Inside the $55 Million Foreclosure Crisis Facing an East Village Landlord

If one views the four buildings between East 12th and East 14th streets, it’s easy to discern they were built in the same style probably by the same ownership: white stone surrounds, elaborate lintels, keystone-like flourishes, and decorative molded crowns punctuating red brick. They are the four East Village buildings now owned by four different LLCs set up by David Jacobson and the late Michael Ricatto. Now they sit a the center of a sprawling $55 million foreclosure battle.

Through the web of LLCs tied to their East Village portfolio, the current ownership is facing coordinated foreclosure lawsuits over Signature Bank-era loans that changed hands after the bank’s collapse. Across just four properties—199 Ave. A, 346 E. 13th St., 441 E. 12th St., and 520 E. 14th Street—complaints filed in Manhattan Supreme Court this May describe more than $55 million in alleged combined debt exposure.

The first mortgages stretched back decades, from the 1980s through the 2000s. For years, the system appeared to work. The rents from commercial and residential tenants gave a steady cash flow.

At 199 Ave. A, a smaller nine-unit building mixed longtime tenants with newer arrivals upstairs while a wireless store and neighborhood convenience shop operated below. At 441 E. 12th St.—the apparent flagship—seniors on fixed incomes lived alongside younger tenants while Boris & Horton, the dog-friendly café, buzzed downstairs beside a barber shop and waxing salon.

On East 13th Street, 346 had evolved into something closer to a machine for the roommate era, packed with students and young professionals in shared apartments. And at 520 E. 14th St., the largest of the four, nearly every unit was occupied as nail salon customers drifted in and out downstairs while roommates cycled through upper-floor apartments. Together, the four buildings generated more than $5.3 million a year in gross rent.

Then, according to court filings, the payments began to falter. Starting in spring 2024, Jacobson and Ricatto allegedly began missing mortgage payments across the four buildings. The original loan balances alone totaled nearly $38 million. By the time foreclosure lawsuits were filed in 2026, penalties, extra interest, legal fees, taxes, and additional loans had added more than $17 million to what lenders said was owed.

But the bank’s argument, now under the control of a Santander-linked lender, is not just that payments stopped. It’s that the buildings were still bringing in substantial rent money while the owners remained in default. The lender is now asking the court to appoint outside managers to take control of those rents and oversee the properties.

And the danger may not stop at the properties themselves. Jacobson and Ricatto also signed personal guaranties tied to these loans, meaning that under certain conditions, lenders can pursue them personally. Plaintiff’s attorney Susan McWalters declined to comment.

Inside the portfolio, the contradictions were everywhere. In one building, a woman paid $72 a month for her rent controlled apartment while commercial renter Boris & Horton paid tens of thousands downstairs. In another, students in market-rate shared units paid dramatically more while long time rent-stabilized tenants paid only a fraction of that. City records added smaller but telling clues: rodent violations, dirty sidewalks, nuisance complaints, unpermitted work, recycling failures. On East 12th Street, rodent and nuisance issues surfaced in the same building that housed a pet-friendly café and Terminate Control below.

Yet tenants’ views were not uniformly bleak. “The owners, they are good people,” one resident at 520 E. 14th St. said. “I’ve been here for 35 years.” Still, he said newer tenants seemed far less rooted, often cycling in and out within months because the rent was too high.

Around forty years ago, David Jacobson and Michael Ricatto sat together signing some of the first deals that would become their East Village empire. Mortgage after mortgage, building after building, they expanded. But by the time foreclosure lawsuits began closing in, only Jacobson remained to face them publicly. Ricatto was dead.

Less than a week after one of those complaints landed in Manhattan Supreme Court, Jacobson’s name surfaced somewhere else entirely—in the Aqueduct race results, where one of his horses won.

Because Jacobson’s career was never built only in brick. Long before foreclosure complaints stacked up downtown, Jacobson had spent decades moving through another world built on speed, instinct, and risk: horse racing. In Saratoga in July 2007, after twenty-five years away from the sport, he stood outside Barn 85 having just won his first race back.

“Exhilarating,” he told the New York Post. “There’s nothing like it.”

For Jacobson, there really wasn’t. He was born into racing royalty and scandal at once—the son of Howard “Buddy” Jacobson, the legendary New York trainer whose life fused racing success, Manhattan real estate, and one of the city’s most notorious murder convictions. David’s first racing career effectively ended in 1982 after the Hugable Tom controversy. The horse’s owner was Michael Ricatto. Jacobson lost his license and left the sport. “Since 1982, I had no contact with horses,” he later told the New York Post.

Like his father before him, Jacobson pivoted from horses to Manhattan property. Over the next twenty-five years, buildings became his second act. And somewhere in that rise, Ricatto transformed from the owner of the horse tied to Jacobson’s downfall into something far larger: investor, real-estate partner, and friend.

Then came another turn. In 2007, Ricatto, by then in his nineties, urged Jacobson back to the track. “Get your license,” Ricatto told him, Jacobson recalled to the New York Post. “And we’ll take one more picture in the winner’s circle.”

Jacobson returned, and over the next several years became one of New York racing’s winningest trainers. Between 2012 and 2014, he was among the sport’s most successful figures, setting records, claiming overlooked horses, and transforming some into major competitors.

But even that partnership appears to have frayed long before the banks arrived.

In a 2009 lawsuit, Ricatto himself accused Jacobson of freezing him out of parts of the real estate venture they had allegedly built together since the mid-1980s. Ricatto supplying capital, Jacobson supplying “sweat equity,” all under what Ricatto described as a 50/50 understanding. Ricatto later dropped the claims.

As for Jacobson, scrutiny followed him in racing too: Hugable Tom, medication controversies, welfare criticisms, and, in 2024, a suspension after regulators said one of his horses showed signs of a banned race-day treatment that may help delay fatigue. Around that same period, court filings suggest mortgage payments across parts of his East Village portfolio were beginning to falter.

According to the Daily Racing Form, Jacobson is now based in Kentucky. He could not be reached for comment. His son, Zachary Jacobson, had not responded by press time.

For now, the four buildings still stand, ornate and unmoved amid the youth, bustle, and churn of the East Village, even as the fate of the empire behind them appears far less certain.