August 27, 2019
SUPERINTENDENT OF FINANCIAL SERVICES LINDA A. LACEWELL AND NEW YORK ATTORNEY GENERAL LETITIA JAMES ANNOUNCE $2.77 MILLION SETTLEMENT WITH ATALAYA CAPITAL MANAGEMENT FOR ITS ROLE IN FACILITATING UNLICENSED AND PREDATORY LENDING BY VISION PROPERTY MANAGEMENT
Atalaya Will Pay $2.4 Million in Restitution to Consumers, Including $20,000 for 108 Identified Properties, and a Civil Penalty of $250,000 to New York State
Company Will Cooperate with DFS and NYAG in Their Lawsuit Against Vision and Vision’s Affiliates to Put an End to Predatory Subprime Home Loans in Lease-to-Own and Contract-for-Deed Properties in New York
NEW YORK − Superintendent of Financial Services Linda A. Lacewell today announced that the Department of Financial Services (DFS) and New York Attorney General (NYAG) Letitia James have reached a $2.77 million settlement with Atalaya Capital Management LP, an investor and business partner of Vision Property Management, for its role in facilitating Vision’s operation of an illegal, unlicensed mortgage-lending business profiting from predatory subprime home loans at the expense of economically vulnerable New Yorkers. Under the settlement announced today, Atalaya will pay $2.4 million in consumer restitution ($20,000 for each identified property), a civil penalty of $250,000 and additional relief of about $123,800, as well as cooperate with DFS and the NYAG’s Office in their litigation against Vision, its affiliates and Vision CEO Alex Szkaradek.
“This settlement will help put an end to Vision’s illegal and predatory operations, which were facilitated by investments from Atalaya, and provides a measure of restitution to New York consumers who were left holding the bag with further debt, uninhabitable properties and broken dreams,” said Superintendent Lacewell. “DFS will continue to use all of the tools at its disposal to protect New Yorkers from predatory companies seeking to take advantage of them.”
“Aspiring homeowners across the state can rest assured that the corrupt partnership that defrauded New Yorkers and tricked our state's homeowners into buying decrepit homes for nearly a decade is finally over,” said Attorney General James. “Not only are we ensuring that Atalaya will no longer be able to invest in or assist Vision Property Management's illegal, deceptive, or abusive schemes that targeted New Yorkers, but, today, we are finally providing their innocent victims with some semblance of restitution. Anyone who preys on innocent, hard-working New Yorkers is on notice that my office will hold them accountable and make them pay the price.”
DFS and NYAG filed a lawsuit earlier this month against Vision, its affiliates and CEO, alleging that the company engaged in deceptive, unlawful, unfair and abusive practices, including offering disguised seller-financed loans as lease-with-option-to-purchase (LOP) agreements and engaging in unlicensed mortgage lending.
Atalaya began working with Vision in 2012, providing financing to Vision, which buys severely distressed properties and markets them at a substantial markup with high-cost, interest rates − in the range of 10% to 25% − to consumers without making any repairs or renovations, passing those obligations and costs to the consumer.
Atalaya formed and controlled ACM Vision V LLC (ACM REIT), a Delaware limited liability company that is owned by an investment fund managed by Atalaya Capital Management LP. ACM has two active Vision properties and, as part of the settlement, has agreed to turn title for those properties over to the residing consumers, at a value of about $123,800 in additional relief.
An investigation by DFS and the NYAG’s Office found that Atalaya had knowledge of the terms of Vision’s LOP agreements and how they were priced, accounted for and represented to consumers. In addition, Atalaya knew or should have known that Vision was not providing consumers with all legally required disclosures designed to help them understand the terms of their transactions and that Vision was not licensed to make and originate loans in New York. By funding Vision’s operations and helping to structure the LOP agreement, Atalaya also enabled Vision to carry out its deceptive abusive and fraudulent acts and practices.
According to the investigation, Vision and its affiliates used Atalaya financing in connection with at least 108 transactions for residential real properties primarily located in central and upstate New York, plus the two properties owned by ACM REIT.
In addition to cooperating with the lawsuit filed against Vision and other remedies, under today’s assurance of discontinuance with DFS and the NYAG’s office, Atalaya will take the following actions:
- ACM REIT will cease all business in New York or register with the New York Department of State to do business in New York;
- ACM REIT will pass title for the properties to which it holds legal title to the consumers currently in contract for those properties, finalizing the sale of those properties; and
- Atalaya will pay restitution of $20,000 per transaction, for 108 transactions, to consumers with whom Vision entered transactions for properties in New York acquired with funding provided by Atalaya. A remaining amount of $240,000 will be held in escrow in the event that additional Atalaya funded transactions are found.
Atalaya, its officers, directors, successors, agents, employees are also prohibited from engaging in any unfair, deceptive or abusive acts or practices, repeated fraud, and before engaging in any project, venture or investment, the company will conduct due diligence to assure that it will not be or is not in violation of law.
A copy of the settlement agreement can be found on the DFS website.
Consumers who believe they may have been affected can file a complaint at www.dfs.ny.gov/complaint, or call the hotline at (800) 342-3736. The hotline is available Monday through Friday, 8:30 AM to 4:30 PM (local calls can be made to (212) 480-6400 or (518) 474-6600).