The Real Deal Miami

Magic City Casino owner sues hotel developer, alleging fraud

Suit surrounds Y Group's plans for redevelopment of 1040 South Miami Avenue site

July 29, 2016 04:30PM
By Francisco Alvarado

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1040 South Miami Avenue site with Isadore Havenick at left, John Yanopoulos on right

After betting big on hotelier John Yanopoulos, a Magic City Casino co-owner is looking to recoup $500,000 lost in a dispute over a failed land purchase in Brickell.

In a June 30 lawsuit filed in Miami-Dade Circuit Court, Southwest Florida Enterprises  the casino’s holding company —accuses Yanopoulos and his firm, Y Group, of fraudulent inducement by promoting a sham investment opportunity.

Southwest attorney Jose Casal declined comment on the suit. Yanopoulos did not return a phone message asking for a response to the allegations.

According to the lawsuit, Magic City Casino Vice President Isadore Havenick was friends for many years with Yanopoulos, co-developer of the W Fort Lauderdale which he and his partner sold in 2014 to a company headed by Miami Dolphins owner Stephen Ross.

This past January, Yanopoulos invited Havenick and Leon Reitnauer, another casino executive, to participate in Y Group’s planned acquisition of a two-story mixed-used apartment building with ground floor retail at 1040 South Miami Avenue for $33 million, the lawsuit states. The ground floor space was formerly occupied by Rosinella.

“Yanopoulos [led] Havenick and Reitnauer to believe that Yanopoulos was experienced in the real estate industry and said investment is a ‘unique opportunity’ to acquire ‘one of the last trophy pieces of real estate in the Brickell corridor,’” the lawsuit alleges. “According to Yanopoulos, the proposed plan for the property included development of a hotel, retail, and condominiums.”

To further coerce Havenick and Reitnauer, Yanopoulos allegedly told them he had a very short period of time to secure the sales contract and purchase agreement, the lawsuit says. He asked $250,000 from each investor to fund a deposit, promising them a $500,000 profit plus their initial investment, the lawsuit claims.

“Yanopoulos also told the investors that he had already negotiated the $60 million sale of the hotel component to [European hotel chain] CitizenM,” the lawsuit says. “Although, he never provided any evidence to Havenick and Reitnauer.”

Then Yanopoulos allegedly claimed he lost commitments from other investors in order to get an additional $250,000 from Havenick.

“After this, Yanopoulos became increasingly difficult to contact and never provided Havenick with any evidence to confirm his ownership interest in the property,” the lawsuit states. “Three months later, Yanopoulos told Havenick that the purchase agreement had been terminated because Yanopoulos failed to make an additional deposit to secure the acquisition.”