The drama surrounding 45 John Street continues. Chun Peter Dong, who owns a large stake in the Financial District residential building, filed a restraining order on Monday against his partner and prominent real estate investor Chaim Miller.
The move follows a lawsuit that Dong filed last week, in which he claimed that Miller embezzled a down payment of nearly $14 million, planned to sell the troubled condominium conversion at a bargain-basement price and never informed him about a $66 million deal to sell the property to Orin Management.
Dong’s suit also names Orin Management, which is in contract to buy the 81,000-square-foot, 14-story property, but is yet to close. Dong’s goal, according to court papers, is to halt the sale altogether. But Miller’s silent partner Sam Sprei — also named as a defendant in both the suit and the restraining order — told The Real Deal today that the case was settled, and that Dong had filed the suit on Miller’s behest, in order to bring a different buyer to the table.
“Everything is going to be worked out,” Sprei said in a brief phone conversation with TRD. In a subsequent email exchange, Sprei didn’t address today’s restraining order, but said that everything had been settled “a few minutes” prior to the phone call.
Dong’s suit, filed in New York Supreme Court, claims that the sales price that Miller agreed upon with Orin was far too low and that Miller had excluded him from the process. Dong further claims in the suit that Miller kept $1.3 million of Orin’s $13.7 million down payment for his personal use, and allegedly deposited the remainder of the money — roughly $12.4 million — to Quick Title Search LLC, a title insurance company operated by Andrew Teitelbaum. Teitelbaum and Quick Title Search are also defendants in the suit.
In March, Miller and Dong purchased 45 John Street for $60 million from Josh Zegen’s Madison Realty Capital. Madison also provided Miller with a $45 million acquisition loan. Miller owned a 68 percent stake in the building until April, when he sold off 41 percent to other investors. Dong continues to hold a 32 percent stake in the property, according to an operating agreement cited in court records. In the suit, Dong claimed that Miller and Sprei got loans on the property through fraudulent means, and accuses Sprei of pretending to be a majority owner of the property despite allegedly never owning a stake.
Miller and Sprei may now be backtracking on their deal with Orin. On Monday, Orin filed for Chapter 11 bankruptcy in an attempt to prevent Miller from dumping the buyer. Orin claims it was unaware of the building’s defaulted loans which have amounted the company $4 million in interests.
Between the pages and pages of legalese, one pop culture-laden section stood out. “The facts recited herein,” it states, “detail the fraudulent escapades of Defendants Miller and Sprei, who have emulated the roles of Max Bialystock and his accountant in the Mel Brooks production, ‘The Producers.’ Bialystock sold the ownership of a Broadway show multiple times over to unwitting investors.”