The year before Daniel Preston of Luminati Aerospace brought Triple Five Group to Riverhead as a partner in a massive land deal with the town, one of Triple Five’s top executives was found by a New Jersey court to have “intentionally defrauded” a party to a real estate transaction — to the tune of $1.3 million.
Triple Five’s director of business development, Stuart Bienenstock, who has been the conglomerate’s point man in its transaction with the Town of Riverhead, had a $1.3 million judgment entered against him and a partner in Essex County Superior Court in July 2016.
Last month, the Appellate Division of the N.J. Superior Court upheld the trial court’s ruling on an appeal taken by Bienenstock’s real estate partner and co-defendant.
The trial court found that Bienenstock, at a real estate closing in September 2012 — during a period when Bienenstock was not working for Triple Five — produced a forged mortgage satisfaction document, fraudulently inducing the title company and the buyer to close on the property without a clean title.
The court found that it was “highly likely that Bienenstock forged the document himself, based on his own admission that some of the handwriting on the discharge looked remarkably similar to his own.” The notary signature and stamp on the mortgage satisfaction document were also false, according evidence presented at the non-jury trial, the court said in 30-page written opinion.
In what the trial court judge called a “twisted tale,” Bienenstock and some business partners had purchased properties on Union Avenue in Irvington, New Jersey. After a dispute with one of the partners, Bienenstock and another partner, Judah Bloch — the pair owned two limited liability companies together — submitted to arbitration of the dispute by a rabbi. As a result of the arbitration, the LLC owned by Bienenstock and Bloch lost one of the buildings and was also ordered to pay a partner $1 million, according to the court decision.
To pay the judgment, Bienenstock and Bloch, through their companies, Union Avenue Holding and SJB Capital, borrowed $1.1 million from an investor. The loan was secured by a mortgage lien on a property they owned through Union Avenue Holding LLC.
They defaulted on the loan, the trial judge wrote. Though no foreclosure proceeding had yet been commenced, Bienenstock and Bloch sought to satisfy the mortgage through an asset swap and debt restructuring. They would sell the Union Avenue property and use the proceeds to buy stock in a certain company traded on an Israeli stock exchange, according to the court. As these discussions were ongoing, “Bienenstock did not disclose to [the investor who held the mortgage] that he had already orchestrated a sale of the property,” the court wrote.
Bienenstock and his partner, through their company Union Avenue Holding, entered into a contract to sell the mortgaged property to Golden Union LLC for $1.4 million. The title was to be transferred free and clear of all liens and encumbrances. Bienenstock produced the forged mortgage satisfaction at the closing and the net sale proceeds of nearly $638,000 were wired directly to their other company, SJB Capital, according to the court decision.
Approximately six months after the closing, Golden Union received a certified letter from an attorney for the mortgage holder alleging the mortgage satisfaction had been forged, the court decision states. Subsequently, Chicago Title Insurance Company paid the mortgage holder $1.3 million to satisfy the mortgage and clear the title it had insured for Golden Union as buyer of the property.
Chicago Title Insurance Co. then sued Union Avenue Holding and its members, Bienenstock, Bloch and a third man whom the court absolved of any responsibility in the transaction. The court ruled the defendants’ actions constituted common law fraud, fraudulent inducement, and fraudulent misrepresentation. The court said there was no “negligent misrepresentation” because “the actions of Bienenstock and Bloch on behalf of UAH were unquestionably intentional.”
The court denied the plaintiff’s claim for punitive damages, which would have greatly increased the judgment against the defendants. Their actions were not motivated by actual malice or accompanied by a wanton and willful disregard of potential harm to the buyer, the court found. Negotiations to restructure the debt and swap the stock for the mortgage “failed,” the court said.
Nevertheless, the court concluded that Bienenstock and Bloch intentionally defrauded the buyer by providing a forged mortgage satisfaction document at the closing and knowingly conveying title that remained encumbered by a large mortgage lien.
The court entered judgment in favor of Chicago Title Insurance Company and against Biensenstock, Bloch and Union Avenue Holding in the amount of $1.3 million, plus interest.
Bloch appealed the trial court’s judgment. An appellate division panel upheld the lower court in a decision dated Jan. 8. Bienenstock did not join in the appeal.
“I’m going to pay my part of it whenever it does come due,” Bienenstock said in an interview Wednesday.
“It was basically a false claim,” he said, “a total misrepresentation.” He said he was “totally defrauded.” He also said he had “a very bad case of Lyme disease” while he was selling the property and was very sick.
The transaction “has nothing to do with Triple Five,” Bienenstock said. “It has absolutely no connection whatsoever to Triple Five.”
The transaction took place during a period — from 2008 to some point in 2016 — when Bienenstock was not working for Triple Five. He was employed by Triple Five as its managing director of real estate until 2008, according to his LinkedIn profile. In 2008, he launched real estate management company SJB Capital, according to his profile page.
Bienenstock returned to Triple Five at some point in 2016 as its director of business development.
His personal webpage states: “Since re-joining the company in 2016, Stuart Bienenstock has been focused on establishing the families [sic] aviation and aerospace divisions and northeast banking expansion efforts.”
In November, Calverton Aviation and Technology, a company owned by a Triple Five affiliate and Luminati Aerospace, entered into a contract to buy 1,643 acres at the Calverton Enterprise Park from the Riverhead Town Community Development Agency for $40 million. The contract was authorized by a 3-2 vote of the outgoing town board in December 2017, subject to a finding that CAT was “qualified and eligible” to buy and develop the land in accordance with a development plan spelled out in the contract.
In another 3-2 vote taken in November, the town board — which sits as the governing body of the Riverhead CDA — determined Calverton Aviation and Technology to be “qualified and eligible,” pursuant to a state law that allows a municipality to sell land without a bidding process or appraisal if the land is in a designated urban renewal area and the sale is to further the objectives of an adopted urban renewal plan.
We need your help.
Now more than ever, the survival of quality local journalism depends on your support. Our community faces unprecedented economic disruption, and the future of many small businesses are under threat, including our own. It takes time and resources to provide this service. We are a small family-owned operation, and we will do everything in our power to keep it going. But today more than ever before, we will depend on your support to continue. Support RiverheadLOCAL today. You rely on us to stay informed and we depend on you to make our work possible.