Daily Archives: November 14, 2008

Old home week

Another former Greenwich resident and current mortgage fraud criminal, Jimmy Licata, has turned up in the news – actually,it’s old news, from a year ago, but I just stumbled across the story of his sentencing for duping some lender out of $19 million. Jimmy was lucky – I always cautioned my clients against committing the crime de jure – and today, bank fraud’s it. A year ago the same act garnered just a day in jail and four years probation. Lucky Jim.

Yes, that’s Licata Terrace off of Valley Road and the unfinished, abandoned mansion on Meeting House Road? Also Jim’s. Or it was-by now, it must belong to some bank or other creditor; given its state of disrepair, I’m sure they’re welcome to it.

Update: Come on, you’ve just got to love these guys’ chutzpa. Here’s Jimmy down in Florida in 2006, acting as a “business consultant” to a builder who stuck a bank with something like 700 unfinished homes, all “no money down” loans. The intrepid reporter had a few questions for the business consultant:

He’s currently under federal indictment on charges of money laundering and wire fraud for $19-million he borrowed from a Long Island Bank in 2001.

Rosyln Savings Bank ended up losing $7-million on the loan that was supposed to finance an assisted living facility owned by Licata. Investigators traced $1.39-million of the money to Licata’s private bank account, the indictment said.

Licata said the charges are a “blip” on his record that will prove unfounded. The bank made a bad loan and blames him for its mistake, he said.

That’s the Jimmy I knew and represented. Glad to see he took my advice. 

Another update: Uh oh, looks as though Jimmy’s consulting didn’t help matters. His builder client went bankrupt and even listed Jimmy as someone who owed him money.

CCI also revealed it has pending claims against, among others, James J. Licata of Greenwich, Conn., whom CCI had retained just months ago to negotiate with Coast Bank.

Licata, who spends part of his time in Bradenton, is under federal indictment on charges of money laundering and wire fraud related to $19 million he borrowed from Rosyln Savings Bank in Long Island.

CCI values the claim against Licata and another Connecticut-based company called Southwick Ventures, run by Herbert Blake in Stamford, Conn., at $600,000 to $1.8 million.

I bet CCI doesn’t get repaid, what do you think?

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If we still have a democracy, …

Then this can’t be good news for the eco-nuts. I received the following summary of poll results from Gallup today:

–Gallup also asked panelists to identify which of five options is their biggest concern regarding energy and the environment. A plurality of panelists (40%) say the price of energy, oil, and gasoline is their biggest concern. One-third of respondents say the dependence on foreign oil is the biggest issue. About 1 in 10 panelists say global warming (12%) and lack of energy efficiency in cars, homes, and businesses (11%) are the biggest concerns, while 5% of respondents say protecting the United States’ natural resources is the biggest issue.

Obama’s promise to send energy costs “skyrocketing” isn’t going to play well in Peoria.

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None of my business

Steven A. Cohen

Steven A. Cohen

Steven Cohen wants to add on, again, to his 35,000 sq.ft. house on Crown Lane.  It’s his house, his wall that shields the monster from the neighbors, so who cares? But I’ll admit, I had hoped that Porsche taking SAC to the cleaners would dampen the man’s taste for excess, if even momentarily. Guess not.

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Will he or won’t he?

264-riverside-ave1Here’s a computer image of a proposed house to be built at 264 Riverside Avenue, sitting on 1/3 of an acre and asking $4.395 million. The land was originally bought by Straza Construction – 0.89 acres for $3.0 million but after building a house on the adjoining lot and selling it for less than asked but still the impressive price of $3.8 million, Straza got cold feet and bailed, selling this lot to Alex Kaali-Nagy for $1.35 million (after first trying to unload it at $1.995 – no builder wants to buy another builder’s mistake at a premium, eh?).

Mr. Kaali-Nagy does beautiful work and I have no doubt that this house will be as nice as his other projects. But the price seems a tad aggressive. Riverside Avenue, busy as it is, was supporting $3.8 price levels for new houses just last year (and, because I sold two of them, I’m delighted it did). But Strazza couldn’t get $4.4 for its own creation and, even if the Kaali-Nagy house is better, the market is worse. This a basically a four-bedroom house (there’s a fifth in the cellar but I don’t give that much weight) on a small lot on what I’ve heard termed a “double-yellow street” – heavy traffic. Buyers don’t like double-yellows, generally, and pay less for houses on them.

So maybe the market will improve. I note that this place is presently just a vacant lot with some drainage systems installed. Construction has been scheduled for the spring but it wouldn’t surprise me if that commencement is pushed back. We’ll see.

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Now it can be told

18 Highgate Rd

18 Highgate Rd

$12.9 million Riverside waterfront goes to contract

I mentioned this at the beginning of the week but couldn’t give details until the contract was officially reported. The odd thing about real estate is that, no matter what kind of market we’re in, the magic words, “you can’t have it” seem to stir buyers into action. When rumors spread that a contract is pending, other agents call their own buyers and say, “you’d better move fast”. And it works.

