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Hard Times: Faced With Lawsuits, a Former Mogul and Philanthropist Solicits Charity

Just before summer began, parents of children attending Camp JRF, a Jewish redoubt in the Pocono Mountains, received an unexpected letter.

“I’m faced with creditors who are trying to take away my home,” the letter said. “I need your financial help to save my home and to clean up the mess so I can start making a living.”

The author was Aaron Ziegelman, 84, a onetime real estate mogul who used to shuttle among his buildings in New York City in a chauffeur-driven Jaguar. He has also been a major benefactor of the Reconstructionist movement of American Judaism, with which the camp is affiliated.

Now, it seemed, he was broke.

The letter, which Mr. Ziegelman also sent to people in real estate, philanthropy and other circles, drew donations and handwritten replies of support from friends and acquaintances, including the developer George Klein and Saul Zabar, president of Zabar’s, the gourmet supermarket on the Upper West Side, near Mr. Ziegelman’s apartment.

Aaron Ziegelman, 84, received positive responses from Saul Zabar, of the gourmet market, and George Klein, the developer.

“He gave me a half-inch pile of documents that he says will show his transactions were successful and did not precipitate his current problems,” said Mr. Zabar, who promised him $5,000. “I didn’t look. I’m not interested. I felt badly for him.”

Others, though, have a different view of Mr. Ziegelman. They accuse him of being a con man who has engaged in Ponzi schemes.

In lawsuits filed last year, his longtime business partner, former friends, a cousin and other investors claim that he owes them millions of dollars.

Gail Stamler, a former friend, said in court papers that she invested $200,000 with Mr. Ziegelman and lost it all. Like others suing him, Ms. Stamler declined to be interviewed.

But she said in her lawsuit that he promised her that he was “not Bernie Madoff,” that he had good investment products and that her money would be safe.

In an interview at a coffee shop near his apartment, Mr. Ziegelman played down the lawsuits.

He said there were no criminal investigations into his financial dealings and no court judgments against him. He insisted that he was settling most of the litigation. And he said the donations that he was receiving were evidence of his reputation, claiming that he had already reaped close to $1 million.

“When word got out that I was having difficulties, the money came pouring in,” Mr. Ziegelman said. “I believe this is an unprecedented outpouring.”

Mr. Ziegelman, who has a full head of gray hair and wears glasses “only for reading,” acknowledged his new role as supplicant. “It’s a big comedown for me,” he said. “I’m a gambler. I’ve taken chances.”

He displayed a scar from his open-heart surgery in December. (“It’s macho.”) He then presented a copy of his credit rating analysis, a book written by his daughter, Jane — “97 Orchard: An Edible History of Five Immigrant Families in One New York Tenement” — and a documentary that he said he had financed.

The documentary, “Luboml: My Heart Remembers,” is about the Polish town where he was born, which was destroyed in the Holocaust.

He opened an envelope and out spilled what he said were letters from well-wishers. He also thumbed through pages listing his many deals over the last 20 years as a so-called hard money lender, a private banker of sorts who provides short-term, high-interest real estate loans.

Over the years, Mr. Ziegelman has given $30 million to charitable causes, he said. He was a founder of the West End Synagogue, contributed $10 million to the Reconstructionist Rabbinical College in Wyncote, Penn., and gave $1 million to Camp JRF so that it could buy a 140-acre parcel in the Poconos. (Reconstructionist Judaism is a progressive movement, founded in the 20th century, that combines traditional worship with modern interpretation.)

“He’s a very generous man,” said Rabbi Dan Ehrenkrantz, who holds a professorship at the rabbinical college named for Mr. Ziegelman and his wife, Marjorie. “Aaron has gone through up and downs in his life. It wouldn’t shock me if he found himself on the ups at some future moment.”

Still, Mr. Ziegelman’s letter to parents created an awkward situation at Camp JRF, which was caught between a key supporter who had fallen on hard times and parental concerns about privacy.

Rabbi Isaac Saposnik, the camp director, responded by sending a note to parents saying that the camp played no role in the letters. “We do not share your contact information with any donors, supporters, or outside organizations,” he wrote.

It is unclear how Mr. Ziegelman obtained the addresses, and Mr. Ziegelman said he realized that his letter may not have been well received. “I’m just going to drop the whole thing,” he said. “They were upset. They should have — and I asked them to — set up a fund.”

During the 1980s, Mr. Ziegelman was known as the King of the Co-op Castle; he made millions by converting apartments in 120 rental buildings in the city into co-ops or condominiums. He held lavish parties at Tavern on the Green and the Rainbow Room. He spent $1 million in 1988 on a family reunion, flying in relatives from Israel, Europe and Brazil. But a change in tax laws in 1986 and a drop in prices brought the co-op craze to an end in 1990, squeezing businessmen like Mr. Ziegelman, who left many of the buildings in financial chaos.

Mr. Ziegelman and his lawyer, Alan Haberman, then jumped into a new business as a hard-money lender. They charged interest rates of 13 percent or more.

But business faltered with the financial crisis in 2008. Borrowers defaulted, according to a lawsuit filed by David and Pernilla Avital, former friends of Mr. Ziegelman who said they invested more than $4 million and are owed more than $2.25 million.

Mr. Ziegelman “continuously sought and is seeking new investors to cover and placate his old investors in a classic ‘Ponzi scheme,’ ” the lawsuit said, adding, “He has even asked plaintiff for more money claiming that if fresh funds weren’t supplied, we would lose everything.”

Mr. Ziegelman’s cousin, Michael Steifman, who lent or invested $2.25 million with Mr. Ziegelman’s mortgage business, said in his lawsuit that he was owed more than $1.7 million.

Asked about these cases, Mr. Ziegelman said he was a victim of the financial crisis and that he had always conducted his business affairs properly.

He said he had sent letters to friends, and other people he had met over the years, to raise money to repay his creditors. Mr. Klein, for one, sent him $10,000.

“I can use this money to give each creditor something until I make a final settlement,” Mr. Ziegelman said. “All I need is someone with money who has a bank connection; then I’m back in business.”

People who have sent him checks said they did not care about what happened with his business. They said they were impressed by his charitable deeds.

Francis J. Greenburger, a real estate investor, said he gave $25,000 to Mr. Ziegelman.

“He was always there for me,” Mr. Greenburger said. “If not for the grace of God, I might have been in his shoes.”

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Posted by on July 9, 2012. Filed under Jewish News,Slider. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.