Attorney General James and Commissioner Visnauskas Preserve Affordable Housing in Rockland County

Real Estate Fraudster Russell Mainardi Mismanaged Funds That Put 54 Low-Income Co-Op Residents at Risk of Losing Their Homes

AG James Bans Mainardi from Real Estate Business in New York 

NEW YORK – New York Attorney General Letitia James and New York State Homes and Community Renewal (HCR) Commissioner RuthAnne Visnauskas today announced they have preserved affordability and home ownership at a low-income cooperative (co-op) development in Rockland County. During the course of a two-year investigation, the Office of the Attorney General (OAG) found that the building, located at 18-36 Columbus Avenue in Spring Valley, was in danger of foreclosure due to illegal misuse of co-op funds by real estate fraudster Russell Mainardi and his girlfriend, who was acting as a property manager for the co-op. Mainardi and his girlfriend grossly mismanaged the building’s finances for personal gain, putting residents at risk of losing their homes.

With support from the Rockland Housing Action Coalition (RHAC), the Community Preservation Corporation (CPC), and law firm Nixon Peabody, the OAG and HCR were able to preserve the property and stabilize it financially and physically.

This agreement requires Mainardi and his collaborators to pay $148,681 in restitution to the co-op and $250,000 in penalties, forces his girlfriend to resign as property manager, and permanently bans Mainardi from real estate development or financing activity in existing residential properties in New York. The agreement also required Mainardi to vacate $696,647.00 in liens he had improperly placed against the property.

“No one should be at risk of losing their home because of someone else’s illegal and fraudulent actions,” said Attorney General James. “Mainardi and his associates scammed their way into managing this affordable building and put residents on the brink of losing their homes because of their fraud and deception. Access to safe, decent, and affordable housing should be a basic right for all New Yorkers, and thanks to our partners at HCR, all of these individuals will remain in their homes.”

“Through no fault of their own, homeowners at 18-36 Columbus Avenue were at serious risk of foreclosure, long-term financial distress, and the loss of their hard-earned homes,” said New York State Homes and Community Renewal Commissioner RuthAnne Visnauskas. “The State’s intervention has guaranteed that this cooperative will remain affordable, well-managed, and in good condition. Located in an increasingly high-cost area, 18-36 Columbus Avenue provides low- and moderate-income residents with the opportunity to achieve homeownership that may otherwise be out of reach. We are grateful to the Office of the Attorney General, the Rockland Housing Action Coalition, the Community Preservation Corporation and Nixon Peabody for their integral support in preserving this affordable housing resource that will benefit New Yorkers for decades to come.”

“As New York continues to face a devastating housing crisis, the loss of existing affordable units, especially due to mismanagement, is not an option for our communities,” said New York City Comptroller Brad Lander. “The New York City Retirement Systems is proud to participate with CPC in this investment through our Public Private Apartment Rehabilitation program. I am grateful for the work of our partners across the state whose work was crucial to help ensure the preservation of this affordable cooperative.”

“I’m proud that CPC was able to provide the financing needed to get the co-op back on its feet, and most importantly to ensure that its residents didn’t lose their homes to foreclosure due to the negligence of a few bad actors,” Sadie McKeown, President of the Community Preservation Corporation said. “With cities across the state facing a crisis of housing affordability, marshaling our resources to preserve existing affordable homeownership is more critical than ever to the stability and vitality of communities like Spring Valley. My thanks to Attorney General James, HCR Commissioner Visnauskas, and to our partners at Nixon Peabody, RHAC, and to the shareholders for their perseverance.”

Constructed in 1970, 18-36 Columbus Avenue is a limited equity co-op originally financed by the federal Department of Housing and Urban Development. In the fall of 2018, following a complaint from a resident, OAG opened an investigation into the co-op’s operations. The investigation found that when the operator of the building – the Spring Valley Housing Development Fund (HDFC) – was undergoing financial problems in 2014, Mainardi convinced the former board president to hire him to assist the co-op with its finances but charged inflated rates. Mainardi misrepresented his experience and background, having never worked with a low-income co-op and hiding his felony conviction for mortgage fraud and tax evasion. He then installed his girlfriend into a position as a “no-show” property manager, double billing the co-op for the same management tasks allegedly performed by both of their entities. Mainardi also set up the board president so that he was paid a salary as the superintendent and did not have to pay any maintenance for his co-op unit, both in violation of the co-op board rules.

Additional findings of wrongdoing against Mainardi included:

  • Presenting fraudulent instruments to third party lenders, inducing them to provide funds to the co-op;
  • Causing the co-op to incur hundreds of thousands of dollars in unnecessary costs on a second loan when an initial lender uncovered his fraudulent submissions;
  • Failing to complete promised capital needs projects and taking hundreds of thousands of dollars in co-op loan proceeds for incomplete and unsatisfactory work; and
  • Expending general operating funds for personal goods and services.


As a result of these fraudulent acts, the Spring Valley HDFC faced foreclosure when it quickly defaulted on the high-interest loans brokered by Mainardi. Fifty-four low-income co-op shareholders were threatened with the loss of their homeownership. The OAG helped to avert foreclosure of the co-op when it recruited RHAC to work with the co-op residents to elect a new board. The new board then hired RHAC as the co-op’s new property manager.

The CPC was able to provide a $3.7 million bridge loan to pay off the co-op’s existing underlying debt and associated fees. The CPC loan ensured the co-op would avoid its scheduled foreclosure auction and allow the partnership to move forward with its preservation efforts.

As a result of the refinancing, all 54 homes will remain affordable to households earning no more than 120 percent of the Area Median Income. HCR is also providing $3 million through the state’s Small Building Participation Loan Program to finance moderate rehabilitation activities such as roof replacement, safety upgrades, and HVAC repairs. CPC is providing an additional $2.8 million in construction financing for rehabilitation work and more than $2 million in permanent financing through its partnership with the New York City Retirement System, managed by the New York City Comptroller’s Office. The State of New York Mortgage Agency’s Mortgage Insurance Fund is providing mortgage insurance on the permanent loan.

“We are proud to have assisted the Coop and to have helped preserve the homes of 44 low-income families,” said Richard Shore, Counsel with Nixon Peabody’s Affordable Housing & Real Estate practice, who led the law firm’s litigation team. “These shareholders were taken advantage of by their former property management company, and then subject to hard money lender interest rates that bordered on predatory. Without the coordinated intervention from the New York State Attorney General’s Office, New York State Homes and Community Renewal, and the Community Preservation Corporation, and our team at Nixon Peabody, the many families living in these affordable homes, that they own, would have been lost forever.” In addition to Mr. Shore, the Nixon Peabody litigation team included Marissa Muscarella, and the firm’s bankruptcy team of Christopher Desiderio and Robert Christmas.  “We truly appreciate the opportunity to partner on this project to preserve affordable homeownership,”  Mr. Shore added.

This matter was handled by Housing Protection Unit Chief Brent Meltzer and Assistant Attorneys General Hannah Baek of the Bureau of Internet and Technology and Jane Landry-Reyes of the Housing Protection Unit. The Housing Protection Unit is a part of the Division of Social Justice, which is led by Chief Deputy Attorney General Meghan Faux and overseen by First Deputy Attorney General Jennifer Levy. The Bureau of Internet and Technology is a part of the Division for Economic Justice, which is overseen by Chief Deputy Attorney General Chris D’Angelo and First Deputy Attorney General Jennifer Levy.