But this time all went well. Barbie Jackson (Cleveland, Duble & Arnold) found the buyer. I don’t know what the final selling price will be but the listing is only 60 days old so I’d imagine it’s close to ask. Nice land, good view, although much of it is of the inner harbor – that gossip columnist in town should perch her chair here on the lawn because it’s straight across the water to Cathy and Frank’s place – no need to beg Valbella’s staff to report sightings.

Whatever – it’s nice to see that someone still has money and is willing to spend it. I suppose the lesson here is that Greenwich waterfront will always be the last real estate to feel the depression, if it feels it at all. Buy more.

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How much do real estate agents make?

You ask, I’ll tell, within reason. Here’s the scoop:

Brokers are the firms that “own” the real estate listings and hold the licenses of real estate agents (everything in this post is generalized so if I short hand the law, don’t worry about it). As a rule, with exceptions, most real estate agents are just that – agents.

Assuming a standard commission of 5%, the listing broker gets 2.5% and the selling broker gets 2.5%. This is split with the broker’s agent in accordance with whatever agreement the broker and the agent settled upon. At a minimum, 50% would go to the agent. When being recruited, agents are sometimes promised a minimum split much higher than that: 60% all the way to 90%. Commissions can also fluctuate with an agent’s sales for a given year – the more you sell, the bigger your slice.

Of course, brokers aren’t quite as generous as they might seem so most of them, but not all, tack on lots of little charges, like a 5-7% “Big Whopper” fee, supposedly to cover some of the marketing expenses for expensive homes (priced above a certain figure, like $3.5 million, or whatever), and errors and omissions coverage, etc. I know of one firm that charges its agents for open house signs which is about as cheap as one can get, in my opinion.

Agents are considered independent contractors which means no health insurance, no employer contributions to Social Security or private retirement accounts, no car insurance (required before we start carting customers around, naturally) and what else – oh! No salary – we eat what we kill, period. If it’s true that 10% of the agents sell 90% of the listings, then there are a lot of starving agents out there, which may explain why some of them grab ahold of you like a Pekenese with loving on its mind and won’t let go no matter how hard you kick them. Pathetic, but there you go.

So how’s all this work out? Let’s take a hypothetical $3,000,000 sale. The listing broker and its agent will split 2.5% of that, or $75,000. Let’s assume that the agent has had a modestly successful year and is working for a 65% split. That means the broker keeps $26,500, from which it will pay for marketing (newspaper, internet, on-line – the NYT charges something like $150 per week for each listing, I think -, magazines, etc.) plus its own insurance, office overhead, salaried staff, etc. If you’ve run a business, you know what it all involves.

The agent gets $48,750, from which she pays, say, 45% in taxes (state and federal income plus 15% SSI), her real estate dues and fees ($5,000?), a car, cellphone, health insurance, if there’s no spousal corporate sugar daddy to provide it, cheap gifts for customers who buy a house from her (ok, I don’t buy these, but most agents I know do), and whatever else she and her accountant can figure out is deductible.

Who wants to be a broker? Not I. When I ran my own law firm I was responsible for making sure the lights stayed on, the rent was paid, secretaries had working telephones (and would be paid to show up and answer them), etc. etc. As a agent I get all of that taken care of and in return I pay a modest amount of the commission to cover that. No worries, mate.

Can you get rich selling real estate? I haven’t yet, but I’ll confess that last year, a very good year indeed, I made a lot more money than I ever did practicing law. That’s probably more a reflection of my lawyering skills than it is anything else, but it’s a little -er, odd – that lawyering requires 4 years of college, usually some work experience and then three years of law school, and, in my case, 20 years experience, while a real estate agent doesn’t have to graduate kindergarten – and I’ve met those who haven’t. But we live in some watered-down version of a free market and if that’s how the respective skills are valued, I can live with it.


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Writing on the wall?

55 Burning Tree

55 Burning Tree

I was looking for something else in the records and noticed this sale from March, 2008, for $2.1 million. Nice street, nice house, so the price isn’t surprising. Checking the history, though, shows that it sold for $2,187,500 in September, 2005. If that wasn’t the high water mark for Greenwich real estate prices, we have certainly dropped below that level now.


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Sotheby’s, Coldwell Banker going bankrupt?

That’s what Bloomberg’s predicting. The last time I reported on this subject, last May, Coldwell Banker had my column terminated at The Greenwich Post by threatening to pull their advertising. They achieved their immediate goal, thanks to my pusillanimous publisher, Marty Greenberg, but they might have better spent their energies preparing for the bankruptcy of their own owner, Realogy. After all, I’m not the one who loaded up the company with junk bonds – that would be the investment banker geniuses who took control of Realogy.

(Thanks, CEA for forwarding me this long awaited story)

Update: You may want to read this NYT story on Realogy’s troubles and future. If you don’t, let me summarize: bleak. The comments to the article are even more discouraging but I assure you, I didn’t write them.

And again. Noted without comment:

“Given our previously stated view that Realogy’s ability to service its current capital structure over the intermediate term will be challenged, we view the exchanges as being tantamount to default,” Emile Courtney, an analyst at S&P, said in a report today.


