An affiliate of Cantor Group, a California-based investor, is under scrutiny after its business dealings contributed to a decline in regional bank stocks last week. The same affiliate owns two luxury rental buildings on Manhattan’s Upper East Side, which are now the subject of a lawsuit in New York City.
The affiliate purchased 227 East 67th Street and 184 East 64th Street in 2019 for $38 million. In 2023, it refinanced the properties with a nearly $20 million loan from Los Angeles-based Preferred Bank. A buyer who signed a contract in 2024 to acquire the buildings alleges that the Cantor affiliate has refused to close the sale. The situation has brought Preferred Bank into focus, alongside Zions Bancorporation and Western Alliance Bancorporation, whose concerns about Cantor Group contributed to last week’s stock market drop.
Last week, Zions Bancorp filed a lawsuit against two Cantor Group funds and investors Gerald Marcil, Andrew Stupin, and Deba Shyam, accusing them of misrepresenting the collateral backing their loans. Western Alliance Bancorporation disclosed a similar suit, alleging that a Cantor fund used fraudulent title policies to conceal other banks’ claims on collateral.
Zions Bancorp extended $60 million in loans to Cantor Group funds intended for purchasing distressed mortgage loans. Western Alliance provided $100 million as a revolving credit facility for similar purposes.
A lawyer representing Cantor Group stated that the company “upheld all its contractual obligations to Zions Bank and any suggestion to the contrary is a lie.” The lawyer added: “there have been multiple audits and independent reviews of these loans at the bank going back years and there have been no monetary defaults.”
Investor anxiety increased amid fears that other regional banks might report losses on troubled loans. The developments followed the bankruptcies of First Brands and Tricolor, which resulted in losses at major Wall Street banks. On October 16, shares of Zions Bancorp fell by 13 percent while Western Alliance shares dropped by over 10 percent. Both banks’ shares have since recovered somewhat but remain about 3 percent below their pre-decline levels.
The Upper East Side buildings were previously owned by Michael D’Alessio, who was sentenced to six years in prison in 2019 after pleading guilty to defrauding investors out of $58 million in what prosecutors described as a Ponzi-like scheme. Preferred Bank foreclosed on the properties and acquired them through bankruptcy sale for $32.5 million in February 2019. Two months later, Preferred Bank sold the buildings to Continuum Analytics for $38 million and provided a $29 million loan on the properties. The deed and loan documents were signed by Deba Shyam, identified as managing member of Cantor Group Member LLC and named in the Zions Bancorp lawsuit.
In late 2024, Continuum Analytics agreed to sell the buildings to two Switzerland-based companies for $24 million—a significant decrease from the original purchase price. The buyers made a $1.2 million deposit and placed the remaining funds in escrow. However, Continuum allegedly tried to withdraw from the deal at the last minute. The Swiss companies filed suit in New York Supreme Court, claiming Continuum failed to honor the agreements and seeking appointment of a receiver for the properties. They also allege that Continuum owes more than $460,000 in property taxes on the buildings. The case is ongoing.
At issue in the lawsuits brought by Western Alliance and Zions Bancorp is whether borrowers misled banks about liens or security interests on collateral securing their loans. Both banks believed they held senior positions on collateral in case of default. However, Western Alliance’s suit claims that Cantor Group’s fund concealed other senior liens using fraudulent title policies. In several cases where Western Alliance thought it had priority, title documents showed Preferred Bank as the actual senior lienholder—including on the New York properties.
Preferred Bank, established in 1991 to serve Southern California’s Chinese American community, has been an active lender to Cantor Group. According to Western Alliance’s lawsuit, Preferred Bank held first-lien positions on at least seven properties tied to Cantor Group, including addresses in Ontario and Valencia, California. The suit alleges that title policies provided by Cantor omitted any reference to Preferred Bank’s senior position on the collateral.
Preferred Bank did not respond to requests for comment.
