Billionaire Developer Forced To Pay Out Buyers After Concealing Condo Conversion Costs
The Pinnacle Group, once one of the largest owners of housing in New York City, has paid hundreds of thousands to settle a lawsuit that alleged it hid the extent of necessary gas pipe repairs from condo units marketed for sale.
Pinnacle, run by billionaire CEO Joel Wiener, converted the rent-stabilized building at 109-20 Queens Blvd. to condos several years ago, but failed to disclose needed repairs to the building's gas lines, according to a settlement with New York Attorney General Letitia James first reported by The City.
Pinnacle, which has amassed a portfolio of thousands of properties in NYC and completed dozens of condo conversions, agreed to pay $330K to the condo association’s reserve fund to cover the costs of gas piping and agreed to pay $150K in penalties to the Department of Housing Preservation and Development, The City reports.
“Joel Wiener and Pinnacle Group cut corners to protect their own fortune, and unfairly transferred the burden of a major repair onto hardworking homeowners,” James told The City. “Developers must deliver on their promises.”
Condos in the Forest Hills building, which is known as The Georgian, have consistently sold above their asking prices since going on the market in June 2017, according to records from StreetEasy.
Sabrina Gao, the condo board president who purchased her unit in summer 2017, told The City that she was unaware of gas repairs at the time of her purchase. Other residents didn’t learn about the extent of the repairs — or the cost — until they were already in progress.
“The sponsor knew that there was an issue, waited until they had the reserve fund funded, and then took money from the reserve fund to fix the issue,” a third-floor homeowner who declined to provide his name told The City. “Whereas, you know, if they knew about it, they should have done it before even trying to turn it into a condo. And that way, they’re not kind of paying themselves back for repairs that they should have paid for.”
Gao didn’t learn about the repairs until a November 2018 condo board meeting. Pinnacle allegedly failed to disclose that it was replacing gas pipes in three subsequent amendments until one in 2019. With two other members of the board, Gao filed a complaint regarding maintenance and management transparency in March 2019 after a gas leak in the building.
In the settlement agreement, the company said it hadn’t received any complaints until October 2021, and that a third party inspector had signed off on the gas piping’s condition both before and after the condo conversion application was approved.
A company spokesperson told The City that maintenance costs were fully disclosed to unit buyers. However, other residents at The Georgian alleged that Pinnacle had also included overcharges hidden within their maintenance fees.
The settlement isn’t the Pinnacle Group’s first. It agreed to pay $1M to 300 tenants in a rent-stabilized Bronx apartment building in 2006 after overcharging them and hired a forensic accountant to review its rental rates in the city. In 2011, the company settled a class-action lawsuit after rent-regulated Bronx tenants alleged eviction attempts, price gouging and harassment. Last year, Pinnacle agrees to shell out another $50K to tenant organizing nonprofits after it failed to apply for a front door lock system change at a Flushing building it converted from rent-stabilized to condo units.
