Actual property fixer Mark Nussbaum is in a giant mess and issues don’t appear to be getting a lot better.
Nussbaum acted as an legal professional, a bridge lender, a deal connector and even a landlord, all whereas operating his regulation agency Nussbaum Lowinger.
Now he’s staring down a $400 million gap with former purchasers alleging he misappropriated escrow funds. He’s additionally dealing with prison expenses from Manhattan’s District Legal professional’s workplace for allegedly stealing a minimum of $15 million from escrow purchasers. (Nussbaum has pleaded not responsible.) One lawsuit accuses Nussbaum Lowinger of operating a Ponzi scheme with a lot of the cash going to a now deceased Borough Park investor named Mendel Steiner.
Previously month, new court docket filings have revealed a number of the most explosive info up to now concerning the breadth of Nussbaum’s affect in tri-state actual property, who he did enterprise with and the difficulties that lie forward for collectors attempting to gather from Nussbaum’s property.
What’s Subsequent For Nussbaum?
The Manhattan D.A.’s prison expenses towards Nussbaum are pending. On the time of the indictment in Could, prosecutors talked about solely two victims, however famous that they believed there have been extra.
Nussbaum is out on bail. He has had two listening to dates, however each issues had been adjourned. His subsequent listening to is scheduled for March.
The case will relaxation on whether or not Nussbaum’s former purchasers knew of his schemes. Nussbaum’s authorized workforce will probably argue the victims had been conscious that their escrow cash was in danger or had been clued in to Nussbaum’s “show capital” tactic, the place Nussbaum would allegedly wire escrow funds to actual property dealmakers to point out a lender that capital was secured. Had been these victims, or buyers?
The Debtors
Nussbaum filed an exhaustive list of all his collectors and debtors in December. He had over $400 million in collectors. However the extra notable names had been on the debtor aspect.
They included:
- Steiner, who had the biggest debt at $306 million.
- Boruch Drillman, a Brooklyn investor who pleaded responsible for his position in a mortgage fraud conspiracy in 2023, owed $4.7 million.
- Yanky Tauber, Nussbaum’s deal associate on Chicago actual property, owes $1.5 million.
- Opal Holdings head Shaya Prager, owed $1.1 million.
In civil court docket, Nussbaum and his former regulation companies Nussbaum Lowinger and Mark J Nussbaum & Associates entered into a substitute for chapter, generally known as an project for the good thing about collectors. He appointed a lawyer, Sheldon Eisenberger, to deal with the method. The purpose is to aim to pay the folks Nussbaum owes cash to.
The method has been a slog. Eisenberger has famous the poor state of books and information saved by Nussbaum. To this point, debtors who owe Nussbaum cash have been reluctant to return it, aside from one individual.
The Wolf
The mercurial Wolf Wercberger is the one one to achieve a settlement with Eisenberger.
Wercberger not too long ago agreed to pay about $15.3 million to resolve the ABC’s claims towards him. In accordance with the settlement settlement, Wercberger deposited funds in Nussbaum’s escrow accounts beginning in 2022. Wercberger made again all the cash he put into the funds plus $16 million to $19 million in further proceeds.
Eisenberger agreed to Wercberger’s cost, citing the poor state of Nussbaum’s books and information and Nussbaum’s lack of credibility if the matter had been to be litigated in court docket, in accordance court docket filings as a part of the ABC.
Eisenberger says that Wercberger made the cost partly to encourage others to make funds to assist the ABC pay “harmless events” who had probably misplaced cash with Nussbaum. This contains individuals who used Nussbaum Lowinger’s escrow providers to purchase household residences.
“The settlement will infuse the property with wanted capital to pay out sure classes of collectors instantly and make it extra probably all collectors obtain distributions,” Eisenberger stated in a court docket submitting.
It stays unclear why Wercberger would care about serving to different collectors getting paid again.
There may be one other potential motivation: The settlement, if accredited by the court docket, may cease future claims introduced by Nussbaum collectors towards Wercberger.
Wercberger has been a prominent figure within the Nussbaum saga and has been sued earlier than by one other Nussbaum creditor. Jacob Sod, a nursing residence govt who was the primary to file a lawsuit towards Nussbaum, additionally filed a lawsuit towards Wercberger claiming Nussbaum gave $15 million of his cash to Wercberger as “hush money” to forestall Wercberger from going to federal authorities.
Wercberger denied the claims and stated Sod’s attorneys had been “operating throughout city, intimidating all of my enterprise contacts and associates.” In June, a Kings County choose dismissed Sod’s claims, however Sod’s attorneys are interesting the ruling.
Nussbaum’s alleged ways
Nussbaum Lowinger’s purchasers largely got here from Orthodox jewish communities in Lakewood, New Jersey, Brooklyn and Monsey, New York. Nussbaum allegedly supplied sure purchasers a profitable alternative. In the event that they despatched over funds into his agency’s escrow accounts he would pay a return.
One in all Nussbaum’s alleged means of manufacturing these excessive returns was by way of a novel transfer known as “show capital.” Nussbaum would wire escrow funds to actual property dealmakers to point out a lender they’d sufficient capital to shut on a transaction. The cash would seem within the accounts for a short-time, simply lengthy sufficient for a lender to conform to the deal, in accordance with lawsuits and court docket paperwork.
Primarily, Nussbaum’s “present capital” transfer allowed an actual property dealmaker to acquire a mortgage with no fairness. Nussbaum would acquire a charge alongside the way in which.
However in some unspecified time in the future Nussbaum ran right into a deficit and he couldn’t pay again his purchasers in full. One shopper, nursing residence govt Sod, filed a lawsuit in January demanding Nussbaum return $15 million in escrow funds. That lawsuit triggered extra Nussbaum Lowinger purchasers to file their very own fits, claiming that Nussbaum wouldn’t return their escrow cash.
Questions had been raised about the place the cash went.
At the very least $300 million went to a 33-year-old Borough Park investor Mendel Steiner, in accordance with Nussbaum’s court docket filings. One lawsuit alleges Nussbaum transferred the cash to Steiner who was supposed to purchase properties. However Steiner by no means purchased the properties and as a substitute used fictitious names and contracts in an try to show that cash was going to authentic offers, the lawsuit alleges.
Steiner died by suicide in January 2025. Days later Nussbaum Lowinger shut down his regulation agency.
Learn extra
Creditors seek at least $400M from Mark Nussbaum’s former law firms
Mark Nussbaum names names in new filings
Mendel Steiner’s Ponzi scheme fueled collapse of Nussbaum Lowinger, lawsuit alleges
