Real estate players are among New York’s most litigious characters and 2017 was no exception to that. Family feuds, angry partners and jilted tenants all meant that the courts were full of industry drama this year, and one high-flying landlord swapped a Hamptons mansion for a Rikers cell. Lawyers prepared colorful complaints full of references to sex, drugs and breach of contracts, and racked up the billable hours.
As always, The Real Deal was there to document the legal intrigue. Read on for a closer look at the juiciest cases from the last 12 months.
1) Breaking up is hard to do (when you’re a billionaire)
With Harry Macklowe, everything is at an epic scale, and his divorce from Linda Macklowe is no exception.
The couple is battling over a fortune reportedly worth up to $2 billion, but they’re both rather bad at counting. Is the couple’s art collection worth $625 million, or $1.4 billion? And their apartment–is it worth $55 million, or $107 million? Don’t count on this pair to come up with the same answer. The judge handling the case has said she plans to split the Macklowe empire down the middle, but we’re a long way off from knowing where the middle really is.
2) I have a fuckload of legal issues, bro
“I’m worth a fuckload of money, bro,” Raphael Toledano once said. But it appears said load may not be enough to ride out his financial woes. This summer, Simon Baron Development moved to evict Toledano from his $13,800-a-month apartment at 393 West End Avenue, citing unpaid rent. Toledano, infamous for vacating rent-regulated apartment buildings and the subject of numerous tenant-harassment suits, has tried to stay in his own unit by claiming–wait for it–that he is a rent-stabilized tenant.
The year also saw Toledano fighting off the vultures circling his holdings, such as Michael Shah, to whom Toledano allegedly said: “I will bury you.”
3) “Shim-sham con man”
Kevin Maloney got sued a lot in 2017. The Property Markets Group boss was sued for $30 million in March by Madison Equities’ Robert Gladstone, who alleged “intentional neglect” at their joint condominium project at 10 Sullivan Street. The following month, he was sued for a staggering $400 million by former Fred Trump protégé Brad Zackson. Zackson, who has worked on real estate deals with Paul Manafort, called Maloney a “shim-sham con man” and accused him of dropping the ball on a planned redevelopment of the Long Island City Clock Tower. And finally, AmBase sued Maloney, partner Michael Stern and Spruce Capital Partners for allegedly trying to squeeze it out of a project at 111 West 57th Street. Maloney seems to have kept himself busy outside of the courtroom, however, having launched a new co-living company amidst the ongoing legal fracas.
4) “Loud and unmistakable sexual intercourse”
2017 offered dozens of stories about sexual misconduct in the workplace and one of the more eyebrow-raising allegations came courtesy New York real estate. Top Douglas Elliman broker Jared Seligman was sued by his former assistant, Amy Gagnon, who claimed Seligman made her watch him sexually harass his own doctor. She also claimed that Seligman would require her to work from his home while he had “loud and unmistakable sexual intercourse” in the room next door to her. The suit has since been quietly, yet unmistakably, settled.
5) The battle against brunch
An East Village resident is waging war against New York’s favorite drunk weekend activity: bottomless brunch. In September, Robert Halpern petitioned the state’s Liquor Authority to outlaw boozy brunches, making the case that the sale of unlimited alcohol is already prohibited by the state. Halpern decried the drinking culture of the neighborhood, where over 550 liquor licenses had been approved in 2016 and 2017 alone, according to his calculations. “There are too many people running around and drinking all the time,” Halpern said at the time. The Liquor Authority moved to dismiss the case claiming Halpern had no standing.
See more 2017 year end reviews here
6) The curious case of Renwick Haddow
Bar Works, billed as a co-working startup with a boozy twist, collapsed amid a flood of litigation after it was exposed as a Ponzi scheme masterminded by British con man Renwick Haddow. Bar Works had several co-working spaces, which doubled as bars, in New York and California, and raised money from investors by selling shares in its workstations and promising double-digit returns. Haddow attempted to conceal his involvement in Bar Works, using the alias Jonathan Black to operate the business, and was exposed by The Real Deal in January. Six months later, the SEC brought criminal charges against Haddow and Bar Works for collecting over $37 million from investors. Several alleged victims filed suit as well, including a group of 71 Chinese investors ensnared in the scheme, claiming they’d lost a combined $7.5 million to Haddow and his wife, Zoia Kyselova (who also goes by Zoe Miller). The SEC case is ongoing, and the Chinese investors’ case ended in a default judgement.
7) A ‘Yuge’ Family Feud
The family of deceased New York real estate titan Disque Deane has been split atwain, and the President of the United States has a stake in the entire mess. The managing partner of the massive Brooklyn housing complex commonly known as Starrett City, which is controlled by Deane’s surviving wife Carol, went into contract to sell it to Rockpoint Group and Brooksville Company. But Carol Deane’s stepchildren and other limited partners claimed the building, with a price tag of about $900 million, was sold for too little money. The stepchildren have since commissioned their own appraisal of the property. Meanwhile, President Trump and his family are said to own as much as a 16-percent stake in the project, but are reportedly uninvolved in the ongoing litigation.
8) In the name of the father
It’s son versus father in a feud over an allegedly squandered inheritance. Richard Ohebshalom filed two lawsuits against his father, Fred Ohebshalom, founder of Empire Management. The first sought to stop the sale of 111 Washington Street, the latest move in a long-running tug-of-war over the property, which Fred allegedly intended to sell for the “woefully” low price of $148 million. A week later, Richard filed a suit alleging that the elder Ohebshalom had depleted a trust that was set up to hold Richard’s stake in eight New York City properties. Richard claimed that when the trust, supervised by his father for 13 years, expired in 2016, it held just $1 million, far less than it should have. His father “wasted and squandered” what was rightfully his, Richard claimed.
9) The tenant strikes back
The Housing Rights Initiative, a nonprofit venture started by Aaron Carr, helped bring more than 20 lawsuits in 2017, all against landlords allegedly violating New York’s rent-stabilization laws. And among those sued are some of the city’s largest multifamily owners: Scharfman Organization, Stellar Management, Kushner Companies, Bronstein Properties and many others. Each suit came with a press release in which Carr provided some of the year’s most colorful statements: “rapacious predator” (Kushner), “Where is the golden toilet seat?” (Bronstein), “robbing tenants and taxpayers in broad daylight” (hundreds of landlords).
All of the suits brought this year are still pending a complete resolution.
10) Mr. Croman goes to Rikers
Steve Croman may be the poster child of tenant harassment in New York City, but that’s not what he went to jail for. Proving intent to harass tenants has been tough to do in New York courts. Attorney General Eric Schneiderman instead nabbed Croman for lying to his lenders about the rent-rolls of his properties in order to snag more debt. When asked by the judge if he would like to make any comment on his crimes at sentencing, Croman replied “no thank you.”
As part of a plea deal, Croman was sentenced to one year in jail at Rikers this October (he’s currently living at the Manhattan Detention Center, however), but could get out a few months early. On Wednesday, the AG announced that Croman agreed to pay $8 million in restitution to tenants.