State Bars Subsidies For Greer’s Companies

New Haven said yes to steering more money to companies controlled by imprisoned sex predator Daniel Greer. The state has now said no.

The state Department of Revenue Services (DRS) has quietly barred Greer’s companies from another $900,000 in government subsidies after decades of similar allocations, even though the Elicker Administration and the Board of Alders signed off on those tax breaks earlier this year.

DRS recently published a final list of approved proposals for the 2021 Neighborhood Assistance Act (NAA) tax credit program.

That’s the annual program whereby DRS provides state business tax credits to for-profit companies that make cash contributions to eligible nonprofits. The credits are supposed to be used to strengthen low-income housing stock.

Local nonprofits looking to participate must first win municipal-level approvals before the state makes a final determination as to whether or not they can solicit tax break-eligible donations.

For the first time in recent memory, Greer’s six local nonprofits — Edgewood Corners Inc, Edgewood Elm Housing Inc, Edgewood Village Inc, F.O.H. Inc, Yedidei Hagan Inc, and Yeshiva of New Haven Inc. — were not included in the final state-approved list.

The state’s decision reverses a recommendation made by the Elicker Administration and the Board of Alders earlier this year. (Update: The city spokesperson reiterated Friday the Elicker Administration’s argument that municipalities are limited by state statute to a purely administrative role in the taking in and passing along of NAA applications. See more below.)

DRS’s decision means that Greer’s companies will not be able to solicit up to $900,000 in state tax break-eligible donations this year through a government program that has long been critical for providing cash flow to Greer’s local nonprofits. Those companies own 53 affordable rental properties in the Edgewood neighborhood.

When asked for comment about why the state removed the Greer-controlled nonprofits from this year’s NAA list, DRS spokesperson Jim Polites told the Independent by email, ​“The Department works with municipalities to ensure their Neighborhood Assistance Act submissions meet statutory requirements, and can request certain information to help in this determination. Ongoing technical assistance and the Department’s auditing authority are tools that support our stakeholders and sustain confidence in administration of the program. On this front, the Department will not hesitate to take steps within its authority to ensure compliance with Connecticut tax laws.”

Citing privacy concerns related to individual taxpayer records, Polites declined to provide any explanation for why these six particular companies were not approved for the 2021 NAA program.

One of the criteria for participation in the competitive annual state tax credit program is that a non-profit organization is ​“limited to receiving $150,000 in contributions in the aggregate,” per the NAA website.

A federal judge’s recent order in an ongoing court case involving allegations of fraud made against Greer’s companies sheds a light on one longstanding criticism of the government’s annual allocations to Greer’s companies: The fact that he controls all of them, yet presents them each as separate entities. The judge’s order allows that fraud lawsuit to continue making its way through court in large part because of the legally separate companies’ admissions that they are all dominated and controlled by one person — Greer. (See more below.)

A representative from Greer’s local nonprofits did not respond to a request for comment by the publication time of this article.

City’s Official Recommendation Rejected

The state’s decision to remove Greer’s companies from the final 2021 NAA eligibility list comes roughly three months after the Board of Alders overwhelmingly approved the Elicker Administration’s recommendation that Greer’s companies be allowed to participate in the annual state tax credit program yet again this year.

Various levels of city government signed off on those companies’ bids to receive up to $900,000 in state tax credits through the competitive neighborhood-improvement program. The alders did so while stamping out any substantive debate of the matter during a public meeting.

City government granted those approvals even though Greer, a rabbi, remains behind bars, where he is currently serving a 20-year prison sentence for raping a former yeshiva student. (He has appealed the criminal case.)

Even though Greer has so far refused to pay his victim, a $21.7 million court-ordered civil judgment.

Even though Greer’s companies have been accused in federal court of funneling money to Greer while protecting him from paying the civil judgment.

Even though a federal judge has temporarily barred Greer’s companies from selling or otherwise cashing in on properties while the lawsuit continues.

Even though one erstwhile NAA donor to Greer’s companies pulled its 2020 contribution out of concerns of foul play (resulting in Greer’s companies suing that company in an ongoing court case involving alleged breach of contract.).

Even though the city conducts no substantive, independent review of how local NAA-eligible nonprofits like Greer’s actually spend the government-subsidized cash.

And even though the very properties Greer’s companies have promised to fix up appear to be losing tenants and falling into disrepair.

Mayor: ​“City’s Role Is Merely Administrative”

In a comment provided to the Independent Friday, city spokesperson Kyle Buda said that the Elicker Administration consistently tried, in vain, to get guidance from DRS about the impact of the ongoing fraud lawsuit on Greer’s companies’ applications.

He said the city’s Livable City Initiative reached out to DRS for guidance in the fall of 2020 and in March 2021, and received no answers both times.

