The Real Deal New York

Fallen real estate star Adam Hochfelder back in the business

Out of prison for year and a half, one-time industry wunderkind working at Merchants Hospitality

April 30, 2014 08:00AM
By Mark Maurer

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From left: Adam Hochfelder, the Brill Building at 1619 Broadway, and Abraham Merchant

Adam Hochfelder, the star real estate executive who went to prison in 2010 for bilking lenders and investors out of $18 million, has quietly re-entered the property game.

Released from prison in late 2012 after two years in jail, the 43-year-old one-time wunderkind of New York real estate has been working for the past year and a half as a consultant at real estate hospitality firm Merchants Hospitality. Led by developer and restaurant owner Abraham Merchant, the firm co-owns the Brill Building, which it jointly acquired with Brickman Associates and Allied Partners from Stonehenge Partners and Invesco Real Estate for $185 million last year. In addition to Merchants’ holdings, Hochfelder co-owns three buildings in Chicago with the Chetrit Group, one of his longest-running business allies.

The Midtown East resident, however, appears intent on maintaining a lower profile this go-round in the property business. His hiring by Merchants, for example, has not been widely publicized. He is not listed as a member of the firm on its website.

“I’m happy being a dad, a coach and helping these guys out,” Hochfelder told The Real Deal, the latter referring to Merchants. He declined to immediately comment about any other matter.

While he was in prison, half a dozen real estate executives visited Hochfelder to talk about possible employment, sources said. One of them was Abraham Merchant, who offered him a position and the back-corner office at the firm’s 111 Broadway headquarters.

“Merchants had prior dealings with Mr. Hochfelder, and when an opportunity arose to bring him in the firm as a consultant, my partner Richard Cohn and I invited Mr. Hochfelder to immediately come on board,” Merchant said in a statement. “It was one of the best decisions we ever made. He is a brilliant and well-liked guy.”

Still, nearly four years removed from his conviction on fraud charges, Hochfelder continues to deal with the fallout from his past.

In February, Massachusetts-based loan servicer Premier Capital LLC filed a motion for summary judgment against Hochfelder over a $2.47 million loan initially obtained in 2003 from Bank of America. Hochfelder confessed to defaulting on the loan in 2004, according to an affidavit. Premier Capital, which acquired the rights to collect on the loan in 2012, sought the full amount, plus 9 percent annual interest dating back to November 2004. Including compounded interest, the loan would total nearly $6 million to date.

Premier filed a discontinuance with the court Monday, according to Hochfelder’s attorney, A. Mitchell Greene, who claimed that the loan was paid off in full in 2004. An attorney for Premier declined to comment.

It does appear that Hochfelder has paid back much of what he owes to creditors and others. According to a September 2010 court summary of victim support and loan payments, Hochfelder repaid 76 percent of loans owed prior to 2008. Of the $21.3 million in principal owed at the time, he paid back $16.5 million before 2010, the court document shows.

In 2012, he paid the remaining $122,000 on a $1.3 million loan tied to an earlier lawsuit filed by the Marion Blumenthal Trust, relatives of his then-wife. The suit alleged that Hochfelder used a co-op at 1025 Fifth Avenue as collateral to secure a loan from Arbor Commercial Mortgage.

That lawsuit was filed in 2003, just seven years after Hochfelder burst onto the real estate scene in New York City. At the time, his firm, Max Capital Management, was snatching up Manhattan trophy properties at a record pace. The purchases included the Helmsley Building, 237 Park Avenue and 450 West 33rd Street. Then, in 2002, Hochfelder bought out his partner, N. Richard Kalikow — an heir to the Kalikow real estate fortune — for a whopping $35 million.

By any standards, it was a meteoric rise in a very tough industry. But the acquisition of Kalikow’s stake marked the beginning of Hochfelder’s downfall. In an interview with TRD several years ago, Hochfelder’s then-lawyer, Marc Agnifilo, said buying out Kalikow left Hochfelder financially stretched — and the real estate executive turned to illegal means to stay afloat.

Hochfelder later admitted to the Manhattan District Attorney’s office that he forged signatures on several loan documents to raise the money to buy out Kalikow. Then, in 2008, he was hit with a 58-charge indictment that accused him of stealing more than $18 million through several fraudulent loans from banks as well as friends and family.

After initially entering a not-guilty plea, Hochfelder pleaded guilty in May 2010 to defrauding lenders. That same year, he also confessed to stealing $2.5 million from investors for the purchase of the Sagamore Hotel on Lake George in upstate New York, and the Peaks Resort and Spa in Telluride, Colo. He admitted that he used the capital to, among other things, pay for lavish spending sprees.

Hochfelder’s former partner, Richard Kalikow, now works for Manchester Real Estate and Construction in Manhattan. Sources said he has not talked to Hochfelder in years.

But through this turbulent past and his newfound employment, Hochfelder appears to increasingly grasp the value of friends, within real estate and other circles.

At the 2010 sentencing, New York Supreme Court Judge Michael Obus said that many of the victims did not want to see Hochfelder punished severely. Jacob Chetrit — brother to Joseph Chetrit — was one of 13 “victims” from the group of 16 named in the indictment who wrote a support letter to the judge. The note requested that Hochfelder not be sent to jail because “society and Adam’s family would be better off with him around.” The Chetrit Group could not be immediately reached for comment.

These days, Hochfelder regularly posts photos of himself and his two sons – ages 14 and 12 – at sporting events and Merchants-run restaurants. He also puts up pictures of his celebrity friends. He recently posted a tweet about having dinner with noted chef Mario Batali.

 

But a tweet Hochfelder posted shortly after returning home in 2012 from the Lincoln Correctional Facility, a minimum-security men’s prison in Harlem, carried decidedly more weight. It was perhaps the only time Hochfelder used Twitter to allude to his past.

“Always work hard. Never quit. Dream big. Only you control your destiny,” he wrote.

  • GrowUpAdam

    His “return” is bad for the industry in general. Clearly, he should pay back those he stole from. However he should find a new career elsewhere…like social work or charity. That is his second chance, not real estate.The people who hired him have made a mistake. HIs presence makes everyone think less of the business and makes borrowing and deal making harder. He clearly is sill a self centered narcissist–if he wasn’t he would have stayed away. He stole and cheated people and went to jail. His conduct then and now is disgusting

  • NotNaive

    He had his issues, but he is clearly brilliant. You don’t amass the portfolio he did, that fast by getting lucky or scamming people. There is room for everyone in this market and if you think most of them are not cheating or curbing the system then you don’t know New York City real estate.

    • Stephen B

      Yes, if you get to break every law known in the business and not play by the same rules you get some advantages that may make you look brilliant, but let’s see how he does playing within the same guidelines as everyone else.

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