The promise of the deal was easy money. It would not take any hard labor or peddling of illicit goods, only a drive to a shallow basement office at 1821 Mahan Street in the Bronx for a real estate closing. All Milton Mendez had to do was follow simple orders: He would sign his name to a property title and a mortgage application, “flip” the property back to the seller, and collect a $5,000 fee.

He would trade his name for cash, and it would take only an hour. “It sounded perfect, simple: improve my credit, make some money,” Mendez says. “But it backfired. It backfired on me big time.”

Now, four years later, he has a $212,500 mortgage at a rate of more than 11 percent–but no deed to the property. The 29-year old aspirant to the state police department has seen his credit rating ruined, and he now claims to owe the city over $26,000 for emergency repairs to 1116 Willoughby Street, a six-family building in Brooklyn. At taxpayer expense, the building is now getting CPR from the city’s housing agency–it’s in Third Party Transfer, the program that seeks to wrest the city’s worst buildings from bad landlords and place them into the hands of community development groups.

Mendez is one of at least three dozen individuals who became involved in a scheme to purchase distressed buildings on behalf of a real estate speculator. They say they were lured by fast money to buy buildings with mortgages often far larger than their incomes would normally allow. In one case, a buyer–a “straw person,” in real-estate speak–says he wasn’t even present when a property was purchased under his name. Hector Reyes, a former detention and deportation officer in the Philadelphia office of the Immigration and Naturalization Service, claims to have been out of the country on government business, traveling in India, when an application for a $200,000-plus mortgage, as well as title to 464 Wilson Avenue, Brooklyn, were signed under his name during the summer of 2001.

While many real estate speculators have been known to shuffle titles and mortgages between holding companies to disguise ownership, real estate lawyers say the practice of using a collection of front buyers was an unusual and brazen method of buying property without much financial risk.

The speculator’s name is Joseph Paradelo, though he insists, as any effective salesman might, that you call him, simply, “Joe.” Since starting work at age 14 selling home improvement services door-to-door and, later, swimming pools, Paradelo claims to have owned, at one time or another, a total of 220 properties–mostly six-family walk-ups in depressed areas of Brooklyn, the Bronx and Staten Island.

A model landlord he’s not. His buildings have racked up nearly 1,500 Class C housing code violations, the most hazardous kind. The Brooklyn anti-abandonment squad of the city’s Department of Housing Preservation and Development estimates that emergency repairs to the properties have so far cost taxpayers more than $700,000, and the agency is taking legal action to recoup the money. “We chase him around the tree, and he escapes every time,” says one lawyer for the city. “Some [owners] have one or two tricks up their sleeves. Joe holds the whole bag.”

Paradelo enrages his tenants, who he says curse him as “Satan” as he goes door-to-door in blue jeans and a baseball cap collecting rent. It isn’t just the raw sewage leaks and the hazardous lead-based paint that housing inspectors find crumbling off walls. Tenant organizers also accuse him of inflating property values in Bushwick–preserving urban blight in the name of profit. Paradelo and speculators like him “are like a vicious tornado that is skyrocketing housing costs for everyone across the city,” charges Rick Echevarria, an organizer who is aiding tenants in some of Paradelo’s buildings. Troubles with these properties are also costing the public: two more are also in Third-Party transfer, and an additional two have city-appointed administrators looking after them.

Like many property speculators at work in New York City’s poor neighborhoods, Paradelo has built a successful business on a shaky foundation. He works from a pay-per-month office on the 33rd floor of the Empire State building, a condo off Central Park South and a 140-acre horse farm in Ocala, Florida.

Even his foes in the industry praise Paradelo for his creative business tactics. Says one attorney familiar with Paradelo’s real estate transactions, “He could be one of those late-night television guys with their own commercials selling tapes, ‘How To Make Millions in Real Estate Without Any Money Whatsoever.'”


Paradelo has considered writing a how-to book on the different ways one can pick up defaulted mortgages at discount prices from banks that are under constant pressure to turn over stockpiles of money designated for loans. He’s thought of writing, too, about the ways one can keep a property out of foreclosure–a lengthy process that he says is “like taking a gun pressed right at my temple and aiming it towards my ankle.”

