Stanley Black says longtime partner bilked him out of millions

Real estate mogul sues Robert Barth, alleging he was defrauded in home sale

Nov.November 27, 2019 08:53 AM
From left: Robert Barth and Stanley Black with 840 Greenway Drive (Credit: Getty Images and Zillow)
From left: Robert Barth and Stanley Black with 840 Greenway Drive (Credit: Getty Images and Zillow)

Prominent real estate investor Stanley Black is suing his business partner of 34 years, Robert Barth, claiming Barth defrauded him out of $8 million in a Beverly Hills mansion sale.

Black filed the explosive lawsuit Thursday in Los Angeles County Superior Court, alleging Barth concocted an elaborate scheme to siphon millions of dollars for himself through a maze of limited liability companies.

Black founded Beverly Hills-based Black Equities Group in 1985 along with his son Jack and brought Barth on board as CEO. The partners grew the firm into one of the country’s biggest commercial and residential real estate investors, with over 18 million square feet of property across the U.S.

However, the lawsuit charges would appear to strain, if not immediately destroy, their longtime partnership.

According to the complaint, Black says that he and Barth bought a mansion at 840 Greenway Drive in Beverly Hills for $17.1 million in 2017. The duo bought the mansion through a series of LLCs which Black manages and Barth holds interests in.

Black alleges that unbeknownst to him, Barth allegedly transferred the property deed from the original LLCs to Eastwind Financial, an LLC completely controlled by Barth and his family.

The deed transfer happened as Barth was negotiating a sale of the property with Eric Baker, an entrepreneur who founded ticket resale marketplaces StubHub and Viagogo, where he currently serves as chief executive. (Earlier this week, Viagogo agreed to acquire StubHub for $4 billion)

The Barth-controlled Eastwind Financial sold the property to Baker for $25 million. Black alleges that Barth then cooked the books and told Black the property sold for $16.9 million – pocketing the $8.1 million difference.

Black is suing Barth for the $8.1 million plus interest, alleging breach of contract and breach of fiduciary duty. Black also alleges that Barth pocketed sundry other fees, including $235,000 Barth earmarked for property “due diligence.”

The Black Equities founder is also suing for punitive damages to “deter future malfeasance” from Barth.

Barth’s current role at Black Equities is unclear. The complaint makes no mention of the pair’s longtime business dealings or present relations. A representative at Black Equities said she didn’t know if Barth still worked for the company, and directed further inquiries to SB Management Corp. – a company Black and Barth founded in 1985, the same year Barth joined Black Equities.

Questions left for Barth at SB Management were not returned. A message left with Black including through his lawyer Howard King, of King, Holmes, Paterno & Soriano was not returned Tuesday. King is perhaps best known for representing celebrity musicians, including Robin Thicke, and artists suing Universal Music Group over master recordings allegedly destroyed in a 2008 fire.

Barth still lists himself as Black Equities’ CEO on his LinkedIn page. He is also co-founder of California Republic Bank, which merged with Mechanics Bank in 2016. He doesn’t appear to have yet appointed his own counsel, court records show.

