The Real Deal New York

Ex-Peebles employee presses on in fight for compensation

Complaint raises questions over current CIO Tawan Davis’ former EDC employment

June 23, 2015 04:19PM
By Tess Hofmann

846 Broadway in Tribeca (inset: Don Peebles, top, Tawan Davis, bottom)

346 Broadway in Tribeca (inset: Don Peebles, top, Tawan Davis, bottom)

UPDATED, June 24, 4:27 p.m.: A former top executive at the Peebles Corp. who says he was stiffed by the developer on a profit-sharing agreement and later fired is appealing a judge’s decision to throw out his suit. But whether or not he is successful in his quest, his complaint raises questions about current Peebles CIO Tawan Davis’ route to his post at the company.

The complaint alleges that while Davis was working at the New York City Economic Development Corporation, he favored the Peebles Corp. and gave the developer insider information on other corporations’ bids for a major Tribeca site. For his part, Davis said the allegations are without merit.

In January, Daniel Newhouse, Peebles’ former director of development and investments, sued the company and its CEO Don Peebles, claiming that he relocated to New York from Miami to help Peebles set up a new operation, under the impression that he would be rewarded handsomely with interest on developments that he was involved in.

The largest project was the acquisition and development of 346 Broadway in Tribeca, a 13-story building Peebles acquired for $160 million in 2013 on an RFP from New York City and is currently developing into a hotel and condominiums with the Elad Group.

Newhouse said he is owed at least $3 million — the equivalent of a 5 percent interest in the project — pursuant to verbal and implied contracts. However, a New York Supreme Court judge dismissed the suit in May, finding that though Newhouse may have been strung along, he never had an executory contract.

On June 12, Newhouse appealed that decision, arguing that the court incorrectly found Peebles’ alleged promises were unenforceable, and also arguing that Peebles should be found personally liable. (The judge found no reason to pierce the corporate veil, saying “The only person that owns property anymore is Donald Trump. He’s the only one that says it’s mine; but everybody else owns it through an onion.”)

But a little-discussed portion of Newhouse’s complaint regards Davis, formerly a vice president of real estate transactions at the EDC who moved to Peebles Corp. as CIO in March 2014.

The complaint alleges that Davis developed a close social relationship with Peebles, visiting his homes in Manhattan and Florida, and provided specific inside information on other corporations’ bids for 346 Broadway.

“At one point during the negotiations, Davis communicated to Newhouse that another bidder had offered more than $200 million for 346 Broadway,” the complaint states. “Ultimately, Davis advised that if they could raise the bid to $160 million, NYCEDC would steer the sale to Peebles, because as Davis advised Newhouse, the City wanted the project developed by a minority developer.”

Davis did seek formal approval from the city’s Conflicts of Interest Board before he started his new position at the Peebles Corp. Based on the information he provided, including guarantees that he would not work with Peebles on the 346 Broadway project, the board granted its preliminary approval, according to a letter reviewed by The Real Deal.

The board advised Davis that the approval was contingent upon his keeping government information private, and his promise that he “not use for private advantage or disclose any confidential information gained from public service that is not available to the public.” Newhouse implies that Davis violated these conditions, then parlayed his business relationship into a new position at the private corporation.

And while Newhouse’s complaint was ultimately dismissed, the allegations concerning Davis were not directly negated by the court, and were not addressed by the Peebles Corp. in its response to the suit.

Davis told TRD that Newhouse’s claims are patently false. “I developed no close social relationship with Peebles during the bid… I did not communicate that there was a $200 million bidder for the asset. There was no $200 million bidder for the asset,” he said. “I shared with all the development teams that [$160 million] bid — what I believed to be the clearing price for the asset. And that is standard industry practice.”

Davis also denied mentioning that the city would prefer a minority developer, saying this was not part of the selection criteria.

“Finally, I would say that the idea that I parlayed my public service into this role is also false. I had the honor of serving for two-and-a-half years in the City of New York and the Bloomberg Administration. And like many others, when the administration was over, I returned to a twelve-year career [as an investor],” he said.

Lowell Plotkin, General Counsel for Peebles Corp., offered his take. “As the court made crystal clear in granting our motion to dismiss – and by throwing out each and every one of Daniel Newhouse’s claims, including those related to Tawan Davis – the allegations are entirely without merit, ” he told TRD in a statement Monday. “We are confident that any appeal will be swiftly and firmly denied.”

In fact, while Newhouse’s entire suit was tossed, he did not make any claims specifically related to Tawan Davis, and the judge, Justice Jeffrey Oing, did not directly address his statements about Davis’ conduct. Oing focused on the contractual claims, and did not mention the background information on Davis, who has not formally been accused of any wrongdoing.

A source told TRD that concerns about Davis’ behavior were raised in a May 15 letter to the Conflicts of Interest Board. Wayne Hawley, the Deputy Executive Director and General Counsel of the board said that the case is private, and declined to comment further.