Hell in Hell’s Kitchen: Truth Social investor, gym mogul settle dispute

A saga of alleged fraud and luxury condos

Patrick Walsh and TMPL gym founder David Barton (JoJosh3131, CC BY-SA 4.0, via Wikimedia Commons, GymuNYC, Google Maps)
Patrick Walsh and TMPL gym founder David Barton (JoJosh3131, CC BY-SA 4.0, via Wikimedia Commons, GymuNYC, Google Maps)

A lawsuit filed by gym tycoon David Barton against Truth Social backer Patrick Walsh has been settled for an undisclosed amount, after more than three years of litigation.

The lawsuit, filed by TMPL gym founder Barton against two entities owned by Walsh, TSI Hell’s Kitchen and Empire Hell’s Kitchen TMPL, had escalated to become a story including allegations of fraud, theft and millions in unpaid New York City taxes.

Walsh, whose landlord at 355 West 49th Street began eviction proceedings against his gym earlier this year, was accused of misusing funds to pay for a lavish lifestyle and to invest $6 million in former President Donald Trump’s Truth Social platform.

“Mr. Walsh lives large and continues to buy assets…by siphoning off profits from EHKT and other entities he controls,” said Barton’s attorney, Thomas Shanahan, in an email this month seeking a temporary restraining order against an entity owned by Walsh. 

Walsh has denied wrongdoing, stating in an affidavit last week that Shanahan “engages in rank speculation and conjecture and makes vicious personal attacks.”

The saga dates back to 2017, when Barton sold the West 49th Street TMPL gym business to Walsh’s entity TSI Hell’s Kitchen. The building owner, SL Green, allowed the sale under certain conditions, including that it would retain $250,000 in escrow until Barton obtained a temporary certificate of occupancy.

But the owner allegedly kept the money even after Barton got the TCO, claiming that TSI Hell’s Kitchen, the entity Walsh used to buy the gym, hadn’t paid its rent. SL Green said it would keep the money until the lease was in good standing.

But TSI apparently didn’t do that. By 2020, TSI allegedly owed $1.4 million in rent and other charges. That number swelled to nearly $2 million by February 2021, according to a filing. 

Barton alleged that TSI’s outstanding debt caused him to lose his $250,000, locked up in escrow by SL Green.

In 2020, a judge issued a temporary restraining order against TSI, preventing it from transferring assets outside of the normal course of business. That was lifted in 2021, when Judge Arthur Engoron took over the case. (Engoron is also overseeing Trump’s civil fraud case.)

Three days later, court records show, assets were indeed transferred out of TSI and into a new entity called Empire Hell’s Kitchen TMPL, which at the time was not registered to do business in New York. When Engoron ordered TSI to pay Barton his $250,000, attorneys argued the entity didn’t have any assets. 

Engoron took issue with the maneuver. “I think this was a clear fraudulent transfer,” the judge said, according to a court transcript from May. “What was transferred? The lease, the membership, the equipment, what I would call the business, in layperson’s terms.”

A second judgment was issued earlier this year against Empire Hell’s Kitchen TMPL, this time with interest added. Shanahan sought to tack on $350,000 for fees but was denied by the court. He appealed, and Walsh appealed Engoron’s decision against Empire Hell’s Kitchen TMPL.

Sign Up for the undefined Newsletter

At that point, Shanahan submitted information showing that Walsh was flush in cash — just not putting it towards the rent. He filed evidence of Walsh’s October purchase of a $4.4 million Jane Street condominium and the purchase of three Palm Beach homes in 2021 and 2022 for roughly $3 million. Walsh also invested $6 million in Truth Social, according to SEC documents filed as evidence. Shanahan also submitted documents from a bankruptcy suit in Florida, alleging that Walsh owed $24 million in taxes to New York City.

Walsh is also facing two sexual misconduct lawsuits filed by former fitness trainers at TMPL, according to The Daily Beast, which Shanahan was concerned could force the gym out of business before a settlement could be reached. 

Walsh denied the sexual misconduct allegations in a statement, calling them “evil-spirited lies intended to defame” him. On Tuesday, the defendants’ attorneys argued in the TMPL case hearing that many of Shanahan’s allegations are irrelevant to the TMPL case and are merely an attempt to “besmirch” Walsh’s reputation. 

Walsh in his affidavit said Shanahan’s mentions of Trump were intended to “denigrate me in the eyes of the court” because Trump “is currently involved in litigation before this Court and has been antagonistic to the Court.”

“I do not know Mr. Trump personally,” he stated.

The TMPL case isn’t the first time Walsh has had legal issues with gyms he owns. Walsh also owned the parent company of New York Sports Clubs, which in 2020 was sued by Attorney General Letitia James for illegally charging members during the pandemic and engaging in “a variety of illegal and fraudulent practices” regarding membership cancellation during the pandemic. TSI Holdings declared bankruptcy and sold its NYSC assets as part of a settlement that also required it to post a bond.

TMPL’s landlord at 355 West 49th Street began eviction proceedings against the gym in June, according to TMPL’s filings seeking an injunction. According to SL Green, TMPL allegedly owed more than $400,000 in rent and water charges by September. TMPL won its injunction, and the eviction was stayed on the condition that TMPL pay rent and post a $50,000 bond. 

“We don’t know where the money’s going,” Shanahan said, before the settlement.

In an affidavit filed last week, Walsh denied that the TMPL gym was having financial difficulties, pointing to the bonds his companies have posted. He also said the gym’s unpaid rent was due to the landlord’s failure to provide adequate utilities. 

Last Tuesday, Engoron, who earlier this month imposed a second temporary restraining order, this time on Empire Hell’s Kitchen TMPL, encouraged the two sides to settle. “I feel bad for people here,” he said.  

As part of the settlement, Shanahan withdrew some of his statements from the record. He said that he was surprised that a settlement had been reached.

“One component of the settlement was monetary,” he said. “The amount is confidential.”

Read more

NYC Brokerages, REBNY, Hit With Copycat Antitrust Lawsuit
New York
REBNY, 26 NYC resi firms hit with antitrust suit
DivcoWest Sues WeWork for $30 Million in Rent
New York
Landlord goes after WeWork for $30M
Missouri Home Sellers Testify In NAR Antitrust Trial
NAR antitrust trial spotlights Missouri home sellers that started it all
Recommended For You