testify competently thereto, under oath.
2. As noted in the supporting memorandum and the concurrently-filed declaration of
Zoila Price, Banc did business with Sprout Mortgage Corporation, Sprout Mortgage LLC, Sprout
Mortgage Asset Trust, and Recovco Mortgage Management (collectively, the "Sprout Entities"),
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NYSCEF DOC. NO. 28 RECEIVED NYSCEF: 06/02/2023
and with Michael Strauss ("Strauss"), the principal of the Sprout Entities. Strauss is also the
managing member of Defendant 16EF Apartment LLC.
Entities'
3. In July 2022, the Sprout Entities abruptly ceased operations. The Sprout
shutdown was covered prominently in the financial press.
4. Shortly after the Sprout Entities shut down, Strauss attempted to start a new
mortgage company called Smart Rate Mortgage. Again, the financial press covered this event.
Attached as Exhibit A is a true and correct copy of an article from Mortgage Wire entitled Did
N chael Strauss, accused of fi·aud, just start a new mortgage company?, dated January 19, 2023
and first retrieved February 28, 2023. This article was gathered by Winston personnel under my
supervision.
Entities'
5. The Sprout shutdown triggered multiple lawsuits, many of them naming
Strauss as well, variously alleging that the Sprout Entities defaulted on purchases of mortgages,
reneged on purchase agreements, failed to satisfy deficiencies to other mortgage originators, failed
to pay rent, and failed to pay its employees. Winston's research has identified seventeen lawsuits
naming the Sprout Entities and/or Strauss as a defendant.
6. In communications with Strauss and his counsel, Banc and I understand that
Strauss'
primary asset is a penthouse condominium located at 610 Park Avenue PH16E, New
York, NY 10065 (the "Park Avenue Penthouse"). Winston performed a title search of the Park
Avenue Penthouse, which confirms that Strauss is the ultimate owner of the Park Avenue
Penthouse. Specifically, the title search indicated that title to the Park Avenue Property is held by
Defendant 16EF Apartment LLC, and that Strauss is the managing member of 16EF Apartment
LLC. Attached as Exhibit B is a true and correct copy of a Real Property Transfer Report for the
Park Avenue Penthouse, dated February 14, 2020, which Strauss certified in his capacity as
Managing Member of 16EF Apartment, LLC.
7. On May 4, 2023, counsel for Strauss informed me that the Board of Managers was
seeking arrears against Apartment 16EF, LLC, which owns the Park Avenue Penthouse and of
which Strauss is the managing member, and that a hearing was scheduled for May 17, 2023.
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Through its ensuing investigation later that day, Winston's research identified the above-captioned
action as the litigation counsel for Strauss had referred to. This marked the first time Banc became
aware of the instant action. Counsel for Strauss has also informed me that he does not represent
Strauss in relation to the above-captioned action.
8. Strauss has put the Park Avenue Apartment on the market, with a current asking
price of over $22.5 million. Although a sale of the Park Avenue Penthouse at the $22.5 million
price would be sufficient to satisfy all the amounts owed to Banc, and despite Banc's demands for
payment, Strauss has refused to agree that he would use the proceeds of the sale to make good on
his obligations under the personal guaranty he had executed in Banc's favor (the "Personal
Guaranty").
9. Instead, Strauss has taken the position that he has tens of millions of dollars in
obligations to other parties (independent of the amounts sought in litigation), including outstanding
tax obligations relating to the Sprout Entities, which exceed the value of his assets and which
preclude him from paying Banc in full, Banc further understands that the Sprout Entities have
insufficient funds to fully satisfy the obligations demanded in the cases against them.
10. After Strauss breached Personal Guaranty, Banc filed suit against Strauss on
November 2, 2022, in an action entitled Banc of California, N.A. v. Planet Home Lending LLC et
al.(the "Banc Action"). The case was initially filed in the United States District Court for the
Central District of California, and was ultimately refiled in the Superior Court of the State of
California, County of Orange. On April 2, 2023, Banc moved for a preliminary injunction in the
Banc Action. Attached as Exhibit C is a true and correct copy of the preliminary injunction,
issued by the California Superior Court on May 1, 2023, that bars Strauss from effecting the sale
of the Park Avenue Penthouse.
11. Attached as Exhibit D is a copy of Banc's proposed complaint.
12. No prior motion for the relief requested herein has been made.
3
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FILED: NEW YORK COUNTY CLERK 06/02/2023 05:50 PM INDEX NO. 151261/2023
NYSCEF DOC. NO. 28 RECEIVED NYSCEF: 06/02/2023
I declare under penalty of under the law of the State of New York that the
perjury
foregoing is true and correct.
Executed on this 1st day of June, 2023, at San Pedro, California.
