The Real Deal New York

Eddie Sitt files new lawsuit against brothers, Sitt Asset

Firm's founder accuses Ralph and David of diluting his ownership in 2 Herald Square

May 10, 2016 08:00AM
By Kyna Doles

From left: Eddie Sitt, 2 Herald Square and Jack Sitt

From left: Eddie Sitt, 2 Herald Square and Jack Sitt

Eddie Sitt is heading back to court with new accusations against his brothers Ralph and David of the family-owned Sitt Asset Management, after a Manhattan Supreme Court judge threw out a similar lawsuit in December.

Eddie, a founder of Sitt Asset and eldest of the four brothers, claims Ralph and David moved to dilute the stakes held by him and his brother Jack in the firm’s crown jewel, 2 Herald Square, according to a new lawsuit filed Monday.

Eddie had previously accused his brothers of trying to misappropriate company funds and squeeze him out of the business. The four brothers and their mother Marilyn each own a fifth of the company, although Eddie and Jack have since branched off to separate ventures, while Ralph and David recently founded a new company, Status Capital.

In the last few weeks, Eddie claims Ralph secretly negotiated to buy out shares from several of 2 Herald Square’s investors under a forged operating agreement that lists him as the sole managing member of the entity controlling the property. Eddie says he was given no explanation and only had five days to deposit $216,615 into Ralph’s account, or his ownership interest would be reduced. Despite’s Eddie’s refusal to approve the buyout, Ralph went ahead with the deal and slashed his brother’s ownership, according to court papers.

Sitt Asset acquired a 70-year ground lease for the 365,000-square-foot office and retail building in 2007. It will have the option to buy the property’s fee interest from TIAA-CREF as early as 2027. Victoria’s Secret occupies one of the retail spaces at the property.

On Monday, Ralph’s attorney Stephen Meister said the lawsuit was “complete fiction.”

“[Eddie’s] not the manager and he’s not fit to be the manager,” Meister added, saying Ralph has been the sole managing member for the property for a decade. “In 2005, Eddie Sitt impersonated a federal agent; now he’s impersonating a managing member.”

Eddie is seeking a temporary restraining order or a court-appointed receiver to stop Ralph from entering into further negotiations concerning the property.

“Absent a court order,” an attorney representing Eddie said in court documents, “Ralph will stop at nothing to exclude Eddie from participating in the management of the family business.”

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