A fight between a developer and a members-only club has come one step closer to a resolution.
The owners of Core Club owe developer Michael Shvo nearly $1 million, a New York state judge decided this week.
The club took out a $750,000 loan from Shvo in 2022, but defaulted by failing to pay up when its location on Manhattan’s Fifth Avenue opened the next year. Lawyers for Core Club in the suit accused Shvo of a “complex, fraudulent scheme” to gain control of its business. The club intended a larger transaction, claiming Shvo promised to invest $100 million. But Judge Andrea Masley said those defenses did not apply.
The case precedes a suit by a larger group of Core Club owners against Shvo, which is pending in front of the same judge. That case concerns the alleged $100 million promise to build out locations in New York, San Francisco and Milan for a 50 percent stake in Core Club. Shvo misled Core Club leadership into believing he was an owner of 711 Fifth Avenue and San Francisco’s Transamerica Pyramid, when he only managed the properties, the owners claim. The opening at 711 Fifth Avenue was allegedly fraught with delays, mismanagement and poor craftsmanship.
The owners have demanded Shvo and his partners reduce the club’s Manhattan rent, rescind its lease at Shvo’s Transamerica Pyramid and pay $600 million in damages.
“The court’s decision affirms what we have maintained from the beginning: Shvo has acted appropriately, responsibly, and in good faith throughout this process,” Morris Missry, an attorney for Shvo with Wachtel Missry LLP, said in a statement. “We are gratified that the court saw through Core Club’s transparent attempts to discredit SHVO’s reputation and evade their tenant obligations and has ruled in our favor.”
Marc Kasowitz, who is representing Core Club in this case with Kasowitz LLP, hit back at the judge’s decision, saying it represents a very small part of the overall fight between the parties.
“To claim somehow that the judge’s decision exonerates [Shvo’s] fraudulent conduct is completely transparent and meritless,” said Kasowitz. “We respectfully disagree with the decision and will appeal.”
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This story has been updated to include comment from attorneys for Core Club.