1‑Month Deadline Set On Yeshiva Foreclosure

A nonprofit controlled by imprisoned Rabbi Daniel Greer has less than a month to scrounge up $620,000 to pay the convicted sex offender’s victim and retain control of the historic yeshiva building at the corner of Elm Street and Norton Street.

That was the outcome of two recent decisions by two different judges in separate but related state and federal court cases.

The first decision came down Friday from federal Judge Charles Haight, Jr. in the so-called ​“reverse veil-piercing” case Eliyahu Mirlis v. Edgewood Corners Inc, Edgewood Elm Housing Inc, Edgewood Village Inc, F.O.H. Inc, and Yedidei Hagan Inc.

The second decision came down Monday from state Superior Court Judge John Cirello in the foreclosure case Eliyahu Mirlis v. Yeshiva of New Haven Inc.

Both concerned Mirlis’s ongoing attempt to take control of the red-brick yeshiva school building at 765 Elm St. as part of a long-stymied attempt to collect on a largely unpaid $22 million civil judgment against Greer. Greer, meanwhile, remains in prison, where he is serving a 20-year sentence for raping Mirlis while the latter was a student at that very same Edgewood Yeshiva. (Greer has appealed the criminal case.)

At question in the relevant parts of these two federal and state judicial decisions is whether or not Mirlis should be able to take ownership of the foreclosed-upon Elm Street school building, or whether the Greer-controlled nonprofit Yeshiva of New Haven Inc. can retain ownership by paying cash directly to Mirlis through the court.

Cirello’s state court decision confirmed that the Greer-controlled Yeshiva of New Haven nonprofit can continue owning and operating the school property if it pays Mirlis $620,000 in cash by Feb. 22.

Based on a contentious state court hearing Monday morning, that outcome will likely be appealed in some way. Mirlis’s attorney argued during the hearing that the property is worth far more than $620,000, and that the nonprofit should instead have to hand over the foreclosed property to Mirlis so that he can sell it at whatever price he can fetch. 

The attorney for the Greer-controlled nonprofit, meanwhile, asked the court for six extra months to be able to raise $620,000 in cash to allow it to retain ownership and allegedly continue to host a Jewish educational program which the organization claims to have ​“somewhere north of 10” adult students currently attending classes at the Elm Street building.

Click here to read Cirello’s state court decision, and here to read Haight’s federal court decision.

Federal Judge Signs Off On Sales

The city sold the building, the former Roger Sherman School, to Greer’s organization in the 1980s. It became a religious school and prayer gathering place that served as the centerpiece of his organization’s efforts, through a variety of technically separate nonprofits, to rebuild the surrounding neighborhood. The school closed as the larger enterprise fell apart upon Greer’s arrest and conviction.

Haight’s federal court ruling on Friday came in a decision dealing with an attempt by Greer’s housing nonprofits to modify a temporary restraining order (TRO) in such a way that they could redirect money meant for housing towards paying Greer’s and the yeshiva’s lawyers.

While Haight turned down the five nonprofits’ request to use housing money on legal fees, he did permit the nonprofit to potentially sell off some of their 50 two- and three-bedroom rental properties in the Edgewood neighborhood in order to raise enough cash to keep the yeshiva out of foreclosure.

Haight was convinced enough, for now, by the housing nonprofits’ arguments that: 1) they exist in part to raise money to support the religious school, and 2) their providing money to the yeshiva to keep the building out of foreclosure will not materially hurt Mirlis’s bid to collect on the unpaid $22 million civil judgment, because it would see Mirlis get paid in cash the equivalent of the ​“fair market value” of the Elm Street property itself.

“Accordingly, unlike Defendants’ proposal to pay the Yeshiva’s lawyers, Mirlis himself would be the ultimate recipient of any funds authorized by the Connecticut Superior Court in lieu of his judgment lien,” Haight wrote in his federal court decision. ​“Moreover, as Mirlis states, the Foreclosure Action is ​‘based on the underlying judgment entered against [Greer] and the Yeshiva by the Hon Michael Shea.” Doc. 92 at 2. Therefore, the concern underpinning the TRO – that Defendants will place their assets beyond Mirlis’s reach and reduce his ability to recover the Judgment – is not implicated by Defendants’ second proposed modification.”

