Corruption or Honest Mistake, Co-op City Scandal Taints Its Board

The issue came to light after the 15-member board of the storied Co-op City — a 320-acre middle-income cooperative in the northern Bronx, whose 15,372 residential units in 25 high-rise buildings and seven clusters of townhouses make it the largest single residential development in the country — voted Oct. 5 to have its attorney, Jeffrey Buss, investigate whether a board member was allowed to have one the coveted townhouses ahead of other residents on the waiting list.

Two other Co-op City board members, Emmanuel "Manny" Torres and Raymond Tirado, were among those on the list for one of the 236 townhouses, which can involve a wait of five years or more. They and two other board members allege that Steve Gold, sales director for the complex's management company, RiverBay, showed favoritism to board member Leticia Morales by bumping her to the head of the list, according to the New York Daily News.

Gold has been suspended while the investigation continues. Morales told the Daily News she was unaware she may have been allowed to jump the line. "This came out after I was a month in the apartment," she said.

No Stranger to Corruption

This would not be the first time corruption plagued a Co-op City's waiting list. A different sales representative was arrested in 2009 for taking bribes to bump people up an apartment list.

A spokesperson for New York State's Division of Housing & Community Renewal (DHCR), which oversees sales and transfers Co-op City since it is a subsidized Mitchell-Lama development, told the News it was reviewing the allegations.

In the interim, Co-op City activists Frank Belcher and Marlene Smith in late October told the Co-op City News, part of the online Bronx News network, that they were preparing a petition drive calling for Morales' ouster from the board. "We, as shareholders, shouldn't have to deal with the corruption that, for years, has plagued the RiverBay Corporation," Smith accused.

Activists also want an independent probe of apartment sales at Co-op City overall. "Past form indicates that Mr. Buss, if given a chance, will sweep this issue under the rug, just as he has swept other controversial issues under the rug in recent years," Belcher said.

Buss told the Daily News, "Co-op City is a great place to live. We want to make sure people are given a fair opportunity to live there."

Lessons for Other Boards

Whatever way the issue is ultimately resolved, this public scandal illustrates, once more, the need for co-op and condo boards to be scrupulous in avoiding favoritism or self-dealing — or even the appearance of such. If one finds oneself in a situation that may be perceived that way, then an honest board member should have no problem in giving fellow board members and real-estate professionals all the facts upfront, and asking for an opinion.

Otherwise, a bad apple or even an oblivious apple can make the board and even the entire co-op look bad — which in the long run is never good.