Diamond dealer developer faces lawsuits at Garment District conversion

New York /
May.May 24, 2010 06:00 PM

315 West 35th Street (source: PropertyShark)

A Midtown diamond dealer and developer is facing legal challenges at a vacant 14-story Office Building On A Side Street in the Garment District.

Developer Aaron Chitrik is an investor and managing member of the Midtown-based development company 315 W 35th Associates LLC that bought the Garment Center building in early 2006 for $16.2 million.

Chitrik, a diamond dealer with Midtown-based Citra Trading, dreamed of converting the 1927 commercial building at 315 West 35th Street between Eighth and Ninth avenues into 57 residential units with 5,000 square feet of ground floor retail. 

But after securing permits in 2007 and 2008, the downturn set in and development stalled, followed by legal action. Between 2008 and 2010 the development company was hit with four separate lawsuits although two of them have since been dropped.


The Garment Center
, which not too long ago was a hub for manufacturers and shops making goods for fashion designers, is attracting attention from commercial tenants seeking cheap rents as well as from a growing number of residential developers looking at the neighborhood.

In the most recent lawsuit Chicago-based lender Wrightwood Capital is seeking to foreclose on approximately $14 million in loans at the 35th Street building, and is also seeking a personal guaranty from Chitrik of $1.75 million, the suit filed May 7 in New York State Supreme Court shows.

Chitrik declined to comment.

The loan on the gutted property is now being offered for sale by Eastern Consolidated, senior director David Schechtman said.

“I can tell you this litigation… is not deterring people from taking a hard look at this acquisition,” Schechtman said.

The building is also being offered for sale by the owners, who are asking $24 million, broker Dan Shapiro said. He is listing the property but does not have an exclusive, he said.

In addition, in 2008, Boris Motovich, founder of Midwood Lumber & Millwood in Midwood, Brooklyn, filed suit against 315 W 35th Associates, claiming that the development company breached a contract with him. He signed a contract in July 2007 to buy the building for $28 million, and subsequently provided $4.26 million in down payments and other fees. But the suit claims the property did not have clear title at the time of the scheduled closing in 2008, and so he is seeking the return of the down payment. The suit remains ongoing, court records show.

Motovich was not available for comment and his attorney did not respond to a call for comment.

Chitrik is party to another legal dispute, where he partnered with developers Shaya Boymelgreen, Ben Nash and Assaf Fitoussi to form NCF Equities, the company that developed the Crescent Club at 41-17 Crescent Street in Long Island City.

Chitrik had been the managing member of NCF at least since late 2005, but in December 2009 was replaced by Nash. In March, Nash and NCF Equities filed suit in New York State Supreme Court, claiming Chitrik had not turned over all the required financial documents. The case is ongoing.

 

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