NNED ON 1151200~ SUPREME COURT OF THE STATE OF NEW YORK - NEW YORK COUNTY MARWN G, I)\m~i;8~ PRESENT: PART Justice $q MOTION DATE -vMOTION SEQ. N O , MOTION CAL. N O . The following papers, numbered 1 to were read on this motion to/for Notice o f Motion/ Order to Show Cause Answering Affidavits - Exhibits - Affidavits - - Exhibits ... ,- Replying Affidavits Cross-Motion: Yes 1 1 No Upon the foregoing papers, it is ordered that this motion Check one: & FINAL DISPOSITION Check if appropriate: I PAPERS N U M B E R E D 4 kAq/vm 15 a NON-FINAL DISPOSITION DO N O T POST 3 REFERENCE , OF TlIE STATE OF N E W Y O N , by ELIOT Sl-’ITZEK,ATTORNEY GENERAL OF THE SI’ATE OF NEW YORK (“the OAC;”), and dcfeendants Isaac Katz (“Katz”) and Yoel Silberstciu (“Silbcrstein”). WHEREAS, Katz aiid Silberstcin have been ciigagcd in the bLisiiiess of pi-chasing and selling I-ea1estaie in New York since at lcast 2002; WHEREAS, Katz aiid Silber-slein ai-e subject to the prdiibitions against fraud iniposed iindci- New York General Uusiness TAW 3 349 and New York Executive Law $ 63( 12), atid the prohibitions against disci.iiiiination set forth in New Yoi-k Executive Law 5 29O(S) and New York Civil Rights Law $ 40-c; WHEREAS, the OAG reccived complaints that Kalz,, Silberstein, and otlicrs werc engaged ill ; I widc-raricjng mortgage fi-aud scheme which resulted in substantial h a m to minority -1- boil-ow ers and art i iici all y i ii fl;i 1ed res i dent i a 1 s;i I c s p I-i ces in ni i nori t y 11ei g11bo rho o ds ; WHEREAS, the OAG coiiiiiicnced, through tlic liling of a complaint, the abovccaptioned lawsuit in the Supreme Coiii-t of the State of New York, in New York County, scckirig injunctive and monetary relief for alleged violations of the aforenientioncd statutcs by Katz and S i 1bcrs tci t i ; and WHEREAS, Katz and Silberstein havc denied any wroiigdoiiig or liability in this action; and WHEREAS, the OACi, Kat;., and Silbcrstein desire to avoid incurring any Iurther limc, costs and expenses and the unccr-tainty of litigation and seck to Tully and linally resolve all niattcrs embraced in this action as between the OAG and Katz, and ;is bctwccn tlic OAG and Silberstein, without resort lo flirthcr litigation; and WHEREAS, in consideration o l the covenants and undcrtakiiigs sct forth hereiii and intending to be legally bound thereby, the OAG, on behalf of itself and the plainti~Ts,KatL and Silberstein, and cach of theni, have agreed to the terms of this Order; NOW, TIIEKEFORE, it is hereby Ordered, Adjudged and Decreed during thc tcrni of this Order as follows: PART ONE: DEFTNl‘l’IONS As used throughout this Order, the following terms shall havc thc following meanings: 1.1 ‘lhe tcrni “Order” means this Order on Consent. 1.2 ‘l’he term “Coiii-t” means thc Supremc Court of the State of New York, in New York County, that shall have jurisdiction over this Order and thc partics to this Order. 1.3 The lemi “Elkclive Date” means thc date this Order is fully executed by the parties. -2- I .4 The tcnri “Sellers” iiicaris Tsaac Katz, Yoel Silbcrstcin, ;ind/or any coi-poratioii, pal-tnership or otlicr entity controllcrl 01- owncd, in whole or pait, by Katz and/or Si 1bers t ein . PART TWO: INJUNCITIVE RELIEF 2.1 The Sellcrs shall be and hereby are pemianciitly enjoined to comply fiilly with the obligations, teniis and conditions of Ncw Yoi-k General Rusiness Law 3 349, New York Execulive Law 8 296(5) and Ncw York Civil Rights Law t): 40-c. 2.2 For a period ~ ~ ‘ ~ c years ~ L I I following - the Effective Datc, the Sellers may not sell aiiy real pi-oper-tywithin New Yorlc State, other