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Fighting Spirit / Developer Robert Toussie no stranger to courtroom, but lawsuits, real estate troubles leave him facing biggest battle yet

AT 28, he bested the U.S. government in a case against the

Selective Service that went all the way to the Supreme Court and set a legal

precedent.

In his 40s, he headed investment partnerships that made a run for two

beleaguered retail giants. Even though the partnerships didn't end up with the

companies, they got more than $1.6 million for their efforts.

Now at age 60, Robert I. Toussie, one of the largest developers in Suffolk

County, may be in the fight of his life, waging battles on several fronts.

First, he is defending himself against more than 200 minority homeowners in

Suffolk County and on Staten Island who are suing the Brooklyn-based developer

and his son, Isaac, 30, charging that they conspired with lenders, lawyers and

appraisers to sell the families shoddily built, overpriced homes. Both father

and son have denied the charges.

Last year, Isaac pleaded guilty to one count of making felony false

statements in a federal mortgage fraud scheme involving the homeowners' houses.

Investigators with the U.S. Department of Housing and Urban Development said

the scheme netted Isaac Toussie more than $20 million and was one of the

Island's largest housing scams in recent years. Isaac Toussie, who denies he

made anything close to that amount, is expected to be sentenced next month.

Robert Toussie wasn't charged. But the controversy over the HUD mortgage

fraud case prompted the Suffolk County Legislature to block the sale of $1

million of property the developer won at a county auction last May.

Responding to homeowners' complaints, the legislators expressed concern

that Toussie, frequently the auction's biggest buyer, would continue to

transfer some properties he won at auction to Isaac.

"I'm troubled by what's gone on here," Brian Foley (D-Blue Point) said last

August, adding that the county had to be careful whom it sold land to and how

it was developed.

Then last fall, the U.S. Attorney's office began investigating Robert

Toussie's sale of the 40-acre Chandler Estate in Mount Sinai after Newsday

reported he sold the property to the county and Brookhaven Town for $5 million,

despite five appraisals valuing the property for half that amount. The county

relied on a much higher appraisal supplied by Brookhaven Town to set the price

because Allan Grecco, who headed the county's Division of Real Estate, said the

developer would not sell the property for less money. Grecco, who engineered

the Chandler Estate sale while his private company did business with Toussie,

subsequently resigned under fire. Last week, in a letter to the county, Toussie

offered to repurchase the Chandler property from the county for $5.5 million.

For Toussie, the stakes are high.

His potential liability in the lawsuits and the Suffolk County

Legislature's blocking of his purchase of county property have put the future

of his local land-development business in question.

The county's action already has taken a toll, according to the $50-million

lawsuit Toussie filed against the Legislature, County Executive Robert Gaffney

and Grecco less than two months after the blocked auction sale.

"The Legislature's decision caused substantial damage to Robert Toussie's

reputation in the business community, as purchasers of land he had previously

acquired sought to delay or cancel contracts with him in light of Suffolk

County's decision," alleges the lawsuit, which is pending.

But Toussie has been in tough spots before and prevailed.

In the early 1970s, the U.S. Attorney's Office investigated Toussie and his

brother, Samuel, after minority homeowners complained of subpar construction

and deceptive sales practices. However, after a two-year investigation, the

government decided not to file any charges against the Toussies, citing

"insufficient evidence."

Toussie shrugged off the inquiry at the time.

"It is very customary to be investigated by any lending institution," he

told Newsday in 1973, referring to the Farmer's Home Administration, which

provided mortgages to the minority homeowners who complained to government

officials.

And Toussie already has begun to strike back this time. Through his

lawyers, he has insisted that homeowners and lawmakers are wrong in lumping his

business operations with his son's. Attorney Matthew Fishbein, of Covington &

Burling's Manhattan office, told the Suffolk Legislature's Ways and Means

Committee, "Robert Toussie stands separate from his son."

And Toussie has denied building any of the families' homes or any homes at

all since the 1970s.

"Isaac Toussie was the builder of the houses, not Robert," said C. William

Phillips, another Covington & Burling lawyer who represents Robert Toussie.

"He's not a home builder; he hasn't done that in decades."

But his lawyers have also acknowledged that the developer did transfer some

of the land he bought at auction to his son, and that Robert Toussie gained

financially from such transactions.

"I think it is fair to say that Robert Toussie has benefited in part from

the business of Isaac Toussie, yes," Fishbein told the legislative committee.

In previous court cases, Toussie has shown himself to be a formidable

opponent - something the U.S. government witnessed firsthand. It sued him in

1967, eight years after Toussie refused to register with the Selective Service

when he turned 18.

