Mother vs. son fight could alter sale of Uptown apartment development

A Chicago real estate family is back in court in the latest instance of local builder Michael J. Lerner of MCZ Development and his wife, Jamie Lerner, suing their son, Michael N. Lerner.

This time, a trust controlled by Jamie Lerner has sued an entity, tied to her son, that built the Harmony Apartments complex at 4513 North Clark Street in Chicago’s Uptown neighborhood, a 57-unit property that completed construction earlier this year.

The younger Michael Lerner, who’s called Nathan by his parents, is accused in the suit, filed earlier this month, of preparing to sell the property and keep all proceeds for himself, despite previously agreeing to share 50 percent with a trust controlled by his mother.

“The trustee believes that Nathan intends to sell the property and retain the funds for himself because he has run out of other means of funding his extravagant lifestyle,” the mother’s lawsuit alleges. It added that the son’s American Express credit card has been canceled for nonpayment.

“We don’t believe the complaint has any merit with respect to the property,” Charles Mack, an attorney for the LLC that owns the building, said in an interview.

The trust in the mother’s name said her son has claimed he doesn’t have any financial obligations to the trust. Its suit claims it received an offering memorandum for the Uptown building — which is nearing fully leased, according to a property representative — despite the trust never authorizing it to be put on the market.

The landlord entity is co-owned by Stan and Eugene Bernshteyn in addition to Michael N. Lerner, public records show, and it’s unclear how the equity in the project was distributed between the three investors. It’s also unclear how much the property might fetch in a sale.

The landlord entity, 4511 Clark Acquisitions LLC, took out a $10.9 million loan from CNB Bank & Trust in 2021 using the property as collateral, ahead of its redevelopment, public records show. The LLC bought the property — which previously housed single-story retail buildings — for $1.7 million in 2019 from an entity controlled by Gloria Fattore, public records show.

MCZ Development, the company founded by Micahel J. Lerner in 1985, has built prominent high-end apartment complexes in Chicago and other markets, such as Kansas City and Washginton, D.C.

His wife’s trust claims their son has “misappropriated millions of dollars from other companies for which he is the trust’s agent and nominee.” The suit seeks a court order saying that the son cannot unilaterally move to sell the property, and that if it is sold, he must immediately split his share of the proceeds with the trust.

The family’s infighting dates back several years, Cook County court records show. The parents or entities controlled by them have sued their son or entities controlled by him on multiple occasions.

“This lawsuit arises out of a family dispute in which Nathan stole millions of dollars from the real estate investment companies that his parents, Jamie and Michael J. Lerner, spent a lifetime building,” documents filed by the mother’s trust in an earlier but still active lawsuit claim.

A judge appointed a receiver, Matthew Brash, to take over management of several properties in a of a portfolio of dozens of buildings that the mother previously sued the son over. The receiver could hire a broker to sell some properties that are struggling with cash flow and eviction issues. The younger Lerner tried to fight the appointment of the receiver but couldn’t stave it off.

The receiver has been sent multiple default notices from mortgage lenders on the properties — which are mostly midsize multifamily buildings — but so far no foreclosure lawsuits have been filed against landlord entities tied to the Lerners, a June court filing said.

Michael Kozlowski, an attorney who previously represented the younger Lerner, recently requested to withdraw “for professional considerations” in that case, which also accuses the son of selling properties and taking out loans using jointly owned real estate as collateral without permission and without subsequently sharing proceeds with the trust as required.

The father also previously sued the son over a $35 million Fulton Market development site sale to Miami-based developer Crescent Heights — which plans a massive apartment tower on the site — from an entity controlled by Nathan and @properties co-CEOs Thad Wong and Michael Golden. That suit was settled with an out-of-court agreement, records show.

Furthermore, the IRS filed a $1.2 million lien for unpaid federal taxes against Michael and Jamie Lerner in Cook County last year, without specifying which Michael Lerner. Jamie and Michael Lerner in May filed a legal action in the U.S. Tax Court in Washington, D.C., to petition the IRS for a hearing in Chicago, but the nature of the request is unclear, as many tax court cases are shielded from public view.

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