than their personal residences, unless cadi of thc f‘ollowing coiiditions is met: h e real estate sale must be an a i m ’ s length transaction in which the Sellcrs do riot pai-ticipatc in aiiy way in rccommending, 1-eferring,or securing mortgage brokers, lcndcrs, attorneys, contractors, or any other scrvice providcrs Cor actual or prospective purchasers; the Scllcrs shall not advise a c t d or prospectivc purchasers ahout loan products, loan programs, or lenders, or 111 any way assist such purchascrs in obtaining or sccuri11g finaiici ng ; and the Scllcr-s shall iiot engage in any real estate sale in which any oftlie following individuals par-ticipates iii any way: Devon C’larke, Esq., Bcnzion Frankel, Esq., Joseph ‘l’reff, Esq., Rcphoel A. Weitmer, Esq., or any attoniey practicing with any of thesc individuals; Shaya Saks; Theodore Welz; aiid hmenophis Alkyne. -3- PART T H R E E : M O N j 3 A R Y RELIEF 3.1 Katz and Silberstcin shall pay the collective slim of $1,500,000, with Katz and Silberstcin each rcsponsiblc for $750,000 of this SLIIX. Such monctary relief‘will be used lo providc reslitution to boimwers who liave filed o r shall lile coniplaints with thc OAG. Such flitids shull be distributed by the OAG in ;1 Fair and equitable manner as the OAG dccrns appropriatc. Any funds remaining a k r rcstitution is paid shall bc paid to the State of New York as penaltics and costs of the investigation. 3.2 Katz and Silbei-stein shall satisfjr this provision in nine installmcnts accoi-ding to the following schedule: 3.3 $250,000 payable within ten business days o the Mfective Date; $156,250 payable within six months of thc Effective Datc; $1 56,250 payable within 12 months of thc EPkctive Date; $156,250 payable within 18 months oftlie Effective Date; $156,250 payable within 24 months of the Effectivc Datc; $156,250 payable within 30 months of tlic Effkctive Date; $1 56,250 payable within 36 months of the Ixffective Date; $1 56,250 payable within 42 months of tlic Elkctive Date; and $1 56,250 payable within 48 months of tlic EIkctive Datc. Payments will be in tkc 1ili-m of a certified check payable to the order of “Tlic State 01 New York” aiid forwarded to the Officc oIAttorncy General, Civil Rights Bureau, 120 Broadway, Ncw York, New York 10271, Attcntion: Bureau Chief; Civil Rights Burcau, -4- PA KT Fc3 LJ R : IN DE P EN DENT 4.1 M 0N I 7 ’ 0K The OAG will appoint an inciepenclcnt i i ~ ~ ~ i i i(“Monitor-”) tor with expertise in I-ea1estate transactions to riionitor conipliance with the tenns of this Order for a period of four years following the Elkctive Date. 4.2 ‘I’he Monitor shall have access to any and a11 documeiits the Monitor deems necessary to ensure compliancc with this Order, including those 1-equired to be mairitaincd pursuant to Part Six ofthis Or-dcr. In addition, within ten business days of a request by tlic Monitor, Katz and Silberstein shall make themselves arid their agciits available for interviews. 4.3 Katz and Silberstein shall pay foi- the hill cost oL‘ the Monjtor, including expenses, up to a maxim u 111 o f $40,000. YAKT FIVE: REPORTING 5.1 Within six months after the EKectivc Date, and cvery six months thereafter for a penod 01’ roLLt- years fcjllowing the Erfective Date, Katz and Silbcrstcin shall provide lo the OAG a written report idcnti fying: the address of each property sold during the prior six-monlli period by thc Scllcrs; the date o f such sale; and thc sales price; tlic iianic, address, and tclcphone nunibcr of(1) the seller listed OII the deed; (2) tlic scllcr’s attomcy; (3) the purchaser; and (4) the purchaser’s