A former executive at DLP Capital is alleging his experience at the Florida-based investment firm has been anything but what the company preaches in its name – Dream, Live, Prosper.
The ex-employee, Anthony Ruben, alleges in a lawsuit that DLP Capital owner Don Wenner “falsely promised” Ruben shares of DLP’s profits, only to terminate him last November. As part of his employment contract, Ruben earned a $160,000 salary with bonuses tied to acquisitions, sales and debt placement for real estate deals that he and the firm brought in, according to the complaint.
He is seeking about $21.7 million in total damages, said his attorney Josh Migdal, of the Miami law firm Mark Migdal & Hayden.
Ruben, who lives in Miami-Dade County, alleges that he set up the business model of “acquiring under-performing real estate with above market leverage,” repositioning the properties and selling them for profits, only to be fired before collecting on the returns. He was most recently senior managing director of investments.
“When Anthony’s hard work turned into profit for Defendants and their subsidiaries, Anthony was sent packing, thereby swindling Anthony out of his share of the pie,” the lawsuit filed in Miami-Dade Circuit Court alleges.
Ruben sued St. Augustine-based DLP and Wenner earlier this year, alleging breach of contract, breach of the implied covenant of good faith and fair dealing, civil conspiracy, fraudulent inducement, negligent misrepresentation and declaratory judgment. The case is expected to go to trial in March, Migdal said.
A spokesperson for DLP said the firm can’t comment on pending litigation. Attorneys Ari Shapiro and Andrew Schindler of Gordon Rees Scully Mansukhani, who represent DLP, did not respond to a request for comment.
DLP invests, develops and manages multifamily real estate across the Sun Belt, including in Texas, Florida, Georgia, Louisiana and Mississippi. Its umbrella of companies has more than $3 billion of assets under management, with more than 14,000 housing units in the U.S., according to its website. In Houston alone, DLP has made eight acquisitions over the past year, bringing its portfolio in the area to nearly half a billion dollars.
Migdal said more employees of private equity firms are being let go as the market — and deal activity — slow down, and he expects that will increasingly occur.
“In some cases they’re being told they’re not entitled to this guaranteed compensation,” he said. “There will be less money sloshing around, and as a result of it [the firms] will want to keep a larger piece of the pie themselves.”
According to the complaint, Ruben was set to receive 2.5 percent of the acquisition fee on deals DLP acquired or sold, plus another 5 percent on deals he originated; 10 percent of the debt placement fee for any refinancings, and 10 percent of the origination feet on bridge loan deals that Ruben originated; 20 percent of DLP Capital’s “promote” on deals he directly managed, or 5 percent of the “promote” on deals that other directors led. The promote is the share of profits that DLP collects after it pays a return to its investors.
On a $1.2 million promote that DLP collected from the sale of a property DLP acquired in February 2019, Ruben alleges he is entitled to a 20 percent share, or about $240,000. After Ruben sought the compensation in November, he was terminated and offered $250,000 in exchange for a release and a covenant not to sue the firm, the complaint alleges.