A man wanted to find a home for his elderly parents where they could spend their retirement. The mother of a young woman wanted to raise her children there. Three families wanted to provide a good school for their children.
The five-story building in Bay Ridge, Brooklyn, built on the site of a former Lutheran church, seemed like the perfect fit for modest-income Asian families—who eagerly watched its construction in the tight-knit neighborhood with a thriving Asian community. The developer, Xi Hui Wu, was a local known to neighbors from the bank and grocery store, and his then-wife, Xiao Rong Yang, was known in the area as a prominent real estate agent.
In the years that followed, more and more tenants moved in, paying hundreds of thousands of dollars for their apartments. Then, in 2018, each apartment received a thick envelope in the mail. Inside was a foreclosure notice, and the tenants realized with horror: The whole thing was just a scam.
Promissory notes and handshakes would never amount to action. For years, Mr. Wu had failed to make payments to a lender. He owed the bank millions of dollars. And he had never received approval from the city to convert the building into condominiums.
That could have been the end – 20 different homes, $5 million lost in total, evicted by a bank. Wu's whereabouts are difficult to determine because tenants and government officials have conflicting information about whether he fled to China or is staying in Brooklyn. (Neither Wu nor his lawyer listed in court records could be reached for comment.)
However, if the building is ultimately converted into a cooperative apartment, the tenants could now become owners, according to an agreement to be announced at a press conference on Wednesday.
Asian Americans for Equality (AAFE), an advocacy group for Asian Americans, purchased the building through bankruptcy proceedings and with a down payment of over a million dollars. The nonprofit is now offering residents a rent-to-own payment structure that will allow them to acquire ownership of their units after more than a decade of deferred purchase. The $50,000 price tag was deliberately low.
“It's not every day that you hear about someone robbing their tenants and fleeing to another country that you never hear from again,” said Dina Levy, senior vice president of Homes and Community Renewal, an agency of the New York state government that has worked with Ovington residents for several years. “This is just a miracle.”
Chin How Tan, 49, who bought a flat in the building for his parents, said his mother can now stay in the place she knows as home. “We are grateful to be here and not have to worry about losing the place tomorrow,” he said.
“Local celebrity”
More than a decade ago, Mr. Tan was one of the residents watching construction workers at 345 Ovington Avenue and asked to meet with Mr. Wu. He liked his mother, now 81,'s easy commute to Brooklyn's Chinatown and he wanted his parents to not have to worry about rent. (His father died last year.)
He paid a $46,500 deposit to Mr Wu in 2013, who told Mr Tan and other residents of the building that the apartments were condominiums. In total, Mr Tan paid Mr Wu a $186,000 deposit to secure the condominium until 2014, and he took possession of the apartment in 2015.
The tenants trusted Mr. Wu, who was “something of a local celebrity” in the neighborhood, said Ed Cuccia, the tenants' attorney. Mr. Wu and Ms. Yang paid $1.5 million for 345 Ovington in 2011, property records show.
Mr Wu was so well-known and trusted, and the building's design was such a spectacle, that he rarely had to look for tenants, said Kris Chan, who was a teenager when she and her family moved into the building. Tenants came directly to him.
“He didn't need to advertise at all,” said Ms. Chan, now 29. “His wife hung a banner on the building,” she said, “and soon most of it was sold.”
According to the Attorney General's complaint, Ms. Yang received a share of the proceeds and also participated in the scheme by acting “as a collection agent, bookkeeper, administrative agent and paymaster for the payments” to Mr. Wu.
Mr. Wu and Ms. Yang divorced in 2020, court records show. According to the New York Department of State, Ms. Yang never held a real estate license under that name. When reached by phone Tuesday, Ms. Yang declined to comment.
In 2013, a resident, Ya Hong Chen, made a $30,000 down payment on the condo, and by 2015 she had paid a total of $208,000, according to the original lawsuit. However, every condo needs approval from the city, and without that process, which Mr. Wu has not completed, selling units as condos is illegal, Mr. Cuccia said.
“It's kind of like renting a car,” Cuccia said. “You go to a car rental company, and the car rental company has the authority to rent cars to you, but instead they just sell you cars.” Tan described a similar stalling tactic: Every two months, he asked Wu for an update on the paperwork to complete the deal, but Wu kept putting it off, saying it would be done soon. Local residents, including Chun Po Kwok and Jian Li Chen, also told their lawyers they had been defrauded.
