An investor is suing Fortis Property Group over allegations the developer lied about the value of assets at Olympia Dumbo, its marquee residential project in Brooklyn.
The lawsuit alleges the firm misrepresented the prospective sale prices of a commercial garage and community center attached to the condo and used the false projections to line up investors, according to the complaint filed in New York on Wednesday and first reported by Crain’s New York.
The investor, an LLC that lists an address tied to the Hakimian Organization, also accuses Fortis of “gross mismanagement,” alleging the developer defaulted on its mortgage and allowed condo units to fall into disrepair.
“Fortis executives falsely claimed the project was thriving,” the complaint states. “Unfortunately, these representations were outright fabrications designed to defraud [plaintiffs] into investing with Fortis.”
A spokesperson for Fortis denied the allegation in a statement, calling the complaint “pathetic” and the accusations “baseless and false.”
“Fortis looks forward to achieving a complete vindication in court,” the spokesperson added.
Inside the lawsuit
The complaint hinges on early valuations of the center and garage, which it says Fortis executives estimated at $122 million in 2019, when it pitched the project to the plaintiff. The investor, who paid the developer a combined $5.5 million in two separate deals, claims former CEO Jonathan Landau and president Joel Kestenbaum confirmed that number two years later.
But last January, the investor discovered the developer was attempting to sell the space for a mere $26 million — a “fire sale price,” according to the complaint. The investor claims that when confronted, Fortis chief operating officer Terrence Storey acknowledged that the value presented was “problematic and unrealistic.”
“Fortis flatly acknowledged that it intentionally provided false information to secure Plaintiffs’ investments,” the complaint states.
The lawsuit also alleges Fortis withheld critical financial information, including that it had defaulted on its $284 million loan from G4 Capital in November 2023 and that it failed to fulfill a 2022 capital call for roughly $350,000. The investor claims Fortis only notified plaintiffs about the default in an email last May.
G4 Capital declined to comment on the lawsuit.
“In the end, Fortis was the only party that profited from the Project,” according to the complaint, which claims the developer drained $10 million from the project in trumped-up development and management fees. “All while Plaintiffs suffered the financial consequences of Fortis’s fraud.”
Though Fortis told them construction was complete, the investor alleges condo units were “unfinished, uninhabitable, and filthy” when they toured the building last January. The complaint describes the apartments as “littered with garbage,” broken smoke detectors and uninstalled sinks and electrical outlets.
When asked to turn over documents related to the project, the investor alleges Fortis has repeatedly resisted in what the lawsuit describes as “a deliberate pattern of delay and deception.”
“Fortis has flatly withheld the critical financial records that would expose its misconduct.”
Attorneys for the plaintiffs did not respond to a request for comment. Representatives for Jonathan Landau and the Hakimian Organization also did not respond to requests for comment.
Fortis’ fading ambitions
The lawsuit, which seeks $11 million in damages, adds to the developer’s growing list of legal woes, which before now have been largely aimed at its infamous leaning tower in the Financial District. A judge gave Valley Bank the greenlight to foreclose on 161 Maiden Lane in 2023, following a protracted dispute.
Olympia Dumbo was the bright spot in the developer’s portfolio, as it battled over the Seaport skyscraper and narrowly avoided foreclosure at the former Long Island College Hospital site in Cobble Hill. The developer sold the parcel and another at 350 Hicks to Madison Realty Capital in 2022.
The project at 30 Front Street was on track to be the borough’s most expensive development when sales launched in 2021. One of its penthouses sold for $17.5 million and another was rumored to be under contract with actor Michael B. Jordan.
But four years later, the sail-shaped tower has sold just half of its 76 units, with its pinnacle penthouse still on the market for $19.5 million. It also cycled through three sales teams at Douglas Elliman. Now the firm’s Eklund-Gomes Team is back at the helm alongside the Jessica Peters Team and Sotheby’s International’s Karen and Casey Heyman.
Outside of New York, the developer is also facing foreclosure at one of its office buildings in downtown Boston. One Lincoln Street is headed to auction next month, two years after landing $1 billion in refinancing.
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