The developers of a $119 million Williamsburg residential project are being sued for fraud by their financial backers after attempting to short sell the property for just $20 million. The plaintiffs, Cornwall Management and Russian investor Oleg Soloviev, are claiming that the developers, which include hedge fund Thor United, Atlant Capital Holdings and North 3rd Development, purposefully misrepresented the project to bilk them out of some $2.2 million, Law360 reported.
The plaintiffs demanded the return of their investment after the developers defaulted on their loan agreements. But the developers allegedly told them that they simply needed more time, while concealing their plans to short sell the property.
The investors are also claiming that the short sale consisted of a transfer of ownership interests to a company controlled by one of the developers, according to Law 360.
“Defendants’ misrepresentations and failures to disclose material facts to plaintiffs were motivated by their desire to gain control over plaintiffs’ funds, to continue operating a fraudulent scheme concocted to develop the Williamsburg property, and to avoid detection and liability for their wrongful acts,” the investors said in a statement.
Cornwall and Soloviev are now suing for $3.6 million. The property’s exact address was not disclosed in the court documents; however, one of the developers is an entity named North 3rd Development, likely based on the project location. [Law360] –Christopher Cameron