Quantcast

DNAinfo has closed.
Click here to read a message from our Founder and CEO

De Blasio Donor Lost $1.9M in Ponzi Scheme Linked to Corruption Probe

By  James Fanelli and Murray Weiss | April 13, 2016 7:40am 

 One of the members of Mayor Bill de Blasio's transition team lost money in an alleged Ponzi scheme connected to a federal probe of the NYPD and de Blasio's campaign fundraising practices.
One of the members of Mayor Bill de Blasio's transition team lost money in an alleged Ponzi scheme connected to a federal probe of the NYPD and de Blasio's campaign fundraising practices.
View Full Caption
DNAinfo/Ben Fractenberg

WASHINGTON HEIGHTS — A landlord who donated to Mayor Bill de Blasio’s transition team was one of the biggest losers in an alleged Ponzi scheme that’s connected to a federal probe of the NYPD and the mayor’s campaign fundraising practices, records show.

Gerald Leibman, 74, who has owned Bronx properties that have landed on the public advocate’s bad landlord list, lost $1.9 million to accused fraudster Hamlet Peralta, according to court documents.

Last week Manhattan federal prosecutors charged Peralta, a 36-year-old Bronx restaurateur, with running a pyramid scheme that bilked investors out of $12 million. The criminal case grew out of a public corruption investigation by the FBI and the NYPD’s Internal Affairs Bureau.

Peralta, who once ran the Hudson River Café, a popular Washington Heights restaurant, told investors that their money would go to a liquor business he had started, prosecutors said. Instead he’s accused of spending millions of their dollars on clothes and food for himself.

Leibman sued Peralta in 2014 in Manhattan Supreme Court, claiming he was never paid back for loans he made to Peralta and his business, West 125th Street Liquors.

The lawsuit shows that Leibman matches the description of "Investor-1" in Peralta’s criminal complaint — the unnamed victim who prosecutors said was one of the two biggest money losers in the scheme.

City records also show that Leibman made the maximum contribution — $4,500— to de Blasio’s transition team on Dec. 10, 2013.

Leibman, who has a $5 million home in the Hamptons, declined to comment when reached by phone on Monday.

“I was advised not to speak to anybody,” he said.

Leibman also denied ever making a contribution to de Blasio’s transition team.

“I don’t know what you’re talking about,” he said.

However, a campaign finance record of Leibman’s contribution to de Blasio lists his occupation as president of Weston Management and his business’s address at 559 W. 189th St. in Washington Heights.

Records show Leibman does run a real estate firm called Weston Management.

Also, an exhibit in Leibman’s lawsuit is a May 15, 2014 loan agreement in which Leibman agrees to lend $1.2 million to Peralta and West 125th Street Liquors. Leibman’s lists 559 W. 189th St. as his address in the agreement.

If Leibman did not make the contribution, then someone else made it under his name — which is illegal. Election laws set limits for individual contributions and prohibit straw donors.  

The wide-ranging FBI-Internal Affairs probe began with an investigation into Philip Banks — who was one of the NYPD's highest-ranking officials — allegedly receiving gifts from two businessmen in exchange for favors.

The businessmen, Jona Rechnitz and Jeremiah Reichberg, are also big de Blasio boosters who served on his mayoral inauguration team and helped raise funds for his now-shuttered nonprofit, Campaign for One New York.

So far four high-ranking police officers have been transferred from their posts, with two stripped of their guns and badges, for being caught up in the alleged graft.

The now-retired Banks, who made at least $250,00 in investments with Rechnitz, and Deputy Chief David Colon, who was among those transferred last week, also hung out at Peralta's now-shuttered Hudson River Café.

Neither Reichberg nor Rechnitz have been charged with any crime. The businessmen were also victims in Peralta’s Ponzi scheme, according to sources.

The investigation is now focusing on how de Blasio raised money for his campaign and Campaign for One New York, sources said.

In his lawsuit, Leibman described Peralta as a friend whom he periodically lent money to for West 125th Street Liquors and other business ventures.

Peralta had been good on repaying the loans, but beginning in late 2013, he started to slip, according to the lawsuit.

Leibman said that between December 2013 and August 2014, he loaned $3.15 million to Peralta and West 125th Street Liquors. Peralta only repaid $1.25 million and owes Leibman $1.9 million, the lawsuit says.

The Peralta criminal complaint says that "Investor-1" gave $500,000 to Peralta on March 26, 2014, and $1.2 million on May 15, 2014. Leibman’s lawsuit says that he gave Peralta those exact amounts on those dates.

On March 31 of this year, Leibman filed an order for a $1.9 million judgment against Peralta.

Leibman’s lawyer, Evan Sarzin, declined to comment.

Property records show that Leibman has owned buildings in the Bronx and Washington Heights.

Last summer Leibman sold two buildings in the Bronx, at 1098 Gerard Ave. and at 1112 Gerard Ave., each for $7 million. Both buildings are currently on the Public Advocate Letitia James’ worst landlords list.

Another Bronx building at 306 East 180th St., which Leibman still owns, is on the public advocate’s watch list for having 172 violations with the Department of Housing Preservation and Development.