The Real Deal New York

Ex-Cachet CEO says he was canned for investigation into sexual harassment. But firm says allegations are a “sideshow.”

LA-based hospitality manager to operate Playboy Club-anchored hotel in partnership with Merchants
By Mark Maurer and Hiten Samtani | October 06, 2017 06:12PM

From left: Adam Hochfelder, Alex Mirza, Robert Roche and a rendering of Cachet Boutique NYC

The former CEO of Cachet Hospitality Group has sued the firm, alleging he was wrongfully terminated in an effort to prevent him from conducting an investigation into sexual-harassment claims against its partner on the upcoming Playboy Club-anchored hotel in New York, Adam Hochfelder. Cachet, however, says the former CEO, Alexander Mirza, was fired for cause, and says an independent investigation found no inappropriate behavior on Hochfelder’s part.

Since September, Mirza, who was fired in August, and Cachet have been arbitrating the termination dispute in Hong Kong, documents show. The matter is currently before the ICC International Court of Arbitration.

On Sept. 27, Mirza filed a lawsuit in U.S. District Court in California against the Los Angeles-based hotel management company, led by chairman Robert Roche. According to the amended complaint filed this week, Mirza cites retaliation as the reason for his termination. He claims he learned in July that three women were pursuing allegations of sexual harassment and gender discrimination against Hochfelder, a onetime star New York real estate investor who served a two-year jail stint for fraud in the early 2010s and has since rebounded as an executive at Merchants Hospitality. Merchants, a development and hospitality company, acquired the long-term lease on the former Out Hotel at 510 West 42nd Street for $40 million from Ian Reisner in 2016.

Neither Hochfelder nor Merchants is named as a defendant. However, Hochfelder is linked to Cachet through Merchants’ redevelopment of the Out Hotel. (Mirza also claims that another female employee at Cachet was looking to bring sexual-harassment claims against a hotel manager.) Cachet is managing the hotel, now called Cachet Boutique NYC, which will also be home to the Playboy Club and two restaurants when it opens in November.

An attorney for Cachet, however, told The Real Deal that Mirza was terminated “for good cause,” noted that Mirza himself was being investigated by the firm for misconduct including sexual harassment and gender discrimination, and said that the allegations against Hochfelder are “part of Mr. Mirza’s ongoing efforts to disrupt Cachet’s business.” Sources familiar with the dispute said that Mirza may be pushing for his termination to be ruled wrongful because of the high financial stakes involved – Mirza has a 10 percent stake in Cachet. (Being fired for cause would mean Mirza may not get to realize the proceeds from that stake.)

Cachet added that an independent investigator hired by Mirza himself “concluded that there was no inappropriate behavior and no basis for the claims whatsoever or any evidence of harassment by Mr. Hochfelder.”

In response, Michael Faber, Mirza’s lawyer, said, “It’s easy to say he’s been exonerated in the investigation that is not yet complete. I suggest awaiting the official results.”

Mirza alleges that once Roche learned of the internal investigation, he interfered and attempted to control the review and demanded he be shown the emails and texts from the female workers. He further alleges that Roche had the company board pass a resolution removing Mirza from the investigation process.

Mirza claims that Roche told him in August that his insistence on a fair investigation was “a battle between Muslims and Jews, and it is clear who is more rational.” Mirza was then fired the following day, he said, allegedly for cause.

According to Mirza, Hochfelder and Roche are not only close friends but also have deep business ties. He claims that Roche negotiated joint ventures with Hochfelder involving two rounds of Merchants investment into Cachet at a $250 million valuation. Also, Roche allegedly personally invested $5 million in the Out Hotel property and in return, acquired a 30 percent ownership stake in Merchants.

But Richard Cohn, a founding partner and general counsel for Merchants, said Roche has no stake whatsoever in Merchants. He reiterated that the independent investigation had found no misconduct on Hochfelder’s part.

Regarding Hochfelder, Cohn said, “It’s easy for him to be a pinata because of his past. But I think everybody deserves a second chance.”

Chava Gourarie contributed reporting.