Nevada condominium residents fear their money is being diverted to First National Center in Oklahoma City
Victims of insurance embezzlement by First National Center owner Aaron Yashouafar say they have yet to be compensated for their losses and are questioning the source of payments being made to Capmark Bank to prevent the Oklahoma City landmark being turned over to a receiver.
Victims of insurance embezzlement by First National Center owner Aaron Yashouafar say they have yet to be compensated for their losses and are questioning the source of payments being made to Capmark Bank to prevent the Oklahoma City landmark from being turned over to a receiver.
Promises and problems
Oklahoma City's First National Center, the pride of the downtown skyline when it opened in 1931, faced having its utilities shut off when its New York-based ownership sold the property in 2006 to investment groups led by Aaron Yashouafar.
The $21 million sale surprised several downtown real estate players who questioned how the price could have shot up from its sale for $5 million in 1999.
Investment groups led by Aaron Yashouafar, chief executive officer of Los Angeles-based Milbank Real Estate, pledged to spend millions to restore the building as Class A office property. Aaron Yashouafar, his brother, Solyman Yashouafar, and nephew, Raymond Yashouafar, courted local leaders and boasted of their track record as successful, award-winning building owners.
“We stand by our word,” Raymond Yashouafar said in a presentation to an exclusive 2006 gathering of civic leaders at the Oklahoma City Golf and Country Club. “We have a good reputation where we've already done work. The previous ownership made a lot of promises and didn't follow through. We don't do that.”
Six years later, the Yashouafars' track record includes being named among New York City's top slumlords by The Village Voice, bankruptcies and foreclosures in California and Oklahoma, and a resident revolt at their Sky Las Vegas condominiums. First National Center, meanwhile, is set to lose about half of its income stream when a lease with Devon Energy expires next year.
Aaron Yashouafar pleaded guilty in July to a felony count of embezzlement of an insurance settlement for fire damages at the Paradise Spa condominiums in Las Vegas.
He first sought to pay $1 million in restitution to Paradise Spa residents over a one-year period. But Clark County, Nevada, Judge Carolyn Ellsworth ruled that the full restitution be paid before the Nov. 14 sentencing. The plea also requires Yashouafar to serve a minimum 30 days incarceration.
In an interview Tuesday, Yashouafar disputed the extent of harm experienced by Paradise Spa residents, saying he owned most of the fire-damaged units and only a couple of residents were displaced. He called an effort by the Paradise Spa homeowners board to publicize their complaints “propaganda” and said they are guilty of sloppy accounting.
“Unfortunately, they have ulterior motives, and you are being played,” Yashouafar said when questioned about the case.
Yashouafar entered the guilty plea after an investigation by Nevada Attorney General Cortez Masto, who claimed Yashouafar defrauded the condominium residents of more than $1 million when he was treasurer of the homeowners association board of directors. Masto accused Yashouafar of collecting two insurance checks, one for more than $400,000, the other for more than $430,000, and depositing them in an out-of-state bank account instead of using the funds for repairs.
“Older victims, many of whom were living on fixed incomes in Paradise Spa, were forced to find and pay for alternative living quarters when they were still obligated to make mortgage payments on their burned condo units, while waiting for repairs that would never be made,” Masto said.
Bill O'Donnell, president of the Paradise Spa homeowners association, told The Oklahoman some of the fire-damaged condominiums now are cement slab foundations while other fire-damaged homes remain boarded up.
“He has ripped this place apart,” O'Donnell said. “It's like watching a rape or robbery in slow motion and not being able to do anything about it. My only hope is that there is a court date in November. This guy has done nothing. We're here suffering until he makes his payments.”
O'Donnell said his board opposes a request by Yashouafar's attorneys to subordinate their liens against the California businessman for the stated intent of refinancing his mortgage on the property. O'Donnell fears that money could go toward paying off a $12 million mortgage with Capmark Bank for First National Center. Yashouafar's investment groups emerged from a foreclosure action and bankruptcy on the Oklahoma City property this year but have been unable to pay off the mortgage.