The fur is flying again between real estate mogul Aby Rosen and long time investor Harry Lis over whether millions of dollars have been properly invested and accounted for throughout the struggling RFR Realty empire.
Lis, through his Gan Global Investments fund, alleges in a March 6 lawsuit filed in Manhattan Supreme Court that Rosen and partner Michael Fuchs took at least $2.5 million he invested at their 275 Madison Avenue office tower and re-invested them without his permission.
Lis, who filed a similar suit this week regarding the Seagrams Building at 375 Park Avenue, as reported by Law 360, is alleging breach of contract, breach of fiduciary duty and illegal conversion against the two executives.
“Through their domination and control of the 275 Madison Avenue ownership structure, Rosen and Fuchs have taken a series of related and plainly improper actions — all without notice to, much less the consent of, Gan Global — that have significantly damaged the property and their owner,” lawyers for Lis allege in the complaint.
Gan Global alleges that Rosen and Fuchs refinanced the $78 million in debt at 275 Madison without the permission of Lis, adding $20 million to the existing debt at the property. The investment firm then claims that Rosen and Fuchs distributed $5 million of Lis’ investment to different properties within the RFR company, without paying anything to Gan Global or getting its consent.
Gan Global is demanding a full accounting of the expenditures at the property and is demanding the appointment of a receiver at the building.
Rosen and Fuchs filed a countersuit the same day asking the court to declare that their entire real estate portfolio as a single entity for the purposes of distributing investment returns.
“The actions of defendant Lis have created uncertainty in the parties’ contractual and legal relations and will cause substantial financial losses for plaintiff’s Rosen and Fuchs,” lawyers for RFR wrote in their March 6 complaint.
That suit cited a 2011 lawsuit that Lis claimed RFR took proceeds from a partial sale of 400 Park Avenue in Manhattan and reinvested the funds into RFR’s struggling office building portfolio in Stamford, Conn. Rosen and Fuchs also claim that Lis has failed to respond to capital calls they made requesting funds at 345 Park Avenue South, 390 Park, 608 Fifth Avenue and an Israeli holding at 36 Yeffet.
Lis previously filed suit against Rosen and Fuchs over the sale of 451 Lexington Avenue, alleging they spent his $7 million share of the proceeds on other properties that he was not directly involved in.
Rosen and Fuchs did not return calls seeking comment. Janice MacAvoy, attorney for Rosen and Fuchs, declined to comment. Lawyers for Lis declined to comment or were not available for comment.