The Real Deal New York

United Realty exec recants fraud charges against CEO Frydman

Al Akerman says claims were based on “apparent misrepresentations” made by third party

February 25, 2015 02:35PM
By Mark Maurer

united-realty-suit

From left: Jacob Frydman, Albert Akerman, Eli Verschleiser and 866 United Nations Plaza

UPDATED, 4:40 p.m., Feb. 25: Albert Akerman, a former top executive at United Realty, has withdrawn a suit he filed earlier this month in which he accused CEO Jacob Frydman of firing him for finding illegal deals in the real estate investment trust’s books.

Akerman had also sent a letter on Feb. 13 to the U.S. Security and Exchange Commission’s Office of the Whistleblower with similar charges of fraud. On Friday, however, he wrote another letter to the SEC, in which he said that those charges were based on “apparent misrepresentations made by a third party.”

“I now believe there was no wrongdoing or impropriety on the part” of Frydman and United Realty companies, Akerman wrote.

Lanny Davis, an attorney for Frydman, said there is “sufficient evidence” that Eli Verschleiser, a founding partner and former president at United Realty, is the aforementioned third party.

In a statement, Frydman said: “Verschleiser has been soliciting his cronies to bring an action against Frydman, but he needed some basis, which he did not have.”

Verschleiser resigned from the firm in 2013 in the wake of the firm’s failed bid to acquire a 38-story tower at 866 United Nations Plaza.

“The REIT has been defrauded – and the public has been defrauded – by Jacob Frydman,” Verschleiser, now chair of real estate investment firm the Multi Group of Companies, told The Real Deal this week. “I resigned because of fraud and mismanagement by Frydman.”

In response, Davis said: “I believe that Mr. Verschleiser’s charges against my client are false and reckless.  They have no credibility, just as the false charges contained in the letter to the SEC have been withdrawn as being ‘wrong’ and ‘false.'”

The fallout from the 866 UN bid led to a series of lawsuits from both Verschleiser and Frydman. At the time, Verschleiser accused Frydman of transferring funds improperly and thus disqualifying the firm from closing on the purchase. The parties are currently in arbitration, court documents show. Frydman sought a temporary restraining order against Verschleiser in April that was later dismissed, records show.

In response to Frydman’s claim about the identity of the third party, Verschleiser said, “I have no idea, but [Akerman] did speak to a few people about the situation.”

Davis said he plans to request that the U.S. Attorney’s Office for the Southern District of New York and the Department of Justice investigate potential email hacking and the creation of fake websites that slander Frydman — charges that were previously alleged in both federal and state lawsuits filed by Frydman against Verschleiser and others last year.

In January, a judge in the U.S. District Court for the Southern District of New York issued a preliminary injunction in January ordering Verschleiser, Akerman and others not to distribute confidential documents obtained from United Realty, in connection with a civil complaint alleging a violation of the federal Racketeer Influenced and Corruption Organizations Act (RICO).

Akerman’s lawsuit was dismissed with prejudice. According to the now-withdrawn suit, United Realty’s suspicious transactions stemmed from a combination of unsatisfied judgments, breach of personal loans and a misappropriation of company assets. Frydman has denied these allegations.

Frydman said there are no plans to return the $500,000 investment Akerman sought as part of the suit or to revise Akerman’s Form U5, a Uniform Termination Notice for Securities Industry Registration. Akerman’s lawsuit described the U5 as unfavorable.

Akerman’s attorney Andrew Kimler declined to comment, on his behalf.

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