Developer Ben Shaoul, who heads up Magnum Real Estate Group, is facing a legal battle with his parents, Abraham and Minoo Shaoul, who claim that the real estate mogul misappropriated millions of dollars from the refinancing of mortgages on properties he co-owned with them.
Abraham and Minoo Shaoul are accusing their son of treating Magnum, a major Manhattan real estate investment company co-founded by Shaoul and his parents, like his “own personal piggy bank,” using clever legal maneuvers to derive payouts from buildings purchased by the company without their permission.
The couple are demanding damages amounting to almost $50 million.
Shaoul’s parents initially filed suit against him last year but have now requested permission to file an updated complaint, according to court records filed February 12. In an answer to the original complaint filed last year, Shaoul denied all his parents’ allegations.
Shaoul told The Real Deal that the issue was a private matter.
“I categorically deny all of the allegations contained in the complaint,” he said in a statement, “which has continued for almost 2 years. This is a family matter that has nothing to do with any business dealings – rather, the deterioration of my relationship with my mother. I believe and hope the matter will be resolved once emotions have settled.”
Abraham and Minoo Shaoul’s attorney Stephen Meister said in a statement: “It is a shame when parents and a child become embroiled in litigation. We hope this will eventually get resolved by the parties.”
Among the many allegations cited in the complaint, Shaoul is accused of cheating his parents out of their interest in a building they co-owned at 166 Elizabeth Street in Noho. He allegedly made an amendment to the operating agreement for the building in 2003, reducing his mother’s interest in the company to zero, but promised to redistribute the membership interests after a planned refinancing. He then failed to do so, his parents claim.
In 2006, Shaoul allegedly applied for a credit loan on another family building at 63 Clinton Street on the Lower East Side and received a direct reimbursement in the amount of $1.25 million. He did not inform his parents of the credit line application and did not split the payout with them, the complaint states.
Shaoul’s alleged misdoings continued through 2013, according to the complaint. Indeed, he allegedly agreed to refinance a family property at 173 Ludlow Street and received another payout of $2 million, which he did not deposit into the company bank account. Instead, he put it in a personal account without informing his parents, they claim.
Shaoul’s parents also allege that their son has failed to repay $2.5 million in loans they gave him.
“The people he is stealing from are his own parents – the same parents who worked hard all their lives and saved their money, the same parents that bailed him out of jail, took him back into their home when he dropped out of school, the same parents who paid for him to learn the real estate business and the same parents who provided the millions in seed money to begin the family real estate business,” the complaint states.
Magnum was founded in 1998, following Abraham and Minoo Shaoul’s purchase of their first building, 813 Broadway, according to the complaint. Abraham, Minoo and Ben were all appointed members of the company but Shaoul’s parents trusted their son to deal with legal matters pertaining to the company’s business activities, the complaint states.
Magnum has been an active player in Manhattan in recent months. The company snapped up the top 21 floors of Verizon’s 140 West Street headquarters, which it plans to convert to condominiums, in September. Magnum is also developing a new 146,000-square-foot dormitory building at 407 First Avenue for the School of Visual Arts in partnership with private investment firm 40 North Properties.