Sales are reportedly brisk and tenant evictions continuing at the Breakers, a 74-unit condominium development in Lynn.
It may not mollify dozens of displaced tenants, but efforts to sell condominiums at the Breakers in Lynn represent a reclamation project of sorts, both for the building itself and for one of the property’s chief principals, felon Sheldon M. Stone.
The Swampscott resident, convicted of various securities and real estate crimes in the early 1990s, is one of three trustees of the 74-unit development, according to records on file at the Essex County Registry of Deeds. Previously owned by Arthur W. Chesterton, the Breakers had its own difficulties when the seven-story property was first converted to condominiums in the late 1980s, just as demand for such units soured. Now a Florida resident, Chesterton responded by renting out the units in hopes that the market would eventually rebound.
And rebound it has, at least according to a saleswoman on hand at the property last week. The representative, who declined to give her name, said all of the units have sold except for a few studios. “The response has been great,” said the woman, estimating that 60 units have either changed hands or are currently under agreement. The most recent sale on record occurred May 31, when a woman paid $109,000 for Unit No. 707.
Oceanside Condominiums LLC, which lists Perry J. Gould of East Boston and Stone’s son, Eric L. Stone, as managers of the entity, was formed in March, even though Chesterton sold the property to that group several months earlier for $3.4 million. Gould and both Eric and Sheldon Stone were named trustees of the property’s condominium association in December.
Calls to Stone Real Estate Corp. in Lynn were not returned last week, while Gould’s East Boston phone number is not listed. But two people claiming to be displaced tenants of the property contacted Banker & Tradesman over the past two weeks to complain about the way the conversion has been handled. “No one’s helping us at all,” said one of the callers, who refused to provide his name. “They’re just telling everybody to get out now.”
The saleswoman acknowledged the evictions as she showed a studio that had just been vacated, stating that the few tenants who remain will be leaving shortly.
One of the more interesting aspects of the Breakers deal is the up-front participation by Sheldon Stone, who is said to be a constant fixture at the property, showing units to prospective buyers and instructing workers on renovation efforts. Although sources familiar with his activities on the North Shore in recent years insist Sheldon Stone has long been a frontline player in his son’s real estate company, Eric Stone has typically been the only family member named in a variety of real estate transactions he has completed during the past five years.
Quick Flips
In a check of Essex County records, Eric Stone has acquired $2.26 million million worth of real estate since graduating from the American Academy of Real Estate’s weekend course in 1996. He has sold $3.04 million worth of property during that same period. In many of those cases, Eric Stone has quickly flipped those properties for substantial profits, as he did this year with 97 Seymour Ave. in Lynn. Eric Stone paid $100,000 in January for the single-family property, selling it two months later for $169,500. Some of the property flips have occurred within a day or two of the purchase, usually reaping substantial profits.
One potential reason for keeping a low economic profile has been a substantial restitution bill that has loomed over Sheldon Stone for years. Federal Deposit Insurance Corp. spokesman David Barr said last week that the agency’s records indicate Stone still owes $98,164 of a $100,000 order levied against him. Barr said it is unclear how active the FDIC has been in pursuing the restitution, but said officials “were very interested” to learn of the Breakers project. Sheldon Stone has not paid anything since 1996, according to Barr.
Sheldon Stone was found guilty of insider trading in the early 1990s, and was sentenced to 15 months in jail in September 1992 for defrauding two banks via a failed condominium project in New Hampshire.
The Granite State project was one of several condominium undertakings Sheldon Stone took on in partnership with another real estate felon, former Massachusetts resident William W. Lilly. The men were close confidantes in the go-go 1980s, a time when Lilly called himself the Condo King as he developed thousands of condominium units throughout New England. He was later convicted of real estate fraud when his empire collapsed and sentenced to five years in federal prison.
Sheldon Stone’s restitution dilemma is even mentioned by Lilly in a 1996 telephone conversation he had with another colleague of the pair, felon Richard G. Kayne. The call was recorded while Lilly served time at the prison camp, and is detailed in a civil case the federal government is pursuing to collect $5 million in restitution owed by Lilly. In the call, Lilly explains that the best way to keep from repaying is to retain a low profile, as Sheldon Stone did by living in a $650-per-month apartment upon his release from jail.
Stone, Lilly explained, paid a nominal fee for two years. “After that, it was over, and that was that,” Lilly said.
Another figure in the Lilly case, Boston attorney Robert G. Kline, is also listed on registry records regarding the Breakers transaction, providing his name as notary public in the naming of Sheldon Stone as trustee. Lilly’s longtime attorney, Kline has been charged in the civil case with helping Lilly conceal assets related to that restitution issue.
