Yoel Goldman’s All Year Management is under investigation by New York Attorney General Letitia James over its use of tenants’ security deposits.
The probe is exploring whether All Year Management moved tenant deposits to other entities, according to filings in bankruptcy court. Under New York law, landlords are required to secure deposits in separate accounts so they are not commingled.
“They don’t have the right to take the money and move it to some other entity,” said Steven Wagner, a real estate attorney at Adam Leitman Bailey, P.C., who is not involved in the matter.
The investigation was revealed in the bankruptcy proceedings of All Year Holdings, a real estate holding company also tied to Goldman and not a subject of the inquiry. The probe is still pending, according to a source familiar with the matter.
Goldman and David Friedman founded All Year Management in 2011 to provide property management services for All Year Holdings’ sprawling residential portfolio in Brooklyn.
In a statement, Friedman said, “I am not involved with All Year Management’s activities any longer, but I understand that there are discussions with the AG’s office for a consensual resolution.”
Neither Goldman nor his attorneys returned a request for comment. All Year Management also did not respond. The attorney general’s office did not return a request for comment.
Goldman’s real estate holdings spanned over 100 properties, mostly North Brooklyn walk-ups. Based out of South Williamsburg, Goldman fueled his real estate empire with cheap financing from the Israeli bond market. But around 2019, Goldman ran into issues with bondholders that intensified as foreclosures and lawsuits mounted during the pandemic.
Goldman was forced to step down from decision-making at All Year Holdings but remained the main shareholder. Control shifted to restructuring officers, who put it into bankruptcy in 2021.
All Year Management was having its own troubles. Last year, the property manager’s bank accounts were frozen because of court judgments against Goldman, according to a filing by Friedman. Also in 2021, All Year Management’s properties were taken over by another management company, Smart Management.
Smart Management said it had no ties to Goldman or All Year Management. Friedman said he transferred his ownership interests in Smart Management to co-founder Abraham Friedrich last year.
“I make sure to enforce the laws,” said Friedrich, the owner of Smart Management. “We make sure that no security deposits are being commingled since I took over the buildings.”
All Year Holdings’ bankruptcy has been messy. The company was seeking to sell most of its portfolio through the process to a group led by health care investor Avi Philipson. But the Philipson-led group, Paragraph Partners, is now seeking to terminate its investment agreement.
In a letter to the bankruptcy court, the group’s attorney cited the attorney general’s investigation as one of the reasons it wants to call off the deal.
“We understand that the failure to segregate tenant deposits is the subject of an enforcement action by the Attorney General of the State of New York that has not been concluded,” the letter stated. “The transferred entities that have failed to segregate tenant deposits are in material default under their real property lease.”
In a response, All Year Holdings confirmed that the investigation is ongoing, but said the action is pending against All Year Management, not All Year Holdings. It also claims that it previously disclosed these issues to Philipson’s Paragraph Partners.
“Paragraph cannot now use these previously disclosed facts as a basis to allege that the debtor has breached the investment agreement,” All Year Holdings said in a statement.
If the deal to Paragraph Partners falls through, All Year will have to find a new buyer or take control of the properties.