WeWork’s first investor, who pledged his stock in the company as collateral on loans, is being accused of short-changing his lenders.
Joel Schreiber, a landlord whose firm Waterbridge Capital owns a vast portfolio of buildings in New York, used his stake in WeWork and properties he owned to back loans totalling almost $3.3 million, which he later defaulted on, according to two lawsuits filed Thursday.
One plaintiff, Vikram Kuriyan, says that he provided Schreiber with five loans totalling $750,000 for real estate and business uses and is yet to receive payment for those loans. The complaint states that Kuriyan agreed to most of the loans with verbal “handshake” agreements, and continued to issue more loans to Schreiber even after he defaulted on earlier loans.
When Kuriyan made a fifth loan of $100,000 to Schreiber in 2016, Schreiber pledged to collateralize that loan and all the prior loans with Schreiber’s “unique” founding stock in WeWork, the complaint states. Schreiber has liquidated some of his WeWork stock, but never to repay his debt, according to the suit.
“Kuriyan considered Schreiber a friend,” the complaint states, “who he believed he could be trusted to honor his word and keep his promises.”
Neal Brickman, an attorney for Kuriyan, said that “it’s not disputed that we lent [Schreiber] this money, and that he promised to repay it.”
In the weeks preceding the lawsuit, Brickman said Schreiber had repaid $145,000 of $350,000 outstanding, but that his client was still seeking $5 million in damages — the amount that Schreiber initially pledged with his WeWork stock.
Brickman is representing another plaintiff in a separate lawsuit, Forefront Income Trust, which issued a $2.5 million loan in 2015 to Schreiber. The loan was backed by multiple properties owned by Schreiber. The complaint alleges that Schreiber has made only partial payments, remains in default and owes $1.4 million in penalties. The firm is seeking $3.1 million in damages.
The lawsuits, which were filed in New York Supreme Court, come as the value of Schreiber’s WeWork stocks has plummeted. The office-space company has undergone a massive correction in its valuation, which has nosedived from $47 billion to less than one-third of that. It faces the prospect of bankruptcy if it does not find more capital soon and is reeling from the tumultuous fallout of a failed push to go public, including the departure of the firm’s CEO Adam Neumann.
In 2010, Schreiber became WeWork’s first investor, when he gave the company $4 million, according to Kuriyan’s lawsuit. That stake was valued as much as $1 billion when WeWork was valued at $47 billion in January, the complaint said.
Schreiber did not respond to a request for comment.
Schreiber has been accused of cheating partners out of deals before. At least a dozen other lawsuits against him accuse him of money owed, with allegations of defaulted loans, unpaid commissions and missing partnership payouts.
Despite his legal troubles, he has continued to access financing. Last year, he and partners RedSky Capital and JZ Capital Partners refinanced their 85,000-square-foot Williamsburg commercial portfolio with a $104 million loan from JPMorgan.