The Hotel Carlisle’s mortgage holder took control of the landmark site in Middlesex Township two weeks ago, after the facility sat in financial distress since late 2015.

Mortgage company Sharestates acquired the site, located at 1700 Harrisburg Pike, to recoup a claim of just under $6.6 million, according to sheriff’s sale records from the Cumberland County Sheriff’s Department.

But dozens of employees are still waiting for paychecks. Further, the deterioration and closure of the hotel, which involved an auction where much of the property was stripped last year, coincides with a series of court cases involving the hotel’s former owners.

The cases span from New York to New Mexico, involving a half-dozen limited liability corporations, as well as the individual owners of those companies — David Embrahimzadeh and Felice DiSanza.

“The fact that they can do this, we just found jaw-dropping,” said Jessica Long, the Hotel Carlisle’s former front-of-house manager. “And after everything goes under, the employees who actually tried to keep the hotel afloat are the last in line to get compensated.”

Embrahimzadeh and DiSanza blame an adverse economy and what DiSanza described as predatory mortgage practices and mismanagement by his employees.

“It was simply a bad investment,” DiSanza said. “We’re the victims, not the profiteers.”

Hotel purchase

Until the sheriff’s sale went through on Sept. 13, the Hotel Carlisle site was owned by Oakdale Suites LLC, a company registered to DiSanza’s address in Ridgewood, New Jersey.

Embrahimzadeh and DiSanza — whose first name is sometimes listed as Filip — purchased Oakdale Suites in February 2015 from Farouk Hegazi, another New York-based businessman who ran the aging hotel for some time. Embrahimzadeh and DiSanza used a separate company, known as Suite Dreams LLC, to serve as the operating entity for the hotel and restaurant, while Oakdale Suites held the real estate.

The property operated under new ownership for less than a year before hitting rough financial terrain. Employees went unpaid, as did vendors and utility providers. The property closed in January 2016, after it had become obviously untenable.

“We kept the business open — we still had people staying the night and kept the restaurant open as long as we could, but the owners had stopped paying every bill,” Long said. “After the lights and water had been shut off, we locked everything up ourselves and walked away.”

After several months of correspondence with state and federal agencies, Long was able to get the U.S. Department of Labor to initiate an investigation into unpaid wages.

The report by the department’s Wage and Hour Division, obtained by The Sentinel, indicates that Suite Dreams LLC missed three payrolls between Nov. 29, 2015, and Jan. 16, 2017, at a total of $47,379.89 based on employees’ prior rates. Even assuming minimum wage and no carried overtime, the department calculated that Suite Dreams still owed at least $32,564.53 to its ex-employees.

When reached by The Sentinel, DiSanza said he was a hands-off owner, and that his employees had inflated the payroll and failed to pay utility bills, all unbeknownst to him.

“The payroll was absurd for the revenue the hotel was making … and I had no idea these people weren’t paying the bills,” DiSanza said. “Unfortunately, we never succeeded in getting [the hotel] to run like we wanted it.”

DiSanza cited a payroll of $16,000 every two weeks, consistent with the Department of Labor’s findings. With 32 employees, this comes to $250 per person per week in labor costs.

Ebrahimzadeh, when reached by phone, laid the blame on his partner.

“I myself was burned and screwed over in many ways,” Ebrahimzadeh said. “The majority owner and person who caused the downfall of this property is Felice DiSanza. Not intentionally, but he could’ve fixed things, and he didn’t.”

“This is not a representative transaction for me, and I’m very careful on who I’m going to partner with in deals in the future,” Ebrahimzadeh said.

The Department of Labor report indicates that investigators dealt primarily with DiSanza, since he was the “sole cooperating owner” of Suite Dreams LLC. Ebrahimzadeh was listed as “unwilling to correspond ... throughout the investigation.”

The investigation report also indicates that Suite Dreams LLC “provided the location of other properties arranged under different corporate structures,” including three hotels in the New York metro area, one hotel in Dover, Delaware, and one hotel in Ocean City, Maryland.

