February 6, 2012 Leave a comment
Michael Shah smiles as he sits in one of the mismatched wooden chairs that contribute to the decor of his Lower East Side restaurant Sons of Essex, a local hot spot that regularly pops up in the gossip pages as the backdrop in photos of partying glitterati. It’s one of at least seven upmarket properties Mr. Shah has acquired in the past four years as he has moved beyond his original focus on affordable housing in the outer boroughs. Mr. Shah’s new growth spurt has been fueled by snapping up properties with problems such as loan defaults and then working them out.
“I find it really exciting,” said Mr. Shah, owner of DelShah Capital, a real estate investment firm.
His latest clash, though, may be a bit too exciting. He is battling the city over fraud charges it leveled last month stemming from unpaid taxes on four of his early purchases. A nonprofit called the African-American Parent Council bought the buildings between 2006 and 2008 and transferred the deeds to companies controlled by Mr. Shah within six months, according to city records. Nonprofits are exempt from paying transfer taxes. Mr. Shah is not. The city says he should have paid the taxes when he took possession, and that it noted a pattern of transactions designed to avoid his tax obligation, according to a spokesman for the city’s Finance Department. With interest and penalties, the city says, Mr. Shah now owes $3.1 million.