The Real Deal New York

Son, what have you done:
Richard Ohebshalom files another suit against Fred

Pink Stone founder says father drained a trust set up to hold his assets
By E.B. Solomont | March 24, 2017 02:00PM

111 Washington Street (Credit: Google Maps)

It’s Ohebshalom v. Ohebshalom — the sequel.

A week after filing a lawsuit to prevent the sale of 111 Washington Street, Richard Ohebshalom “reluctantly” filed a second complaint against his father, Fred, alleging the elder Ohebshalom drained a trust that was set up to hold his son’s stake in eight New York City properties.

“Fred has siphoned significant assets away from Richard through multiple means,” Richard alleges in the March 23 suit, which also names Fred’s Empire Management. Those methods include “abusing Fred’s position as a trustee of a trust established for Richard’s benefit, and looting a property management company in which Richard purchased a minority interest.”

Representatives for Fred didn’t immediately respond to requests for comment, nor did representatives for Richard.

According to the suit, Richard’s ownership stake in eight commercial properties was put into a trust 13 years ago, when he was 22. Fred was the sole trustee, but when the trust expired last year, Richard discovered it held just $1 million — a sum the suit says “pales in comparison to the amount of cash that should have been generated over the 13-year period.”

The suit alleges Fred “manifestly wasted or squandered cash resources” that rightfully belong to Richard. For example, the suit claims, Fred took management fees from the trust that were twice or three times the standard 3 percent of revenue. He also allegedly entered into agreements to benefit himself and used cash for deals not related to the trust.

In the complaint, Richard also alleges that his father’s actions stem from resentment over Richard leaving Empire in 2010 to launch his own commercial real estate firm, Pink Stone Capital.

The suit alleges that prior to founding Pink Stone, Richard spent 10 years at Empire, during which time he was “substantially” underpaid in exchange for being permitted to buy a 10 percent stake in the management company. When he left, the suit says, “Fred retaliated by taking steps to deprive Richard of any of the financial benefits of his 10 percent interest.”

Last week, Richard sued his father for trying to push through the sale of 111 Washington Street in the Financial District for what he said was a “woefully deficient” price of $148 million. In that suit, the younger Ohebshalom accused his father of using 111 Washington as leverage to “extract concessions from Richard” in the pair’s ongoing dispute, which is the subject of the March 23 suit.

The feud echoes a similar battle being waged over the real estate empire of the Macklowes, with Harry Macklowe TRData LogoTINY suing his son Billy late last year and accusing him of handicapping his firm, Macklowe Properties.