However, Suite Dreams LLC “claims inability” to make back wages, according to the report, although DiSanza indicated he was seeking a loan that could cover back payments, but failed to produce.

Bankruptcy

While the LLC claimed it was unable to pay its workers, the disposition of the actual partners may be different. The concept of a limited liability corporation is to shield investors from having their personal assets impugned by the company’s losses.

Theoretically, this protects investors from outcomes that are outside of their control. But it can also be open to abuse.

The labor investigation against Suite Dreams LLC was followed by four related bankruptcy filings: the bankruptcy of Oakdale Suites LLC, the bankruptcy of Diamond Condo LLC, and the personal bankruptcies of Ebrahimzadeh and DiSanza themselves.

In each case, federal bankruptcy judges partially overturned what is called “automatic stay,” which is the suspension of a creditor’s ability to seize property from a debtor while the debtor seeks a solution through the courts.

Rather, Ebrahimzadeh and DiSanza’s creditors filed motions to relieve them from the stay, on the grounds that Ebrahimzadeh and DiSanza were using their personal bankruptcies and those of their LLCs to shift assets around and avoid having properties repossessed.

Sharestates’ lawyer, Janet Gold, noted that shortly after the court granted Sharestates’ request for relief from stay on Oakdale Suites — allowing the company to pursue a sheriff’s sale of the Hotel Carlisle — DiSanza filed for personal bankruptcy, claiming protection of his companies’ assets as his own.

However, DiSanza failed to notify Sharestates or file the necessary asset schedules for his personal case, concealing what ability he may have had to pay for Oakdale Suites’ obligations on the Hotel Carlisle mortgage.

“Creditor is entitled to an annulment of the automatic stay because the debtor acted in bad faith by intentionally failing to notify creditor of the pending bankruptcy proceeding and intentionally violating a court order to file schedules,” Gold wrote in her letter to the court.

Lawyers for Knighthead, a real estate investment trust that funded Diamond Condo, further labeled Ebrahimzadeh and DiSanza as a “serial filer” of bankruptcies. Diamond Condo LLC is wholly owned by DiSanza, according to court records, but exists solely to hold a single piece of property — a luxury duplex apartment on East 77th Street in New York City, valued at $8.6 million, according to an appraisal filed with the court.

This is Ebrahimzadeh’s home, according to bankruptcy filings, but he does not legally own it or even hold a lease on it, given that it is booked to an LLC owned by his business partner.

Additionally, Diamond Condo was formed when a previous LLC filed for bankruptcy protection under Chapter 11 and reorganized its debts under a new corporate structure that, while new in corporate name, was not new in ownership.

In requesting relief from stay, Knighthead noted that “this is the third bankruptcy filing in a series of bad faith bankruptcy filings by the debtor parties, as part of a scheme to hinder, delay and frustrate Knighthead’s right to enjoy the property.”

Not only was the Diamond Condo bankruptcy dismissed, but the judge in the case ordered a one-year suspension on any further bankruptcy filings regarding the East 77th St. property, either by DiSanza’s corporate entity or by the occupant, Ebrahimzadeh.

DiSanza’s personal bankruptcy is still ongoing, but was described by Knighthead as the “latest stunt” to stave off bankruptcy without actually committing any capital to his creditors.

DiSanza defended his bankruptcy tactics as not uncommon.

“Of course the banks are going to say we’re stalling because they want to foreclose on us as fast as possible,” DiSanza said. “But it’s total nonsense what they said in court.”

Ebrahimzadeh does not list any assets on his personal bankruptcy petition. The interior furnishings of his home are valued at $1.2 million, according to an appraisal in court documents, but the furnishings are legally owned by Diamond Condo. However, Ebrahimzadeh does indicate that he receives approximately $20,000 per month — just under a quarter million per year — from other sources to cover his personal expenses.

Ebrahimzadeh repeatedly insisted during a phone call with The Sentinel that he “legally doesn’t have to” pay anything out of his own pocket, since the obligation to his employees falls under Suite Dreams as a company and not him personally.

Further, Oakdale Suites’ bankruptcy filing indicates a simple reason that it was unable to pay the Hotel Carlisle’s mortgage — it had no cash flow.