He’s gotten into trouble in the past for his business practices. In 1995, Paradelo pleaded guilty to misdemeanor charges of bank fraud and larceny. In that instance, he acknowledged that he had falsely denied there were tax and other debts outstanding on a property for which he had obtained a refinancing loan.

One thing Paradelo doesn’t do is depend on a steady rent roll to keep operations afloat. “My business,” he says, “is targeting the banks.” His m.o., like that of many other speculators in New York neighborhoods, is to obtain mortgage loans to purchase distressed properties, then resell those properties at higher prices.

But perhaps more unusual is the way Paradelo orchestrated the financing of these flips. As he freely admits, he worked with ordinary people willing to put their own credit on the line for an opportunity to make a little cash. They signed on as limited partners, and agreed to have loans taken out in their names. The properties were briefly deeded to them–then sold back to Paradelo. In many cases, he sold the same properties again to new partners, at higher prices. And he collected rent the whole time.

Take Milton Mendez’ Willoughby Street building. Paradelo remembers purchasing the property in June 1999 from a Chinatown company, Ben Sun Realty, for about $160,000, using a line of credit at the Ponce De Leon Bank. Then Paradelo looked to pay back the bank–“putting the money back in the drawer,” he calls it.

He teamed up with Anthony Baker, a Bronx resident in his twenties, and agreed to arrange a $172,000 mortgage for Baker from a mortgage lending company, EquiCredit. Baker’s mortgage money was used to restore Paradelo’s line of credit at Ponce De Leon, as well as cover closing costs and real estate transfer taxes.

While 1116 Willoughby briefly belonged to Baker, the deed was then flipped back to Paradelo. In March 2000, the property was then flipped again from Paradelo to another partner looking to make quick cash–Milton Mendez. A new, higher mortgage–for $212,500–was arranged for Mendez from EquiCredit, and a new closing was scheduled. According to Paradelo, Mendez’ mortgage was intended to pay off Baker’s loan of $172,000, leaving money for expenses and profit as well.

Mendez remembers the closing this way: “I got there. I signed a bunch of papers. I left.”

One of those papers was a mortgage application from EquiCredit, filled out the same day of the closing. Mendez says he was working then at his uncle’s printing shop in Queens, earning about $40,000 a year. But his signed mortgage application states that he made more than $106,000 a year, and also says, falsely, that he lived in the Willoughby Street building.

Paradelo denies any doctoring of mortgage applications. He claims Mendez is someone he’s known “all my life,” who was making additional income selling suits and at other odd jobs. (Mendez calls this claim “total bullshit,” and says he’s only met Paradelo a few times, starting in 2000.)

Baker could not be reached for an interview. But Paradelo says the deals with Baker, Mendez and others were presented as a “limited partnership” where both partners could win quick money or risk damaging their credit. “Those are the best kinds of deals,” says Paradelo. “Like taking a pint of blood from both of us and placing it together in a jar.”

Partners say Paradelo promised them that he would buy out their mortgages within a couple of months. But in many instances, that apparently did not happen. A review of 27 properties that Paradelo held under the entities HRC Holdings and Central Park Holdings show that in cases where titles were bought and sold between Paradelo’s limited partners and himself, 20 partners still hold mortgages under their own names.

And no one, it seemed, was paying the bills. Milton Mendez remembers when the foreclosure notices started to come a few months after he signed the deal. He began to panic. He called Paradelo for help. “Then Joe disappeared,” says Mendez. “I tried calling him everywhere. His numbers changed. He was always somewhere else.”

Mendez finally went to see his building. He remembers being scared to be there. “The place was a dump,” he says. Inside, he met one of the tenants and told her his name. Mendez remembers her face turning stiff and white.

“We thought you were a ghost,” he remembers her saying.


The bills for emergency repairs from the city and notices for hearings in housing court still keep coming in the mail to Romana Pichardo. She stuffs them into a large envelope on the top shelf of a closet in her Washington Heights apartment.

She somehow qualified for a $315,000 mortgage on her salary of $22,000 as a home care attendant. Her finances are even worse than they sound–much of her earnings go to pay for medical care for her youngest son, who had to undergo numerous surgeries to remove a cancerous tumor near his heart.