Gregory (A
Subscribed and sworn be e me
this 1st day of June, 3
Notary Pu
4
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NYSCEF DOC. NO. 28 RECEIVED NYSCEF: 06/02/2023
CALIFORB IA JURAT WITH AFFIANT STATEMENT GOVERNMENT CODE § 8202
See Attached Document (Notary to cross out IInes 1-6 below)
See Statement Below (Lines 1-6 to be comple d only by document signer[s], not Notary)
3
Signature of Document Signer No. 1 Signature of Document Signer No. 2 (If any)
Anotarypublic or otherofficer completing this certificate verifles onlytheldei1tjty of theindividualwhosigned the document
to which this certificate Is attached, and not the truthfulness, accuracy, or validity of that document.
State of California Subscribed and sworn to (or affirmed) before me
County of __ on this day of ( / )'d . 20
by Date Month Year
PATRICE 0AlYE
- (and (2) )
Notary Public California
LosAngelesCounty Name of Signer
Cornrnission# 2395473
My Cornrn.ExpiresMar 2, 2026 proved to me on t e basÊ; of satisfactory evidence to
. . ,_ .... - - - - - - - - - the perso who appeared before me.
Signature
Place Notary Seal and/or Stamp Above Signature of Notary Publlc
OPTIONAL
Completing this information can deter alteration of the document or
fraudulent reattachment of this form to an unintended document.
Description of Attached Document
Title or Type of Documen .
Document Date: Number of Pages:
Signer(s) Other Than Named Above:
©2017 National Notary Association
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FILED: NEW YORK COUNTY CLERK 06/02/2023 05:50 PM INDEX NO. 151261/2023
NYSCEF DOC. NO. 28 RECEIVED NYSCEF: 06/02/2023
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Preview
FILED: NEW YORK COUNTY CLERK 06/02/2023 05:50 PM INDEX NO. 151261/2023 NYSCEF DOC. NO. 28 RECEIVED NYSCEF: 06/02/2023 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK - - - - - - - - - - - --------------- - - __________ X BOARD OF MANAGERS OF THE 610 PARK : AVENUE CONDOMINIUM, Plaintiff, v. 16EF APARTMENT, LLC, MARA DOE" ENTERPRISES, AND "JOHN No. 1 DOE" through "JOHN No. 15, the true name of said defendants being unknown to plaintiff, the Index Nos. 151261/23 parties intended to be those persons having or an interests in the mortgaged premises (Kahn, J.) claiming as described in the complaint by virtue of being tenants, or occupants, or judgment-creditors, or lienors of any type of nature in all or part of said premises. Defendants. And Banc of California, N.A., Proposed Intervenor Plaintiff AFFIDAVIT OF GREGORY A. ELLIS I, Gregory A. Ellis, declare as follows: l. I am of counsel at the law firm Winston & Strawn LLP and counsel for Proposed Intervenor Plaintiff Banc of California, N.A. ("Banc"). I am a member in good standing of the State Bar of California. I am making this declaration based on my personal knowledge of the facts set forth below and, if called as a witness, could and would testify competently thereto, under oath. 2. As noted in the supporting memorandum and the concurrently-filed declaration of Zoila Price, Banc did business with Sprout Mortgage Corporation, Sprout Mortgage LLC, Sprout Mortgage Asset Trust, and Recovco Mortgage Management (collectively, the "Sprout Entities"), 1 of 7 FILED: NEW YORK COUNTY CLERK 06/02/2023 05:50 PM INDEX NO. 151261/2023 NYSCEF DOC. NO. 28 RECEIVED NYSCEF: 06/02/2023 and with Michael Strauss ("Strauss"), the principal of the Sprout Entities. Strauss is also the managing member of Defendant 16EF Apartment LLC. Entities' 3. In July 2022, the Sprout Entities abruptly ceased operations. The Sprout shutdown was covered prominently in the financial press. 4. Shortly after the Sprout Entities shut down, Strauss attempted to start a new mortgage company called Smart Rate Mortgage. Again, the financial press covered this event. Attached as Exhibit A is a true and correct copy of an article from Mortgage Wire entitled Did N chael Strauss, accused of fi·aud, just start a new mortgage company?, dated January 19, 2023 and first retrieved February 28, 2023. This article was gathered by Winston personnel under my supervision. Entities' 5. The Sprout shutdown triggered multiple lawsuits, many of them naming Strauss as well, variously alleging that the Sprout Entities defaulted on purchases of mortgages, reneged on purchase agreements, failed to satisfy deficiencies to other mortgage originators, failed to pay rent, and failed to pay its employees. Winston's research has identified seventeen lawsuits naming the Sprout Entities and/or Strauss as a defendant. 