Real estate developer and lawyer Jacob Frydman, is selling his Dutchess County Property for a whopping $29.9 million dollars.
Jacob Frydman originally purchased the Ledgerock property in 2005 for approximately $1.5 million with the intention of tearing down the existing structure and building their dream home.
The ‘Ledgerock Estate is now currently on auction to the highest bidder via Sotheby’s Concierge Auctions, in cooperation with the listing agent Jason Karadus of Corcoran Country Living.
Sotheby’s originally promoted the sale of Ledgerock for $45m, yet soon after the auction went live, the auctioneer dropped the property by over $15m to its current listing of $29.9 million dollars.
The average home in Dutchess County Costs $419k, so a multi-million dollar sell in the area would still be considered a real-estate victory for the sellers and local township.
Should a sale be commenced, Sotheby’s are to receive a total of over 14.5% of the final sell price. The buyer is expected to pay 12%, and the seller is expected to pay 2.5% for using Sotheby’s website and services to promote the property sale.
David Goldberg, a real estate agent, says Sotheby’s price to auction this home is almost triple the average brokerage fee. He claims the average commission for buying or selling a property is 5%, which is almost always split in half to 2.5% between the buyer and seller.
There is only one ‘small’ issue any interested party in the mansion should investigate. A “Freedom of Information Act” request conducted by a former contractor of the estate named Alexander P. Francese revealed the nearly 15,000 square-foot glass and limestone residence, designed by architect Lee Ledbetter, lacks a “Certification of Occupancy” or a “CO” as required by law to become inhabitable.
Francese claims he was surprised to find that no evidence confirming a Certificate of Occupancy is on record at the municipality of Hyde Park, and that he has notarized documentation confirming that fact. The certificate and accompanying inspection documentation are required by law to confirm that the development complies with pre-approved building plans.
Another source, speaking on condition of anonymity, claims the estate requires additional permission from the United States Army Corps of Engineers (ACOE) to exist because it is built on the Hudson River.
Congress gave the engineering Corps command to regulate all water-front property structures in the USA via the Rivers and Harbors Act of 1899. Section 9 of the entitlement stipulates the military is responsible for overseeing and permitting any structure built on a waterfront such as homes, boat houses, catwalks, or piers. In lack of thereof, the Army has the right and responsibility to order a demolition.
In an interview originally appearing in the Wall Street Journal, Jacob Frydman suggested the property does not require an updated ‘Certification of Occupancy’. According to Frydman, the plans were grandfathered in because from the pre-existing structures, which were connected underground.
In contrast, architectural experts familiar with the estate explain that since Frydman demolished all pre-existing structures and expanded on the size and engineering, a new certificate of occupancy is required by law to inhabit the property. In lack of thereof, they claim according to New York State law, he can’t even rent the property.
To demonstrate the importance of proper certification, developer Mohamed Hadid was forced last year to demolish into ashes and dust a $100m mansion he developed that spanned over 32,000 square feet by a Los Angeles court.
The Ledgerock estate development has a long history of lawsuits. Almost immediately after the purchase of the Ledgerock property, the Frydman Opened litigation against the original sellers at the Dutchess County Supreme Court (Index No. 5827-2014).
In this lawsuit, the Frydman’s claimed they were unaware the pool didn’t have the required fence surrounding it – which was clearly apparent to the naked eye during the negotiations to Jacob, who professes to be an expert real estate developer. The family was seeking a $150,000 credit on the closing price.
The entire lawsuit seems startling (and perhaps even frivolous), given the Frydman’s later gave interviews appearing in Mansion Global where they claimed to have originally purchase the property with the intention to demolish everything and rebuild from scratch.
Suffice to say, as the construction commenced, Jacob Frydman would seemingly enter into a lawsuit after another with nearly every contractor involved in the development.
The abusive pattern was so outrageous it caught the attention of the New York Postwho published an article titled “Real-estate honcho ‘stiffs’ contractors over measly amounts”. The NY Post claims every person who sued for wages would be countersued for hundreds of thousands or even millions.
A lawyer who defeated Frydman in court, speaking on condition of anonymity, stated, “Jacob wears two hats. He is first a lawyer, then a real-estate developer. Almost everybody he does business with ends up in court. He’s the type to take a loan, default on his financial obligations, and then sue the lender to tie things up in litigation.”
The irrevocable trusts of Jacob Frydman and his wife Monica Libin Frydman are the owners of the Dutchess County estate via the company Ledgerock LLC.
The Frydman’s have been embroiled in multiple bankruptcy litigation after their irrevocable trusts were used to guarantee loans in the tens of millions for a property located in Albany, New York known as “Kenwood Commons”.
In the Kenwood Commons deal, Monica Frydman’s father Alex Libin acquired the property from a non-profit church for $3m on August 21st, 2017. On the same exact day, Alex transferred ownership of the estate to “Kenwood Commons LLC”, an entity under Jacob and Monica’s control for $18m. At first glance, it would seem like Alex Libin did a flip-contract for $15m and paid the IRS a huge capital gains tax. Insiders familiar with the deal claim no money was transferred, nor were the taxes paid.
However, by inflating the acquisitionalsum from $3m to $18m, and thereafter create development plans, Jacob was able to successfully increase the appraised value of the property to $24.5m.
The flip-contract method of increasing value assisted Jacob and Monica’s trust entities to receive a $5m loan from TPG Funding LLC and a $10m loan from The United States Fire Insurance Company. Almost immediately after receiving the mortgage loan checks, the Frydman’s defaulted on their payment obligations and were sued.To prevent the foreclosure, Frydman filed bankruptcy proceedings on behalf of Kenwood Commons.
Insiders involved with the bankruptcy proceedings claim the sale of the Kenwood Commons property involves fraud; both to lenders, the NY State regulators, and the IRS.
According to Jonathan Smith,a P.I. hired to investigate the Frydman’s, the intent to sell the Ledgerock estate via auction seems to be a fire sale to empty the irrevocable Frydman family trusts of all assets.
Smith says, “Sotheby’s originally announced the property value at $45m, as did other articles appearing online, but as soon as the bidding began, their auction website listed it a discounted price of more than $15 million dollars by starting the bidding at $29.9m without any explanation. This supports my theory Jacob is conducting a fire sale to rid the family trust of assets.”
Smith goes on to prophesize, “Once the judge forces the Frydman’s to hand over collateral assets to TPG Funding LLC and The United States Fire Insurance Company in excess of $15m, the Trusts won’t have any money or assets to repay.”
Smith explains that the courts have already ruled on Jacob Frydman’s asset protection practices by stating, “The New York Supreme Court (index 154932/2016) have already determined in an unrelated case that Mr. Frydman and his wife Monica’s legal Trusts were involved in a series of transactions designed to hide assets and move money beyond the reach of creditors.”
Jonathan Smith concluded his thoughts on the Frydman bankruptcy issues and the news of the Ledgerock estate lacking proper certification by stating, “Potential buyers of the Ledgerock property will most likely be stuck in litigation with the Frydman’s, escrow companies, and other regulating bodies for years to come. I could also see them potentially suing Sotheby’s and all listing brokers for false representation by portraying an uninhabitable home as a legal residence, especially since the auctioneer is charging nearly 15% of the asking price to purchase the estate.”