The Real Deal New York

Conseco slams GM Building suit by Macklowe rival

April 11, 2008 03:06PM
By David Jones

The attorney for Conseco Inc. has slammed developer Leslie Dick’s fraud and conspiracy suit against Harry Macklowe.

Conseco attorney Reed Oslan told The Real Deal that Dick’s case was “groundless,” a day after Dick’s attorney urged the New York State Court of Appeals to force the principals in the 2003 sale of the General Motors Building to testify under oath through a discovery process.

Dick alleges that Conseco conspired with billionaire philanthropist George Soros and broker Eastdil Secured to sell the GM Building for a record $1.4 billion through a sham auction process that precluded rival bidders from the deal.

“The allegations of bid rigging and predetermined bidding are all totally false,” Oslan said. “It did not happen.”

The suit by Dick, and developer Sheldon Solow’s similar conspiracy case, have helped stall Macklowe’s attempts to sell the GM building in recent months, as potential buyers like Larry Silverstein reportedly grew concerned about gaining ownership rights to the building.

Oslan, Conseco’s attorney, says that since the GM Building sale was not done through the U.S. bankruptcy court, it was not considered a true auction, and therefore Conseco and Eastdil Secured were free to consider bids based on the buyer’s merits, not just the highest price.  

“Macklowe demonstrated a significant amount of work in pursuing the building,” Oslan said. “He was very visible in due diligence. He toured the property many times. He really played it like a pro.”

Attorneys for Leslie Dick Worldwide, Dick’s Manhattan-based development firm, allege that Soros engineered a deal in 2003 that would place Conseco into a pre-arranged bankruptcy in return for fixing the auction in favor of Macklowe. As part of the alleged conspiracy, the suit claims that Macklowe was a frontman for Soros, the building’s true owner.

“Mr. Soros never directly or indirectly acquired the GM Building,” said Soros spokesman Michael Vachon, in an e-mailed statement. “The lawsuit is totally without merit.”

Yesterday, the New York Observer reported that Dick stated in an affidavit that he spotted Soros spying on him at the bar in Grand Central Station.

“Mr. George Soros was sitting at the bar directly diagonally across from us,” the statement said. “Mr. Soros was observing me with great interest.”

The suit also claims that Eastdil and Conseco said the highest bidder would be awarded the building, which should have been Dick, who bid $1.5 billion. The suit also alleges that Eastdil tipped off Macklowe about rival bids and allowed him to increase his original bid to match Solow’s rival $1.4 billion.

“If the whole auction itself is a sham and a pretext, a confidence game to give the appearance of a real auction, that’s a fraud,” Robert Hantman, attorney for Leslie Dick Worldwide, told The Real Deal.

A Macklowe spokesman declined comment and Eastdil Secured’s lawyers were not immediately available for comment.

Conseco officials say they believe they will prevail in the Dick and Solow cases.

“We remain highly confident that the Solow litigation will join the Dick case in the pile of groundless claims regarding the GM Building,” Oslan said.

Macklowe
must sell the GM Building to pay down the overdue debt that he owes on the seven Midtown buildings he bought last year for $7 billion.

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