Rushmore and Hud

http://therealdeal.com/newyork/articles/gary-barnett-extell-faces-hud-probe-over-rushmore-complaints-from-andrew-cuomo

he U.S. Department of Housing and Urban Development has launched an investigation into the Rushmore condominium, amid allegations that the lawyers for the developer, Extell Development, held previously undisclosed meetings with state Attorney General Andrew Cuomo's office to prevent existing buyers from backing out of their apartment contracts.

HUD officials said that as of May 11, 2009, Extell "voluntarily suspended" the building's registration under the Interstate Land Sales Full Disclosure Act (ILSA), a federal law that protects consumers in newly constructed condos with more than 99 units. The move would allegedly be a way for the developer to shield itself from ILSA-related claims.

HUD opened the probe after media reports mentioned that 34 buyers filed complaints with the AG's office. While officials did not disclose why Extell would suspend, documents obtained by The Real Deal show the Rushmore developer was facing an ILSA-based lawsuit prior to the filing.

"While this suspension remains in effect, the developer must not make any sales unless those sales are exempt under the provisions of the Interstate Land Sales Full Disclosure Act or its implementing regulations," Brian Sullivan, spokesperson for HUD told The Real Deal.

extell goes under?

Held pointed out, however, that Extell failed to offer rescission of the original contracts and the lawsuits and complaints from buyers in any amendments. Finally, he argues that it cannot blame the missed deadline on a typo, because the developer submitted 15 prior amendments where errors, typos, and revisions were regularly updated, according to court documents.

So, if this is true, it seems likely the original 34 lawsuits will prevail and seriously compromise the viability of the building. Then watch other closers who want to get out file to bail based on Extell fraud.

If this building is toast, and it is certainly beginning to look that way, then how is the rest of the 10 plus million sq ft that Extell is developing in Manhattan going to be affected? Could this be a big problem for Manhattan RE? Not looking good.

oops. first paragraph was supposed to be in quotes from above referenced article

Wow shady shady.