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Challenges mount for Nassau Coliseum leaseholder

Nick Mastroianni II stands inside his offices in

Nick Mastroianni II stands inside his offices in Jupiter, Fla. on Jan. 12. Credit: Richard Graulich

Nick Mastroianni II is back at Nassau Coliseum decades after rooting for the New York Islanders in the rafters as a young boy with his father.

The real estate developer raised in Huntington has assumed majority control of the county-owned arena at a pivotal moment.

It’s up to Mastroianni, 57, of Jupiter, Florida, to determine a viable business strategy for the venue as it emerges from the COVID-19 pandemic shutdown just as the Islanders christen a competing arena — their new home at Belmont Park, scheduled to open in November.

The success of the Coliseum, located in Uniondale just eight miles east of the Islanders' arena, is crucial to a $1.5 billion plan to develop the 72-acre "Nassau Hub" property surrounding the Coliseum.

Mastroianni and his partner in the Hub project, Scott Rechler, CEO and chairman of RXR Realty, aim to turn the largest undeveloped property in central Nassau into a mixed-use site with health care research centers, hundreds of new residential units and open space.

The timeline for starting the Hub project is tight: Rechler forecasts construction on the county-owned site will begin by March.

The key elements of the plan will require approval by the Town of Hempstead and Nassau County Legislature.

Officials have released no expected completion date for the Hub project.

In Mastroianni, the county is entrusting the arena, and to a significant extent the massive Hub redevelopment, to a man who in recent years has become well known for his successful use of a federal loan program that raises money for construction projects in the United States from immigrant investors.

In return, they gain a pathway to U.S. citizenship.

Mastroianni's career record shows he has no experience in operating sports and entertainment arenas and no involvement in any large-scale developments on Long Island.

But he says he can handle the Coliseum job.

"Our strategy has been to assemble a team of respected and recognized professionals who share our common goal of reinventing and reinvigorating the arena," Mastroianni said in a statement to Newsday last week.

"Much like the successful seasons played inside the Coliseum, it takes a team to win — and that’s what we are creating," he said.

Mastroianni called the Coliseum, "a significant asset owned by the taxpayers. It needs to succeed in an era when it faces any number of challenges — from all of us having to 'recalibrate' after a year or more of social distancing, the arrival of Belmont, and the role of digital entertainment."

Mastroianni declined to be interviewed and provided answers to questions through a spokesman.

Mastroianni began his career as a residential and commercial real estate developer in Rhode Island, and acknowledged he has faced challenges.

By 2000, Mastroianni's construction company was in receivership, and banks foreclosed on his office properties and two homes, according to a Fortune magazine story about him in 2014.

The collapse of his company forced construction projects to lapse, Fortune reported.

The fallout included a 2002 lawsuit in which a surety bond company attempted to recoup costs of unfinished projects.

Federal court records in Rhode Island obtained by Newsday show that in 2003, Mastroianni was ordered to pay $1,089,973 to settle the suit. Mastroianni finished paying the judgment in 2013, the court records show.

In 2003, the U.S. Department of Labor accused Mastroianni of diverting $401,361 in employer pension contributions for his own use, federal court records in Rhode Island show.

In a judgment, he was ordered to repay the full amount. While the court records do not show whether Mastroianni satisfied the order, Fortune reported that years later he negotiated partial restitution of $75,000.

Also in 2003, Mastroianni filed for federal bankruptcy protection in Rhode Island, listing debts of more than $2.5 million and only $69,100 in assets, U.S. Bankruptcy Court records show.

Mastroianni agreed in 2005 to abandon his bankruptcy filing, "without making any admissions," according to court papers, although he remained responsible for his debts. The records do not show when or whether he satisfied them.

Asked about this series of events, Mastroianni said in an emailed statement last week: "You are referencing business events that are over 20 years ago and were resolved long ago."

In an earlier statement to Newsday, he said he had, "fully paid all of my obligations that arose from those situations."

In the same statement, Mastroianni said his career had, "spanned over three decades and over this period I have experienced turbulent real estate and financial markets that, in turn, created challenges that affect my business."

He continued: "Thomas Edison suffered through many failures before he literally ‘saw the light.’ My career path has been similar."

Mastroianni’s career direction began to change when he became involved in the U.S. government's EB-5 loan program that allows developers to fund projects with the financial backing of immigrant investors. He's done EB-5 projects for about 20 years

Mastroianni is founder and chairman of U.S. Immigration Fund, a private company that has funded real estate development projects nationwide through the EB-5 program, which was designed to create jobs in the United States.

Mastroianni said that through his Jupiter, Florida-based company, he has raised more than $3 billion from noncitizens for more than 20 projects. He and his executives have made more than 100 trips to China since 2011, he said.

"I recognized early on that this program had the means to be an economic generator of considerable power," Mastroianni said.

To finance the Coliseum's 2017 renovation, Mastroianni raised $100 million from 200 Chinese investors, U.S. Immigration Fund officials told the Nassau County Legislature in filings and testimony.

In exchange for a $500,000 investment, the investors each were to get a U.S. visa and receive their money back within five years.

Stephen Yale-Loehr, professor of immigration law practice at Cornell Law School in Ithaca, described Mastroianni as "a major player" in the EB-5 loan world.

"He's done EB-5 projects for about 20 years and the Nassau Coliseum is just one of many that he's been in charge of," Yale-Loehr said.

Yale-Loehr noted that in dealing with potential investors, Mastroianni also "touts his political connections."

Mastroianni’s USIF has had a business relationship with the family of Jared Kushner, former President Donald Trump’s son-in-law and former White House adviser, according to USIF's website.

