Milligan’s day in court continues – at least through Thursday

Updated, 8:13 a.m.: Copy edits, corrected quote attribution.

NORWALK, Conn. – The “POKO” hearing resumed Monday with a day-long battle over what questions Redevelopment Agency Executive Director Tim Sheehan could and could not answer.

Attorney David Rubin, representing Wall Street real estate broker Jason Milligan, tried to get Sheehan to answer questions Milligan has been asking for months, repeatedly seeming to argue with Sheehan over the merits of the lawsuit filed against Milligan. Attorney Joseph Williams, representing the Redevelopment Agency, objected to inquiries over and over again, while Assistant Corporation Counsel Darin Callahan sat frustrated behind him, barred by Judge Charles Lee from chiming in lest Milligan be ganged up on.

“They chose to have one attorney,” Callahan said in protest.  Lee replied that the City’s interests and the Redevelopment Agency’s interests were identical.

Milligan’s LLCs – Wall Street Opportunity Fund , Komi Ventures and Milligan Real Estate – are just some of the defendants in the complex case stemming from his purchase of “POKO” phase II and III properties, but as the hearing revolves around the plaintiff’s request for a temporary injunction to prevent him from altering, selling or leasing the properties, Milligan has been the only defendant present for the hearing.

Milligan’s Wall Street Opportunity Fund in May bought properties that had been slated to be part of what is commonly called “POKO,” and more officially Wall Street Place, a Wall Street-Isaac Street-Leonard Street redevelopment project dating to the early 2000s involving apartments and retail in the heart of Norwalk Center. Construction on POKO Phase I halted in mid-2016 and the partially completed building is notorious for being covered in Tyvek, as the City works with its owner, Citibank, to attempt to restart the project.

Milligan bought 83 and 97 Wall St., and 21, 23 and 31 Isaac St. from Richard Olson of POKO Partners, under the LLC ILSR Owners; ILSR is also a defendant, accused by The Redevelopment Agency of violating the Land Disposition Agreement (LDA) for the properties because the Agency did not approve of Milligan as the redeveloper before they were sold. Agency approval was not sought, and Milligan is accused of unfair trade practices and deceptive acts by using sham corporations to transfer properties.

The plaintiffs still don’t know who the members are of Milligan’s LLCs, as Rubin has filed an objection to that request and Lee has not ruled on it. As issues, the lawsuit cites Milligan’s attempt to have Wall Street Opportunity Fund issue Komi Ventures a 25-year lease on 23 Isaac St., the former municipal parking lot.

“The defendants have engaged in an elaborate scheme in an attempt to white-wash the unpermitted transfer of the Properties from ILSR to Wall St by positioning Komi to attempt to gain certain lender rights that would make Komi a lender owner under the LDA and Amended LRA {Loan Recognition Agreement} all in ways that were not intended by the LDA and Amended LRA,” the plaintiff’s amended complaint states. “… The conduct described above is immoral, unethical, oppressive, or unscrupulous; offensive to public policy; and/or causes substantial injury to consumers, competitors, or other business persons.”

On Monday, Rubin asked Sheehan to explain how Milligan is involved in an elaborate scheme; Williams objected on the ground that this would be divulging legal strategy – much of the afternoon went that way.  Rubin complained afterwards that he expected Sheehan’s cross examination to take two hours, but it was heading into day two.

The hearing is scheduled to continue through Thursday. Rubin was skeptical that the deadline would be met.

Sheehan was allowed to answer.

“The whole issue regarding the conveyances of these properties, the public record was left with gaping holes in it,” Sheehan said. “The issue of coming back and taking mortgages off, then leases on, then taking them off, basically saying, ‘Shh, don’t tell the city about this,’ leads one to believe that it is an elaborate scheme.”

All Wall Street (Opportunity Fund) did was buy the properties as a non-permitted transferree, Rubin replied.

“I wouldn’t say that was just ‘all.’ Related to the complaint, that’s not ‘all,’” Sheehan shot back.

A mystery has been solved: although it appeared in December that a $5.8 million mortgage owned by CC Rivington was still on the properties, in addition to a $5.2 million mortgage held by Komi Ventures, it’s been released, Sheehan said.

That was one of the “gaping holes,” as the public record indicated that there were two mortgages. A document obtained by the plaintiffs through a subpoena showed that it had been released, on the condition that Wall Street Opportunity Fund would reap the financial reward if the City exercised its right of reentry on the property, Sheehan said. Meaning, if the City bought it back, WSOF could profit.

‘It’s all broken’

Earlier, Rubin tried to pin Sheehan down on what Milligan would have to do to become the approved redeveloper and to prove that Milligan had attempted to gain that status. Sheehan said no one wanted to give redeveloper status to someone who could turn around in a month and try to redo the entire plan; Milligan both states that he wants to be the redeveloper and says he disagrees with the redevelopment plan, Sheehan said.