Mark Panus, spokesman for Realogy, declined to comment.

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This just keeps getting better

You’ll have to scroll down for the initial posts about DFT Builders and their principle, Dominick DeVito but the more I dig, the better it gets, so I’m posting new material here. I linked to the indictment of this guy below. Here’s the Justice Department’s announcement of his guilty plea this summer, and get this:

Also, DEVITO obstructed justice in connection with his sentencing in 2003 in Manhattan federal court after he was convicted of racketeering and mortgage fraud in an earlier case.

Would one of you investment banker types please explain to me how someone can be convicted of racketeering and mortgage fraud in 2003 and still get loans afterwards? I’m also just a little disappointed that DFT’s website doesn’t mention the criminal record of its founder. Gee, I thought they had to tell the truth about such things!


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More on DFT Builders

"Not Necessarily to be Built"DFT Builders or “Dream on Productions” as one astute reader has suggested. Their 508 Round Hill “Georgian” isn’t doing so well at its asking price of $6.295 million which is odd, because the tax assessor has pegged the place as worth almost $3.0 million, and we all know how conservative those guys are.  27 Vineyard Lane bought with such fanfare and promised a thorough tearing down is back on the market as is and going nowhere, even though DFT dropped its price a cool million to $3.995 last month. I was up at 508 this morning, looking to see if maybe there was a Georgian hidden behind that cape but no luck. I did see DFT’s other project next door, 518 Round Hil Road, the one with a $6.2 million lis pendens filed against it: uh oh, some banker’s in trouble. There is a quarter-finished house on the site but no activity (duh) and very little sign of $6 million in construction expenditures. I thought construction loans were advanced in stages, as certain milestones were accomplished. If there’s that much money already advanced on this plywood palace, it must have come in all at once at the beginning. Hmmm.

DFT has also let the listing expire on 516 Round Hill Road, the sketch for which is shown above. I couldn’t get back to see whether there has been any progress made on that one or whether its acreage remains the fallow field it once was. Either way, I doubt that the company’s dream of selling it for $14 million is going to come to fruition soon.

I shouldn’t take any pleasure in all this, but anyone who proudly acclaims himself  “the Tear-Down King” has it coming, in my opinion.


Boy the things you learn from readers – lookie here:

“Dear Chris,
Got a chuckle this morning reading your blog. Antares boys haven’t gone to jail however, Dominick DeVito
i.e. DFT LLC entered a guilty plea in a multi-million dollar mortgage and insurance fraud scheme. Poor lender who lent him the money! See www.mortgagefraudblog.com

So it’s goodbye to the Tear Down King, I suppose. Too bad.

But wait, there’s more!

Here’s the indictment of Mr. DeVito. In light of my comments above wondering how $6 million could have been advanced on 516 Round Hill when it was so clearly unfinished, I find this part of the indictment interesting:

DEVITO and DIDONATO “cashed out” on certain properties by taking additional private loans against the already fraudulently-inflated sale price of the properties. The proceeds of these loans, which were never repaid in full, were deposited in a bank account used for the benefit of DEVITO. 

If you follow the link to DFT’s website, be sure to check out the page devoted to Mr. DeVito’s magnificent contributions to various charitable organizations and his service on their boards. I’m sure we’ll hear more about all that at his sentencing; we always do.

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This has to hurt

136 Cat Rock Road

136 Cat Rock Road

This property was purchased as a renovation/replacement project for $1.4 million on November 24, 2003. There were enormous problems with the existing septic field, corrected at huge expense, plus other difficulties but eventually a new house (new from the foundation up, anyway) was put up for sale, while still under construction, in January, 2006. So, 2+ years of loans. No doubt wishing to recoup those loans and make a little profit, the builder made a common mistake and priced the house way above what the market allowed: in this case, initial asking price was $3.750 million which was, in my opinion, utterly ridiculous. That number eventually dropped to $3.4 but when the listing expired a new broker stepped in and raised (!) the price back up to $3.625.

That tactic didn’t work so a third broker stepped in and dropped the price to $2.995, a price that might have attracted a buyer had the place been priced there originally but alas, it was not. So it still didn’t sell and this February, broker number four came in and listed it for $1.999 million, not much more than the land had sold for 4+ years before. Even then, nothing happened until August 28, 2008, when it finally got a contract.

That contract has not closed, almost three months later. The delay might be attributed to the fact that the property has a $2.2 million lis pendens filed against it by the builder’s lender and there might not be enough cash around to pay, say, taxes owed, commissions and all the other assorted transaction costs involved in the sale of real estate. Or not; I’m just speculating here. But if the buyer ever does gain title, I’m sure he’s paying less than that last asking price in which case someone has built him a perfectly nice, brand new house, for free. Good deal.

Yes, there is a moral here namely, don’t get greedy or stupidly optimistic when pricing your house, especially when there’s a foreclosure looming – you will suffer.

Update: Courtesy of reader Jess, you can get details here.


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