As HFZ Capital Group’s luxury real estate portfolio disintegrated in a series of foreclosures, liens and investor disputes over the last two years, chairman Ziel Feldman consistently pinned the firm’s misfortunes on Nir Meir, its former managing principal.
In various lawsuits, Feldman has accused Meir of forging his signature on loan documents, stealing millions from HFZ and making deals without his knowledge. A complaint filed by the embattled developer last August referred to Meir as a “sociopath,” compared him to Bernie Madoff and blamed him for the downfall of HFZ’s signature condo project on the High Line.
An appeals court isn’t buying it.
Last week, a New York appellate court granted a lender on a separate HFZ condo project a summary judgment of more than $18 million against Feldman and HFZ — partially reversing a lower court ruling that allowed the lender to go after Meir for the money, but would have required it to go to trial in order to pursue repayment from Feldman or the firm.
In November 2020, an entity tied to the Israeli car magnate Yoav Harlap sued Feldman, Meir and HFZ, alleging the developer had defaulted on a loan for a planned condo project on the Upper East Side.
The project never got off the ground, and last year the lower court ruled in favor of the Harlap entity, YH Lex Estates, issuing a summary judgment against Meir, but denying a judgment against HFZ and Feldman, who brought in handwriting experts and claimed that Meir had forged Feldman’s signatures.
The appellate court ruled last week that Feldman was aware of the transaction and the Harlap entity could pursue repayment on the defaulted loan from him and HFZ, in addition to Meir.
“For several months, Feldman had notice of all the underlying transactions, as well as the default thereunder and negotiations to resolve it,” the order stated. “He then received actual copies of the allegedly unauthorized agreements, signed by Meir and one bearing his own ostensible signature, but conducted no investigation and made no objection for the three months prior to being sued.”
The ruling is a major dent in Feldman’s argument that Meir was solely responsible for HFZ’s downfall and that he was unaware of his former business partner’s actions. Feldman and HFZ are separately suing Meir for $688 million, claiming, among other things, that Meir lied to HFZ about the group’s marquee project, the XI, being on sound footing. That project was lost in a foreclosure to Witkoff Group and Len Blavatnik’s Access Industries in December.
“As the [appellate court] recognized, Mr. Meir and Mr. Feldman ran HFZ together for many years,” said Mark Hatch-Miller of Susman Godfrey, the attorney of YH Lex Estates. “YH will continue to pursue Mr. Feldman and HFZ, along with Mr. Meir and his associates, until every last penny owed has been recovered, and until the defendants and their associates have been held fully accountable for their misconduct.”
HFZ and Feldman’s attorney, Y. David Scharf of Morrison Cohen, said the appellate court’s “decision is divorced from the reality and evidence.”
“HFZ and Ziel Feldman will continue to contest these allegations that arise from its victimization by Nir Meir and his cohort friend, Yoav Harlap, who did not do a scintilla of common due diligence on Nir Meir’s authority to act,” said Scharf. “The evidence that has come out in discovery, that unfortunately the Appellate Division did not have the opportunity to review, shows that the $18 million did not benefit HFZ and instead was used at the direction of Nir Meir to repay debts to Yoav Harlap’s close friend.”
Meir’s attorney had his own interpretation of the ruling.
“The Appellate Court’s unanimous decision confirmed what we have been saying — that the claims against my client are baseless,” said Larry Hutcher, a co-Founder of Davidoff Hutcher & Citron.
Meir, however, is not off the hook. Despite the judgment last year, YH Lex Estates has had trouble collecting from him, according to Hatch-Miller, who alleged in a lawsuit filed in New York Supreme Court that Meir has transferred millions of dollars and several luxury vehicles to his wife. Meir’s lawyers have denied that the transfers are illegal and claimed that many of the cars were owned by Meir’s wife or an LLC.
HFZ Capital was once among the most active luxury condo developers in New York, backed at least partially by Beny Steinmetz, an embattled Israeli diamond magnate who was recently convicted of bribery in Romania and Switzerland. As the firm became besieged by lenders and other creditors, Meir departed in December 2020.