The fight for a $900,000 building once owned by the S.F.-based Jewish Educational Center is over. And nobody really won.
Instead, the three contesting parties have agreed to a compromise, which is expected to be signed later this month by U.S. Bankruptcy Court Judge Dennis Montali.
The building originally was supposed to become an Orthodox synagogue for San Francisco's Russian emigres. That expectation is dead.
The deal divides $171,200, which is the net proceeds from the recent sale of the building, among three parties — the JEC's bankruptcy trustee, the Jewish Foundation for Learning and a San Francisco woman who loaned money to the JEC.
Bankruptcy trustee Stuart Kaplan gets $71,200. The JFL receives $27,000. And Luba Troyanovsky, who loaned money to the charity, gets $73,000.
All three sides were satisfied with the outcome.
"It cleans up a big question about that property and avoids litigation, which could have been nasty and expensive," said Malcolm Leader-Picone, an attorney for Kaplan.
Rabbi Maklouf Benchlouch, JFL board president, also looked at the resolution this week with a practical eye.
"I hoped to get more with the settlement, but there was no way to get more money than that. I was worried if we didn't get that money, we would wait and not get anything," he said.
Benchlouch plans to use the money to help keep the Torah Day School running. The day school has about 30 students.
Nils Rosenquest, Troyanovsky's attorney, also was satisfied with the deal.
"I guess I would say the settlement worked out," Rosenquest said. "Under the circumstances, it's fair and that's life."
The compromise over the disputed building, which sits at 11th Avenue and Clement Street in the Richmond District, is another step toward concluding bankruptcy proceedings.
Since last summer, the trustee has been selling property and real estate, either donated to or purchased by the JEC. More than 100 creditors are owed a total of about $1 million.
Kaplan is still seeking the $472,000 home owned by Rabbi Bentzion Pil and Mattie Pil, the JEC's founders. Kaplan and the state Attorney General's Office claim that the home was purchased with money diverted from the charity. The Pils have denied that accusation.
Troyanovsky also is involved in that dispute. The state attorney general's civil lawsuit claims that Troyanovsky is among those who helped the Pils divert funds from the charity. Troyanovsky denies that charge.
"She didn't divert anything," Rosenquest said.
The JEC bought the 11th and Clement building in October 1996 for about $900,000. A few months later, the JEC gave the building as a gift to the Schneerson Russian Jewish Center, a non-functioning sister charity of the JEC.
Last May, the Pils signed a deed of trust that created a $150,000 lien against the building for Troyanovsky, the girlfriend of then-JEC board secretary Sam Budovsky.
Troyanovsky had lent the JEC $100,000 and then another $18,000.
But according to a lawsuit filed by the trustee, the Pils did not have the authority to grant the deed of trust. In addition, the deed wasn't recorded until June 24, 1997 — more than a week after government officials swooped down on the JEC and took over the charity.
Over the past 10 months, Troyanovsky has been trying to get her loans repaid.
Meanwhile, the Schneerson Russian Jewish Center, which is now known as the Jewish Foundation for Learning, has been claiming the building as its own.
And the bankruptcy trustee, who is trying to pay back creditors, has been claiming the building was fraudulently transferred from the JEC's ownership in the first place. Thus, he had argued, the building still belongs to the JEC.
Kaplan filed a lawsuit in October to win the building.
The building, which contains a linen store and apartments, was sold in late December to a couple for about $920,000. The proceeds were put in escrow.
Under the deal, the $73,000 for Troyanovsky is secured, which means she will get paid. The other $45,000 still owed to her is unsecured, which means the amount falls into the same category as money owed to the rest of the creditors.
It's unlikely that any of them will get paid in the end, Leader-Picone said.
Leader-Picone acknowledged that Troyanovsky believed she had received a valid lien.
"The problem is that when you start giving out liens, you have to do it right," he said.
The Pils gave out the lien without the board's approval, he said, adding that there were other technical problems with the transaction.
"If [Troyanovsky] clearly had a proper lien against the property and there weren't questions of validity, then she might have received payment in full," Leader-Picone said.
Before the settlement was wrapped up, the JFL had promised not to proceed with a lawsuit filed in November against the trustee in U.S. District Court. That suit claimed the trustee's actions on the building violated the JFL's constitutional religious rights. The trustee denied the accusation.