Haight included a key caveat in his federal decision, however.

He ruled that Greer’s nonprofit can pay Mirlis $620,000 in cash and retain control of the Yeshiva building only if the Connecticut state court judge overseeing a parallel foreclosure action on that same property signs off on such a deal.

State Court's "Hot Potato"

The relevant hearing in that state court foreclosure case took place online via live videostream on Monday morning.

State Superior Court Judge Cirello heard arguments from Mirlis attorney John Cesaroni and Yeshiva of New Haven attorney Jeffrey Sklarz on whether or not to grant the yeshiva’s request to reopen an existing judgment of strict foreclosure against the Elm Street property for the sake of extending the ​“law day” from Jan. 31. Sklarz was joined in virtual court by attorneys Richard Colbert and David Grudberg, who also represent Greer and various Greer-controlled nonprofits in separate but related civil and criminal cases. 

(In foreclosure legalese, ​“law day” refers to the last day that the owner of a foreclosed property can pay off outstanding debts and retain control of the property before its handed over to a creditor or, in this case, the holder of a judgment lien.)

“I feel like this is a hot potato that nobody really wants to enter a decision on,” Cirello said at the top of the hearing, referring to Haight’s federal court ruling. The federal court ​“essentially kind of dumped it in my lap as to how to proceed.”

Cirello asked Cesaroni if his client, Mirlis, would be OK with accepting $620,000 in cash from the yeshiva instead of taking control of the building itself. 

“We still object to there being a substitution of a bond or funds in lieu of a judgment lien at this point,” Cesaroni replied.

He objected for two reasons: 

First, this foreclosure action on the yeshiva property has gone on for over four years. In that entire time, during state court and appellate proceedings, the yeshiva nonprofit has never pointed specifically to the funds it plans to use to pay Mirlis, or the rental properties its related nonprofits plan to sell to raise such funds.

Cesaroni also said his client thinks that the $620,000 valuation of the Elm Street school building property is now ​“stale.” State Superior Court Judge Claudia Baio set that $620,000 valuation back in February 2020 after reviewing contested appraisals from 2019. The city, meanwhile, last appraised the property as worth over $6.5 million.

“The property has appreciated in value, and we would really need another hearing to determine what is a sufficient bond,” Cesaroni said.

That would inevitably lead to more appeals and more delays, he continued. 

“The plaintiff’s best interest is to take title and then he could sell the property and get whatever it’s worth,” Cesaroni said.

Cirello then turned to Sklarz. Where is this money going to come from? he asked. ​“You haven’t presented anything along those lines to inform the court what assurances you’re giving Attorney Cesaroni’s client that they’re going to get paid.”

Sklarz explained that the money would take the form of cash. If the yeshiva nonprofit doesn’t have adequate funds on hand, he said, then the related housing nonprofits — per Haight’s federal court order — would likely sell off some properties to raise those funds.

“I was going to ask for six months,” Sklarz said, to give the nonprofit time to ​“sell the property or get a mortgage on the property.”

Six months is a long time, Cirello said, especially in an ever-fluctuating real estate market. ​“Where are interest rates going to go? What’s the value of the property? Has it increased in value?”

Sklarz said that the rental properties that the related housing nonprofits would sell are ​“all income-producing property, some retail and office space. It’s valuable property. It’s not a bunch of dilapidated lots. These are valuable pieces of property.”

Skalrz and Colbert estimated that the roughly 50 two- and three-bedroom rental properties owned by the related housing nonprofits are valued by the city at around $10 million in total.

Colbert told the state judge that the yeshiva, with the help of the related housing nonprofits, could likely put down 20 percent, ​“maybe more,” of the $620,000 court-set cash bond value soon, and then raise the rest of the money over the next few months.

Cesaroni pushed back again on that request for more time to raise $620,000.