attomey; the name, address, and telephone number of the mor-tgage broker arid thc compariy lor which he or she woi-ks; the idcntity of the lcndcr and the name, address, arid telephone number of the lender’s attorney or reprcscntativc at closing; -5- (e) tlic iiaiiic, adrlrcss, and telephoiic nwnbcr of any individual or cntily who referrcd an aclual or prospective purcliascr to the Sellers; thc ariiount and/or nature of any fecs or consideration paid to such ii-tdividual or entity in connection with the sale; and a description o U aiiy noii-rcfcrral services provided by that individual or entity in connection with the sale; and (f) thc datc tlic property was firs1 acquired by tlic Sellers and tlic price paid by lhe Sellers for such property at that time. 5.2 Within 2 1 days after receiving a wi-ittcii request from the OAG, Katz and Silberstcin shall provide to h e OAG any material the OAG believes is related to conipliance with this Order, including documents Irom the real estate transactlons disclosed pursuant to Section 5.1. This Order does not i n any way impair or affect the nght ofthe CIAG to obtain inatcrial from Katz and Silbcrstein piirsiiant to subpoena. PART SIX: IIEC'OllnKEEPING 6.1 For a pcriod of four ycars following the Effective Date, for each proper-ty sold by tlic Sellers, KatL and Silberstcin shall mairitaiii tlie following rccords and information: (a) tlic closing rccord lilc lor the sale, including but iiot limited to the executed contract of sale, deed, H'CILI- 1 settlenicrit statement, and tax and transfer d ocu iiient s ; (13) copics of checks arid rcccipts reflecting any and all paymenls fr-om the purchascr to the Sellers, including deposits, down payments, closing; arid any paymerits niade at copies of baiik stntemenls and other records reflecting any and all deposits o f paynicnts li-om the purchaser to he Sellcrs; copies oLchecks and other records rctlccting any and all payments hiii the Scllei-sto individuals or entities who i-eIer-red actual or prospective purchasers to the Scllcrs; and any records neccssary to preparc thc repor-1s required by Section 5.1 of this Order, PART S BV EN : A CC-0IJ N ‘I I N G 7.1 Within seven bUSiTleSS days of thc EI’lctive Datc, Kat7 and Silberstein will provide lhe OAG with a written report idcntiiying: (a) the address of each property sold from Januaiy 1, 2002, through the bffectivc Date by the Sellers; 7.2 (b) the namc(s) oPthe seller(s) as listed on tlic deed for each such propcity; (c) the iiarne(s) oU the purchascr(s); and (d) the date of the transaction. Within 21 days after rccciviiig a writtcn request from the OAG, Katz and Silbcrstein shall providc to the OAG any inaterial from the rcal estate trimsaclions discloscd pursiiant to Section 7 .I . ‘l’hisOrdcr does not in any way inipair or affect the right ofthe OAG to obtain material from KatL arid Silbersleiri pursuant to subpoena. -7- PAR'I' EIGHT: JLJKISDICTTQN ANT) OTHER PROVISIONS 8.1 This Order, when fully cxccuted aiid pcrfoimcd by Katz and Silbcrstein to the rcasoiiable satisfaction orplaintifk, will resolvc any and all claims against Katz and Silbcrstciii that were 1-aised in the complaint filed by pliii~itirkin this action, including but not liniitcd to claims relatcd to the real cstate transactions disclosed pursuant to Section 7.1 or on material provided to the OAG pursuant to Section 7.2. 8.2 Nolwithstandiiig any provision or this (Ilrdel-to lhc contrary, plaintifl's may, in thcir sole ciiscretion, grant writtcn cxtciisio~isof time for Katz and Silbcrstein to comply with any provision of this Order. 