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Harlem woman pleads with court for mercy in $7M real estate debt case

2019-09-06

Giselle Allard, 75 photographed outside her Harlem Brownstone, Friday. Three of her buildings are being put to auction because of bad loan Allard took out, when she originally bought the properties in the 80s. (Gregg Vigliotti/for New York Daily News)

In a bizarre courtroom spectacle, a Harlem woman who could lose four buildings over a debt that started at $100,000 and ballooned to over $7 million argued Thursday she’s been hammered just shy of homelessness through predatory interest rates.

For 20 years, the saga of Gisele Allard’s brownstone at 50 E. 126th St. — and the money she owes on it — has been wending its way to some sort of resolution.

On Thursday, it inched closer to that end as she and two sets of lawyers she’s retained tried to make the case in Manhattan Supreme Court that she should not have to pay the full freight demanded of her.

That’s where things got strange.

One of her attorney’s, Robert Strougo, presented a motion to the court requesting her creditor’s demands be vacated because a compounded 25% interest rate on her defaulted loan was erroneously set by the court and applied after the statute of limitations passed.

Meanwhile, two other attorney’s working for Allard, Arthur Trakas and Andrew Schultz, submitted a separate motion requesting the foreclosure sale of one of her properties be halted so a simple interest rate could be applied to her debt, rather than the 25% interest — a difference of about $600,000 and up to $7 million.

A look at the exterior of 32 W. 120th St. in Harlem, owned by Giselle Allard, who says predatory interest rates of 25% on an old $100,000 loan may force her to sell at least some or all of her properties to cancel the more than $7 million debt.
A look at the exterior of 32 W. 120th St. in Harlem, owned by Giselle Allard, who says predatory interest rates of 25% on an old $100,000 loan may force her to sell at least some or all of her properties to cancel the more than $7 million debt. (Gregg Vigliotti/for New York Daily News)

Thursday’s court proceeding began with a simple question from Judge Arlene Bluth: “Who represents you?”

“They can both represent me,” Allard answered.

“No,” Bluth responded flatly.

After some back and forth among Strougo, Schultz and Trakas — with the court stenographer at one point pleading they not speak over one another — the judge ordered Strougo to sit down so the hearing could proceed.

From almost the moment she purchased the brownstone on a then drug-plagued Harlem block, Allard’s E. 126th St. property has been mired in trouble. She bought it for $135,000 with $35,000 down and agreed to pay the owner, Robert Robinson, the rest over 10 years at a 6% interest rate.

But Robinson died several months after the sale, and a confused Allard maintains that after attempting to make payments on the debt, she gave up because she couldn’t find anyone to accept them.

A decade later, Robinson’s estate — and its executor Jocelyn Davis, a relative — came knocking, arguing that Allard defaulted on the loan and owed a debt at the considerably higher default interest rate of 25%.

Following that logic, a court-appointed referee tallied the bill to $400,000 total in 2009. But that recommendation sat in limbo for several years until Judge Judith McMahon ruled the debt should be 25% compounded monthly for the life of the 10-year loan, plus every month since. Hence, the demands for between $5 million and $7 million to clear Allard’s account.

Since that ruling, Robinson’s estate has sold the debt on the property to 50 East 126th Street Realty LLC. The property itself has been auctioned off. And to pay down the remaining debt, Allard may have to auction off her three other Harlem properties as well.

“There’s no basis in the law for the compounded interest,” Schultz argued in court. “The interest of justice supports the fact that she doesn’t owe five or six million dollars.”

The attorneys for the LLC that now holds the debt argued otherwise.

“It’s really time to put this case to bed,” said Brendan Marx, one of the LLC’s lawyers. “If there’s any injustice, it’s our client and their predecessor haven’t been paid for years.”

Bluth has not yet ruled on the matter.