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Foreclosure suit presents new challenge for New Land

Feb. 2, 2010

For more than a decade, Boris Gokhman has been perhaps Milwaukee's best known - and, to some, infamous - developer.

Immigrants from the former Soviet Union, Gokhman and his partner, Walter Shuk, started a painting business in 1990 and later bought apartment properties. By 1995, they were building small condo projects on the city's east side, making them among the first to recognize a new demand for high-end urban living.

Their firm, New Land Enterprises, eventually developed hundreds of condos and apartments on the east side and downtown. Even Gokhman's 2004 conviction for Medicaid fraud didn't slow down the firm. But Gokhman and Shuk now face what might be their biggest challenge: a foreclosure suit targeting the Oriental Theatre building and Habhegger buildings, both on Milwaukee's east side, and the Fox Bay building, in Whitefish Bay.

The lawsuit, filed in Milwaukee County Circuit Court, claims investment groups organized by Gokhman and Shuk have defaulted on loans from Madison-based Anchor Bank. The amount owed, including late fees and interest, totaled $14.8 million as of Jan. 22, according to the suit. The combined assessed value of the properties is $9.8 million, according to public records.

A bank spokeswoman declined to comment. New Land has been in negotiations with Anchor to try to obtain a new loan, said Tim Gokhman, the firm's director of sales and marketing, and Boris Gokhman's son.

"We're confident that we'll be able to come to a mutually satisfactory conclusion in the very near future," Tim Gokhman said Tuesday, in a statement. "In the meantime, we will continue to serve our existing and prospective tenants, and complete our plans for future development."

Those plans include Bookends North, a high-rise with 224 apartments proposed for the northeast corner of E. Kilbourn Ave. and N. Van Buren St. Its financing would include a $51.75 million loan guaranteed by the U.S. Department of Housing and Urban Development and a $3.45 million loan guaranteed by the city.

But the Common Council has delayed acting on the proposed city guarantee because officials in HUD's Milwaukee office declined to guarantee the larger loan, saying the development would be too risky.

New Land plans to appeal the agency's decision. Tim Gokhman said Anchor's suit won't hurt the firm's ability to secure financing for Bookends North, or for the proposed 35-unit Transera condo tower, planned for the Goll house site, 1550 N. Prospect Ave.

New Land's other pending projects include an extended-stay hotel at the Downer Ave. building that once housed the Chancery Pub & Restaurant and Einstein Bros. Bagels. Like Transera, that project is on hold until the economy recovers.

Anchor's foreclosure suit seeks to take control of three well-known properties.

The Oriental Theatre building, 2216-2230 N. Farwell Ave., features the cinema and other businesses, including Landmark Lanes. A New Land partnership bought the building as part of a package deal that included a nearby lot where the firm planned to develop apartments. But New Land sold the lot last year to developer Dermond Property Investments, which is building the Latitude apartments there.

The Habhegger buildings, at N. Water and E. Brady streets, are where New Land has plans to eventually develop a condo or apartment building. Also, John and Anne Nehring plan to lease a portion of the Habhegger property for a Nehring Family Market.

The Fox Bay building, 302-334 E. Silver Spring Drive, houses Fox Bay Cinema Grill and other businesses. New Land proposed 21 condos for the building's parking lot after a larger development plan was opposed. The firm last year sought financing assistance from the village, and that request is still being evaluated, Village Manager James Grassman said.

New Land's condo projects include City Green, 1111 N. Marshall St.; Cathedral Square, 545 E. Wells St.; and The Sterling, 1550 E. Royall Place. The firm has drawn praise from city officials for creating projects that generate property tax revenue and attract residents to Milwaukee from the suburbs.

But New Land's critics include condo buyers at two N. Water St. developments, Highbridge and Riverbridge, who sued the firm over claims of building defects.

Boris Gokhman was among several area residents charged in connection with a Medicaid fraud scheme, resulting in a guilty plea in 2004 for illegally receiving $12,050 from the tax-supported program. He received one year of probation, a $7,500 fine and $90,000 in civil forfeitures.

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