Mastroianni has provided funding for developments by the Kushner family's development company, including a 50-story apartment tower in Jersey City, New Jersey, called Trump Bay Street, according to the USIF website.

Charles Kushner, Jared Kushner's father and the founder of the company, told Newsday in an interview: "I couldn't be prouder to have Nick as my close friend and my partner. Nick is one of the smartest and most honorable business people I know."

In 2016, Mastroianni appeared at investor events in China with former Trump personal attorney and one-time New York City Mayor Rudy Giuliani and former New York Gov. George Pataki, both Republicans, according to video available on YouTube and news accounts of the events.

Neither Giuliani nor Pataki responded to messages seeking comment.

A year ago, the county negotiated with Mastroianni to take control of the Coliseum lease after the leaseholder, Russian billionaire Mikhail Prokhorov, stopped paying rent to the county.

Mastroianni sold a 25% stake in the lease last month to Fortress Investment Group, a Manhattan investment firm.

The county turned to Mastroianni because of his role as leaseholder lender for the arena.

The county legislature had approved the use of EB-5 financing through Mastroianni in 2015 at the recommendation of Barclays Center developer Bruce Ratner, who had been awarded the Coliseum lease by then-Nassau County Executive Edward Mangano.

At that legislative meeting, only Legis. Kevan Abrahams (D-Freeport), the minority leader, raised concerns about Mastroianni’s background, after reading passages aloud from the Fortune story.

"I would be hard found and hard pressed to think why would this legislative body consider going into business with somebody that has a … past like this?" Abrahams said.

Josh Meyer, the county's outside counsel on Coliseum matters, said Mastroianni's background was not a concern.

"He apparently has a colorful past, I guess," Meyer said at the hearing. "But he's a lender in this instance. So it's not something that I would say would have an impact here."

Later in 2015, Ratner sold the Coliseum lease to then-Brooklyn Nets owner Prokhorov.

Last summer, just as the COVID-19 pandemic was putting a stop to all mass gatherings, Prokhorov shuttered the Coliseum.

County officials said they were faced with two options for the arena: Take their chances if Prokhorov entered bankruptcy, and risk years of litigation, or work with Mastroianni to take Prokhorov’s place as leaseholder.

County officials chose the latter.

As part of the their deal with Mastroianni, he paid the $2.2 million Prokhorov owed in rent.

The county then allowed Mastroianni to delay payment of $4 million in annual rent until six months after all pandemic restrictions are lifted from arenas.

Nassau and Mastroianni also made a deal for the Islanders to use the arena during the past NHL season, although fans could not attend many of the games.

Evlyn Tsimis, Nassau’s deputy executive for economic development, said Mastroianni has lived up to his end of the lease deal so far.

Tsimis also praised Mastroianni for allowing the county to use the Coliseum as a large-scale vaccination site in March.

Tsimis said the county's sole financial contribution to the vaccine operation at the Coliseum was to cover Mastroianni's building expenses.

The previous December, however, county officials learned Mastroianni had written to his Coliseum investors encouraging them to move their money to a Times Square hotel project.

Because of pandemic restrictions, the Coliseum, "generates little to no revenue, and it continues to lose substantial sums of money each month," Mastroianni wrote.

In the letter, obtained by Newsday, Mastroianni also revealed that investors likely would not recoup their $500,000 investments in the arena, "for at least several more years in order for the effects of the pandemic to be gone."

At the time, Mastroianni said in a statement to Newsday the, "possible actions outlined in the letter have no impact on the operations of the Coliseum or the long-term success of the Nassau Hub development."

Nonetheless, county officials asked Mastroianni to execute an indemnification agreement to protect the county from investor lawsuits. County officials told the legislature in January that Mastroianni had complied.

Mark Giresi, USIF's chief operating officer, assured county officials in a letter that month that Mastroianni had the, "financial wherewithal, operational capability, commercial relationships and decision-making authority," to operate the Coliseum successfully.

And when Mastroianni reached a partnership with Fortress at the Coliseum last month, Richard Kessel, chairman of the Nassau County Industrial Development Agency, called the move "a show of confidence."

Fortress oversees $53 billion in investments for wealthy individuals and institutions.

The Coliseum has a 50-year exemption on Nassau County property taxes through a PILOT agreement arranged by the Nassau IDA in 2015, before the arena renovation.

Coliseum officials are preparing to host the first non-Islanders events with spectators, post-pandemic.

Dude Perfect, the sports-and-entertainment group made famous on YouTube, is slated to appear Oct. 9, followed by Canadian singer Michael Bublé on Oct. 15.

UBS Arena at Belmont opens in November with Islanders home games.

What will the new normal look like as the Coliseum competes with UBS Arena for acts without a big-league sports team as an anchor tenant?

And how will the new Coliseum fit into the development plans for the Nassau Hub?

The answers are unclear, but Mastroianni has promised county officials a plan later this year for operations at the Coliseum and the Nassau Hub.

In a statement, Rechler praised Mastroianni for working "constructively with Nassau County and RXR to seamlessly fill the shoes left by the previous owner of the Coliseum."

That, Rechler said, allowed the Islanders to play one more season at the Coliseum and the Hub project to remain "on track."

Mastroianni said he's "humbled" to work with Rechler and shares his vision for the Hub property as a residential, commercial and entertainment destination for Long Islanders.

"Nassau Coliseum and the surrounding Hub represent an opportunity to reinvent one of the most iconic arenas in the nation — and for me, to do so in my hometown," Mastroianni said.

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