The Real Deal New York

Yoel Goldman claims Zelig Weiss, partner squeezed him out of Bed-Stuy deal

All Year head sues over “sham merger” that saw him lose interest in projects

April 14, 2016 02:40PM
By Rey Mashayekhi

Rose Castle

378 Flushing Avenue in Bedford-Stuyvesant

All Year Management’s Yoel Goldman is suing two fellow real estate investors for allegedly fleecing him out of a partnership by engineering a “sham merger,” which saw Goldman lose his managing stake in an entity developing two properties near the Brooklyn Navy Yard.

Goldman, a landlord and developer whose firm manages a sizable portfolio of multifamily rental properties across Brooklyn, filed suit in New York State Supreme Court last month against former partner Zelig Weiss and fellow investor Fedor Itskovitch.

According to the complaint, Goldman and occasional collaborator Weiss were formerly 50/50 partners and joint managers of Rose Castle Redevelopment LLC — an entity that alongside other investors was involved in the redevelopment of two Bedford-Stuyvesant parcels, at 376-378 Flushing Avenue and 39-51 Franklin Avenue, into “residential condominiums, commercial condominiums, commercial offices and parking.” Right now, the Flushing Avenue site holds a one-story industrial building and two-story commercial building, while the other site is vacant.

Rose Castle’s interest in the properties was “worth in excess of $130 million,” the lawsuit claims, with Goldman’s 50 percent stake in the LLC worth “at least $65 million.”

But the All Year head alleges that Weiss teamed up with Itskovitch on a scheme that saw Goldman sell a 10 percent “phantom/income interest” in Rose Castle to Itskovitch for $8.5 million – before allegedly going on to “mischaracterize the deal” and claim that Goldman had actually sold Itskovitch a 10 percent “membership interest” in the partnership.

According to the suit, the transaction served to reduce Goldman’s stake in Rose Castle to a 40 percent minority interest, with Weiss and Itskovitch going on to remove Goldman as a manager in the partnership and merging Rose Castle into a new entity in which the two men were the sole members. The suit claims this completed “their conspiracy to deprive Goldman of his interest in Rose Castle.”

“Weiss’s representations to Goldman regarding selling the 10 percent income interest were fraudulent and were made by Weiss as part of a scheme to reduce Goldman’s membership interest in Rose Castle and then squeeze Goldman out,” the lawsuit claims.

The All Year head is seeking “to unwind the fraudulent merger” and have it ordered “unlawful,” while having Rose Castle declared owner of the properties since transferred to the new entity as a result of the merger, and having Goldman himself declared 50 percent owner of Rose Castle.

Goldman, whose firm is based in Bedford-Stuyvesant and has a mailing address of 199 Lee Avenue in Williamsburg, is also seeking damages ranging from $1.5 million to more than $130 million across the lawsuit’s numerous causes of action.

Neither representatives for Goldman nor Weiss returned requests for comment. Itskovitch could not be reached for comment.

Goldman and Weiss have collaborated on a number of large-scale Brooklyn development projects, including the 21-story William Vale Hotel in Williamsburg slated to open in May. The two men have also worked with developer Toby Moskovits in their own dealings – with Goldman and Spencer Equity’s Joel Gluck recently settling litigation against Moskovits.

Goldman recently acquired a piece of a residential assemblage at the six-acre, former Rheingold Brewery site in Bushwick for $72 million, as The Real Deal reported last week.

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