A company connected to Alma Realty, owners of Center City Mall, provided a $450,000 mortgage when councilman Michael Jackson sold his property on Grand Street that houses his restaurant Jacksonville more than two years ago, according to court records.
Ellis Equities LLC filed a lawsuit in New Jersey Superior Court late last month alleging Jackson pledged his restaurant business as collateral and guaranteed the loan. The lawsuit is against Jackson, his restaurant Jacksonville Cafe LLC, and Grand Street Holding Group LLC, controlled by Lisa Vasquez of Fair Lawn, which purchased 325 Grand Street in Dec. 2016, according to public records.
The loan came due on Jun. 30, 2017, but no payments were ever made, says the lawsuit. Both parties defaulted on their obligations, alleges the suit. The lawsuit was first reported by the Paterson Press early Wednesday morning.
As of May 1, 2019, Jackson and the other defendants owe $769,777 in principal, interests, and fees, according to the lawsuit.
The lawsuit raises questions about Jackson’s ardent support for the Center City Mall expansion at a time when the mayor and the City Council are engaged in pitched battles over who should receive a chunk of the $130 million in state tax credits.
Alma Realty wants to build a branded 150-room hotel atop the existing mall and a 12,000-seat multi-purpose arena for soccer games, football, concerts, and events for $100 million. It is seeking $40 million in tax credits for the project.
“There is absolutely no impropriety here,” Jackson told the Press on Monday. He said he was unaware of the link between Ellis Equities and Alma Realty.
Ellis Equities and Alma Realty are both based at 500 at 31-10 37th Avenue in Long Island City in New York.
Jason Fink, spokesman for Alma Realty, confirmed the two companies are affiliated.
“This loan by Ellis Equities, an independent financial services firm, to Grand Street Holdings, was made as a traditional investment on real estate in the city of Paterson,” said Fink. “As repayments on the loan have been delayed, Ellis Equities has initiated foreclosure proceedings, as would any lender in similar circumstances. This is now a matter of pending litigation.”
Jackson could not be reached for comments on Wednesday.
The contract dispute case is before Passaic County judge Thomas F. Brogan. It remains unresolved, according to court records.
The lawsuit alleges the defendants are in violation of their contractual terms for allowing unpaid municipal liens to accrue against the property which “jeopardize” and “cloud title to the property.”
Municipal officials sold $22,047 in liens against the Grand Street property in 2017, according to the lawsuit.
Jackson has struggled with his business over the past decade.
In 2009, Jackson defaulted on a $140,000 loan issued by Paterson Restoration Corporation, a quasi-governmental organization that issues loans to small businesses. The corporation is garnishing Jackson’s paycheck to collect the debt.
Jackson listed $1.3 million in debt in his 2013 bankruptcy filing. $1 million of that was a loan on the Grand Street property from Sun National Bank.
His financial problems first came to light in Paterson Times coverage during Jackson’s unsuccessful at-large council run in 2014. The next year, Jackson won the 1st Ward council seat that was previously held by disgraced councilman Anthony Davis in a special election. He successfully won re-election in 2016 even though some of his political opponents criticized for the loan default.