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Cefalu investors: We haven't seen a dime

2009-08-06T00:00:00Z Cefalu investors: We haven't seen a dimeBlake Jones
Glens Falls Post-Star
August 06, 2009 12:00 am  • 

Recently retired school teacher Carol Young thought she was investing in the future of Glens Falls when, about five years ago, she put more than $100,000 of her savings into real estate ventures affiliated with Charles Cefalu and his mother, Sophie.

The Gloversville resident was told her money would eventually yield a hefty and regular return. After touring some of the properties pegged for development, the investment seemed like a wise move.

"I was in the stock market. I had an annuity. I carefully saved over the years, but I did feel that this would give me a cash flow," Young said. "I thought it couldn't fail."

Now, with foreclosure lawsuits mounting against companies tied to the Cefalus and not a penny returned on her original investment, Young is furious, and she feels duped.

"I just trusted in the venture and thought it was a good place to place my money," she said. "You feel foolish to be taken by somebody like this."

Young is one of many investors who say they have not seen a return on money they fronted to SBC Properties LLC, Canfield Properties LLC, Parkside Development Partners LLC and other ventures tied to the Cefalus.

What is more, they say, the Cefalus have refused to provide them with lists of other members or access to the books, or to return phone calls.

Charles Cefalu, in an interview with The Post-Star on July 23, said he is not a member of any of the LLCs now facing foreclosure. He said he was involved with many on a consulting basis and as a real estate broker, but his role ended there.

Investors, however, say Charles Cefalu was their primary contact, followed by Sophie Cefalu. They say they never dealt with anyone else.

Neither Charles nor Sophie Cefalu has returned The Post-Star's calls seeking comment for the last two weeks.

Lack of transparency

Gary Marcantonio, a consultant and spokesman for a group that invested in Crandall Square Condominiums, a Cefalu project now in foreclosure, said the Cefalus' financial dealings have lacked transparency.

Marcantonio said, for at least two years, investors have not received Schedule K-1 tax forms that allow them to declare their share of losses or gains.

"The books and records have never been observed or looked at by any member to my knowledge," Marcantonio said.

Investors say they would like to find a way to move forward with the faltering projects, but do not believe they have enough information to do so.

And without the cooperation of Charles and Sophie Cefalu, questions remain as to whether other mortgage or tax obligations exist on the properties facing foreclosure.

"No one seems to know specifics about what other liabilities may exist, if any," Marcantonio said.

Some investors say they are having a hard time figuring out who else has sunk money into the properties.

"There are so many different people, and we're spread out all over New York," said Thomas Scully, an investor from Indian Lake. "We're like a terrorist cell - we're so divided that we don't know who each other are."

Scully said he put $160,000 from the sale of his restaurant of 28 years into two Cefalu ventures tied to the condo project.

Timothy O'Connor, another investor, said he also put $60,000 into two Cefalu entities. He was initially told he'd make 30 to 35 percent return each year.

To date, O'Connor hasn't made any money or had access to financial statements.

"No one knows where all the money has gone," he said.

In an earlier interview, Charles Cefalu described O'Connor as a "dissident" member whom the group unsuccessfully tried to buy out.

O'Connor claims that, after he raised concerns about Charles and Sophie Cefalu's leadership, Charles Cefalu offered to give him his money back over a period of two years with zero interest, which he declined.

Allegations lodged

While some investors feel they've been scammed, it remains unclear whether officials believe any of the allegations amount to criminal behavior.

Glens Falls Police Detective Sgt. Peter Casertino said the Police Department received a complaint from an investor who questioned whether Cefalu broke the law. He said the Warren County District Attorney's Office is reviewing the matter.

District Attorney Kate Hogan could not be reached for comment Wednesday.

Some investors, like O'Connor, say they aren't going to take the matter lying down. He plans to hire a lawyer this week to help him recover his investment and then some.

But others, like Young, don't know if they have any recourse.

Young doesn't want to sink more money into the problem with no guarantee she'll recoup the legal expenses - or her original contribution. Still, it's too much money to walk away from.

"Bigger fish than I am are trying to get him," she said, with resignation in her voice. "I just don't know what to do."

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