Toussie, who was raised as a pacifist, said his conscientious beliefs

against war prevented him from signing up for the draft. He argued that by the

time the government got around to suing him, the five-year statute of

limitations had run out on any offense.

The government unsuccessfully countered that military law imposed a

"continuing duty to register, which would last until age 26." It contended that

the clock didn't start ticking on the five-year statute of limitations until

then - an argument the Supreme Court turned down by a 5-to-3 vote.

Toussie's defense produced not only a victory - and a front-page story in

The New York Times on March 3, 1970 - but also set a legal precedent.

In 1996, a Wisconsin federal circuit court judge wrote in another

statute-of-limitations case: "Toussie remains the leading case on defining the

scope of the continuing offense doctrine."

By several measures, Robert Toussie has been a brilliant scholar and is

considered an astute businessman today. He graduated from Lafayette High School

in Brooklyn at 15. He went to work because he couldn't afford college. By

1961, when he was 20, he owned eight children's clothing companies, including

Merry Mites, a well-known manufacturer. After selling the companies in the late

'60s, he enrolled in Columbia University. After just six months of

undergraduate work, he was allowed to skip to the MBA program, the university

confirmed. He earned an MBA in 1969 at the age of 28.

His holdings make him one of Long Island's largest and most influential

developers.

Three years ago he and Isaac told Newsday they owned more than 5,000

parcels throughout Suffolk County, ranging from one acre to 100 acres of

buildable land. Beginning in the 1970s, Toussie started accumulating land on

Long Island, he said, increasing his land holdings during weak real estate

markets, particularly in 1974, the early 1980s and the early 1990s, when he

often bought foreclosed subdivisions from banks. The extent of Robert Toussie's

current holdings aren't known, because he declined to be interviewed and all

his companies are private.

Robert Toussie is involved with many companies - at least 19 are registered

to his Brooklyn address, with four recently dissolved for nonpayment of taxes,

according to the New York Department of State.

One of the key issues in the homeowners' lawsuit - as well as Toussie's

dispute with Suffolk County over his auction purchases - centers on his

lawyers' assertion that he is a large land owner, but not the builder and

seller of the houses sold to homeowners who are suing him.

Documents obtained by Newsday show that practically all the companies that

sold homes to the homeowners list Robert Toussie's Manhattan Beach address in

their state filings.

According to Brookhaven Town documents, either Robert Toussie or two

companies he heads applied for 70 building permits between 1996 and 1999, many

of them for the houses owned by the homeowners filing suit. In addition, an

examination of more than 100 county land transfer documents involving the

homeowners showed that Robert Toussie often transferred the property from

himself to one of the companies he heads on the same day the company sold a

completed house to the homeowners.

That was the case with Maxine Wilson, a plaintiff in the homeowners'

lawsuit, and her husband, Terry. On the same day they closed on their house in

Gordon Heights, Aug. 8, 1997, Robert Toussie transferred the parcel from

himself to his company, David Park Estates, which in turn sold the house to the

Wilsons for $',000. Of the sum, the Wilsons' mortgage documents and copies of

canceled checks show that David Park Estates received almost $93,000, and

another company Toussie heads, Greenstar Enterprises, received $40,000.

In other similar transactions, homeowners' documents showed that Robert

Toussie received large chunks of money from home sales in Gordon Heights and

other areas in Suffolk County.

Of the nearly $161,000 that George and Evelyn Rodriguez borrowed to

purchase a home from Toussie's David Park Estates in 1997, $60,000 went to

Robert Toussie.

Homeowners who wanted extras for their houses, such as dishwashers, showed

Newsday copies of canceled checks made out to Robert Toussie for those items.

Cassandra Seward, who with her husband, Floyd, purchased a home in Yaphank

from Toussie's Easy Home Program in 1999, said that if they wanted anything

additional, their contractor told them "we had to write out the checks to

Toussie."

Robert Toussie's signature also appears on some of the homeowners' deeds.

Both his signature and identification as the president of the Easy Home Program

appear on the Sewards' bargain and sale deed, a form commonly used to transfer

ownership from the seller to the buyer.

Lawyers for the homeowners suing the developers assert that both Toussies

were involved in the home sales. "The complaint pleads a case that with respect

to all the counts, Isaac and Robert Toussie were equally liable," said

attorney Paul D. Young of Milberg, Weiss, Bershad, Hynes & Lerach in Manhattan.

Phillips, Toussie's lawyer, responded, "These are issues that are involved

in litigation."