8.3 The signatories to this Order warrant and reprcsent that they are duly authorized to execute this Order and that lhey have the authority to takc all appropriatc action requircd or pcniiitted to be taken pursuant to the Order lo cffcctuate its terms. 8.4 This Order may be executed iii one or- more countciparts, all of which shall be dcaned one and thc same instrumcnt. 8.5 This Order shall be binding upon, aid inure to thc benefit of, thc successors and assigns of the parties hercto, provided, however, that 110 assignment by any party hereto shall operate to relievc such parly of its obligations hereundcr. 8.6 All ofthc teims oftliis Order- arc contractual and not merely recitals, and none may be amcndcd or modified except hy a writing executed by all partics liereto approvcd by the Court, or with Court approval. -8- L 8.7 ‘I’hc C‘OLII-~ shall retain jui-isdiction ovct- Ilic parties and thc niattcr, and shall retain thc power to order all applicable ccliiitablc remedies to c1is~ii-ecompliancc with this Ort-ler, including but not limited to contempt, ibr ;I period of 5 0 months. 8.8 This Order supersedes and rcnders null and void any and all written or oral piior iindcrtakings or agrccmciits betwecii the partics regarding the subject malter hereof. 8.9 The parties hcrcby waive and shall not have any I-ight to appcal any of the terms ofthis Order or in any way clialleiige the validity of any of the t e r m orthis Order in any fnnu-ti. 8.10 If any orthe provisions, terms, or clauses ofthis Order arc declared illegal, unenforccable, or ineffectivc in a legal forum, lhosc provisions, tcrnis, and clauses shall be dccmed severablc, such that all other provisions, terms, and clauses of this Ordci- shall remain valid and binding on the parties. 8.1 1 The pai-ties may seck to enforce this Order by motion beforc the Court lo the full cxteiit of the law, provided however, in the event of a dispiitc among the partics r-cgarding any issue arising hcreLiiider, the parties shall attempt in good .Faith to resolvc the dispute beforc seeking thc Court’s intervention. 8.12 Nothing in this Ordcr is intended to confer any right, remcdy, obligation or liability upon any pcrson or entity other than the parties hcrcto and their respeclive successors. 8.13 Thc iise of thc singular fonn of any word includes thc plui-a1 and vicc vcrsa, -9- 8.14 All comniunications and notices regirding this Order shall bc sent by first class mail arid facsimile, i f 2 5 pages or lcss in leiigth, lo h e following addrcsscs or to such other addresses as tlic partics may dcsignatc: P 1 a inti lfs D c I'eiidant s Natalie R. Williams Rurcaii C h i d Civil Rights Bureau Office of tlic Attoi-ncy (l;ciicral 120 Broadway, 3rd Floor New York, Ncw York 10271 tcl. (212) 416-8250 fax (212) 416-8074 Steven D. C'ohn, Esq. Goldberg gL Colin, LLP 16 Court Street, Suite 2304 Brooklyn, New York 11241 tcl. ( 7 18) 875-2400 fiix (718) 858-2101 1 Iarolcl Levy, Esq. Flamhaft Levy Kaiiiins Uirsch k Rendeiro 1,0 Court Street, Suite 3301 Brooklyn, New York 11241 [el. (718) 237-1900 fax (718) 624-5626 - 10- lYU~’-#Ll-duulb 1 f .I1 P. 12 NYh I J t Y H K I M t N I Uk I-HW IN WITNESS WHEREOF, plaintiffs and defendants Katz and Silberstein, intadins to bc legally bound hereby, have executed this Order on Cmscnt on the date written below. ELIOT SPITZER New York State Attorney General 120 Broadway Isaac Kat2 By: I I Dated: Novmibcra, 2006 Brooklyn, New York 3ureau Chief Civi I Rights Bureau Yoel Silberstein 94 Ross Street Brooklyn, New York 1 1211 Dated: N o v e m b c a , 2006 New York, New York Dated: Novembad-’ 2006 Brooklyn, New York -1I- -