Elite social club sues Shvo for $600M, alleging failed projects

Case involves high-profile developments in NYC, San Francisco, Milan

Core Club Sues Michael Shvo for $600M Alleging Fraud
Jennie Enterprise and Michael Shvo with the Transamerica Pyramid in San Francisco, 711 Fifth Avenue and Core Club's would-be Milan location at Corso Giacomo Matteotti, 14 (Core Club/Instagram, Shvo, Google Maps, Getty)

The owners of an elite, members-only club sued developer Michael Shvo for allegedly overpromising and underdelivering on developing high-profile club locations in New York City, San Francisco and Milan.

Core Club, founded in 2005 by Jennie Enterprise, accused Shvo of fraud and demanded he and his partners reduce the club’s Manhattan rent, rescind its lease at Shvo’s Transamerica Pyramid and pay $600 million in damages.

Enterprise began a business partnership with Shvo in 2020, according to the lawsuit, and her club inked a 20-year lease in 2021 for 60,000 square feet at Shvo’s 711 Fifth Avenue, once known as the Coca-Cola Building.

Shvo allegedly promised to invest $100 million to build out the New York location and develop locations at Shvo’s Transamerica Pyramid and in Milan, for a 50 percent stake in Core Club.

Enterprise and her various Core groups claimed they were misled by Shvo, not only in his promises of investment and turnkey clubs, but about the ownership of the New York and San Francisco buildings. According to the lawsuit, Shvo said he had equity investments in 711 Fifth Avenue and the Transamerica building but in fact was “merely the property manager.”

Shvo acquired the buildings with investment partners Bayerische Versorgungskammer, Germany’s largest pension fund, and Deutsche Finance Group, both of which are named as defendants in the lawsuit.

The suit alleges that Shvo lured Core Club into unfair loan terms and leases in order to enhance the value of his properties and attract other high-profile tenants.

Shvo’s attorney denied the lawsuit’s version of events and characterized it as a pressure tactic.

“The lawsuit filed today is a desperate attempt to bail out the owners of Core Club from fulfilling the very clear obligations they committed to in a series of binding, written agreements,” said the lawyer, Morris Missry of Wachtel Missry, in a statement. “We will not be threatened or pressured into providing rent reductions or other undeserved concessions and will aggressively defend this lawsuit.”

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The filing comes just weeks after Shvo sued the club, alleging that it defaulted on a $1 million loan to build out the three club locations.

When Core Club signed on with Shvo, its lawsuit claims, he “painted a picture” of turnkey clubs and extensive funding, but the 711 Fifth Avenue club opening was fraught with delays, mismanagement and poor craftsmanship. 

The lawsuit also complains that Shvo used that club “as a de facto personal office to host meetings and events for business associates and friends.” Shvo allegedly racked up an $80,000 tab at Core Club’s restaurant and event spaces for events for the Ramaz School, which his child attends, as well as a child’s birthday party and weekly religious group meetings.

“Not only has Shvo not settled his bill,” the lawsuit stated, “but he has also refused to pay any gratuities to Core’s hardworking staff.”

Core Club’s expected tenancy at the Transamerica Pyramid was announced in 2021 and its opening was publicized as recently as this month in the San Francisco Chronicle. But the lawsuit says “there is no realistic prospect” of the 45,000-square-foot space opening this year or in the foreseeable future.

The future of the location in Milan, which Enterprise’s lawyers described as a cornerstone of the deal with Shvo, is also unclear.

Enterprise’s lawyer could not be reached for comment.

The case comes at a bad time for Shvo. On Wednesday his former partner, Turkish businessman Serdar Bilgili, continued their feud with a new lawsuit over ownership of a Manhattan condo project. Earlier this month the Wall Street Journal published an investigation into Shvo’s precarious real estate portfolio, as did Business Insider.

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