In 2018, South Florida’s real estate industry saw longtime business partners going through bitter divorces, buyers seeking to get out of luxury condo deals by accusing developers of construction delays and false advertising, foreign governments and investors suing local companies over allegedly fraudulent real estate investments and sizzling disputes over allegedly unpaid six-and-seven-figure commissions. Here’s a look back at the 10 most scandalous lawsuits filed in the past 12 months:
1. Craig Studnicky and Philip Spiegelman built International Sales Group into one of the region’s leading luxury condo brokerages during a quarter century’s worth of peaks and valleys in South Florida’s real estate cycles. The company outlasted recessions and the market bottoming out in 2008, but it may not survive an internal civil war between the ISG founders.
Over the summer, Studnicky and Spiegelman sued each other in Miami-Dade Circuit Court over control of ISG. Studnicky wants to force Spiegelman out and keep ISG in business. Studnicky wants a judge to dissolve the company. Both partners made scathing allegations against the other. Spiegelman accuses Studnicky of burning “through large amounts of cash” that ISG made in sales commissions, and failing to deliver any profits. Studnicky alleges Spiegelman’s “overbearing narcissism and obnoxious personality” alienated an original founding partner, employees and clients.
2. Vulcan Investment Partners, a fund founded by a group of leading Mexican businessmen and financial experts, had plans to go on a voracious buying binge when it announced six years ago that it planned to invest $150 million to purchase 1,200 single family homes throughout South Florida. Turns out that 41 properties Vulcan ended up buying were actually financed with allegedly pilfered funds from the Mexican state of Veracruz. The state sued Vulcan Dynamic Realty Fund and its CEO Inaki Negrete, Miami-based Nexxos Realty and its managing member Ana Maria Velasquez, and Delaware-based ACE Realty Holdings.
The Veracruz government claims the money used to buy the properties was stolen by Javier Duarte De Ochoa during his term as the Mexican state’s from 2010 to 2016. Duarte is currently awaiting trial on corruption charges in Veracruz after he was captured last year in Guatemala. Veracruz is seeking at least $25 million in compensatory damages and additional punitive damages, as well as control over the properties.
3. Jupiter developer Nicholas Mastroianni II has become somewhat of a guru in the world of EB-5 financing and investing. As founder of U.S. Immigration Fund for EB-5 Investment, Mastroianni has raised tens of millions of dollars for a number of major projects, including his own $170 million Harbourside Place in Jupiter. But nearly 80 Chinese investors in the Jupiter development sued Mastroianni in Palm Beach County Circuit Court, alleging he defrauded them by intentionally falling short of a $100 million capital fundraising goal.
Mastroianni, who’s been linked to President Trump’s longtime attorney, Michael Cohen, as well as to the Kushner Companies, vehemently denies the allegations and in a statement said that his company invested close to an additional $34 million in equity to “ensure all investors would receive their immigration benefits…. In addition, all investors have been, and continue to be, paid interest and their investment remains superior to the developers equity.”
More than 60 of the 78 plaintiffs have received their green cards, but have not been paid back, according to their attorneys.
4. Brenda Nestor lorded over Victor Posner’s estate for nearly 15 years until she was abruptly removed as its personal representative in 2016 for allegedly disobeying court orders to provide a full accounting of her management of the late corporate raider’s assets. So earlier this year, she sued the national law firm Akerman for breach of fiduciary duty, legal malpractice and civil conspiracy.
Nestor, a former-girlfriend-turned-business-associate of Posner’s who was named the primary beneficiary of his $321 million estate in 2002, alleged that she suffered damages as a result of “negligent and reckless” legal advice Akerman provided to her court-appointed successor of Posner’s estate. That successor, Philip von Kahle, sued the estate’s insurer to claim a $23.1 million bond she had posted back in 2002 that allowed her to operate Posner’s real estate business through his estate.
Von Kahle alleged that Nestor caused the Posner estate to lose $375 million in value to negative $50 million during her tenure as personal representative. In November, Nestor voluntarily dismissed the complaint.
5. Canadian developer Pierre Heafey and the Peluga family helped save the long-troubled Conrad Fort Lauderdale Beach project two years ago by becoming 51 percent owners and infusing $100 million in the development. But shortly after the condo-hotel finally opened this year, Heafey and the Pelugas, who own the NFL’s Buffalo Bills, became entangled in a legal battle with the Conrad’s original developers, Jose and Joseph Cabanas.
