Leonard Grunstein, a prominent real estate attorney known for his work on the Stuyvesant Town Peter Cooper Village case, pleaded guilty to perjury in the third degree for testimony he gave in a legal battle for control over a portfolio of 170 nursing homes.
As part of the plea agreement, Mr. Grunstein, 61, a former Troutman Sanders attorney who later resigned from the New York State Bar, can never re-apply for re-admission, according to the Manhattan district attorney’s office.
The perjury conviction stemmed from a lawsuit over a complicated real estate deal in which Mr. Grunstein partnered with one of his clients, real estate investor Ruby Schron, orchestrating a leveraged $1.3 billion buyout of a nursing home operator known as Mariner Health Services in 2004. As part of the deal, Mr. Schron, who made a $100 million loan to help finance the buyout, was entitled to acquire a controlling share of the resultant company, SV Care Holdings. (The acquisition involved taking the publicly-traded company private and separating the real estate from nursing home operations.)
However, when Mr. Schron tried to the exercise the option in 2010, Mr. Grunstein and his business partner filed a civil lawsuit to stop him, claiming that Mr. Schron had never made good on the promised $100 million loan and thus was not entitled to exercise the option. Mr. Schron filed a countersuit and as part of the legal war that followed, Mr. Grunstein testified that in 2009 he told an associate the $100 million loan had never been funded, when in fact, he had never had such a conversation. The judge in the case ruled against Mr. Grunstein and his business partner, finding that documents showed that the loan had been funded, a decision upheld on appeal.
In his guilty plea, Mr. Grunstein admits to having made false statements under oath.
“On January 25, 2011 I testified at a deposition in the civil matters at a law office in Manhattan. Prior to giving my testimony, I affirmed before a notary public that I would testify truthfully. During the deposition, however, I intentionally made a false statement that I did not believe to be true. I testified at that deposition that, in the summer of 2009, I told Jack Boese that the $100 million loan had not been funded, a relevant fact, when in truth I did not have that conversation with Boese,” states the guilty plea, which Mr. Grunstein read this morning in court.
Mr. Grunstein has not yet responded to a request for comment made through his attorney, Barry Berke. Currently a managing member of Hanlen Real Estate Development & Funding and Hanlen Healthcare Development & Funding, Mr. Grunstein has maintained a high profile during the court proceedings, penning editorials and blogging. He was also featured in New York Times reporter Charles V. Bagli’s April 2013 book about Tishman Speyer’s default on the Stuyvesant Town mortgage. Mr. Grunstein represented the Stuyvesant Town-Peter Cooper Village Tenants Association, helping tenants win a $173 million settlement by proving that Tishman Speyer had illegally removed apartments from rent stabilization.
“Witness oaths are sacred,” said District Attorney Cyrus R. Vance in a statement following the conviction. “The administration of justice is the victim when witnesses believe that they can lie with impunity, and especially when that witness is an attorney. Falsely testifying under oath, in a civil or criminal proceeding, is a crime, and we will continue to pursue such conduct.”
Mr. Grunstein is due to appear in court on February 4 for sentencing. The maximum sentence for perjury in the third degree, a Class A misdemeanor, is one year in jail, a fine of $1,000 and restitution. However, as part of the plea agreement, the D.A. will recommend that Mr. Grunstein be sentenced to a conditional discharge, 150 hours of community service and a $1,000 fine.