6. In communications with Strauss and his counsel, Banc and I understand that Strauss' primary asset is a penthouse condominium located at 610 Park Avenue PH16E, New York, NY 10065 (the "Park Avenue Penthouse"). Winston performed a title search of the Park Avenue Penthouse, which confirms that Strauss is the ultimate owner of the Park Avenue Penthouse. Specifically, the title search indicated that title to the Park Avenue Property is held by Defendant 16EF Apartment LLC, and that Strauss is the managing member of 16EF Apartment LLC. Attached as Exhibit B is a true and correct copy of a Real Property Transfer Report for the Park Avenue Penthouse, dated February 14, 2020, which Strauss certified in his capacity as Managing Member of 16EF Apartment, LLC. 7. On May 4, 2023, counsel for Strauss informed me that the Board of Managers was seeking arrears against Apartment 16EF, LLC, which owns the Park Avenue Penthouse and of which Strauss is the managing member, and that a hearing was scheduled for May 17, 2023. 2 2 of 7 FILED: NEW YORK COUNTY CLERK 06/02/2023 05:50 PM INDEX NO. 151261/2023 NYSCEF DOC. NO. 28 RECEIVED NYSCEF: 06/02/2023 Through its ensuing investigation later that day, Winston's research identified the above-captioned action as the litigation counsel for Strauss had referred to. This marked the first time Banc became aware of the instant action. Counsel for Strauss has also informed me that he does not represent Strauss in relation to the above-captioned action. 8. Strauss has put the Park Avenue Apartment on the market, with a current asking price of over $22.5 million. Although a sale of the Park Avenue Penthouse at the $22.5 million price would be sufficient to satisfy all the amounts owed to Banc, and despite Banc's demands for payment, Strauss has refused to agree that he would use the proceeds of the sale to make good on his obligations under the personal guaranty he had executed in Banc's favor (the "Personal Guaranty"). 9. Instead, Strauss has taken the position that he has tens of millions of dollars in obligations to other parties (independent of the amounts sought in litigation), including outstanding tax obligations relating to the Sprout Entities, which exceed the value of his assets and which preclude him from paying Banc in full, Banc further understands that the Sprout Entities have insufficient funds to fully satisfy the obligations demanded in the cases against them. 10. After Strauss breached Personal Guaranty, Banc filed suit against Strauss on November 2, 2022, in an action entitled Banc of California, N.A. v. Planet Home Lending LLC et al.(the "Banc Action"). The case was initially filed in the United States District Court for the Central District of California, and was ultimately refiled in the Superior Court of the State of California, County of Orange. On April 2, 2023, Banc moved for a preliminary injunction in the Banc Action. Attached as Exhibit C is a true and correct copy of the preliminary injunction, issued by the California Superior Court on May 1, 2023, that bars Strauss from effecting the sale of the Park Avenue Penthouse. 11. Attached as Exhibit D is a copy of Banc's proposed complaint. 12. No prior motion for the relief requested herein has been made. 3 3 of 7 FILED: NEW YORK COUNTY CLERK 06/02/2023 05:50 PM INDEX NO. 151261/2023 NYSCEF DOC. NO. 28 RECEIVED NYSCEF: 06/02/2023 I declare under penalty of under the law of the State of New York that the perjury foregoing is true and correct. Executed on this 1st day of June, 2023, at San Pedro, California. Gregory (A Subscribed and sworn be e me this 1st day of June, 3 Notary Pu 4 4 of 7 FILED: NEW YORK COUNTY CLERK 06/02/2023 05:50 PM INDEX NO. 151261/2023 NYSCEF DOC. NO. 28 RECEIVED NYSCEF: 06/02/2023 CALIFORB IA JURAT WITH AFFIANT STATEMENT GOVERNMENT CODE § 8202 See Attached Document (Notary to cross out IInes 1-6 below) See Statement Below (Lines 1-6 to be comple d only by document signer[s], not Notary) 3 Signature of Document Signer No. 1 Signature of Document Signer No. 2 (If any) Anotarypublic or otherofficer completing this certificate verifles onlytheldei1tjty of theindividualwhosigned the document to which this certificate Is attached, and not the truthfulness, accuracy, or validity of that document. State of California Subscribed and sworn to (or affirmed) before me County of __ on this day of ( / )'d . 20 by Date Month Year PATRICE 0AlYE - (and (2) ) Notary Public California LosAngelesCounty Name of Signer Cornrnission# 2395473 My Cornrn.ExpiresMar 2, 2026 proved to me on t e basÊ; of satisfactory evidence to . . ,_ .... - - - - - - - - - the perso who appeared before me. Signature Place Notary Seal and/or Stamp Above Signature of Notary Publlc OPTIONAL Completing this information can deter alteration of the document or fraudulent reattachment of this form to an unintended document. Description of Attached Document Title or Type of Documen . Document Date: Number of Pages: Signer(s) Other Than Named Above: ©2017 National Notary Association 5 of 7 FILED: NEW YORK COUNTY CLERK 06/02/2023 05:50 PM INDEX NO. 151261/2023 NYSCEF DOC. 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