A Real Estate Auction With A Checkered Background - 27 East

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A Real Estate Auction With A Checkered Background

author on May 7, 2019

A real estate investing family that boasts one of the largest portfolios of privately owned real estate on Long Island, and a storied history of controversy and legal intrigue—including the only presidential pardon that was ever revoked—is hoping to entice buyers by holding an “auction” of more than 200 properties across Long Island, including several on the South Fork, later this month.

The 10 properties in Southampton and East Hampton that are to be put up for auction are but a fraction of the properties owned by Robert Toussie and his son, Isaac, or one of the many family names and corporate entities through which they own property.

Included in the auction of 236 properties—mostly in Babylon, Brookhaven or Islip—are five lots in Southampton Town and five in East Hampton. The South Fork properties are a mix of developed and undeveloped lots, all of which have a minimum bid, or “upset price,” for them to be sold. In most cases, the minimum price listed appears to linger somewhere near what the property could be expected to fetch on the open market, according to local real estate watchers.

There are two large tracts of undeveloped land. One, on Manor Lane in Springs, totals 15 acres and could be subdivided into no more than three building lots. The minimum bid on the property, according to the auction brochure, is $4 million. A 13-acre parcel in Noyac, which the brochure claims can be divided into four lots, has a minimum bid of $4.5 million.

A 12,000-square-foot mansion on 9 acres of land in northern Water Mill has a minimum bid of $6.5 million.

An 8,000-square-foot parcel on Bryant Street in Springs has a minimum price of $400,000, even though the vacant parcel would not be able to be developed without being merged with additional land because of its small size.

The auction format would appear to be designed to stir interest from buyers, even though the minimum prices would seem to preclude any substantial bargains.

“I guess it’s supposed to get everyone hot and bothered,” Douglas Elliman broker Paul Brennan said of the auction format.

The approach is similar to an auction organized by two local brokers in 2009 to auction off 17 South Fork properties that had been languishing on the sale market. The auction received a flurry of bids—but only one met the minimum price threshold.

The company that is putting on the auction, on Tuesday and Wednesday, May 14 and 15, at the Hyatt Regency in Hauppauge, is called Suffolk County Land Auction LLC. A disclaimer in the brochure promoting the event notes there is no connection to any municipality.

Suffolk County regularly auctions off property at tiny fractions of their market price—which is where the Toussies have purchased many of the more than 1,000 properties they reportedly own across the island.

The Toussies have made fortunes building residential developments, and have been acquiring individual properties around the island for decades. They have also been amassing legal battles nearly as prodigiously.

The elder Mr. Toussie has been involved in what can safely be described as dozens of legal fights over his real estate dealings. He was sued in 2002 by former state Attorney General Eliot Spitzer for conspiring with a Suffolk County official—then-county Division of Real Estate Director Allan Grecco—to sell the county a large parcel of land called the Chandler Estate in Mount Sinai at an inflated value in exchange for directing business to a company Mr. Grecco owned. The lawsuit was dismissed in court in 2005, mostly on the basis that the County Legislature had approved the Chandler Estate sale.

The younger Mr. Toussie, however, was convicted of mail fraud in 2002 after admitting to having duped Suffolk County officials into overpaying for land, and he had previously pleaded guilty to defrauding a government mortgage insurance program.

In 2007, outgoing President George W. Bush granted Isaac Toussie a presidential pardon. But the pardon was rescinded by the White House one day later, after news broke that Robert Toussie had donated more than $38,000 to Republican campaign programs that year.

The elder Mr. Toussie has a long legal history locally as well. He is still embroiled in a lawsuit brought against him by former East Hampton Town Republican Party Chairman William Gardiner, over a land deal that Mr. Gardiner claims Mr. Toussie defaulted on.

Mr. Gardiner had sold a 6-acre tract of land to Mr. Toussie for about $1 million and gave Mr. Toussie a mortgage on the sale price. He says Mr. Toussie’s company, Prand Corp LLC—one of more than 40 such corporate entities that are registered to Mr. Toussie’s Brooklyn address—paid just $250,000 of the agreed-upon total, in the down payment and a few of the early mortgage payments, but then stopped paying.

In 2012, Mr. Toussie sold the land to East Hampton Town to be preserved as open space, for $3 million from the town’s Community Preservation Fund.

Mr. Gardiner’s lawsuit against Mr. Toussie, and East Hampton Town’s title insurance company, is pending.

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