The Real Deal New York

Former investor in 1500 Broadway says billionaire owner hoodwinked him into selling stake

Chaim Zabludowicz lied to Simon Murray about tax obligations, property's value: lawsuit

November 30, 2016 06:10PM
By Miriam Hall

1500 Broadway

1500 Broadway

A former investor in a prominent Times Square retail-and-office tower is suing the building’s owner, alleging he was lied to about the property’s value and his tax liabilities when he sold his stake, losing millions of dollars as a result.

Billionaire investor and art collector Chaim “Poju” Zabludowicz has owned 1500 Broadway — a 500,000-square-foot building where “Good Morning America” is produced — through his company Tamares Group since 1995. Rushbury Limited, a trust that was set up by Simon Murray, acquired a 6.25 percent stake in the building in 1996. Murray agreed to sell Rushbury’s stake back to Tamares Group in 2014 for $12 million, to be paid in installments.

In a lawsuit filed in New York State Supreme Court on Wednesday, Murray accuses Zabludowicz and his lawyer Harry Braunstein of deliberately misleading him into selling the stake in the building.

According to the complaint, Zabludowicz approached Murray in 2014 and asked to buy Rushbury’s interest in the building. Murray says that Zabludowicz “concealed his true reasons” for wanting to buy the stake and “misled Murray with a story about each man’s children.” In truth, Murray alleges, Zabludowicz wanted to buy the stake so he would not have to share the available cash from a $335 million mortgage loan the company was in the process of obtaining.

In his complaint, Murray says Zabludowicz also lied to him about related tax liabilities at 1500 Broadway, claiming if Rushbury’s stake were to be sold to a third party he would be forced to pay 40 percent in taxes. Zabludowicz’s lawyer Burnstein — who is named as a co-defendant in the suit — is accused of helping in the deception, even though he knew Murray did not have legal representation.

Murray — who says he has been a friend of Zabludowicz’s for three decades — claims he only agreed to sell the stake in the building for $12 million because he was led to believe he would not pay tax on the sale. However, according to court documents, Murray claims the total tax liability for the sale may total more than $16 million. He claims he is still owed $2 million for the sale of the building stake.

Murray, who retained Mitchell Karlan of Gibson, Dunn & Crutcher, also says the building was worth a fair market value of $820 million in 2014 when the new mortgage was obtained. He’s asking the court to reinstate his 2 percent ownership stake in the building.

Representatives for Harry Braunstein, Chaim Zabludowicz and the Tamares Group could not be immediately reached for comment.

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