The Real Deal New York

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

Federal judge tosses RICO lawsuit filed by former equity partner AmBase
By Kathryn Brenzel | October 29, 2018 02:01PM

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.