Inside Developer Michael Stern, Gianluca Vacchi’s Dispute

A partnership between developer Michael Stern and Italian investor and entrepreneur Gianluca Vacchi is imploding, newly filed court records show.

Stern, founder and CEO of JDS Development Group, teamed up with Vacchi in 2024. They formed a joint venture to invest in a $4 billion pipeline of new developments that included Mercedes-Benz Places Miami, the Dolce & Gabbana-branded 888 Brickell, the 1250 West Avenue project in Miami Beach, and a planned buyout Casablanca condo-hotel, also in Miami Beach.

Of those, only two are still owned by Stern: Mercedes-Benz Places and 888 Brickell. Both are facing separate lawsuits, including a foreclosure.

Vacchi first sued Stern and related LLCs in December, alleging he orchestrated a “deliberated and calculated fraud” over a $2.5 million investment in the Casablanca property.

In a new lawsuit filed last week, Vacchi sued Stern and companies affiliated with the Casablanca LLC, JDS and its affiliates, 888 Brickell, 1250 West Avenue, and other LLCs. Vacchi and four of his companies allege that Stern violated state law and defrauded Vacchi into investing at least $60 million into two developments in Miami.

Vacchi accuses Stern of running a Ponzi scheme. Vacchi alleges that Stern misrepresented the state of the projects, promising to use Vacchi’s investment in one development but instead diverting them to another. He also accuses Stern of violating a settlement agreement they reached this year.

Stern, in a separate lawsuit obtained by The Real Deal, alleges that Vacchi’s original complaint is “not only a fraud” but also “an abuse of the legal system” that was filed “for the sole purpose of maliciously creating reputational destruction” and to extract a settlement from Stern. It’s unclear whether the lawsuit has been filed.

Stern and LLCs affiliated with him allege that Vacchi “repeatedly failed to meet his capital obligations because of an apparent lack of liquidity relative to his financial obligations, a complete and utter lack of any business experience of any kind, and a chaotic and disorganized structure beset by a series of advisors primarily motivated by their own grift,” according to the complaint. Stern alleges that Vacchi’s initial lawsuit and the disclosure of false and defamatory allegations resulted in damages of at least $500 million, in part tied to it killing the Casablanca deal, as well as reputational damage.

Stern also alleges that Vacchi failed to disclose KYC and compliance risks prior to teaming up, including a prior criminal conviction in Italy.

Jason Giller, an attorney for Vacchi, declined to comment on the complaint and said in a statement that Vacchi’s pleadings “speak for themselves.”

Vacchi alleges that Stern convinced him, in 2024, to invest $25 million in the Dolce & Gabbana project, another $30 million in the Mercedes-Benz project and $2.5 million in the Casablanca proposal. Vacchi said he made another $5 million investment into Mercedes-Benz to complete the sales center on time, help pay for opening events and to stabilize the project for a few months.

He claims that under the settlement agreement, Stern agreed to pay Vacchi’s entities $42.5 million, guaranteed by JDS Development Group. Vacchi wants Stern removed from the Mercedes-Benz project.

The Miami projects

Last year, Stern secured approval for an upzoning of the property that will allow for a taller and slimmer tower on the bayfront site at 1250 West Avenue in Miami Beach. But Stern and JDS are no longer affiliated with the project. Ownership of the 1250 West Avenue project was transferred to developer David Martin of Terra, and Stern was replaced by Martin in a consent to change control granted by the city, which was recorded earlier this year. That development is planned for the site next to Monad Terrace, a luxury condo tower that Stern/JDS completed in 2021.

Mercedes-Benz Places

The stalled 791-unit, two-tower development that is partially built in Brickell, next to Southside Park, has been wrapped up in a foreclosure lawsuit brought by the developer’s new lender, Cottonwood Management. Cottonwood alleged the developer failed to repay the loan by the January 2025 maturity date. The JDS affiliate countersued, accusing Cottonwood of underhandedly acquiring the note while JDS was in the market for a construction loan.

An affiliate of JDS is working to rescue the project as it nears a deal to bring on Jeff Soffer’s Fontainebleau Development and secure an over $1 billion loan package that includes a C-PACE component, sources previously told TRD. Byron Trott and Gregg Lemkau’s firm, BDT & MSD Partners, and Blackstone are the lead lenders. That deal has not yet closed.

Vacchi alleges that Stern violated their agreement when he negotiated with Soffer’s firm, BDT & MSD and Blackstone without introducing Vacchi to them and without obtaining Vacchi’s consent to partner with Fontainebleau.

Mercedes-Benz Places, the first residential project for the German automaker, is valued at more than $2 billion once completed, according to a court filing. The 67-story development is planned to have 130,000 square feet of amenities and hospitality space, 200,000 square feet of office, health and wellness space, a 174-key hotel, retail and parking.

888 Brickell

The developer is also reportedly in the process of securing new debt for the 250-unit Dolce & Gabbana-branded condo-hotel project planned for 888 Brickell Avenue, a source previously told TRD.

In May, One Sotheby’s International Realty, the brokerage firm hired to lead sales and marketing of the project, sued the JDS affiliate behind that tower, seeking more than $500,000 in allegedly unpaid commissions, expense reimbursements, marketing fees and other costs the brokerage has incurred while selling the project, according to the lawsuit.