The Real Deal New York

Ben Shaoul’s parents sue developer for fraud, theft

Asking for damages of close to $50 million from head of Magnum Real Estate

February 14, 2014 06:07PM
By Katherine Clarke

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Ben Shaoul

Ben Shaoul

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.

  • http://www.redagroupre.com/blog Jonathan Yunason

    Ben is a brilliant real estate guy no one doubts that, but to fight with family over money and greed is a very unfulfilled life. I hope the matter gets better soon. No money is worth ruined family relationships.

    • James Henley

      You are clearly a very compassionate person, Jonathan, but this is something more deep rooted than finances.

      • http://www.redagroupre.com/blog Jonathan Yunason

        Agreed James!

    • brilliantmyasscomeon

      brilliant?

      • http://www.redagroupre.com/blog Jonathan Yunason

        The only reason I say that is because he owned 1000 residential apts at the age of 30. We use the same banker and he speaks highly of him. Sl green invests with him.

        • Proper

          I think his banker’s job is to speak highly of his client.

        • goaway

          u r a tool.

          • Jonny Yunatanov

            Thanks guest!

  • choppedliver

    that wont make any family gatherings for ever more the least bit uncomfortable, much!

  • Morris

    You are a piece of ushchal “trash”

  • Guest

    This is clearly a family matter that is being played out in the real estate media to simply get hits. Ben is a good guy. Anyone that has anything else to say about him, doesn’t know him.

    • Bowerygals

      Good guy?

      maybe not if your an elder who used to live at Cabrini, now scattered away from friends and family. Or a rent stabilized tenant who has lived in your home and built community for decades. Or someone who lives in unsafe construction zones so “Ben” can make yet more profit. Or just someone who loves landmarked buildings.
      A partial list via NYTimes of “Good guy Ben’s” doings:

      - he bought the Cabrini Center for Nursing and Rehabilitation, a residence for low-income seniors, converting it to market-rate apartments.
      -he booted the much-loved its First Avenue Bean coffee shop to rent to Starbucks.
      -hours before the Landmarks Preservation Commission voted to
      landmark the Educational Alliance building he secured permits to build a
      rooftop addition.
      -The Fire Department had to use a cherry-picker to rescue a tenant from one of his buildings -a construction crew had removed the staircase (where no permits had been filed).
      -Rent-stabilized tenants in his buildings reported threats of eviction, and he racked up HPD complaints and violations for the interruption of heat and hot water, blocked fire escapes, broken locks and other issues related to construction and maintenance.
      - at 515 East Fifth Street and 514-516 East Sixth Street. Mr. Shaoul put rooftop additions on both buildings, provoking an outcry from tenants and local politicians who said the construction violated the Multiple Dwelling Law.
      -he sued several of Elizabeth Street rent-regulated Latino and Chinese tenants, harassed others in an effort to make them leave and turned off the building’s gas for four months. He sued the Committee Against Anti-Asian Violence for “severe emotional distress” after it organized protests against him, …eventually settled after Mr. Shaoul made repairs and restored the gas.
      -the DOB issued a vacate order for 638 East 11th Street when his construction caused a foundation wall to crack and separate from an
      exterior wall, issued a stop-work order for construction at 120 St. Marks
      Place, where excavation was being done without permits. residents of the A Building brought a lawsuit for numerous construction defects. the DOB
      discovered no permits had been filed for 435 East 12th Street and issued a stop-work order.
      - Rosie Mendez, a City Council member who has represented the area since 2006. “He is, for lack of a better word, a chronic bad actor.” One memorable complaint, she recalled, came from a long-term tenant who reported that the Fire Department was using Shoal’s building for evacuation exercises because they had been told it was vacant.
      - tenants from 120 and 118 East Fourth Street tenants, fear reprisals, portray him as an aggressive and unresponsive landlord. They
      recalled not learning who owned their buildings for months, lost rent checks, eviction notices, heat and hot water turned off with little notice, scant communication from the management company, a menacing property manager and intense construction that lasted well over a year. One tenant said. “ We’re like bugs.” “We don’t understand the discourteous communication, the lies, the unsafe conditions for workers and tenants.” “I can’t begin to express how awful of an experience this has been,” said a tenant in another building, who has lived in his apartment for 20 years, in a separate interview. At one point, he said, the management company listed his apartment for rent.

  • Ben

    SCUM. He will get his

  • AFB

    The old man is a mench. A good old school operator. He ran an antiques shop at 813 Broadway til a couple of years ago. I used to work in the building next door and converse with him on a regular basis. He even bought an antique chandelier off of me at what I thought to be a very generous price back in the day when I was having trouble paying the bills. I am sorry that this is happening to him.

  • Statist

    “…Bailed him out of Jail….” ?
    Is Shaoul a Felon?
    Someone who is convicted of a felony
    is not allowed to have a Real Estate License in the first place,
    So I’m wondering….

  • Karma

    Family matter or not, the way this guy diminishes neighborhoods and displaces anything in his path to squeeze as much profit as possible out of properties is shameful. I relish in anything negative that happens to him and he deserves worse.

  • Jim Neilas

    After reading this article I feel Ben is much worst than Jawad Rathore about whom I read a few months back, Jawad also cheated and did fraud but he did this with investors and not with his parents. I don’t understand How a person can be so shameless to do such a thing to the people who has brought him into this world.

    I wish Ben’s parents get all the claims they have asked for but I know it would be really difficult to settle the emotional and mental trauma they have gone through all these years.

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