An affiliate California investor group whose tangled West Coast transactions stoked a regional bank stock slide last week also owns a pair of luxury rental buildings on the Upper East Side now at the center of an unusual lawsuit in New York City.
The firm, an affiliate of Cantor Group, bought 227 East 67th Street and 184 East 64th Street in 2019 for $38 million. They refinanced the properties with a nearly $20 million loan from Los Angeles-based Preferred Bank in 2023, but a buyer who entered into a 2024 contract to buy the properties claims that the Cantor affiliate refuses to close the deal. Zions Bancorporation and Western Alliance Bancorporation were the two banks whose concerns about Cantor led to the stock drop (and fears of broader failure); the Upper East Side buildings’ bizarre financial saga ties in a third regional bank: Preferred Bank.
Questions about Cantor emerged last week when Zions Bancorp announced that it was suing two Cantor Group funds along with investors Gerald Marcil and Andrew Stupin and their associate Deba Shyam for misrepresenting the collateral underlying the bank’s loans. Western Alliance revealed it had a similar lawsuit, alleging a Cantor fund used fake title policies to hide other banks’ claims.
Zions Bancorp provided $60 million in loans to Cantor Group funds which were supposed to be used to purchase distressed mortgage loans. Western Alliance provided $100 million in loans as a revolving credit facility also to purchase mortgage loans.
(A lawyer for Cantor Group said it upheld all its contractual obligations to Zions Bank and any suggestion to the contrary is a lie. The lawyer said “there have been multiple audits and independent reviews of these loans at the bank going back years and there have been no monetary defaults.”)
The news rattled investors who feared the other regional banks would reveal write-downs on troubled loans. It also came in the wake of the bankruptcies of auto parts company First Brands and auto lender Tricolor, which led to losses at major Wall Street banks.
On Oct. 16, Zions Bancorp’s shares slid 13 percent, while Western Alliance’s shares fell over 10 percent. The bank’s shares have recovered and are trading around 3 percent below where the banks were prior to the decline.
The flip
Michael D’Alessio owned the Upper East Side buildings at 227 East 67th Street and 184 East 64th Street, but in 2019, a court sentenced him to six years in prison after he pled guilty to defrauding investors out of $58 million in what prosecutors referred to as a “Ponzi-like” scheme. His lender, Preferred Bank, initiated a foreclosure and purchased the properties through bankruptcy sale for a combined price of $32.5 million in February 2019.
Two months later, Preferred Bank flipped the properties to a firm called Continuum Analytics for $38 million and also provided a $29 million loan on the properties. But the deed and loan were signed by Deba Shyam, who described her position as Cantor Group Member LLC’s managing member. (Shyam was named in the lawsuit brought by Zions Bancorp.)
In late 2024, Shyam’s Continuum Analytics found a buyer for the two buildings. Two Switzerland-based companies allegedly sought to purchase the Upper East Side pair for $24 million. The new sale was a 36 percent decrease from the price Continuum paid for the properties. The unknown Swiss buyers made a $1.2 million deposit and put the balance in escrow, but Continuum allegedly wanted out of the deal at the last minute.
The Switzerland companies filed a lawsuit in New York Supreme Court alleging Continuum failed to honor its purchase and sales agreements. The buyer also sought to appoint a receiver on the properties, alleging Continuum owes more than $460,000 in property taxes on the buildings. The lawsuit is still pending.
Preferred Bank
At the heart of Western Alliance and Zions Bancorp’s lawsuits is the allegation that the borrowers misled the banks about liens or security interests on collateral they believed secured their loans. In the event of a default, Western Alliance and Zions Bank presumed they were getting paid back first.
But Western Alliance’s lawsuit alleges Cantor Group’s fund hid other senior liens through bogus title policies. In many cases where Western Alliance presumed to have a senior lien, documents from title companies show the lienholder to be Preferred Bank — the lender on the New York properties.
Preferred Bank, founded in 1991 to serve the Chinese American community in Southern California, was an active lender to Cantor Group. It had the first lien position on at least seven properties, according to Western Alliance’s lawsuit. These include: 2522 South Grove Avenue in Ontario, California, and 28207 Newhall Ranch Road in Valencia, California, according to the lawsuit.
Western Alliance alleges the policies provided by Cantor had no reference to Preferred Bank’s first position on the collateral.
Preferred Bank did not return a request to comment.
