The former managing director of Elevated Returns, an asset-management company that specialized in single-asset real estate trusts, claims he was fed a “string of lies and deceptions” by CEO Stephane De Baets, who allegedly stiffed him on compensation.
In a lawsuit filed in New York’s Supreme Court, Jason Kirschenbaum claims he poured “significant time, resources and his own money” into a partnership with De Baets and Thosapong Jaruthavee, a Thai billionaire also known as “Mr. T.”
Kirschenbaum alleges breach of contract, breach of fiduciary duties and unjust enrichment, among other charges. He is seeking damages of an unspecified amount.
Reached for comment, a representative for De Baets said the claims were “specious” and the facts “don’t comport with reality.”
“Mr. Kirschenbaum was never a partner in any of the ventures referred to in his complaint as is explicitly shown in the contract attached to his filing,” De Baets’ spokesperson said.
The dispute dates back to the end of 2015, when Kirschenbaum said he approached De Baets with the “idea, structure and concept” of a single-asset REIT, a rarity in the real estate world.
According to the complaint, the pair started meeting at the Mercer Hotel in New York, where they discussed building an advisory company. De Baets and Jaruthavee would provide the initial assets—“certain hotels”—to create the REIT, while Kirschenbaum would run the day-to-day operations of the listing, including business development and marketing, the lawsuit claims.
In March 2016, Kirschenbaum and De Baets formalized their agreement, signing a contract that outlined compensation for the formation and listing of a single-asset REIT for the Sunset Tower Hotel in Los Angeles, the lawsuit claims.
A copy of the agreement filed with the complaint shows that Kirschenbaum was offered a 25 percent share of founders equity for the planned advisory company—adding that if the deal was unsuccessful, the advisory company would be dissolved.
“Nothing in this letter is intended to create a partnership or joint venture,” the contract stated.
After the Sunset Tower deal didn’t pan out as planned—the hotel was sold in 2017— Kirschenbaum says he worked on a single-asset REIT for the St. Regis Aspen Hotel, using the same agreement.
In February 2018, The Real Deal reported that Elevated Returns had postponed its planned public offering for the St. Regis REIT, “in order to retool our crowd funding distribution channel to create a seamless conversion of the robust traffic to our site.”
Later that year, the company sold almost one-fifth of the hotel through digital tokens.
Kirschenbaum claimed that while his original contract was centered on the earlier Sunset Tower deal, it also applied to “future deals,” pointing to three references to “future deals” in the text. Further, he said that ER Global, formed in 2018, is today worth an estimated $40 million, meaning he is entitled to a 25 percent share worth “at the very least” $10 million.
But in a letter from March 2019, reviewed by TRD, Richard Menaker, De Baets’ lawyer, said the scope of the agreement was much narrower, and no equity was owed.
“The only equity interest contemplated by the agreement was Kirschenbaum’s potential interest in a different entity, the advisory company, which would have been created only if the public offering of a NASDAQ-listed single-asset REIT venture got off the ground,” Menaker wrote. “As Kirschenbaum knows, it never did.”
Menaker’s letter went on to say that after Kirschenbaum was hired full-time in 2018, his performance became “irregular” and “unsatisfactory.” Eventually, Menaker said, he stopped coming in altogether.
Kirschenbaum’s attorney, Stephen Riccardulli, rejected the account, branding the letter “false and self serving.”
The case continues.