Controversial Developer Of 'Deplorable' Prospect Park Residence Defaults On Building's Mortgage

1 Prospect Park West (Photo by Park Slope Stoop)

Karma’s a bitch, isn’t it?

Messing with the elderly and their families may finally have come back to haunt real estate developer Haysha Deitsch, who hasn’t been having his most lucrative month. Not only does he have to pay out $3.35 million in a recent settlement, he has also defaulted on the building’s $33.4 million mortgage.

The drama began in 2014 when the developer threatened to evict the elderly because of “financial hardship,” created “deplorable living conditions,” raised the ire of local and citywide politicians, and at one point refused to turn on the air conditioning for the residents. Deitsch intended to empty the building of residents so that he could sell it for $76 million to Sugar Hill Capital Partners. He bought the building in 2006 for $40 million.

According to Brooklyn Paper, a real estate investor called One Prospect Park Holder, LLC is foreclosing on the property after purchasing Deitsch’s debt.

Just weeks ago, five elderly women who refused to leave their apartments at the residence reached a $3.35 million settlement that Deitsch has to pay out, providing each tenant with $533,333 and an August 31 extension.

Prospect Park residents hold signs in response to elderly evictions during a demonstration in 2014. (Credit: Prospect Park Residence/Facebook)

Deitsch’s attorney Frank Carone plans to fight the lawsuit, however he has not been clear about their reason for doing so.

There is one massive downside for families who are currently suing Deitsch in a separate wrongful death lawsuit for seniors who died in the residence. A $10 million lien — which was placed on the property and set aside to pay those families should they win the wrongful death lawsuit — could vanish due to the mortgage default.

“It means my clients might not get paid,” said John O’Hara, the attorney in charge of seven pending death lawsuits. “That was the whole point of the order of attachment,” he told Brooklyn Paper.

New York City Councilmember Brad Lander stands senior residents outside their Prospect Park Residence home in 2014. Courtesy: Councilmember Lander

O’Hara believes that both Deitsch and One Prospect Park Holder — the company foreclosing on the property — may be in cahoots.

He has filed a counterclaim “alleging that Prospect Park Holder is really Sugar Hill Capital Partners, the real-estate fund Deitsch was supposed to sell the building to in 2014, before residents sued and a judge ordered him to keep the home open throughout the two-year legal battle,” reports Brooklyn Paper. “O’Hara’s suit alleges the firm is colluding with Deitsch in order to complete the exchange without the expense of the liens.”

Lawyers for both Deitsch and and One Prospect Park Holder deny the claim that collusion is taking place.

While Deitsch could soon be out of the picture from 1 Prospect Park West, his development presence will remain for now in the neighborhood. The “pet-spa” luxury rental planned at 243-245 4th Avenue (between President and Carroll Streets) is helmed by the controversial developer.

Stay tuned to see how much of a bitch karma really is.