Silverstein battles his former chief operating officer
World Trade Center site leaseholder Larry Silverstein has sued a veteran executive who spent 25 years in his employ, claiming his former colleague owes about $2.6 million for the reconstruction of 7 World Trade Center.
Silverstein claims that Joseph Ritorto, a former senior executive vice president and chief operating officer at Silverstein Properties, owes more than $2.55 million for the reconstruction effort of the tower destroyed on September 11, according to documents filed in state Supreme Court.
The case revolves around matching funds that Ritorto, who worked for Silverstein from 1978 to 2001, was supposed to provide to rebuild 7 World Trade.
Silverstein, who contributed $51 million to the rebuilding of the property, says Ritorto agreed to provide 5 percent of his former boss’ contribution in exchange for an equity stake. In August 2005, Silverstein asked for the money, giving Ritorto six days to pay the $2.55 million. When he didn’t, Ritorto lost his interest in 7 World Trade.
Ritorto claims Silverstein’s suit is about revenge. Ritorto filed a suit in 2004 for money he believes he was owed for other development projects. After a January 2005 ruling that upheld most of his suit against Silverstein, Ritorto got the cash call for the $2.55 million.
Justice Helen Freedman of the New York State Supreme Court’s commercial division rejected Ritorto’s claim that Silverstein’s lawsuit was retaliatory. On May 3, she ruled that the suit also came shortly after Silverstein’s contribution to 7 World Trade Center and that Silverstein’s contribution to the reconstruction costs “constitutes a reasonable motivation for [Silverstein’s] cash call.”
Ritorto is appealing that decision. He says he had an oral agreement with Silverstein under which money he owed Silverstein would be advanced by his former boss, then repaid from money already owed to Ritorto. Rosalind Fink, Ritorto’s attorney, told The Real Deal that “it had been understood by everybody that cash calls would not be done.”
Ritorto in May appealed Freedman’s decision. The appeal has not yet been resolved.
Silverstein could not be reached for comment.
Milstein brothers in fraud lawsuit
Peter R. Friedman, former owner of New York commercial brokerage Peter R. Friedman, is in a litigation tussle with market veterans Howard and Edward Milstein as well as Milstein Brothers Real Estate for an undisclosed sum upward of $10 million.
Friedman says he entered into an oral agreement with the Milsteins to establish a joint venture, full-service real estate company that later began operating as Douglas Elliman Commercial, but claims he was defrauded by his erstwhile partners.
The plaintiff said he dedicated himself and his company to developing the joint venture between October 1997 and the middle of 1999, but claims the Milsteins in June of that year sold the rights to operate under the name Douglas Elliman to Insignia.
Around the same time, Friedman was being investigated by the Attorney General for reasons not disclosed in court documents.
Though the court documents don’t detail the reason, they state that the Milsteins and Friedman never signed off on their joint venture, Douglas Elliman Commercial, possibly because of the investigation and sale of the naming rights.
In August 1999, according to Friedman’s complaint, the Milsteins banked commissions from the joint venture into their own accounts, not that of Douglas Elliman Commercial.
Friedman asserts in the documents that “Milstein fraudulently induced Friedman to relinquish control of the joint venture’s assets.”
Friedman is suing for damages in the tens of millions of dollars and equity position in Milstein Brothers Real Estate, LLC and/or MB Real Estate Services, the two companies to which Friedman claims his assets were transferred.
The Milsteins filed a motion to dismiss the claim, but in April of this year Justice Bernard Fried upheld 19 of 21 complaints by Friedman.
The case is currently beginning discovery and a compliance conference is scheduled for late September.
Lawyers for both parties declined to comment.