Between February and March, both sides sued each other for breaches of contract, self-dealing arrangements and delaying a $40.9 million sale of the property at 551 North Fort Lauderdale Beach Boulevard. The Heafey-Pegula company alleges that the Cabanas partnership has refused to execute part of the agreement that allows the Heafey-Pegula company to buy 20 percent of the condo-hotel units. The lawsuit claims the Cabanas partnership initially agreed to consummate the deal after Heafey and Pegula raised their offer from $37.5 million to $40.9 million last October, when the Conrad Fort Lauderdale Beach opened for business.
6. Stephen Hess was expecting to have 3,635 square feet of living space in the three units he bought at Muse Residences in Sunny Isles Beach. Instead, he lost about 400 square feet in each unit after realizing the floor plans included exterior areas such as columns, corridors and balconies that are not part of the units, according to a Miami-Dade Circuit Court lawsuit Hess filed against development entity PMG-S2 Sunny Isles LLC, which is controlled by Property Markets Group.
Hess is seeking to recoup more than $7 million in deposits he put down in 2014 and 2015. The buyer alleges a disclaimer in the sales materials was tiny and unreadable. Hess clams it violates Florida law regarding conspicuous type, which requires at least 10-point bold type. Attorneys for the developers refuted the allegations.
7. Local developer Ari Pearl agreed to leave a joint venture with the Chetrit family in 2017 to develop a massive five-phase development on the Miami River, consisting of 1,678 residential units, 330 hotel rooms, 266,000 square feet of retail and office space, and more than 2,000 parking spaces. But more than a year later, Pearl is trying to collect half of the $2.25 million that was part of the separation package.
Pearl is suing the Chetrit-controlled Miami River JV LLC in Miami-Dade Circuit Court for $1.125 million, the third and final payout as part of a settlement between the two. By paying Pearl, the Delaware-based joint venture company agreed to release and waive all claims against the joint venture, including “his employment by JV or his acting as a consultant to or on their behalf,” according to a 2017 contract that’s attached to the suit as an exhibit.
8. Yamile Espinosa and her company Miami Grand Realty brought a big-time buyer to look at units at Marina Palms Yacht Club and Residences. But when her client closed on a $5.5 million and a $440,000 boat slip, the developers and their in-house sales director muscled her out of a commission, Espinosa alleges in a May lawsuit filed in Miami-Dade Circuit Court. Espinosa claims she is owed roughly $356,400, representing the 6 percent commission she would have made on the sale.
Espinosa sued Marina Palms Realty, its manager Michael Internoscia, and Marina Palms Residences North and Marina Palms Residences South, the development entities. All three companies are owned by The Plaza Group and The Devstar Group, which built the two-tower project at 17201 Biscayne Boulevard through a joint venture. According to the lawsuit, Internoscia sold the penthouse and the boat slip in early 2017 to Pablo Otero and his company Blue Marlin without Espinosa’s knowledge or participation, even though Espinosa is alleging he was aware that she represented the buyer in previous transactions at Marina Palms.
9. Hotelier John Yanopoulos, who developed the W Fort Lauderdale, allegedly keeps disappearing on high-profile friends who give him six figure sums for investments. Former NFL running back Julius Jones, who claims Yanopoulos befriended him during one of his South Florida vacation, is suing the hotel developer in Miami-Dade Circuit Court for failing to repay $300,000 from a $500,000 loan. Yanopoulos missed a September 2013 deadline to satisfy the loan and it took him another two years to pay back $200,000, Jones alleges.
To date, Yanopoulos has not repaid the balance, yet was able to purchase a $3.1 million mansion in Pinecrest in March 2017, according to the suit. In 2016, Magic City Casino co-owner Isadore Havenick sued Yanopoulos for allegedly welching on a $500,000 loan.
10. Christopher Benjamin, an indigent man born with Albinism which caused him to develop problems with his sight, forced the Florida Realtors Association to place its member brokers on notice about violating local laws against discriminating against low-income renters. Benjamin filed civil lawsuits against 46 Miami-Dade and Broward brokerages and dozens of listing agents for allegedly engaging in discriminatory advertising practices, according to court documents.
The lawsuits allege realtor associates working for the defendant brokerages listed rental property advertisements that rejected individuals who receive Section 8 assistance, a federal program which pays landlords the balance of a rent payment that exceeds 30 percent of a renter’s monthly income. The Florida Realtors Association sent out an urgent legal alert to its membership to remind them that discriminating against Section 8 tenants violates Miami-Dade and Broward laws.