The office of U.S. Attorney Preet Bharara has reportedly launched an investigation into the sale of 45 Rivington Street on the Lower East Side, a former nursing home for AIDS patients that was purchased by a trio of luxury-condo developers for $116 million, months after the City agreed to lift a deed protecting the building as a non-profit healthcare facility in perpetuity.
Mayor de Blasio has denied that he was aware of the controversial agreement when it was signed last November, insisting that if he had been informed, he would have intervened to stop it. The City—which got $16.1 million in exchange for the deed lift—has since stated that those with knowledge of the deal in the Mayor's office believed that the building would become a for-profit nursing home once it was out from under City-imposed restrictions.
Bharara's public corruption unit is investigating the deal, sources told PoliticoNewYork. The A.G.'s office is the fourth to take a closer look, alongside the Department of Investigation, Comptroller Scott Stringer's office and the State Attorney General's office.
"We have no knowledge of this inquiry [by the U.S. Attorney General] but will cooperate fully with any investigation," Mayoral spokeswoman Karen Hinton said on Wednesday.
Allure Group, a for-profit nursing home operator, purchased 45 Rivington from a nonprofit called VillageCare in 2014, for $28 million. Allure reopened the facility briefly in 2015 as the Rivington Center for Nursing & Rehabilitation, but shut down last December, citing its failure to obtain state Medicaid reimbursements. The $116 million sale to China Vanke Co., Slate Property Group and Adam America Real Estate was announced in February.
James Capalino, one of the city's top lobbyists, represented VillageCare from January 2013 to October 2014, and has since lobbied for Slate Group, although a spokeswoman for Capalino says he had no involvement with the Rivington sale. Capalino has reportedly bundled $50,000 in donations to Campaign for One New York, a nonprofit unimpeded by donation caps that has funneled donations to the Mayor's 2017 reelection efforts and initiatives like Universal Pre-K and affordable housing.
A Stop Work Order has been in effect at 45 Rivington since last Tuesday. The Department of Buildings says it was performing a routine audit of construction plans filed for the property, and found that the plans called for major building alterations that the construction permit does not cover.
The Mayor's office has stated that no deed restrictions will be removed for the duration of an internal review of the restriction-lifting process, and is exploring the possibility of suing Allure for damages. Lower East Side residents are demanding compensation for the lost hospital beds, and stricter laws regarding deed restrictions.
Bharara's office is also working with the FBI to investigate whether donors to the Campaign for One New York may have received favorable treatment from the de Blasio administration in return for their donations. The probe is part of a large investigation into two prominent businessmen who are backers of the Mayor, as well as top NYPD officials, some of whom have already been demoted over their alleged corrupt practices.
The good government advocacy group Common Cause New York called for a closer look at the Campaign for One New York in February, arguing that the fund violated the city's conflicts of interest provisions. Mayor de Blasio disbanded the nonprofit in March, stating that it had served its purpose.
"Everything we've done is legal and appropriate," said de Blasio at an unrelated press conference earlier this week.
"Everyone has a right to judge, but I want you to look very carefully at what these resources were supporting," he added. "They were supporting progressive change. There’s a lot of money out there that’s trying to hold back progressive change."