The spirit of Adam Hochfelder is still haunting Merchants Hospitality.
The company’s owners, Abraham Merchant and Richard Cohn, were sued last week by George Comfort & Sons over an investment that the controversial Hochfelder allegedly helped solicit eight years ago.
But instead of paying a nearly $2 million judgment levied against it in 2020, Merchants has begun shifting company assets to shield them from collection, the plaintiffs claim.
“Assets and revenue sources were diverted to Hospitality GS [created shortly before the judgment] and other entities and GS became a façade of Merchants,” the complaint reads.
GS has no known website or social media accounts, the lawsuit notes, “which is unusual for a hospitality business.” Yet it has received six-figure sums from Merchants while maintaining bank accounts for payroll and business operations, the suit claims.
Abraham Merchant and Cohn each own 50 percent of the new company, which mirrors their ownership stakes in Merchants Hospitality, the lawsuit also points out. Comfort & Sons alleges that only $25,000 of the judgment has been satisfied.
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The dispute between Merchants and Comfort & Sons stems from a small investment the latter made in 2014, when Merchants hatched a plan to enter the residential market with an ambitious, ground-up project on the Upper East Side.
Hochfelder was allegedly instrumental in securing the investment, which Comfort & Sons made in 2014, two years after Hochfelder was released from prison. He had been hired by Merchants following a two-year sentence for defrauding investors of $18 million.
Merchants envisioned a $250 million residential building at the corner of 93rd Street and Second Avenue. But completion of the project, dubbed the Amalfi, proved as distant as the Italian coast. The joint venture in which Comfort & Sons invested was never formed, the company alleges, and the land deal never took place, city records show.
Merchants had a falling out with Hochfelder in 2020, accusing him of embezzlement and defrauding investors, before attempting to settle the dispute. The case has since been discontinued. The company did not respond to a request for comment.