The Real Deal New York

Feud between United Realty CEO and ex-president turning ugly

Frydman claims "disparagement campaign" being waged by Verschleiser, who denies assertion
By Zachary Kussin | April 17, 2014 02:45PM

The ongoing war between United Realty Partners’ Chairman and CEO Jacob Frydman and his onetime business associate, Eli Verschleiser, is getting even nastier. Now, Frydman is claiming that the former United Realty president is orchestrating a “disparagement campaign” against him.

In a request for a temporary restraining order filed this week, the United Realty chairman alleges that Verschleiser is behind a smear campaign that includes anonymous email attacks and an unflattering post about him on consumer reporting site Ripoff Report.

“Jacob Frydman will wine you, dine you, then screw you,” the review reads, which is still posted on the site. “He does not pay his bills, even the smallest of them.”

One of the emails allegedly sent on Verschleiser’s behalf was mailed in February from an anonymous address to a company Frydman had contacted about a potential sublease. “As an informed consumer we wish you to be one as well,” the message reads. “You are about to enter into an agreement with an individual who [allegedly] does anything and everything NOT to pay his vendors and or circumvent any written agreement he or his affiliated entities have … ”

The broker handling the sublease contacted Frydman to tell him about the message, informing him that the sublandlord was “very concerned about proceeding,” according to the court filing, which is an amendment to a lawsuit filed by Frydman in March.

Verschleiser claims that the judge hearing the case already denied Frydman’s request for the restraining order. In a written statement to The Real Deal, Verschleiser noted: “He lost in court and the judge did not award him the injunction. I ultimately decided to resign as the President and Treasurer of United Realty Trust due to the fraud and actions of my ex-partner Mr. Jacob Frydman as outlined in my the lawsuits against him.”

Frydman, however, says the request has not been denied, and that the matter will be dealt with at a hearing later this month.

The disagreement over something as basic as the disposition of the restraining order request is hardly surprising. Indeed, Frydman and Verschleiser have been at loggerheads ever since United Realty’s attempt to purchase 866 United Nations Plaza fell through last year. The property was ultimately purchased by Meadow Partners.

On December 18, Verschleiser sued Frydman for allegedly transferring funds improperly — a move Verschleier claims disqualified United Realty as a prospective buyer of the building. In the complaint, Verschleiser says that Frydman moved nearly $7 million of investors’ funds after Verschleiser resigned from his post at the company. The suit alleges that Frydman still had control of the funds even though they were not used in the failed bid to Purchase 866 United Nations Plaza.

But Frydman told The Real Deal at the time of the suit: “All investor money was returned immediately, and before [Verschleiser’s] lawsuit was ever filed.”

Court records show a communication authorizing the transfer of $4.9 million was made on December 17 — a day before the Verschleiser suit was filed. Documents obtained by The Real Deal indicate that the next day, an attorney representing Verschleiser apparently messaged Frydman seeking to block any monetary transfer, claiming that such a move required Verschleiser’s approval.

Sources with knowledge of the deal say that the money was not transferred to investors, but to Frydman’s personal business account. Other sources, however, claim that the account was not Frydman’s but had been set up for investors.

For his part, the former United Realty executive insists that Frydman’s current lawsuit is an attempt to deflect attention from his own allegations. “Jacob Frydman simply copies my complaints and lawsuits and files the same, in an apparent act to mislead the public and avoid filing the required 8-K notifying them of my allegation.”

In a complaint filed on March 14 of this year, Verschleiser did accuse Frydman of making defamatory remarks about him and instructing others to do the same in an email message about the disputed transfer of funds. According to the suit, Frydman also sent the message to an independent broker with nearly 200 representatives and Verschleiser’s affiliates in the real estate business.

“Frydman’s email did not disclose that he only returned the funds to investors after being sued by Verschleiser, thereby confirming that Frydman understood Verschleiser’s claims to be true and accurate,” the suit reads.

Frydman denies the allegation, claiming that the former United Realty president knew the funds had been transferred prior to the December 18 filing of Verschleiser’s suit.

In January, Justice Eileen Bransten ruled that the dispute over the funds should be sent to arbitration.

Verschleiser appealed this decision in February, court records show.