Fontainebleau trustee brings suit against board members

June 22, 2011 05:48 PM

Soneet Kapila, the trustee overseeing the Chapter 7 bankruptcy of Fontainebleau Las Vegas Holdings, has brought an action for damages against 12 defendants, including Jeffrey Soffer, chairman and CEO of Fontainebleau Miami Beach and several Fontainebleau Resorts board members. Soffer is also the president and COO of Aventura-based Turnberry Associates.

Fontainebleau Resorts was formed in 2005 to operate the Miami and Las Vegas locations of the hotel.

The complaint, which was filed June 8 in the Southern District of Florida, is seeking unspecified damages and to avoid and recover avoidable transfers, that is, transfers or payments made in the period leading up to the property’s bankruptcy.

The five-count complaint includes breach of fiduciary duty, aiding and abetting the breach of fiduciary duty and the avoidance of fraudulent transfers.

The Vegas property entered bankruptcy in 2009 [], and was only half-finished. It was to include a 63-story glass skyscraper featuring 3,800 guest rooms, a 100-foot-high casino complex, along with spas, restaurants and other resort amenities.

The complaint alleges that internal budgets for the project totaled nearly $100 million more than those disclosed to third parties, including lenders, that the construction drawings were never completed, and that committed contracts to certain third parties “substantially and materially understated the known costs.”

According to the complaint, there were breaches of several duties to exercise reasonable care: to ensure that the project was managed competently, to accurately report financial conditions of the project and that it be completed in accordance with the budget.

Soffer did not respond to a request for comment. The trustee’s attorney, David Cimo of Genovese Joblove & Battista, did not respond to repeated requests for comment.

Kapila said he did not wish to comment on the suit.

Updated Thursday, June 23 at 2:57 P.M.

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