Friday, August 11, 2017
An Orange County agency agreed to issue $8 million in tax-exempt bonds for a Hasidic congregation in June, money that the group misleadingly said it would use to buy the two boys schools and surrounding property that it had been renting on County Route 105 in Monroe and Woodbury.
Congregation Bnai Yoel's application referred to the property owner as a "related entity," which was an understatement. Public records indicate that the same seven men run both the congregation and Cody Inc., a shell company created in 1990 to hold the congregation's property. And what was presented as a cost-saving property purchase appears, in reality, to have been a method of refinancing a $5.7 million bank mortgage that Bnai Yoel and Cody Inc. jointly obtained in 2013 and 2014.
There's no sign that the bonding the Orange County Funding Corp. approved for Bnai Yoel was improper, apart from the congregation's deceptive explanation for why it wanted the money. Laurie Villasuso, chief operating officer and executive vice president for the funding agency, said that helping nonprofits refinance their debts is a legitimate use of the corporation's bonding authority. She pointed out the agency did something similar for Mount Saint Mary College in 2012, when it approved up to $75 million in bonds for the Newburgh college to renovate its Dominican Center and pay off earlier bonds.
The funding corporation is not allowed to issue bonds for religious activities. But its bond attorneys had determined the $8 million in bonds for Bnai Yoel "was allocable to portions of the school that relate to secular education and other secular school-related activities," Villasuso said.
Yitzchok Tyrnauer, who is board secretary for both Bnai Yoel and Cody Inc. and signed the bond application, didn't respond to calls and emails from the Times Herald-Record to discuss the transaction.
Stephen Weiss, a Long Island financial adviser who spoke for the congregation at the funding corporation's meeting in May, told the Record he had referred the matter to an attorney for the project and hung up.
Edward Ambrosino, the Long Island attorney who represented Bnai Yoel at the same board meeting in New Windsor, didn't return phone calls.
Less than two months before he sat at that Orange County meeting, a federal grand jury on Long Island indicted Ambrosino on eight counts of wire fraud, tax evasion and other charges, accusing him of depositing in his own account $800,000 in legal fees that belonged to his law firm and failing to pay more than $250,000 in taxes. Ambrosino, who specializes in economic development and financing, had collected $1.3 million in payments from two Nassau County economic development agencies from 2013 to 2015, according to federal authorities. He's free on $250,000 bail while his criminal case is pending.
County records show that Bnai Yoel and Cody Inc. borrowed $5.7 million from the Bank of Princeton through two transactions in 2013 and 2014. The purpose of the mortgage, according to a court petition they submitted to get permission to borrow, was to pay off $4.6 million in private loans and a 2006 mortgage on which the congregation still owed just more than $300,000.
The court papers listed 23 private loans and indicated they had been made to pay for school construction. A financial statement noted that several Bnai Yoel board members had personally lent the congregation $914,000, and said that most of the private loans were repaid right after the initial Bank of Princeton mortgage in 2013.
Bnai Yoel was founded in 1989 and runs religious schools for Kiryas Joel families who don't belong to the Hasidic community's main congregation or use its yeshiva system, known as the United Talmudical Academy. About 2,000 children now attend Bnai Yoel schools, according to the bond application.
The congregation's bond application in March said it was borrowing $8 million to help buy the two schools for $11.5 million. It stated the transaction would provide "lower debt service and lower annual operating costs" and create 20 jobs, giving no explanation for the new jobs.
The county agency that approved the bonds has the same seven-member board and support staff as the county's Industrial Development Agency, but serves a different purpose. The IDA offers property-tax abatements and other tax breaks to encourage companies to locate or expand operations in Orange County. The funding corporation's functions include issuing bonds, typically for nonprofits or manufacturers, according to its mission statement.
The corporation merely acts as a "conduit" for the bonds, which means Bnai Yoel has sole responsibility for making regular payments to the bond holders. The corporation plays no part in that debt service and wouldn't be liable if the congregation defaults, Villasuso said.
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