HFZ sued by former developer of Turtle Bay site

James Kennelly alleges fraud in transfer of co-op units

TRD New York /
May.May 24, 2013 04:00 PM

Developer James Kennelly filed suit Wednesday against HFZ Capital Group and Arbor Realty Funding, alleging the development firm and the lender defrauded him in a deal to give them control of his three Turtle Bay co-op units.

He filed the suit, seeking up to $14 million, in New York State Supreme Court, alleging HFZ misrepresented assets it purchased from Arbor and made false inducements to get him to enter into the deal.

Spokespersons for HFZ and Arbor said the firms had no comment on the suit. Rex Whitehorn, an attorney for Kennelly, did not return calls. Kennelly was not immediately available for comment.

Kennelly’s East 51st Street Development was famously building a residential tower at 303 East 51st Street until a fatal crane collapse in 2008 brought the project to a halt. Ultimately, Arbor foreclosed on the site, and HFZ took over developing the condos, now known as Halcyon NY.

As part of the transfer, Kennelly signed a deed-in-lieu of foreclosure deal with Arbor and HFZ to take over the co-ops at 304 East 52nd Street, which he had pledged to secure $45.6 million in loans made to his firm, according to court documents in a related Nassau Supreme Court case.

Arbor foreclosed on its lien on the units in April 2010, using a $750,000 credit bid, which is a frequently used measure for lenders to acquire assets at auction if there are no competing bidders.

Kennelly acquired the co-ops for almost $1.7 million in 2006.

HSBC, which issued a loan for the units in March 2007, filed a foreclosure suit against the developer this past January, as The Real Deal reported, alleging he defaulted on a $441,900 loan for one of the units.

The crane collapse killed seven people on the ground and resulted in millions of dollars in litigation. But after much wrangling, HFZ has pushed the project forward with financial backing from CIM Group. The 123 units planned for Halcyon NY will start at $1.5 million.


Related Articles

arrow_forward_ios
Creston Apartments at 2030 Creston Avenue in the Bronx (Credit: Google Maps, iStock)

Construction firm with alleged mob ties worked on Bronx affordable housing project

Construction firm with alleged mob ties worked on Bronx affordable housing project
Former HFZ Capital Group executuve John Simonlaca (Credit: HFZ, iStock)

Meet the HFZ exec accused of taking mob bribes

Meet the HFZ exec accused of taking mob bribes
HFZ managing director John Simonlacaj and The XI development (Credit: LinkedIn and Wikipedia Commons)

HFZ’s High Line condo-hotel project was ATM for the mob, prosecutors say

HFZ’s High Line condo-hotel project was ATM for the mob, prosecutors say
From left: The Chrysler Building, Beny Steinmetz, and 76 Eleventh Avenue (Credit: Unsplash, Getty Images, and The XI)

Beny Steinmetz, reported backer of Chrysler Building owner and HFZ, to be tried in Guinean bribery scandal

Beny Steinmetz, reported backer of Chrysler Building owner and HFZ, to be tried in Guinean bribery scandal
From left: Graeme Hart, The XI and HFZ Capital Group's Ziel Feldman (Credit: Getty Images)

New Zealand’s richest man buys condo at Ziel Feldman’s the XI

New Zealand’s richest man buys condo at Ziel Feldman’s the XI
But at the Belnord: Why HFZ’s UWS project is offering a rosier view of the market

But at the Belnord: Why HFZ’s UWS project is offering a rosier view of the market

But at the Belnord: Why HFZ’s UWS project is offering a rosier view of the market
HFZ vs. the market: Will Ziel Feldman make money or get burned on one of his most high-stakes projects to date? 

HFZ vs. the market: Will Ziel Feldman make money or get burned on one of his most high-stakes projects to date? 

HFZ vs. the market: Will Ziel Feldman make money or get burned on one of his most high-stakes projects to date? 
Architecture review: Bjarke Ingels is twisting convention at HFZ’s 76 Eleventh Avenue

Architecture review: Bjarke Ingels is twisting convention at HFZ’s 76 Eleventh Avenue

Architecture review: Bjarke Ingels is twisting convention at HFZ’s 76 Eleventh Avenue
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...