Andrew Bradfield and No. 22 Renwick
Developer Andrew Bradfield — son of erstwhile FDIC bigwig Michael Bradfield — is being sued for fraud by his construction lenders at new Soho condominium No. 22 Renwick.
Broadway Bank — the construction lender at No. 22 Renwick, which Bradfield is developing along with Helix Partners — is alleging that Bradfield made “knowingly false” representations about the project in an attempt to push through a sham closing.
Bradfield made “misstatements and omissions of material fact to Plaintiff Broadway Bank,” and “intended to deceive Broadway,” the March suit says. Helix Partners is not named in the suit.
The plaintiffs are asking for the sale of the commercial unit to be voided, or that the bank be given $1.038 million — the appraised value of the unit — plus interest and damages.
Chicago-based Broadway, which struggled during the real estate downturn, was closed by regulators in April and purchased by MB Financial Bank in a transaction facilitated by the FDIC. MB Financial is continuing the suit against Bradfield.
In his answer to the suit, Bradfield — though his attorney Robert Braverman of Braverman & Associates — denied the majority of the allegations and asked for a judgment dismissing the complaint.
When reached by phone, Bradfield declined to comment about now-stalled project at 22 Renwick Street, as did the attorney for the plaintiffs, James Daniels.
Bradfield, who is principal of Manhattan-based Orange Management, is currently marketing 47-unit 123 Third in Union Square with another partner, F&T Group. He is the son of former FDIC general counsel Michael Bradfield, who abruptly resigned from his post in August.
The elder Bradfield, who was appointed general counsel in 2009, was formerly general counsel of the Federal Reserve System and a partner at the law firm Jones, Day. (He could not be reached for comment.)
In June 2007, the complaint says, Broadway Bank loaned Andrew Bradfield and his partners $19 million to Build A New Condo On Renwick Street between Spring and Canal streets, with 19 residential apartments and one commercial unit.
The offering plan stated that if the first closing did not take place before May 31, 2009, known as the “outside date,” condo buyers at the building would be given the right to rescind their contracts and get their money back.
At that time — in the midst of the economic downturn — six buyers were in contract at the building, but no closings had occurred, according to the complaint.
“Because the real estate market has substantially declined since the dates on which the contracts were executed, it was all but certain that each of the purchasers would exercise their right to rescind,” the suit says.
Bradfield contacted Broadway seeking approval for a contract to sell unit 1B, the building’s only commercial unit, to an entity known as Blue Zees Real Estate for a price of “only $150,000,” the complaint says. The value of the unit, the court documents say, had been appraised at $1.038 million, or $750 per square foot.
According to the complaint, Bradfield told Broadway that he had spoken with the attorney general’s office to ensure that the transaction would count as the first sale in the building, and obviate the need to offer buyers the right to rescind their contracts.
Bradfield also did not tell Broadway that “the owners/principals of Blue Zees were close business associates who had been actively involved in the project,” according to the suit. State law requires that the first official closing in a condo must be an “arm’s length” transaction — i.e., a bona fide purchaser, not a member of the sponsor’s team.
As The Real Deal reported, Blue Zees has acted as a “development consultant and owner’s representative” to Orange Management at 22 Renwick Street, helping to facilitate the purchase of the property and negotiate a joint venture agreement.
After Broadway consented to the sale, purchasers of residential units at the condo filed disputes with the AG’s office claiming that the sponsor had engaged in a “sham transaction” by selling the unit to a business associate.
“Contrary to the representations and assurances given to Broadway by Bradfield,” the complaint says, the AG’s office did not approve the sale of the commercial unit and found that it did not satisfy the sponsor’s obligation to close on the sale of the first unit by the outside date. As a result, the sponsor was required to offer a right of rescission to all six residential purchasers, all of whom chose to get their money back, the suit says.
Next Block Over, the LLC that Blue Zees used to purchase the unit, is also named in the suit. Blue Zees wasn’t immediately available for comment.
No. 22 Renwick is still unfinished, industry sources said, and Streeteasy.com shows only one unit in contract.
But 123 Third is selling well, with 15 signed contracts since it began sales this summer, according to Corcoran Sunshine Marketing Group, the project’s exclusive sales agent.
The AG did not respond to requests for comment about whether the offering plan for 123 Third includes a mention of the No. 22 Renwick lawsuit.
Steven Sladkus, an attorney at Wolf Haldenstein Adler Freeman & Herz who represented several 22 Renwick buyers who rescinded their contracts, said buyers at 123 Third should be informed about the suit.
“The buyers should be made aware that there’s a problem,” he said.