One Madison Park faces even more lawsuits

Ex-Yankees/Nets Chairman Harvey Schiller is one of numerous plaintiffs
By David Jones | January 15, 2010 11:32AM

The developers at One Madison Park are facing millions of dollars in additional lawsuits for alleged loan defaults and refusing to release down payments to buyers as well as a judgment for unpaid rent at the property’s off-site sales office.

In November, former Yankees/Nets Chairman Harvey Schiller and his wife Marcia filed a $1.5 million fraud suit in New York State Supreme Court against the developers, Ira Shapiro and Marc Jacobs’ (not the designer) who operate under the name New City, N.Y.-based Slazer Enterprises, alleging they collected multiple deposits on the same apartment to keep in good standing with lenders.

The couple alleges that it signed an agreement in July 2007 to buy apartments 45A and 45B in the building for $7.15 million, and put a 10 percent deposit into an escrow account controlled by the law firm Goldberg Weprin Finkel Goldstein.

They claim that in January 2009, the developers got another party to bid on the apartment and promised to refund the Schiller’s deposit and pay them $850,000 to terminate the contract. Additionally, they allege the sponsor took a deposit on the apartment from the new purchaser, but refused to refund the money.

Schiller and his attorneys told The Real Deal that the developers have repeatedly given them a run around about whether the money would be returned.

“We’ve had scenarios where we thought the matter was settled, then at the 11th hour we find out it was not settled,” said Debra Guzov, the attorney for the Schillers.

Earlier this month, the original deposit was returned, however no portion of the $850,000 fee was paid to the couple, Schiller told The Real Deal.

Shapiro, who is the majority owner of the company, and Jacobs have not returned repeated calls for comment. Shapiro’s attorney, Burton Dorfman, was not immediately available for comment.

The developers originally borrowed $125 million from Istar Financial to develop the 23 East 22nd Street property, which was scheduled to be a 60-story high rise tower near Madison Square Park. In 2008, the developers reached an agreement with architect Rem Koolhaas to connect a 24-story building to the tower, raising some cost estimates to $300 million, but those plans were scaled back.

At least eight units have closed since October, according to Department of Finance records. The sponsor is now offering six months of free common charges for new buyers and has agreed to cover the common charges for the same period of time for buyers who have already moved in.

At least half dozen lawsuits have been filed in recent weeks by buyers seeking return of their deposits, according to court documents and interviews with local attorneys. Other cases are still being negotiated with the developers. This does not include individuals who loaned the developers money in recent months.

As The Real Deal previously reported, the developers are facing a lawsuit from Brown Harris Stevens broker Wendy Maitland, who formerly handled marketing for One Madison Park. She claims the developers failed to repay $300,000 that she loaned them to help pay for mechanics liens.

Other lawsuits include one from David Kestenbaum of Mount Vernon, N.Y. who says he loaned $1 million in January 2009 to the developers for “working capital” and that they failed to repay the loan; a Queens couple, Harvey and Linda Levine who seek a $600,000 judgment against the two developers, for allegedly borrowing the funds between November 2008 and March 2009; and a man named Gerald Cohen who alleges that he loaned the developers $500,000 for a term of 30 days and they pledged the same unit, apt 7D, as collateral for the loan, but never paid the money back.

As The Real Deal previously reported, the same apartment 7D was pledged as collateral in a loan by Edward Lau, a Tobyhanna, Pa., man who loaned $1 million to the developers in late 2008.

In another case, Green Mercer Holdings, the landlord at 27 Mercer, was awarded a judgment in November against Jacobs and Shapiro for $84,636 after they defaulted on personal guarantees for more than $80,000 in back rent.

The developers failed to pay back rent at the One Madison Park sales office between April and June of 2009. Jay Itkowitz, attorney for the landlord, declined to comment except to confirm that the judgment remains unpaid.

In addition, a Brooklyn contractor called BILT/DFI Inc. filed suit against the developers alleging almost $138,000 in unpaid fees. The firm started construction work on the One Madison Park showroom in September 2008 and was paid most of the $712,615 it was owed.

Comments are closed.