The Real Deal New York

Beninati sues Gamma over 3 Sutton Place, alleging “greed” and insider trading

Mezzanine lender seeking to foreclose on 68-story condo 

July 14, 2016 06:16PM
By Konrad Putzier

3 Sutton Place

Rendering of 3 Sutton Place in Midtown (credit: Foster + Partners) (inset, from left: Joseph Beninati and Richard Kalikow)

Fighting foreclosure on his condominium project 3 Sutton Place, developer Joseph Beninati on Wednesday sued his mezzanine lender Gamma Real Estate in federal bankruptcy court for at least $100 million in damages.

The complaint alleges that Gamma’s N. Richard Kalikow conspired with his cousin — Richard R. Kalikow of Herrick Feinstein, Beninati’s lawyer for the supertall project — to take control of the property “and reap the greedy reward of all its profit.”

Beninati claims that the attorney Kalikow served as a sort-of double agent on his cousin’s behalf while working for his firm the Bauhouse Group, feeding Gamma information and manipulating loan documents to make it easier for Gamma to foreclose on the property.

The two Kalikows “enjoyed what is tantamount to an insider trading relationship” and “worked in concert to lull Beninati into a sense of trust and faith,” the complaint reads.

Gamma could not immediately be reached for comment.

In response to the lawsuit, Richard Kalikow, Beninati’s lawyer on the project, told The Real Deal, “Everything that we did was proper.”

The complaint also accuses Gamma of creating “fabricated defaults” and failing to fund the project despite available committed funds — all with the alleged ulterior motive of taking over the property.

Apart from at least $100 million in damages, Beninati also seeks to void a lien Gamma filed on the property.

Beninati’s Bauhouse Group reportedly took out a $147 million mezzanine loan from Gamma to fund land acquisition and predevelopment costs for 3 Sutton Place, a planned 68-story, Norman Foster-designed condo tower. It defaulted on the loan in January. A month later, the Bauhouse-controlled entity owning the property filed for Chapter 11 bankruptcy protection in an attempt to prevent Gamma from foreclosing.

TRD first reported Beninati’s plans to sue Gamma in April.

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