In a letter to the bankruptcy court, Oakdale Suites’ attorney Matthew Cabrera asserted “as Oakdale is an entity only holding the title to the land it has no recent balance sheet or cash flow statements to produce. The company also has not filed a recent tax return.”

That would indicate that Suite Dreams was not paying anything for the rights to operate on Oakdale Suites’ real estate, even though the companies are legally separate entities.

DiSanza said that this was simply because Suite Dreams was never profitable, even at zero real estate cost.

Oakdale Suites did receive a $1.9 million flow of cash, however, roughly six months prior to filing for bankruptcy, when it sold the northwest corner of the Hotel Carlisle lot to Sheetz. A new gas station and market was built on the Middlesex Township site this year.

Records from the Cumberland County Recorder of Deeds indicate that Oakdale Suites was the seller of record in the transaction, which was completed on Oct. 7, 2016.

DiSanza said that all of Oakdale’s sale proceeds were written off as mortgage costs.

“It all went to the lender,” he said. “They took every cent from the Sheetz sale.”

Additionally, the address listed for Oakdale Suites on its deed is not the address listed on its bankruptcy filings. The latter uses DiSanza’s personal address in Ridgewood, New Jersey, while the deed lists the business as located at 551 Madison Ave. in New York City, the address of Ebrahimzadeh’s primary business, Corniche Capital LLC.

Corniche is currently involved in a case in New Mexico where it allegedly failed to complete a transaction to purchase 12 Snappy Mart liquor stores, according to court records.

Labor enforcement

The most recent contact employees have had with investigative authorities was on Feb. 9, 2017, when Long said she received a letter from the Pennsylvania Bureau of Labor Law Compliance, part of the state Department of Labor and Industry.

The letter stated that the bureau “is not pursing further action against your employer. Accordingly, the bureau is reassigning your wage claim back to you. This reassignment does not preclude you from pursing private legal action against your employer.”

The letter also gives instructions for employees to get the results of the federal labor investigation.

“We were surprised that that was the end point,” Long said. “I would’ve thought they would do something further. We don’t have the money to hire lawyers on our own.”

In an email, the state Department of Labor and Industry spokeswoman, Lindsay Bracale, said the department “continues to investigate the case” but cannot comment on its current status.

Bracale also said the department can issue certifications that employees are owed back wages, “but the department does not have the authority to arbitrarily fine or penalize an employer.”

In bankruptcy cases, employees must typically take their certifications from the department and file the proof of claim with the bankruptcy court, Bracale said.

The extent to which wage theft goes unreconciled is difficult to quantify. The Economic Policy Institute estimates that an average of 107,000 Pennsylvanians are shorted out of roughly $448 million each year through wage theft, although these estimates are based on claims of employers paying less than minimum wage, which may not include employers who book employees at a legal wage but simply don’t pay it.

“Wage theft in general is a significant problem,” said Stephen Herzenberg, a labor economist with the Keystone Research Center. “The issue is that a lot of people who are victims of it are financially vulnerable already, and may be afraid to report it.”

From a policy standpoint, Herzenberg said, most experts advocate state agencies developing more comprehensive reporting systems, which track chronic abusers not just on minimum wage, but on taxes, unemployment remittances and other issues.

“It’s one thing to get some employees their money back, but it’s another thing to get employers to obey the law consistently in the first place,” Herzenberg said.

Despite the selective separation between corporate and personal liabilities, as seen in the Hotel Carlisle case, Pennsylvania does have what is called the Wage Payment and Collection Law, said Harrisburg-based labor attorney Irwin Aronson.

“Under the law, individuals are personally responsible for wages of employees, at least in Pennsylvania’s courts,” Aronson said.

Pursuing action under the law would require the state itself to bring charges, as opposed to the employees pursuing civil action, but the tools appear to be there, although Aronson said that he could not say anything definitely without knowing the Hotel Carlisle situation more intimately.

“Wage theft is a very common act, unfortunately, and comes in many forms,” Aronson said.

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