“Further, in August of this year Mayor Elicker personally spoke with Commissioner Boughton and requested that DRS explore the state’s authority to deny NAA eligibility to these entities,” Buda wrote by email. ​“A letter with the same request was transmitted to Commissioner Boughton earlier this week.” Click here to read that letter.

“We would like to be able to take criminal convictions into account, unfortunately the state of Connecticut has the sole authority to approve or deny NAA applications,” Elicker told the Independent. ​“While we’d have liked to deny this applicant, the city’s role is merely administrative and gives us no ability to deny a complete application. I’ll be asking the New Haven delegation and the Connecticut General Assembly to review this statute and offer an amendment to provide authority to local governments.”

Earlier this summer, city Corporation Counsel Patricia King also authored a memo, defending the city’s decision to OK the tax break requests by Greer’s companies.

“While no one in the City administration in any way condones the sexual abuse of children or the hiding of assets from a judgment creditor,” she wrote, ​“the statute as currently written constrains the City from taking either of these factors into consideration in the approval process.”

“Further, the City has taken steps to bring these issues to DRS’ attention through the fall 2020 and April 2021 email and phone contact between [Livable City Initiative Deputy Cathy Schroeter] and DRS staff,” King continued. ​“The City now is confident that DRS as the decision maker is aware of the concerns raised by the participation of the Greer-affiliated Entities in the program and of the injunction issued by the federal court, and can make whatever use it wants of that information.”

Judge Allows Fraud Case To Continue

On Sept. 9, meanwhile, federal Judge Charles Haight, Jr. issued a 12-page order in the ongoing fraud case that allows that case to continue. Click here to read that order in full.

The case itself is called Eliyahu Mirlis v. Edgewood Elm Housing Inc., F.O.H. Inc., Edgewood Village Inc., Edgewood Corners Inc., and Yedidei Hagan Inc.

Mirlis, Greer’s former yeshiva student and rape victim, has alleged that the five Greer-controlled nonprofits are shielding Greer from having to pay out a still-unsatisfied $21.7 million civil judgment in a separate case from 2017. The so-called ​“reverse corporate veil piercing” case seeks to compel Greer’s companies to make good on the civil judgment that Greer and the Yeshiva have so far dodged paying.

The Sept. 9 order issued by Judge Haight follows a June court hearing debate over three specific legal motions. Those include:

• A motion by Greer’s companies for a so-called ​“summary judgment” in their favor — that is, for the judge to throw out the case in its entirety on the grounds that Mirlis has not and cannot prove that Greer’s companies have done anything illicit.

• A motion by Mirlis that he does not need to respond to motion for summary judgment until Greer’s companies have provided a host of requested information about how those companies operate. So far, those companies have provided zero discovery in the case.

• A motion by Greer’s companies to stay all discovery — that is, to allow them not to provide any information requested by Mirlis about how the corporations operate.

Ultimately, Judge Haight denied the latter two motions, and reserved his final decision on the first one until Mirlis provides a response to the summary judgment motion and until Mirlis offers a narrower discovery request about how Greer’s companies work.

Haight said he’s not convinced that Mirlis needs detailed financial and operational information about these companies dating back to the 1970s, when the substance of the lawsuit relates to a claim stemming from his being raped as a student between 2001 and 2005.

“I am unable to discern how years of Defendants’ corporate activity prior to 2001, the earliest time when Plaintiff could have even been a gleam in the predatory eye of Daniel Greer, would be germane to the particular issues raised by Defendants’ motion,” Haight wrote.

Nevertheless, Haight allowed the fraud case to continue making its way through court in large part because of an earlier admission by Greer’s companies that makes plausible Mirlis’s claims that they could be shielding money owed by Greer the individual.

That is: that Greer controls and dominates all five companies involved in the suit.

“Certain issues that ordinarily arise in veil piercing cases are mooted in this case by Defendants’ concession (for the purpose of their summary judgment motion only) that ​‘Greer dominated and controlled the Defendants,’” Haight wrote in his order.

Mirlis still has to prove that Greer used the corporations to commit a fraud, and that Greer’s control of the corporations proximately caused the injury of which Mirlis complains — that is, the lack of payment of the $21.7 million civil judgment.

“Again, the core issue has to do with the manner and effect of Greer’s control of the corporations and the effect of that control upon Plaintiff’s ability to collect the judgment,” he continued.

And yet, Haight wrote, this was still a consequential admission by these companies.

And it influenced the judge’s decision to reject the companies request for summary judgment — at least for now.

“The Defendants’ concession of Daniel Greer’s domination and control of the Defendants, tactical but probably inevitable given Greer’s ubiquitous presence as president of the corporations, sets the stage for a further factual inquiry under Rule 56(d), so long as that inquiry is governed and limited by the Rule and the cited cases.”