A new lawsuit depicts prominent Chicago landlord Larry Weiner as a business partner who will use “ruthless” and “illegal” tactics to exert financial and “emotional control” over his investors.
David Ruttenberg, of Ruttenberg Gordon Investments, co-owns over 50 properties with Weiner, primarily in Chicago and its suburbs, and filed a lawsuit in Cook County court on July 3 accusing Weiner of fraud and defamation, among other allegations.
The new lawsuit alleges Weiner, principal of the large Chicago-based landlord Marc Realty, withheld profits from shared investment properties, refused to sell underperforming assets and defamed Ruttenberg by continuously using “false, expletive, derogative, sexual and homophobic slurs to describe Ruttenberg in professional and business settings.”
Via his defamatory comments, “Weiner has embarked on a ruthless journey to assert financial and emotional control over Ruttenberg,” the lawsuit alleges, adding that Weiner was holding the investor’s funds “hostage.”
The investor, who was previously based in Chicago but is listed as a Florida resident in the lawsuit, is not related to Chicago-based David W. Ruttenberg, president of real estate development firm Belgravia Group.
The complaint is the latest in a string of legal challenges filed against Weiner and Marc Realty. A tangled web of at least five ongoing legal battles totalling about $60 million in disputed funds have ensnared the local firm, one of Chicago’s biggest commercial real estate owners.
One of those prior lawsuits also involves Ruttenberg. He and Marc Realty purchased a Tulsa, Oklahoma apartment complex in a joint venture with Oklahoma-based Vesta Capital. Vesta later sued Marc Realty over allegedly withholding payment owed to Vesta from the investment.
Marc Realty countersued, accusing Vesta of fraud and seeking at least $300,000 in damages. At the time, Weiner called the investment a “rat’s nest of fraud and deceit.”
In March, Marc Realty brought Ruttenberg into the legal battle by separately suing him for allegedly conspiring to collect additional fees from the Tulsa apartment complex unbeknownst to Marc Realty. The lawsuit seeks $500,000 in damages from all parties involved, including Ruttenberg.
The legal back-and-forth over the Oklahoma deal negatively impacted Weiner and Ruttenbergs’ other business dealings in Chicago, Ruttenberg’s lawsuit alleges. In his claim filed last week, Ruttenberg said Weiner refused to sell an underperforming investment property in Chicago that the two co-own unless Ruttenberg convinced Vesta’s CEO to drop his lawsuit against Weiner over the disputed funds from the Oklahoma apartment complex.
The accusation was one of several that Ruttenberg’s lawsuit highlights as evidence that Weiner engages in a pattern of deceitful and sometimes fraudulent business tactics through his companies, Marc Realty and NW Loan.
When buying investment properties with Weiner, Ruttenberg alleged that Weiner insisted they be purchased with loans issued by his company, NW Loan, at a 10 percent interest rate.
Weiner would then refuse to distribute profits from the investment properties to Ruttenberg and two Ruttenberg Family Estates entities — investment vehicles Ruttenberg used to make the purchases. As a result, the loan balances quickly accrued interest, according to the lawsuit.
“Weiner often gloated that he refused to make the necessary distributions to force Ruttenberg’s loans with NW Loan — an entity that Weiner also controlled — to accrue significant interest,” the filing states.
The properties that Ruttenberg invested in with Weiner generated $8.8 million in profits to be distributed to Ruttenberg and his estates between 2019 and 2022, according to federal and state tax returns. But Ruttenberg alleges he and the estates only received $2.6 million, which was “substantially less in actual cash distributions owed to members of the entities,” the filing states.
At one point, Ruttenberg requested to buy himself out of some investments with Weiner and in the 18 days it took Weiner to respond to that request, he accrued an additional $13,000 in interest on the debt.
Overall, Ruttenberg paid $2 million in “unnecessary interest” to NW Loans, the lawsuit states.
“What I am surprised with is how out in the open it is,” Ruttenberg’s attorney Michael Kozlowski said. Weiner “is obviously abusing his position,” he added.
Nearly 20 properties listed in the lawsuit are failing to turn a profit. When Ruttenberg urged Weiner to sell some of the properties, he refused, despite Ruttenberg expecting several properties to sell for significantly higher amounts than the debt owed.
“Weiner refuses to sell these negative cash flow entities to unlawfully seek leverage on unrelated matters for his personal benefit and because the negative cash flow entities continue to pay Weiner and his related entities, including NW Loan, lining Weiner’s pockets to the detriment of the entities and their members,” the filing states.
Ruttenberg’s attorney said he estimates damages owed to Ruttenberg could exceed $10 million. They include $6 million in unpaid investor distributions, nearly $3 million in over-inflated business expenses charged by Weiner, and over $2 million in unnecessary interest on loans from NW Loan.
In the complaint, Ruttenberg and his associated estates seek over $760,000 in damages as well as a court-ordered accounting of the shared investments and a third-party negotiator to determine a pay-out option for Ruttenberg.
Attorneys for Weiner and Marc Realty declined to comment.
Weiner and Marc Realty’s legal representatives have not yet filed a response to the lawsuit but they’re fighting accusations made in their five other pending legal disputes.
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One lawsuit includes similar accusations that Weiner and his associates used high-interest loans from NW Loan to exert pressure in negotiations with investors.
A lawsuit filed in September by Colorado-based investor Mark Iuppenlatz claims that Iuppenlatz’s business partners, Frank Talbert and Todd Bryant, took out business loans via their shared company for personal use without his knowledge or consent.
To help pay off those fraudulent business loans, Iuppenlatz alleges that Weiner’s business partner Gerald Nudo offered to issue Bryant and Talbert a $650,000 loan from NW Loan at a 12 percent interest rate as long as Bryant and Talbert agreed to sign a lease in an office building owned by Marc Realty. The arrangement was made without Iuppenlatz’s consent, the lawsuit alleges. That case is still pending in federal court.