Danskers arrested for co-op fraud - Norman and Gloria Dansker charged with grand larceny and real estate fraud in New York Supreme Court in conversion of cooperative apartments

Real Estate Weekly, Dec 2, 1992 by Lois Weiss

Converter Norman Dansker and his wife, Gloria, answered a 46-count indictment last week, charging them with grand larceny and real estate fraud and scheming to defraud and offering a false instrument for filing. In New York State Supreme Court.

The couple was released on a $500,000 personal recognizance bond.

As the principal owners of Coronet Properties, the Danskers had converted more than 7,000 apartments worth $1 billion by their estimate in the heyday of the 1980's and allegedly commenced these actions when they were actively involved in 28 New York co-op properties comprising more than 4,000 units.

The two are alleged to have diverted funds from nine buildings to their own use and did not pay the underlying mortgages. The co-ops were unaware the mortgages were going unpaid until lenders began foreclosure actions and unit owners were forced to come up with duplicate mortgage payments.

The co-ops are: 127 West 79 Street (Clifton House), 51 Fifth Avenue, 405 West 57th Street, 74 West 68th Street (The Morleigh), 170 Second Avenue and 157 West 79th Street all in Manhattan; the Skyview in Riverdale; the LeHavre in Whitestone and One Ascan Avenue in Forest Hills.

Attorney's Gerald L. Shargel and Gerald B. Lefcourt released a statement on behalf of the Dansker's denying all of the allegations.

Like other converters, the Danskers were caught up in a heady time when prices were rising and it seemed as if everyone was trying to buy an apartment. Multi-million dollar loans were taken to refurbish converted buildings before a huge number of apartments flooded the market and prospective purchasers began fearing for their jobs.

Late last month, the First New York Bank for Business, which was a primary financing vehicle for Coronet, and on whose board Dansker sat for a time, was taken over by the FDIC.

The statement of the Danskers' attorneys noted the couple was being made "scapegoats" for a failing real estate industry and market.

The Danskers are also charged with continuing to sell co-op units while concealing Coronet's precarious financial situation to buyers.

Calling their actions an "elaborate shell game," Attorney General Robert Abrams said in a statement, "The Danskers allegedly put thousands of co-op owners at financial risk by pocketing money earmarked to pay off nine mortgages."

Coronet Properties Company, Coronet Realty Company, and Skyview's general partnership, were also named in the indictments.

Frederick K. Mehlman, former chief of the Attorney General's Financing Bureau said, "I'm pleased that the Attorney General's enforcement efforts are aggressively pursing actions that put dozens of co-ops and condos at

While industry experts were generally sympathetic that Gloria Dansker had been indicted, Mehlman, who is now a partner with Wolf Haldenstein Adler Freeman & Herz, warned, "These folks signed certification forms saying they have read and are familiar with the offering plans and should take these responsibilities seriously."

Shargel and Lefcourt called Mrs. Dansker's role in the indictment simply that of a hostage.

Norman Dansker, charged with a Class C felony, could face up to 15 years in prison and the partnerships could be liable for more than $5 million. Gloria Dansker could face up to 12 years in prison.

"This sends a very powerful message to sponsors and the industry," Mehlman said, "that their responsibilities are taken seriously and that the Attorney General will enforce the Martin Act civilly or criminally."

Assistant Attorney General Stephen Dobkin and Rhonda Greenstein, supervised by Gary Connor, chief of the Real Estate Financing Bureau, are handling the matter for the Attorney General's office.

"It's a real tragedy," said one co-op attorney who has tangled with the Danskers in the past. "It's not the kind of thing that one can take any pleasure from."