7-19-23 As seen in the Rochester Business Journal - Landmark Rochester East End properties head to foreclosure auction -John McAndrew of Woods Oviatt represented M360 in the proceedings.
Three landmark commercial properties in Rochester’s East End District will be up for auction next month, the latest step in protracted foreclosure proceedings by a California-based lender that began more than three years ago.
The Hiram Sibley Building, at the southwest corner of East Avenue and Alexander Street; the Valley Building, which is next door at 337-339 East Ave.; and the Fitch Building at the northwest corner of East and Alexander, will be sold at auction by lender M360 Community Development Fund LLC.
The foreclosure auction also includes several adjacent parking lots. In all, there are 10 properties to be sold, quite possibly as a package, at 10 a.m. on Aug. 3 in the lower lobby of the Hall of Justice in Rochester.
The lender is owed $18.2 million in principal and interest by East/Alexander Holdings LLC and Louis Masaschi. The total amount due will very likely surpass $19 million after back taxes, legal fees and accruing daily interest of $4,525.24 is applied.
Louis Masaschi, of Longmeadow, Mass., is the brother of Rochester developer Thomas Masaschi. Louis Masaschi and his wife, Jeanette Norman, face federal charges in Massachusetts for their roles in an alleged scheme to defraud commercial lenders, federal prosecutors say.
They were indicted in U.S. District Court in Springfield, Mass., in May. No Rochester properties were listed in the federal complaint, although two of the LLCs named (JLL Realty Developers LLC and 79 Enfield Realty, LLC) are among a host of defendants in civil filings by Rochester-based lender U.S. Income Partners.
A spokesperson for the U.S. Attorney’s office in Boston would say only that the investigation continues.
Thomas Masaschi was the previous owner of the East End properties through a series of limited liability companies he managed. He transferred ownership to his brother in August of 2019, about the time foreclosure proceedings and civil filings began to percolate against his development firm, DHD Ventures.Louis Masaschi was the guarantor of a loan and security agreement between East/Alexander Holdings and M360, dated July 29, 2019. Loan documents, part of the foreclosure filings in state Supreme Court in Monroe County, show that the $13.2 million was to be used for renovation and development of the properties.
Interest-only payments were required until the loan’s maturity date of Aug. 1, 2022, at which time a balloon payment for the balance would be required.
Foreclosure papers indicate that late payment of interest by East/Alexander Holdings began as early as Sept. 1, 2019. The loan entered forbearance on May 1, 2020, and the last payment received was on Oct. 30, 2020, which was applied as partial payment toward the Aug. 2020 bill.
East Avenue Holdings attempted to block M360 from foreclosing on the properties through a Chapter 11 bankruptcy proceeding; however, Paul R. Warren, judge for the U.S. Bankruptcy Court in the Western District of New York, denied the motion in May of 2022 and, upon appeal, Elizabeth A. Wolford, chief U.S. District Judge for the Western District of New York, upheld Judge Warren’s ruling in October.
John McAndrew, partner in the secured lending and financial recovery department at Woods Oviatt Gilman LLP, represented M360 in the proceedings.
In the federal case against Louis Masaschi and Norman, prosecutors allege Masaschi and Norman “conspired with each other and others to fraudulently obtain loans for their companies from financial institutions and commercial lenders by providing materially false, fictitious and fraudulent financial information — including false rent rolls and fraudulent lease agreements.
“After receiving the loans, Masaschi and Norman allegedly made some or no payments and ultimately defaulted on the loans, causing substantial losses to the financial institutions and commercial lenders.
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