NY Wheel investors settle messy legal battle over equity stakes

Terms of the agreement have not been disclosed

Rendering of the New York Wheel (Credit: S9 Architecture/Perkins Eastman)
Rendering of the New York Wheel (Credit: S9 Architecture/Perkins Eastman)

The warring investors in Staten Island’s controversial New York Wheel project have laid down their arms.

A group of the project’s major investors, including the Feil Organization, BLDG Management’s Lloyd Goldman and jeans mogul Joseph Nakash, settled a lawsuit against two minority shareholders, Eric Kaufman and project founder Meir Laufer.

“All investor suits have been settled amicably,” Wheel CEO Rich Marin said in a statement.

Kaufman said he was pleased to have resolved the issues, while Laufer did not immediately respond to a request for comment.

Kaufman, Laufer and the rest of the investors had locked horns over ballooning costs and delays at the wheel project. Wheel Estate LLC, an entity held by Feil, Goldman and Nakash, filed suit against the two men last year in a bid to dilute their stakes in the project, alleging that Kaufman and Laufer hadn’t met capital call requirements.

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But in their responses to the suit, Kaufman and Laufer alleged mismanagement of the project, the cost of which had ballooned to upwards of $500 million.

They claimed the capital calls breached the terms of the project’s operating agreement, and were merely part of an “egregious scheme” to deprive them of their ownership interest. Laufer alleged that he’d been discriminated against because he was Hasidic, and Kaufman alleged massive financial bungling at the project, saying the wheel had no valid business plan in place, despite having secured investments from institutions such as JPMorgan Chase subsidiary Highbridge Capital Management.

Marin objected to that characterization.

“If there was no coherent business plan, do you believe major financial institutions like the Highbridge would have put $195 million of senior debt in?,” he told TRD last year. “How on earth did we close on $476 million in funding without a coherent business plan? We’ve gotten all the major authorities to give us the thumbs up. To me, that speaks for itself.”

Wheel Estate had asked a judge to approve reducing Laufer’s stake to just 11.08 percent and Kaufman’s stake to just 1.08 percent. It wasn’t clear if a new equity arrangement had been agreed upon. Marin declined to address the matter.