Pichardo says she was approached by one of Paradelo’s former associates, Julia Peralta, who promised her $10,000 if she would apply for an EquiCredit mortgage and assume ownership of 98 Linden Street, in Brooklyn. Peralta, brokering the deal, would take $3,000 for herself. Pichardo met Peralta through a longtime friend, Lydia Coss, whose sons Egdar and Juan Gilbert also qualified for EquiCredit mortgages to purchase properties from Paradelo. (Neither Coss nor Peralta could be reached for comment.)

“We thought it was the deal of a lifetime,” Pichardo says. Now, looking back on the entire ordeal, she says she will “never trust anyone again.”

For one thing, the $10,000 in checks that Paradelo gave her after closing both bounced. The appraisal forms on the property, filled out by licensed appraiser Almito Nieves, also include questionable statements. Nieves detailed the property as a “four-unit” building with rents ranging from $600 to $2,000. But the property has six units, and $700 is the highest rent any tenants pay. Mortgage experts say buildings with four or fewer units are much more valuable in the real estate-finance marketplace, because they qualify for cheaper interest rates.

Pichardo is also miffed that although her name was on the deed of 98 Linden Street for 16 months, it was Paradelo and his associates who collected the rent. “I just want out,” she says.

Christie Leacock wants out, too. In exchange for $5,000, her name was printed–never signed–on a boilerplate form, identifying her as “NEW PARTNER” to HRC Holding Corp. For a one-year period, the document stated, Leacock was a partner in ownership of 315 Stanhope Street, a six-family walk-up on the Queens border.

HRC “promised me that I could become a homeowner and that it could see to it that I would own the house in question without it costing me a penny,” she states in her affidavit in a legal case battling over the ownership of 315 Stanhope. “I signed many papers…not having any idea of what I was signing.”

Like Mendez and Pichardo, Leacock also claims her mortgage application included fraudulent information. “How they got me a mortgage of $254,700 with my then-income of $29,000 a year was nothing short of a miracle in my mind,” she states. Her income was listed on her mortgage application as more than $7,000 a month.

Again, the appraisal forms appear inaccurate. A six family walk-up became four apartments, with a rent roll inflated above reality.

While Paradelo promised to take care of the mortgage, Leacock, like other partners, started getting foreclosure notices. “My credit has been totally destroyed,” she states in the affidavit.

But in this case, unlike the other transactions, no subsequent paperwork was submitted declaring Paradelo the sole owner of the property. The deed filed with the county clerk continued to list Leacock as its owner. When the property eventually showed up on foreclosure listings, another real estate speculator jumped in–and set off a showdown with Paradelo over ownership of the building.

Leacock was contacted by Eli Maor, who owns about 42 apartment buildings in the city. Maor allegedly offered Leacock a deal: Maor would pay off her existing mortgage and, if he could negotiate a lower price for the mortgage from the bank, offer her 10 percent of the savings. In essence, he would cut her loose from her deal with Paradelo.

The offer was irresistible to Leaock, and Maor went ahead and arranged to have the deed flipped to him.

Soon after the title transfer, Maor approached the tenants at 315 Stanhope Street. He presented himself as the new owner. He asked the tenants, all immigrants from Puebla, Mexico, to direct the monthly rent to him.

Meanwhile, Paradelo proclaimed he owned the building, and sent the tenants rent notices as well. They received two letters every month. “We didn’t know who the owner was,” says Catalina Carpintero, as her 20-year old daughter, Olga Torres, translates in the living room of their one-bedroom apartment at 315 Stanhope Street.

The two speculators, Paradelo and Maor, are now locked in a duel over the deed to 315 Stanhope. (Maor did not respond to requests for an interview.) The tenants, many of whom work as day laborers and whose children sleep side by side on mats sprawled across cramped kitchen floors, have placed their rent, typically $600 to $700 a month, into an escrow account. They have been sued three times in the last two years by their alleged owners for nonpayment of rent–once by Paradelo, twice by Maor.