Phillips refuted assertions that the homeowners' documents indicated that

Robert Toussie was the builder of the homes in question, adding, "We dispute

the premise of the questions and intend to litigate them vigorously."

While several developers who know Toussie declined to comment, two

businessmen familiar with the developer offered different perspectives.

"He is considered by builders to be a tough competitor," said Robert

Wieboldt, executive vice president of the Long Island Builders Institute, who

said that Toussie specializes in housing on either side of $200,000.

"I did business with Bob Toussie 25 years ago and I will never do it

again," said John Kanas, chief executive of Melville-based North Fork Bank. He

wouldn't elaborate.

Phillips countered, "Robert Toussie is surprised to hear that Mr. Kanas

apparently feels this way, particularly since North Fork Bank has repeatedly

solicited business from him over the years."

Toussie has displayed toughness for many years. In the late 1980s, he and

two investment groups he headed launched a hostile takeover of New York-based

retailer and former toy-train maker Lionel Corp., which owned the Kiddie City

toy stores; and Heck's Inc., a West Virginia-based discount chain. Both stores,

now defunct, were being hammered by competitors at the time.

Lionel's board fought the Toussie-led group to a standstill agreement that

paid him and his partners $600,000. A Discount Store News report at the time

said the takeover fight Lionel waged against Toussie cost the company its

entire profits in 1989.

Phillips, Toussie's lawyer, responded: "Lionel management's own

intransigence contributed substantially to the costs, both to the company and

to Mr. Toussie, who was also the company's largest shareholder."

The Toussie group dropped its Heck's bid in 1987 after the company said it

wouldn't meet quarterly income projections. The group later sued the company

for $1 million in expenses and interest. "The litigation was satisfactorily

resolved in Mr. Toussie's favor," Phillips said.

Like many successful businessmen, Toussie is known for acquiring expensive

things as well as sharing his wealth with charities.

Several people who have had dealings with him noted the developer's

penchant for expensive suits, with the trademark handkerchief in the breast

pocket. And they pointed to his taste for expensive cars - he owns a 2001

Jaguar; 1998 and 1989 Bentleys; and a 1989 Rolls-Royce, according to New York

State Department of Motor Vehicle records. A real estate agent said homes in

Manhattan Beach, where Toussie and his wife, Laura, live in a stone and shingle

house, average $1.5 million.

His charitable contributions in recent years include a $50,000 donation

last year to the New York Presbyterian Hospital-Weill Medical College of

Cornell University in Manhattan; a $10,000 contribution in 1999 to Babylon Town

toward a park's refurbishment, and a $1,000 donation that same year to the

Guide Dog Foundation for the Blind in Smithtown; a $10,000 donation to Hatzolah

ambulance service in Brooklyn in 1998, and a $500 donation that same year to

the Correction Officers Benevolent Association in Manhattan.

And, Phillips added, his client has shown concern for minorities over the

years.

Mr. Toussie "is proud of his role of being among the first to integrate a

large factory in Alabama in 1962," Phillips said. "Decades later, his son Isaac

became the pre-eminent seller of houses to minority families on Long Island,

further assisting in the integration of towns and townships all over Long

Island."

But an NAACP-Toussie partnership, which was formed in the 1970s to build

affordable subdivisions in Brookhaven, went sour. The alliance fell apart after

homeowners who bought other Toussie homes complained of such things as shoddy

workmanship, said Gordon Heights resident Elsie Owens, 73, a longtime

neighborhood activist.

Phillips disputed that account, saying that Toussie stopped building only

after his contracts expired.

"These were fine houses," Phillips said. "Indeed, for years Mr. Toussie and

his family themselves lived in one of the identical houses built for the

NAACP."

OTHER TOUSSIE ENDEAVORS

Robert Toussie has been involved in many private local development companies,

including:

Chandler Property Inc.

(previously known as Toussie Family Enterprises Ltd.)

David Park Estates Inc.*

Delson Equities Corp.

East Coast Land

Developers Corp.**

Easy Home Program Corp.**

Greenstar Enterprises Inc.

Marconi Realty Ltd.

(registered to his address but in someone else's name)

Paltrrz Corp.

R.I. Brookfield Corp.

R.I. Boyle Corp.

R.I. Camelot Homes Corp.*

R.I. Miller Place Corp.

R.I. Monterrey Oaks Corp.

R.I. Paulis Corp.

R.I. Ridge Green Corp.

R.I. Rolling Hills Corp.

RIHB Development Corp.

Rod Staten Corp.

Staten Sketch Corp.

Toussie Group Ltd.

Your Long Island Home Corp.

SOURCE: New York Department of State and Dun & Bradstreet

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