The Real Deal New York

Harounian patriarch accuses son of “looting” company assets to pay for mistresses, luxury cars

Mark Harounian allegedly cheated 90-year-old father, sister out of ownership stakes
By Christian Bautista | April 17, 2018 04:00PM

A feud that’s divided a Great Neck real estate family took another dramatic turn this month when the patriarch sued his son for allegedly “looting” his company’s assets and diluting his shares in a Manhattan rental portfolio valued in the hundreds of millions of dollars.

In a $90 million lawsuit filed in Nassau County Supreme Court, Jacob Harounian, 90, accused his son Mark of using the company accounts of JAM Realty and United Nationwide Realty as his “personal piggy-bank.” The Harounians’ real estate portfolio includes around 30 Manhattan rental properties valued at $500 million, according to a related lawsuit filed in 2014.

The younger Harounian allegedly used company funds to pay for cosmetic surgeries, expensive art and a fleet of luxury cars such as Ferraris and Range Rovers.

“Taking extreme advantage of the faith and trust reposed in him, and without any thought to his fiduciary duties, Mark looted the family companies with impunity, taking everything he could think of for himself, while attempting to cheat his sisters and strip his elderly parents of their assets so that Mark would have the ‘lion’s share’ of family assets built up over the last 35 years. His modus operandi was ‘what’s mine is mine and what’s yours is mine,’” the complaint read.

According to the lawsuit, Mark’s alleged misdeeds came to light in 2014, after he confessed to misappropriating $3 million in family funds. At the time, Mark handed over a ledger of his expenses, which include $700,000 in payments to his mistresses and $250,000 for his son’s Bar Mitzvah, the suit alleges. Mark also allegedly disclosed that he used company funds to buy three Manhattan buildings: 163 Chrystie Street, 172 Mulberry Street and 329-331 Lexington Avenue.

Even after the disclosures, Mark prohibited his family from seeing the company’s books, the lawsuit claims. His sister, Mehrnaz Nancy Homapour, filed a separate lawsuit in 2016 to gain access to the documents. The audit found that Mark refinanced 12 Fifth Avenue with a $3.2 million loan without telling his family, Jacob claims in the April filing. Mark also supposedly paid himself millions in management fees.

The lawsuit filed by Mehrnaz soured the relationship between Mark and his parents. According to the complaint, Mark “spitefully engaged in a number of hostile actions against his elderly father.” This included kicking Jacob out of the family headquarters at 29 East 32nd Street. In December 2016, Jacob found his office empty and his belongings in storage. Later, he received a letter from his son saying that he will be renting out the building, according to the complaint.

The lawsuit also detailed how Mark allegedly cut into shares of other family members. In 2005, he amended the operating agreements of five LLCs that control the family’s multifamily properties, effectively trimming his father’s 40 percent stake to make himself the majority owner, Jacob alleges in the complaint.

Jacob also claimed that Mark tricked him into transferring his stake in seven family LLCs to his children. Mark allegedly staged a “ruse” under the guise of estate planning, telling his father that transferring his assets would translate to $10 million in estate tax savings. Jacob said that he didn’t know what he was signing and that he didn’t intend to relinquish his ownership until after his death.

Jacob is seeking $90 million in damages and the restoration of his 40 percent stake in two family companies.

The Harounian skirmish bears similarities to other family disputes in New York City real estate. Last year, Richard Ohebshalom sued his father Fred to stop the sale of 111 Washington Street at a “woefully deficient” price of $148 million. That case is still ongoing.

Jacob’s attorney did not immediately return a request for comment, and Mark’s counsel also did not comment.