They lose money every time they have to leave their jobs to show up in court. Meanwhile, they are suffering at home. Raw sewage stands in the cellar, the roof has leaky holes, and lead paint is falling off the walls. Tenants now pay utility bills from the escrow pool.

Paradelo and Maor continue to slug it out over ownership. Is Paradelo fuming that Maor was able to lure Leacock into flipping a property away from a flipper himself? Not really. Says Paradelo, “I deal with this kind of bullshit every day.”


Paradelo had help pulling these unorthodox deals together. And the biggest loser of all appears to be the bank that put up the money.

Paradelo’s now-ex-wife, Teresa, was the mortgage broker. He also seems to have had a hand from Cardinal Abstract Corp., the company hired to make sure that title to the properties was transferred successfully. In an affidavit filed in state Supreme Court, Ron D’Amico, who worked to clear titles for Cardinal, remembers participating in “at least many dozens” of “unusual” closings with Paradelo. For one thing, D’Amico attested, the closings all happened at night–when banks and other offices were closed. More bizarre, he stated, Paradelo “seemed to have an overabundance of control over the closings.”

D’Amico claims he couldn’t do his job properly. He was never given checks to clear up existing tax liens and mortgages–the usual procedure in transferring title on property. “In my more than twelve years experience as a title closer, I have never experienced such an unusual set of transactions,” D’Amico states. “It is simply not normal or customary, but it is dangerous to permit title to close with outstanding mortgages and liens or other objects to title left unresolved.”

Paradelo responded in his own affidavit that D’Amico presents a “vague” account of the closings. He also questioned D’Amico’s competence.

But it was the attorney for the mortgage company whose role was apparently most pivotal. Representing EquiCredit, a subprime lender that until mid-2001 was a division of Bank of America, Bronx lawyer Stephen Bogart LeBow was also the only attorney present at the closings. Using mortgage paperwork filled out with the names of the limited partners, LeBow obtained the loans from EquiCredit. He was supposed to deposit them in an escrow account and use the money to pay off old debts on the properties, including outstanding tax and mortgage payments.

But according to a lawsuit underway in Suffolk County, LeBow failed to do that in numerous instances. And no one seems to know where the money went. When he was deposed in the title company litigation, LeBow took the fifth. (LeBow did not return calls seeking comment.)

EquiCredit went bankrupt in 2002. In its suit against LeBow, NationsCredit Financial Services Company, which picked up part of EquiCredit’s business, claims that when it sought to foreclose on some of the properties its loans were supposed to have paid for, it instead found a trail of unpaid debts. In some cases, the company alleges, other lenders had already foreclosed on the properties, without EquiCredit even knowing about it.

The sales prices of the properties in question totaled $3.96 million. NationsCredit is seeking $10 million to cover the mortgages and associated costs, as well as $30 million in punitive damages.

Meanwhile, LeBow is also under fire in state Supreme Court in Brooklyn, where the insurance company that handled the property sales is suing LeBow, Paradelo and Cardinal Abstract for allegedly failing to properly complete the transactions and misusing the escrow money. (In an affidavit, Paradelo claims that the title insurance company is simply trying to recoup its own losses, and accuses the company of hurting his business by failing to file essential paperwork.) In June 2003, with escrow money still unaccounted for, Judge Muriel Hubsher demanded that LeBow surrender his passport to the court.

LeBow’s work as a lawyer has come into serious question elsewhere. In 2001, his membership in the New York State bar was suspended for 18 months after a court disciplinary committee concluded that in an unrelated personal injury case a decade earlier he had “neglected legal matters,” “failed to return the unearned portion of a fee” and “failed to return a client’s property,” along with failing to participate in the committee’s investigation.

Nor is this the first time EquiCredit mortgages have been misused in New York. In 2002, prosecutors from the office of Queens District Attorney Richard Brown charged 17 people–including three lawyers, an unlicensed real estate broker and a title closer–with creating an elaborate charade. In four fraudulent sales financed by EquiCredit, “actors” were hired for $500 or so and given false identification to pretend to be real buyers and sellers at closings. The five principals were indicted on seven separate counts, including grand larceny, conspiracy, enterprise corruption and forgery. Two have pleaded guilty; sentencing in those cases is expected to begin this April.