According to the attorney general's office, Wu pocketed tenant payments and used them for construction and to pay off loans on the building. In 2018, Wu's lender, from whom he had borrowed $5.8 million, began foreclosing on the building, the attorney general's office said.
Ms. Chan still remembers the day the foreclosure notice arrived. When she received the notice, she knew immediately that she and her family had been cheated by Mr. Wu.
Her mother wanted to raise her three children in the condo and had saved a significant amount of money to do so. According to the lawsuit, Ms. Chan's mother made an initial down payment of $100,000 over two months in 2013, and she paid another $100,000 in 2015.
Ms. Chan recalls that her mother trusted Mr. Wu so much that she went to his house, a beautiful family home just a few blocks from Ovington, to sign the papers. She sat in his living room. “For Asians, inviting us to their home is trust,” she said.
Because there were no lawyers, banks or land registry offices, no one raised the alarm, says Cuccia. The tenants had handed over money – often the result of decades of careful savings – only on Wu's word.
“Every time I mention this, I could cry,” Ms. Chan said. “Because when I was a freshman in college, I basically took care of the whole building.”
“Our only hope”
As one of the few tenants in the building who speaks fluent English, Ms Chan took on a leadership role. 345 Ovington previously had no caretaker, so neighbors contributed to maintenance and looked out for each other when needed.
Ms. Chan began looking for lawyers, but the lawyers either thought the case would be too time-consuming or the proper purchase process had not been followed, she said. Another challenge was getting all the tenants from 20 different units on board. Then, in 2019, they found Mr. Cuccia, and 18 of the 20 units took part.
The tenants filed individual lawsuits in 2019. The legal proceedings were increasingly delayed due to the pandemic, but as the months went by, interest and penalties on the mortgage at 345 Ovington continued to mount.
With foreclosure imminent, Mr. Cuccia organized a news conference in 2022 to call on local authorities to stop the foreclosure. The building was forced into receivership, a process in which a creditor goes bankrupt, freezing it, Mr. Cuccia said. The tenants won their individual lawsuits, ultimately allowing them to become creditors in the bankruptcy, he said. Letitia James, the state's attorney general, filed a separate lawsuit against Mr. Wu in 2022 to recover the stolen money, which totaled more than $5 million, according to Ms. James's office.
“Everyone involved in this recognized that it would be a terrible tragedy if we allowed these people to be evicted from their homes and lose everything,” Cuccia said. “But we didn't do that.”
The latest effort to allow tenants to stay paid off with the help of AAFE, a nonprofit that advocates for Asian Americans and also provides affordable housing.
“Our intention was to give something like the American dream back to the people who were defrauded,” said Thomas Yu, AAFE's executive director. The Attorney General's Office and HCR, New York State's affordable housing agency, first approached Mr. Yu and AAFE for assistance in late 2022 and became involved in early 2023.
Some tenants were initially skeptical of Mr Yu, especially after their trust had been betrayed so many times, but Ms Chan said she trusted him – there was no other choice.
“We were helpless,” she said. “And I think they are our only hope.”
AAFE purchased the mortgage from the previous lender, meaning they now own the building. To do so, the nonprofit had to make a down payment of over $1 million to secure the purchase or the bank could have proceeded with foreclosure. On May 23, the purchase was finalized in bankruptcy court.
The nonprofit is still waiting for government funding to renovate the building and convert it from rental to cooperative housing, Yu said. The conversion will take about one and a half to two years, and then the building will belong to the tenants.
The fight to stay in their homes may be over. Zhang Jiang Lin said his hair has turned gray. Now that he can stay in his home, for which he made a $200,000 down payment, Mr. Lin plans to retire at 345 Ovington.
Ms. Chan knows that such an outcome is rare and the work is far from over, but she attributes their success to a common denominator: their Asian identity. Having all of them want to own a home and having Chinese roots, Ms. Chan said, made their voices even louder. All of the renters could have been strangers, she said, but everything that happened over the years ultimately brought them together.
“We all consider this building a home,” Ms Chan said. “And now I'm glad no one can take it away from us.”
Debra Kamin contributed reporting. Susan C. Beachy contributed research.