“We’ve been in this foreclosure action for four-and-a-half years,” he said. ​“Now they’re asking for another indeterminate amount of time so that they could possibly sell some properties and possibly raise some cash.” For an amount, by the way, that Cesaroni’s client still thinks is well below the true value of the Elm Street property.

What's Happening In School Building Now?

“I have no idea to what extent or how they’re using” the Elm Street building today, Cesaroni said about the Greer-controlled yeshiva nonprofit.

“It appears it’s still operated as a school building.”

Cesaroni said that, if Mirlis takes ownership of the Elm Street building, ​“there is interest in the building as a school, especially within the Orthodox Jewish community, which we think adds substantial value to it.”

Cirello then turned back to Sklarz. ​“Are their current students in the school now?” the judge asked. ​“How many are there? What grades?

Sklarz said he believes that there are indeed still students attending classes at the yeshiva. ​“I haven’t been to the building to observe this,” he said. He pointed to a brochure for the yeshiva that he had included in a recent court filing in the foreclosure case. He said he does not know how many students currently attend that program.

“Can you give me a round number?” Cirello pressed. Are there roughly 10 students? 50? 500?

“I would say it is somewhere north of 10, but again, I am speculating,” Sklarz replied.

Sklarz added that however many students there are at the yeshiva are adults. ​“There’s no minors at the school,” he said.

Judge Cirello's Decision

Cirello closed out Monday morning’s hearing by promising a decision soon. ​“I would like to take a little time, review the law, review your pleadings, and make a decision,” he said.

As promised, later Monday afternoon, Cirello handed down a three-page decision.

The decision was clear in its denial of Greer’s nonprofit’s request to reopen the strict foreclosure judgment.

It was clear in its extension of the ​“law day” from Jan. 31 to Feb. 22.

And it appeared to affirm the propriety of the yeshiva paying Mirlis $620,000 in cash in exchange for retaining control of the Elm Street school property. He did so be referring to Judge Baio’s order from February 2020 permitting such a cash-bond substitution.

Otherwise, the bulk of Cirello’s order is dedicated to a re-listing of some of the facts discussed during the Monday morning hearing. 

Those included, to quote the decision directly:

1. YESHIVA currently does not have enough funds to produce the cash bond.

2. YESHIVA currently has cash on hand to put up 20% of the cash needed for the bond. Counsel for YESHIVA, was unable to give the court an exact figure of how much cash would be produced and speculated that it would be 20%.

3. YESHIVA is requesting a new law day, 6 months from now in order for the affiliated nonprofits to sell assets in order to pay the cash bond. Attorney Coldbert testified that the affiliated nonprofits were commercial and residential rental properties that had an estimated value of $10,000,000.00. He was unaware of the current value of the school house which is the subject of this action. He did not present evidence as to which buildings would be sold in order to produce the funds to pay for the cash bond.

4. YESHIVA’s counsel did not present potential buyers for the assets mentioned above or a plan on how the bond would be paid for.

5. YESHIVA’s counsel did not know how many students attended the school and could not speculate as to the number of active students. YESHIVA did state that all the students were adults and there were no minor students at the school.

6. YESHIVA’s counsel could not provide the current market value of the school and relied upon the appraised value of the subject property which was $620,000.00 pursuant to Judge Baio’s decision of February 24, 2020.

7. YESHIVA has had months to come up with a plan to pay the full cash bond. As of today’s argument, no plan has been presented to the court. In the alternative, YESHIVA, is asking the court and the plaintiff to take it on faith, that they will do what is necessary to come up with the cash to pay the bond in a timely manner.

8. This case has been pending since July of 2017. There have been numerous delays due to the an appeal and standard motion practice.

9. The plaintiff, Mirlis Eliyahu (“ELIYAHU”) has been waiting through these delays and is anxiously awaiting a final resolution of this matter.

Cirello concluded his decision by turning down the Yeshiva nonprofit’s request to reopen the strict foreclosure judgment and extend the law day by six months. He explained his decision by writing that ​“there are no assurances provided to ELIYAHU when and how the cash bond would come into being, or any assurances that the debt owed would be paid.”

“Nevertheless,” Cirello wrote, ​“the court must extend the law day to February 22, 2022.”