But the worst mess Paradelo’s in, as far as he’s concerned, is a deal he initially thought was a slam dunk. In May 2002, Paradelo was able to pick up the titles to 34 decrepit Bushwick properties–at a fire-sale price of a little over $2,100 apiece.

The seller was Alpha and Omega, one of the nonprofit development groups ensnared in the HUD 203(k) scandal. (In that scheme, speculators obtained properties with federally insured mortgages, raised their sale prices through rapid flips, and had nonprofit front groups take ownership and responsibility for the mortgage payments.) Unable to come up with the cash to make mortgage and tax payments on the 34 properties, Alpha and Omega directors say, they cut a last-minute deal with Paradelo to bail them out.

Paradelo and the nonprofit negotiated a meager price of $275,000 for the bunch. “We needed the money,” says Ayyub Muhammad, Alpha and Omega vice president and co-founder.

But Paradelo stiffed them, Muhammad claims. They received $25,000 in cash, and a $50,000 check that went through. But two other checks, totaling $200,000, bounced. And Paradelo still possesses the deeds, through his company JP Apartments.

That was a year and a half ago. Alpha and Omega has since filed for bankruptcy and is suing Paradelo for breach of contract. The group also wants its buildings back. But that’s unlikely to happen; the properties are moving into foreclosure.

City records show that they are crumbling into further disrepair. In the short time Paradelo’s company has held title to the buildings, they’ve been cited for 250 “extremely hazardous” code violations.

Sharon Harris, a 23-year tenant of 84 Menahan Street, says Paradelo came to visit the property once last summer, claiming to be the owner. Tenants haven’t paid rent since. The six-family building “is really stinkin’,” she says. Feces and raw sewage float around the basement. The roof leaks. The gas company has issued a cut-off notice. City inspectors recently found peeling lead paint on the walls.

Harris is concerned. She has 10 grandchildren living in the building. “This is our history,” Harris says. “Someone like Joe shows up. He promises to be our landlord. He takes a few months in rent money and then we never see him again.”

Paradelo denies cheating his tenants, deceiving his limited partners or participating in any fraudulent transactions. “I have nothing to hide,” he says. “Joe Paradelo admits when he’s wrong, when he makes mistakes.”

But watchdogs are taking interest in his work. The Consumer Fraud Bureau of the state Attorney General’s office says it is reviewing complaints. Investigators from the state Banking Department have also been reviewing the transactions, ever since Bank of America referred the case in 2001.

For any trouble he’s having, Paradelo blames HPD, which had sought to have community development groups take over and fix the Alpha and Omega properties, as well as “adversaries” such as tenant organizer Echevarria and attorney Kevin Hsi of the Bushwick Housing Independence Project, who are representing Paradelo’s tenants.

Paradelo claims that he makes essential repairs–and adds that over 80 percent of his tenants are delinquent in their rent payments. (Echevarria estimates the rate of delinquent tenants at more like 40 percent.) Without a steady rent roll, Paradelo says, it wouldn’t be fair to have to invest in significant improvements. “I understand that neighborhood–I come from that kind of neighborhood,” Paradelo says. “These tenants want their services, but they don’t want to give you a dime. They’re so used to getting something for nothing. They figure, hey, it’s better to live like this then to pay Joe for anything better. It’s this cycle of poverty…not wanting to get out of it.”

In fact, Paradelo claims, he is one of the only property owners preserving “real” affordable housing. If he were like other landlords, he says, he’d be jumping on the wave of gentrification that has swept Brooklyn, and looking to push his poor tenants out.

But Paradelo says he’s had enough of Bushwick and the real estate game. He plans to retire to Florida and breed horses. Unlike tenants, he jokes, his horses “don’t talk back.”

When presented with fishy-looking mortgage applications and affidavits claiming foul play at dozens of closings, he insists he’s never done, nor orchestrated, anything criminal. “I live my life by a few rules and one of those rules is to always play by the rules,” he says. “I know what’s right is right, what’s wrong is wrong. You can try and hide it. You can try and cover it. The truth always comes out sometime.”