The legal and financial troubles for the owner of downtown Oklahoma City's First National Center now include a six-count indictment charging him with theft by false pretenses and embezzlement in connection with a senior condominium property.
M. Aaron Yashouafar heads up two partnerships that bought the First National Center in 2006 for $21 million with promises of restoring it to Class A status. Instead, the property is in bankruptcy and its largest tenant, Devon Energy, has filed suit alleging Yashouafar has failed to maintain the building's elevators. The judge in the bankruptcy case, Niles Jackson, ruled Monday in favor of Devon Energy's request to arrange for inspections of the elevators.
That ruling is overshadowed, however, by the announcement by Nevada Attorney General Catherine Cortez Masto that a Clark County grand jury on Dec. 16 returned a six-count indictment against Yashouafar for the alleged defrauding of $1 million from the Paradise Spa Home Owners Association.
“This type of crime is particularly jarring when you realize that 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 in a news release.
Yashouafar, 50, Beverly Hills, Calif., was not available for comment on Tuesday. The indictment alleges the following: Yashouafar, who served as the treasurer of the Paradise Spa board of directors, received insurance checks for two fires which occurred on Sept. 18, 2009, and Jan. 15, 2010.
In his capacity as treasurer of the Homeowners Association he was provided two checks, one for more than $400,000 and the other check for more than $430,000, issued by the Civil Service Employees Insurance Group, for property damage to two separate buildings caused by fires, according to the indictment. The insurance checks were issued for repairs.
The jury determined that rather than repair the buildings, Yashouafar deposited the checks in an out-of-state bank account that he controlled. According to several Nevada news organizations, condo owners, many of them seniors, were forced to find other living arrangements, while still making mortgage payments on their uninhabitable units.
The indictment goes on to allege that in some cases, Yashouafar rented units he owned to the displaced condo owners, resulting in them paying him rent while they waited for repairs that were never done because of the alleged theft.
Masto said bank records show that in September 2009, Yashouafar, in his capacity as treasurer, wired more than $250,000 from the Paradise Spa operating account. She said he subsequently deposited that money into an out-of-state account and disbursed the money into various personal projects.
Records show the Yashouafars are experiencing difficulties with properties across the country. The Roosevelt, a historic building in Los Angeles, was placed in bankruptcy while it was being converted into condominiums.
And more than a dozen properties in the Bronx went into bankruptcy as tenants' complaints prompted The Village Voice to list Yashouafar among New York City's top slumlords.
Bronx housing officials alleged tenants in Yashouafar's properties endured “horrible” living conditions as his company, Milbank Real Estate, overleveraged their buildings.
Yashouafar's partnerships declared bankruptcy after First National Center was foreclosed upon by Capmark Group. Devon Energy officials estimate they lease about half of the complex's 1 million square feet of office space. The company's lease is set to expire in 2013, but Devon's operations will move to its new headquarters at 333 W Sheridan by mid-2012.
In court testimony earlier this year, Keith Armstrong, a vice president with Capmark, argued Yashouafar's group won't be able to keep up with $1.5 million in debt service on the property once Devon's lease expires.