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Fraudulent transfers. Breach of promissory note. Fraud and concealment. Those are just some of the charges against real estate mogul, Bel Air Church deacon and several-times-convicted felon C. Frederick Wehba, who sold his Beverly Hills mansion last month as part of a settlement with one of the creditors he allegedly tried to dodge. And if yet another creditor has its way, that won’t be the only property the Wehba family is forced to sell. Wehba founded the Los Angeles-based commercial real estate firm BentleyForbes, which made risky bets during the years leading up to the downturn, putting up less than $50 million between 2005 and 2007 to acquire its largest properties, which had a combined price tag of $1.64 billion. Wehba, a prominent Republican donor who has hosted fundraising parties for the likes of Rick Santorum at his lavish homes, had to sell many of those commercial properties at a loss. Reckless borrowing practices seem to have followed him throughout his career, but only recently have the consequences caught up with Wehba. He sold his estate at 1700 Green Acres Drive for almost $12 million in early February and while it looked like a typical deal on the surface, sources familiar with the matter told The Real Deal that he hardly sold it willingly. The sale was pursuant to a settlement with Torrance-based Mitsuwa Corporation, which sold two of its shopping centers in Costa Mesa and Torrance to BentleyForbes. In a 2011 complaint filed in California Superior Court, Los Angeles District and obtained by The Real Deal, Mitsuwa said BentleyForbes sold the retail properties out from underneath them after paying only part of the original purchase price. BentleyForbes, which Wehba co-founded with his son C. Frederick Wehba II, was supposed to pay the rest of the purchase price after closing, but failed to do so, according to Mitsuwa. Instead, Mitsuwa claimed, the Wehbas transferred ownership of the centers to a maze of LLCs, using them as “alter ego” entities to pay out a handful of members of the Wehba family while the debtor on each promissory note defaulted. Because the entities had no assets, Mitsuwa was unable to collect the amounts it was owed, and the Wehbas were able to both profit from the shopping centers and, ultimately, from selling them, according to the complaint. In the April 2015 decision obtained by The Real Deal, Judge William MacLaughlin ruled that the Wehbas, BentleyForbes and the maze of entities under which they conducted business were one and the same, writing that the tangled web allowed “the Wehbas to pay themselves millions of dollars.” The decision meant Mitsuwa could seize the Wehbas’ other assets for repayment. On November 2, 2015, Fred Wehba Sr. signed a second deed of trust — California’s version of a mortgage — on his mansion at 1700 Green Acres Drive. That document said he was obligated to pay Mitsuwa all proceeds of the sale. Days later, a notice obtained by The Real Deal was filed in Superior Court announcing the settlement of the entire case. Now, in a complaint filed in January, another creditor, Key Bank, is citing the decision in the Mitsuwa case to try to put a lien on other properties owned personally by the Wehbas. Key had loaned BentleyForbes a significant amount of money for the lease of a corporate jet. Key alleges breach of contract, among other things, because the Wehbas stopped making their lease payments. The jet was ultimately seized, but not before BentleyForbes wracked up more than $10 million in debt to Key, according to the California complaint. The longtime residence of Fred Wehba Jr., a mansion at 1021 Chevy Chase Drive now owned by a trust associated with his wife Natalia Wehba, might be the next up for sale if Key successfully puts a lien on it, said a source familiar with the matter. Key’s complaint alleges that the Wehbas tried to prevent their property from being used to pay creditors by transferring it out of Fred Wehba Jr.’s name and into a trust that had his wife as sole trustee at a time when BentleyForbes owed Key almost $500,000. The complaint also claims that the Wehba family aided and abetted each other in a conspiracy to cash money out of the sale of their most flamboyant property without paying their creditors. They allegedly funneled money into building a 36,000-square-foot mansion with gold-plated doorknobs, dramatic marble columns and 13 bathrooms at 9577 Sunset Boulevard, where Fred Wehba Sr., known for wearing tailored suits even during casual moments, held weekly bible study classes. After selling it for $34.5 million (about half the asking price) and paying off their mortgage, they “secreted” $10.2 million from the sale, the complaint alleges, and pocketed it without paying off their lenders, including Key. In addition to Fred Wehba Sr., Fred Wehba Jr. and Natalia, family members Cyle Wehba, Chad Wehba, Christian Wehba and Susan Wehba were also named in Key’s suit. Key Bank and Mitsuwa could not be reached for comment. Sources close to the matter say Key will probably succeed in forcing a sale of the Chevy Chase mansion. Those sources also note that Fred Wehba Sr. and Fred Wehba Jr. don’t exactly have a clean track record on financial issues. Fred Sr. was convicted in Oklahoma in 1978 of fraud and in 1997 in Texas for false claims and statements. And in 1994, Fred Jr. admitted to forging the names of his business associates in a sworn declaration as part of a civil complaint in the Circuit Court of Cook County, Illinois. Fred Wehba Sr.’s Texas conviction came into the light in 2007 when he was both donating to and holding fundraising events for Republican presidential candidate Mike Huckabee. According to an article in the Los Angeles Times, Fred Wehba Sr. was convicted in 1997 of “fraudulently concealing his interest in his Beverly Hills home.” At the time, he owed money to a failed Texas financial institution, Vernon Savings & Loan. “My feeling is that everybody is not only entitled to make mistakes, but to move past them. And obviously he has, and I commend him for that,” Huckabee said to the Times. It’s unclear if the Wehbas are indeed moving past their mistakes. BentleyForbes has shuttered, but sources said it might be in name only — the company seems to have found new life as another entity. The firm’s managing director Gustavo Boros left to form the multifamily investment firm Metropolitan Equities earlier this year. Boros told The Real Deal in an email that several former executives with BentleyForbes made the transition to Metropolitan. In fact, Boros’ LinkedIn page states his place of employment as “Metropolitan Equities (formerly BentleyForbes).” But Boros said that the former BentleyForbes executives are not principals. As for Fred Wehba Sr., Boros said he has retired from active business life to focus on the work of his personal foundation. However, when The Real Deal called the phone number for BentleyForbes office, a receptionist answered, “Metropolitan Equities,” and took multiple messages for Fred Wehba Sr. He did not, however, return the calls. The Wehba Foundation, which is not listed with the IRS as a charitable organization and which Boros said is private, “exists as an instrument for God’s Earthly works,” according to its website. That apparently includes real estate. “[Assisting] non-profit, church and private organizations in development of real estate strategies for their operations,” is one of its missions.

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