Former city dealmaker Sal Brancati (pictured) and a business partner have agreed to give back $15,000 of proceeds they made on the sale of an East Rock widow’s home — money that was supposed to go towards a fund for “crippled children.”
A settlement agreement submitted to New Haven Probate Court this week is the newest development in a case about how lawyers handle estates, how insiders get deals on property, and whether a community foundation and a fund for “crippled children” were shortchanged.
Probate Judge Jack Keyes (pictured below) received the settlement agreement at a status hearing Thursday, but did not approve it. He said he must schedule another hearing before doing so.
The agreement is a first step to settling a controversy — first reported here — over the handling of the estate of the late Margaret Amrich of 18 Cottage St. The elderly widow’s will dictated that the proceeds of her estate go toward a “crippled children’s” fund at the Community Foundation for Greater New Haven. Her estate’s executor, Attorney Gabriel Cusanelli, sold the property to his own business partners for only $250,000. His partners turned around and resold the house for $368,000 — a $118,000 profit.
Brancati and Perez’s signatures on the settlement agreement are a tacit acknowledgment that the estate, and therefore the fund for disabled children, was shortchanged by their actions. The settlement agreement is signed by representatives from the Community Foundation and from the office of Attorney General Richard Blumenthal, who launched an investigation into the deal to defend the interests of the non-profit agency.
The agreed-upon repayment doesn’t tackle the “core issue” of the case, explained attorney Irving Schloss, who’s representing the Community Foundation. It deals with a subsidiary issue: Brancati and Perez agreed to buy the home in August of 2005, continued to conduct repairs on the building, but never got around to purchasing the home until April 12, 2006.
During that eight-month delay, the estate was losing money each day. The delay even sparked a rift between Cusanelli and his business partners, Brancati and Perez. Cusanelli filed proceedings to try to evict the two from the home.
“Our investigation found they [Brancati and Perez] were unjustified in the delay in the closing,” reported Assistant Attorney General Karen Gano at the hearing Thursday.
The Community Foundation calculated the cost to the estate between the closing date and the actual closing date, plus the cost of utilities, said Schloss. “Fifteen-thousand dollars seemed like a reasonable figure.”
Under the terms of the settlement, Brancati and Perez would pay $15,000 of the $118,000 in proceeds, which have been put in escrow pending further action by the court. The “balance” of the proceeds would go to the sellers — Brancati and Perez.
“Not Done Yet”
What about the propriety of selling the estate to business partners? piped up Bill Donahue (pictured at right, with Schloss at left), a neighbor and friend of the late Amrich, at the hearing Thursday. Cusanelli was joined in business with Brancati and Perez in a partnership called PCB Ventures LLC at the time of the sale. Keyes responded that that matter was not encompassed in the settlement agreement.
Does the Community Foundation intend to pursue a claim against Robert Sacco, the man who brokered the sale of the home? Judge Keyes asked.
“We concluded there is no meritorious claim against him,” replied Schloss.
Left unaddressed after Thursday’s hearing was what Schloss called the “core issue” of the controversy: “The real question is, was the house sold at fair market value” when Cusanelli passed it off to business partners Brancati and Perez? “Did the estate get that to which it’s entitled?”
That question will be addressed in future hearings, Schloss indicated. He said he expected to pursue a settlement with Cusanelli.
Attorney General Blumenthal, reached by phone, said Donahue’s question about propriety would be part of his office’s ongoing investigation. He declined to get into specifics of what action may be sought, but said only: “We’re not done yet.”
Read previous Independent coverage of the Cottage Street sale here:
• Keyes, Blumenthal Go After 18 Cottage Profits
‚Ä¢ “‘Crippled Children’ Shortchanged?”
‚Ä¢ “AG Investigating Cottage St. Deal”
‚Ä¢ “City: Deal Was ‘Not Honest’”
‚Ä¢ “No Permits On File For 18 Cottage St.”
‚Ä¢ “Insiders Paid $250K; He Would Have Paid $350K”
‚Ä¢ “Ginsberg: We Never OK’d Insider Sale”
‚Ä¢ “Blumenthal Objects to Cottage St. Ledger”