In response to accounting concerns we asked for access to the 425 East 86th Apartment’s books of accounts. Such access is permitted per paragraph 5 of the proprietary lease, and New York common law but was refused. We were forced to litigate to ensure compliance.
- 12/13/15: 425 East 86th’s Co-op’s corporate attorney e-mailed me a response letter. Essentially, the Co-op’s attorney’s letter says: a) It would be cost prohibitive to allow the building’s accountant to respond to requests from individual shareholder; b) I may ask the managing agent (who unlikely understands details of GAAP accounting including ASC 850 which details required related party disclosures), but it incorrectly argues that the request is related to information we demanded in a subpoena they are challenging, so the managing agent won’t discuss the issue with me in any case. Remarkably, the attorney’s letter also says that NY Corporate Business Law nullifies the Co-Op’s contractual obligation in paragraph 5 of the proprietary lease to allow shareholders to inspect the Co-Op’s books of account. That statement, in my view, says volumes about the Co-op’ board’s approach to transparency, corporate governance and compliance.
- 12/16/15: My attorney’s response.
- 01/14/16: Since the 425 East 86th Co-op refused to respond, we had little option other than to file an Article 78 complaint proceeding to obtain the information.
- 02/02/16: Unbelievably, 425 East 86th Street Co-op decided to expend enormous legal resources to fight the proceeding so they could avoid giving basic information to a shareholder!
- 02/23/16: Our response to the 425 East 86th Co-op’s attempt to dismiss the proceeding entirely as opposed to welcoming a hearing on the merits.
- 02/29/16: 425 East 86th Street Co-op’s final response to support their motion to dismiss. Incredibly, the co-op’s assistant property manager, Kaswaree Narine, signed a sworn affidavit claiming not to understand the term “books of account” even though the Co-op’s own proprietary lease requires the Co-op and property manager to maintain the Co-op’s books of account and to make the complete books of account available for shareholder inspection.
- 04/04/16: 425 East 86th Co-op’s attorney’s letter to judge saying we could not agree on document production terms. It includes our prior communication on the issue
- 04/05/16: Our attorney’s response to Co-op’s attorney’s letter.
- 4/18/16: Judge’s decision. Interesting decision. The judge apparently didn’t think the Co-ops refusal to provide access to the books of account due to their belief NY law conflicted with this request was a refusal to provide any specific document. But the decision affirmed that we have the rights to inspect the broader category of the Co-op’s books and records and pointed to the specific case law precedent.
- 5/25/16: After significant discussion, the Co-op allowed us to inspect copies of portions of its books and records. Unbelievably, the co-op paid a Statin Island security firm, EOT Associates, to send a retired NYC police officer, Kenneth Rinaldi, to sit in the room the whole time and hover over us while we read! It was an obvious attempt to intimidate us. It might have been funny, it it hadn’t cost shareholder a few thousand dollars. The information we reviewed further supported the concerns we had about the Co-op’s accounting practices and left us with several additional questions about the Co-op’s lack of disclosure regarding environmental issues. We will be following-up on these.
- 9/20/2016: Attached is a follow-up document inspection request. We believe this letter, raises significant health and safety concerns about the building. Board President David Munves wrote a disappointing, but not unexpected response.
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