A federal judge has ruled in favor of the Town of Oyster Bay in a creditor’s lawsuit seeking to collect more than $6 million in disputed loan guarantees to former concessionaire Harendra Singh.
The ruling is the first in three lawsuits brought against the town last year collectively seeking more than $17 million from loan guarantees made to companies established by Singh.
U.S. District Judge Sandra Feuerstein in Central Islip, in a ruling issued Tuesday, dismissed a suit brought by Connecticut-based creditor PHL Variable Life Insurance Co. against the town. She ruled that the loan guarantees had not been approved by the town board and executed by the town supervisor as required under state law.
With “no indication” that the loan guarantee was approved by the supervisor or town board, PHL’s complaint “fails to state a plausible claim that a valid and binding contract existed between SRB Convention and the town that was intended for plaintiff’s benefit,” Feuerstein wrote.
In 2011, Singh’s S.R.B. Convention & Catering Corp. borrowed $7.8 million from PHL, an affiliate of Connecticut-based The Phoenix Companies, to be used for capital improvements at the Woodlands at Woodbury, the town’s catering hall at its golf course in Woodbury.
PHL officials said in court filings that they had relied on representations from Uniondale-based law firm Harris Beach and former deputy Oyster Bay Town Attorney Frederick Mei, as well as documents signed by former Town Attorney Leonard Genova. PHL sued Oyster Bay last year after S.R.B. defaulted on the loan.
Town Attorney Joseph Nocella said Wednesday that the ruling vindicated the town’s position that the loan guarantees were “bogus.”
“The judge dismissed all the claims because the town board never authorized or ratified the loan guarantees, and it’s our position that the loan guarantees are invalid,” Nocella said.
Feuerstein’s ruling noted that while the concession agreement and extensions had been executed by former Town Supervisor John Venditto, the loan guarantee had been executed by Genova.
The ruling does not address the town board’s 2010 resolution authorizing the town attorney “to perform the duties of the Town Supervisor, including the signing of contracts” if the supervisor were “absent or unavailable.”
Nocella said he didn’t know how the ruling could affect other town contracts that may have been signed by Genova.
Genova, who has not been charged with a crime, resigned in January, a week after Venditto.
Singh was charged with bribing a former deputy town attorney, income tax evasion, disaster fraud and obstruction of justice in a 13-count indictment in September 2015. Singh has pleaded not guilty.
Venditto last year pleaded not guilty to federal corruption charges that include soliciting and accepting bribes from Singh to obtain town loan guarantees.
Mei resigned on Aug. 31, 2015 — about six months after the town hired criminal defense attorneys to handle the loan guarantee issue. Sources have identified Mei as the unnamed deputy attorney who allegedly accepted bribes in the charges brought against Singh. Mei has not been charged with a crime. Lawyers for The Phoenix Companies did not respond to requests for comment.
The two remaining lawsuits filed by other Singh creditors were brought by another subsidiary of The Phoenix Companies and Manhattan-based Atalaya Asset Income Fund II LP.