Rubin was working to establish a defense of impossibility, Lee said: Rubin tried to show that Milligan couldn’t possibly become the redeveloper because the Land Disposition Agreement is in opposition to the Zoning approval, given that some of the parking required for Phase I was moved onto Phase II.

“It’s all broken and you have merged the two phases for Zoning, and Zoning and the LDA are inconsistent,” Rubin said. “The LDA requires you to be consistent with Zoning, there is a cross pollination.”

Rubin said he’d obtained a deposition given by Planning and Zoning Director Steven Kleppin in January, in another POKO-related lawsuit, filed by John Dias against the City in an eminent domain issue.

Williams objected to the deposition, but Lee allowed it as “new evidence.” It wasn’t discussed, as Rubin moved onto emails that showed that JHM Group was allowed to be part of the discussions regarding Phase I, although it has not applied for redevelopment status.

JHM is Citibank’s consultant, Sheehan said.

Rubin characterized this as inconsistent, as the plaintiffs won’t discuss the properties with Milligan until he becomes the redeveloper.

“The bank is entitled to talk,” Lee replied. “They are entitled to say ‘we are a bank, we don’t build things, we’ll use XYZ.’ I don’t see anything wrong about this, or nefarious, and I don’t see how it has anything to do with Mr. Milligan.”

Rubin replied that Milligan was being treated differently.

Redevelopment says that it doesn’t trust Milligan, Lee replied, asking, “Why is that wrong?”

“If they would just come forward and say that, it would not be a problem,” Rubin said. “But they are hedging and they are not admitting things that are true so these become issues of credibility as well, and impeachment. The testimony is a moving target.”

‘Confidential’

“I think Mr. Milligan has a genuine interest in the Wall Street redevelopment plan area, generally,” Sheehan volunteered at one point.

Rubin asked if Milligan had ever done anything that was not in the best interest of the people of Norwalk.

“He did some demolition that wasn’t productive,” Sheehan said, referring to Milligan tearing down 21 Isaac St.

This took the property off the tax roles, Sheehan said, then explaining that the 25-year lease, if it had been issued, would have prevented redevelopment of that property for 25 years.

“I can’t say that he hasn’t taken actions that have, in my mind, to some degree, mislead the people of Norwalk,” Sheehan said.

Asked about deceptive practices, Sheehan brought up the May 31 meeting in Mayor Harry Rilling’s office, when Milligan said he wasn’t closing on the properties the next day but had already bought them.

Testimony about that issue was a bone of contention in itself, with Williams and Callahan standing up – literally – for their clients’ rights in insisting that it was a confidential settlement conference.

Sheehan had been “amenable to discussing” Milligan’s ideas for the properties but Rilling and Corporation Counsel Mario Coppola said there would be no discussions until and unless Milligan applied to become redeveloper, Rubin said, drawing objections, and replying, “I think it was confidential to the press not confidential related to complications from the complaint.”

“There won’t be any further settlement discussions… If this is what is going to happen,” Williams said.

Lee forbid further questions about the meeting, telling Rubin, “You have not been able to stay out of the guts of it. You continually tipped over as to what was said. That is the essence of the privilege.”

‘Irreparable harm’?

Rubin asked Sheehan how Milligan was doing irreparable harm to the Agency, why an injunction is justified.

Repairs to buildings could entail an environmental concern, Sheehan replied.

Milligan “told the court from day one” that he would stipulate to not demolishing properties, Rubin said.

“Would you object to all of the remaining structures?… They’re all supposed to be demolished anyway in connection with the execution of the project under the LDA,” Rubin said.

They would be demolished when the project was ready to move forward, Sheehan said.

“One of the criticisms of urban renewal is you’re leaving a hole, open holes,” Lee offered.

Milligan wants to fix up the buildings and have people in them until Phase III is “ripe,” Rubin countered, observing that active tenants would be good for the area.

“That doesn’t mean they’re not entitled to an injunction,” Lee said.

“Maybe not to the extent that they are seeking,” Rubin replied.

“Mr. Milligan may change his mind,” Lee said. “I mean, so far he’s been perfectly honorable in this proceeding but that doesn’t negate the concern about prevention of the demolition and other activities, consistent with an urban renewal area.”

Rubin asked Sheehan how Milligan would make it difficult to move ahead, and Sheehan said that the dentist Milligan had been talking about renting to would have gotten a 5-year lease.

Phase III wouldn’t move ahead for five years, Rubin countered; Sheehan said the Redevelopment Agency has no control over the length of leases.

“We don’t see your leases, we don’t have any approval over your leases, and demolishing the properties, yes that’s a concern because basically you’re taking those buildings off the tax rolls, the structures themselves,” Sheehan replied.

Rubin asked Sheehan if he knew what Milligan’s intent was.

“Mr. Milligan has indicated to me that he had interest in primarily the properties that were fronting out onto Wall Street, and he looked to improve those and rent those properties out,” Sheehan replied. “His thought process with regards to the phase II properties was ultimately contemplating working with Citibank to try and figure out how he could dispose of that.”