Moskovits, Lichtenstein not out of Williamsburg Hotel mess

Lawsuits continue to pile up against Brooklyn developers Toby Moskovits and Michael Lichtenstein.

Moskovits and Lichtenstein are facing a new suit from their former lender, Benefit Street Partners, just a month after their marquee asset — The Williamsburg Hotel — sold in a bankruptcy auction for $96 million to Quadrum Global.

Benefit Street claims Moskovits and Lichtenstein still owe money on its loan for the hotel, even after the sale. The lender says the remaining debt, including default interest, is $29 million.

Benefit Street further alleges Moskovits and Lichtenstein violated their loan agreement, which the borrowers guaranteed, by putting the project into bankruptcy in White Plains in 2021. The bankruptcy filing was a “bad boy” action, making the loan full-recourse, according to the lender.

“New York real estate and legal circles have since come to recognize Moskovits and Lichtenstein as grifters,” Benefit Street’s attorney alleged in the lawsuit.

Moskovits and Lichtenstein did not return a request for comment and have not filed a response in court. Benefit Street declined to comment.

The lawsuit spelled out Moskovits and Lichtenstein’s history of legal troubles, counting 30 lawsuits in which the developers were involved in New York state court over the past few years. 

“A sampling of just some headlines in leading real estate journal The Real Deal summarizes the financial ruin Moskovits and Lichtenstein have visited on their unsuspecting victims,” the lawsuit stated.

The lawsuit pointed to the following TRD headlines: Lawsuit: Toby Moskovits and Michael Lichtenstein owe investor $3 million; Judge: Moskovits and Lichtenstein can’t be trusted with Williamsburg Hotel; Moskovits and Lichtenstein lose another Williamsburg property to bankruptcy. 

Over the years, Moskovits and Lichtenstein blamed their lenders, including Benefit Street and Fortress Investment Group, for their troubles. They previously claimed that Benefit Street was attempting to steal their properties.

“I guess Fortress and Benefit Street are in a competition on who is the biggest asshole lender in New York City, so I think Benefit Street might even take — might win that one, but we’ll see,” said Lichtenstein in one deposition.

The bankruptcy court appointed an examiner to determine the whereabouts of the debtor’s money.

After analyzing 50 bank accounts, conducting 11 interviews and reviewing over 10,000 pages of documents, the examiner concluded, “The investigation uncovered evidence of a complex scheme to divert and siphon substantial amounts of money.”

Bankruptcy Judge Robert Drain ultimately appointed a trustee to oversee the hotel and said Moskovits and Lichtenstein could no longer be trusted to “deal like fiduciaries.”

“The record…shows a series of serious and I believe willful failures to disclose and appropriation of assets,” Drain, who has since retired, said at a hearing. “Some of those actions also appear to me to rise to the level of fraud.”