Toby Moskovits, Michael Lichtenstein Indicted Over PPP Fraud

Toby Moskovits and Michael Lichtenstein, once-prolific Brooklyn developers whose partnership came unraveled under the weight of debts they couldn’t pay, have been charged with fraudulently trying to obtain $5 million in Covid-era government loans.

They’re accused of using forgiven payroll loans to pay their lawyers, architects and even a hat shop.

Prosecutors from the Southern District of New York charged the developers on October 27 with three counts of fraud related to the Paycheck Protection Program and Economic Injury Disaster Loan program.

“After obtaining funds from these programs, Lichtenstein and Moskovits used most of the funds for purposes that were not permitted by the programs and lied about doing so,” prosecutors wrote in their indictment.

Instead of using the monies to pay employees and for working capital, prosecutors allege Moskovits and Lichtenstein used the funds “to pay lawyers, architecture firms, a real estate lender, a real estate and titles services company, and for expenses” related to a residential development in the Bronx.

Prosecutors said the duo fraudulently obtained $1.9 million in loans and tried to get another $3.1 million between March 2020 and April 2022.

In 2020, the developers got a $1.4 million PPP loan through their hotel management company from a bank and used the money to pay $15,000 to a real estate attorney and another $10,000 to an architecture firm, according to prosecutors. Then they submitted a forgiveness application saying the money was used for eligible payroll costs, which was approved by the Small Business Administration.

In 2021, they applied for another $2 million loan, with Moskovits explaining, “We need the PPP funds in order to get through this difficult period and pay the salaries of the 90 people that rely on us for their living wages.”

“If you look at the first PPP loan that [the Hotel Management Company] received, all of it went to pay people’s salaries and to cover payroll. None of it went for other purposes,” she told her bank.

But prosecutors say that just wasn’t true.

“In fact, Lichtenstein and Moskovits had used less than half of the 2020 PPP loan to ‘to pay people’s salaries and to cover payroll,’” they allege.

The bank ultimately denied the loan on the grounds that Moskovits and Lichtenstein had not disclosed their interest in the hotel company in connection with the previous loan.

Representatives for Moskovits and Lichtenstein could not be immediately reached for comment.

Moskovits, an Orthodox Jewish single mother of three, worked in Israel’s tech venture capital industry and then turned to real estate during the Great Recession, emerging as one of Brooklyn’s biggest builders.

She built a reputation by developing ambitious projects in relatively untested neighborhoods, including the 147-key Williamsburg Hotel and 25 Kent — a 500,000-square-foot office complex that was the first ground-up commercial development in Williamsburg in more than 40 years.

But Heritage Equity has come under duress in recent years.

They lost their Williamsburg Hotel in 2023 in bankruptcy.