The Real Deal New York

One Madison Park developers face lawsuits over defaults

Brown Harris Stevens' Wendy Maitland is one of the plaintiffs
By David Jones | January 12, 2010 03:55PM

The developers of Flatiron District condominium One Madison Park are facing a flurry of lawsuits alleging they failed to pay back millions of dollars in loans and deposits to a number of high-profile investors, including Brown Harris Stevens’ Wendy Maitland, the building’s original listing broker, and Charles Milite, president of the Gotham City Restaurant Group.

Maitland, a senior vice president at BHS, filed suit against Park Madison Associates in New York State Supreme Court Dec. 22, alleging that Ira Shapiro, who co-developed the building with investor Marc Jacobs (not the designer) under the name Slazer Enterprises, asked to borrow from her $300,000 in August 2009 to help pay for unpaid mechanics liens on the property. Shapiro told Maitland that he would receive money from another source, so Maitland agreed to lend the funds if the money was repaid within 24 hours, according to the complaint.

Maitland made two $100,000 wire transfers into Shapiro’s account between Aug. 19 and Aug. 20, the complaint says, and then made a third wire transfer of $100,000 to Five Star Electric, an Ozone Park-based contractor.

An official from Five Star confirmed that it was a contractor at the building, but did not have any further comment on the mechanic’s liens or the case.

Maitland’s attorney Noah Weissman filed several exhibits to back his claims, including e-mails and other correspondence between Shapiro and Maitland, in which the developer acknowledges the loan. Weissman declined to comment. Shapiro was not immediately available and Maitland said she could not comment on the case.

As reported by the New York Post in November, BHS was replaced by Tamir Shemesh, a managing director at Prudential Douglas Elliman, as the listing broker for One Madison Park, however there was a dispute over whether BHS was fired or resigned from the account. The New York Times reported that Maitland and her colleague Wilbur Gonzalez bought and resold apartments at One Madison Park, a process known as flipping.

Court records show that Maitland was not the only individual lender at the property.

Edward Lau, a resident of Tobyhanna, Penn., filed suit against the developers in U.S. District Court in October, alleging they failed to repay two $500,000 loans he made in November and December 2008.

He alleges that Shapiro and Jacobs agreed to personally guarantee the money and pledged condo unit 7D as collateral, according to court documents. He alleged in the suit that an agreement allowed him to buy the apartment for $1,000 if the developers failed to repay the loans, and that they did in fact fail to pay back the loans when they came due in May and June 2009.

Jacobs’ attorney Lawrence McCarron said he would not comment beyond the written answer to the complaint, which says: “I think our answers speak for themselves and we’re contesting many of those allegations.”

In court documents, Shapiro’s attorney Burton Dorfman says that the agreements are unenforceable. He declined further comment. Lawyers for Lau were not immediately available for comment.

Milite of Gotham City Restaurant Group filed suit in New York State Supreme Court Dec. 31, alleging that in October 2007, he put a 10 percent deposit to buy apartment 16A for $6 million. He said that in April 2009 the developers asked him to waive any objections to some planned design changes in the project and he agreed on the condition that he could assign the purchase contract to someone else by July 31. Furthermore, if he could not find someone to take it over, the suit says, he was told he could get his deposit refunded. He said the developers also agreed to raise the interest payments on his $600,000 deposit to 8 percent, in the court documents.

By July 31, Milite signed a second agreement with the developers to get out of his contract entirely, adding that his deposit was due back by Oct. 4, 2009. By Nov. 30, Milite filed suit against the escrow agent, Goldberg, Weprin, Finkel, Goldstein. The original deposit amount was returned following the suit, according to lawyers for Milite. Goldberg, Weprin officials were not immediately available for comment.

That apartment, a 2,700-square-foot, three-bedroom unit, was later sold in November to another couple for $5 million, according to records with the city Department of Finance.

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