Dubai-based consultants allegedly scared off Skyrise Miami’s Middle East investors: lawsuit
Tower’s lender accuses Step America of spreading false info that project was dead; Step America says changes to financial structure of deal caused investors to pull out
UPDATED April 23, 3 p.m.: Skyrise Miami lost a slate of Middle East investors after a pair of Dubai-based lawyers allegedly frightened them with false claims that the proposed observation tower in downtown Miami would not get built, according to a recently filed lawsuit in Miami-Dade Circuit Court.
Skyrise Miami Tower Investors LLC, a project lender incorporated in Delaware, claims it paid $720,000 in commissions to Step America and its founders, Shariar Zamanian and Preeya Malik, to secure financing agreements with 14 Middle East investors, only to have the two attorneys sabotage most of the deals.
Located on waterfront land adjacent to Bayside Marketplace, Skyrise Miami is a 1,000-foot, $430 million project currently under construction. It’s the brainchild of Miami developer Jeffrey Berkowitz, who is relying on the controversial EB-5 visa program to fund more than half of the construction cost with foreign investors’ monies. The program is a vehicle that encourages foreign investment by granting permanent U.S. residency to investors (as well as their immediate family members) who create at least 10 domestic jobs and contribute at least $500,000 to $1 million in a U.S. business venture. Over the years, the program has gotten a bad rap due to instances of fraud and abuse by developers and investment fund managers.
Skyrise Miami Tower Investors entered into an agreement with Step America in 2014 to pay the firm a commission fee of $45,000 for each investor that successfully contributed $500,000 to the project. Step America would also get an additional $22,500 annually for five years for every investor the firm successfully recruited. Step America had exclusive rights to market Skyrise Miami in Dubai, Abu Dhabi and Iran, the complaint states.
Zamanian and Malik hooked 14 investors who gave $500,000, each, for a total of $7 million and two more that ultimately did not make investments. Skyrise Miami Investors paid commissions for all 16, resulting in Step America collecting $720,000 in fees, the suit states.
In October 2018, Skyrise Miami Tower Investors notified its foreign investors that due to a change in market conditions there would be a change in the financing structure and gave them the option to back out of the project and receive refunds, according to the lawsuit.
“Skyrise did not anticipate that the investors would withdraw,” the complaint states. “To the surprise of Skyrise, most of the EB-5 investors associated with Step America indicated their desire to withdraw.”
Five months later, the Skyrise lender found out that Zamanian and Malik “falsely advised investors” that the project was not proceeding as planned, that they would not get their green cards, that they would not get repaid and that all the EB-5 investors involved in Skyrise had withdrawn their commitments, according to the suit.
“None of these statements were true,” the complaint states. “The Skyrise project has been under construction for some time, more than $41 million has been expended, and enough jobs have already been created to satisfy all exiting EB-5 investors’ job requirements.”
The lawsuit also notes the project has received an additional $40 million in equity capital and secured “a nationally recognized and respected hospitality company as an investment-management partner.”
Julie Feigeles, the attorney for Skyrise Miami Tower Investors, declined comment.
Malik claims that Skyrise Miami principals, including partner and Executive Vice President Hank Adorno, told Middle Eastern investors that the project would be completed in June 2017. “This deadline was missed,” she said. Additionally, part of the material change in the financial structure of the project placed the Middle East investors behind senior debt after large equity investors were added to Skyrise Miami, Malik said.
Malik said her company never “frightened off” or “misled” the investors, she said, and Skyrise Miami and Adorno owe Step America “a significant sum of money, which remains unpaid as of today.”