Stern, Maloney notch huge legal victory in fight over 111 West 57th Street

Federal judge tosses RICO lawsuit filed by former equity partner AmBase

TRD New York /
Oct.October 29, 2018 02:01 PM

From left: 111 West 57th Street, Kevin Maloney, and Michael Stern (Credit: WSP and Getty Images)

In the latest win for the developers of 111 West 57th Street, a federal court judge on Friday tossed AmBase Corporation’s lawsuit that accused JDS Development and Property Markets Group of conspiring to squeeze the Connecticut-based company out of its stake in the supertall.

U.S. District Court Judge Analisa Torres dismissed AmBase’s complaint, which alleged that the developers arranged “an elaborate and long-running fraudulent scheme” to cheat the holding company out of what ultimately amounted to a $70 million investment in the condominium tower, according to court documents. The lawsuit — which AmBase initially filed in state Supreme Court in 2016 and then refiled in federal court this year — had accused JDS and PMG of violating the Racketeer Influenced and Corrupt Organizations Act.

“JDS and PMG are very pleased with the federal court’s well reasoned and detailed decision dismissing Ambase’s meritless claims,” JDS CEO Michael Stern said in a statement.

Representatives for AmBase did not return requests seeking comment.

The decision marks a significant win for JDS and PMG after several years of legal fighting with their former equity partner. Back in 2013, AmBase bought a 59 percent stake in the supertall condo for $56 million. But the company had a falling out with the developers and lost its control of the property when the project’s most junior lender, Spruce Capital, foreclosed on the property in August 2017.

In January, a state Supreme Court judge rejected AmBase’s attempt to undo the foreclosure with a temporary restraining order. Two months later, the holding company acknowledged in its annual report that AmBase faced possible financial ruin. The company’s founder Richard Bianco has been financing the firm’s legal expenses through a loan.

Meanwhile, JDS and PMG officially launched sales at the 1,428-foot-tall-tower in September. Douglas Elliman is now handling marketing of the units, which start at $18 million. In June, the project’s former marketing team, Corcoran Sunshine Marketing Group, filed a $30 million lawsuit accusing the developers of purposely sabotaging the sales effort.

Related Articles

From left: Jed Wilder, Bess Freedman, Richard Grossman, Josh Sarnell and Adam Mahfouda (Credit: Emily Assiran) 

Agents to StreetEasy: The fee is too damn high

40 East 72nd Street (Credit: Google Maps)

Nightmare on E. 72nd Street raises question: Are small condos risky?

Jed Garfield of Leslie J. Garfield; Richard Grossman, president of Halstead Real Estate; Sarah Saltzberg, principal broker and CEO of Bohemia Realty Group; Douglas Elliman’s Howard Lorber

NYC brokers slam bias, promise action after Newsday exposé

The bombshell probe also found that minorities had to meet more stringent financial qualifications than white buyers. (Credit: iStock)

LI agents routinely discriminate against minority buyers, undercover probe finds

Zillow CEO Rich Barton (Credit: iStock)

Zillow and Opendoor aren’t making much on home-flipping

From left: The Blau and Berg Company's Karine Blanc, TD and Partners' Nana Duncan and Lemor Development Group's Kenneth Morrison (Credit: Blauberg, TD+Partners and Lemor)

Black developers say partnerships aren’t always equal

This week, the State Department of Taxation and Finance issued a new memo that notably made no mention of condos. (Credit: iStock)

Regulators quietly change stance on condos in LLC law

Realogy CEO Ryan Schneider (Credit: iStock)

Realogy’s plan to stop the iBuyers from gaining a foothold in Chicago