Two key parties in Michael Shvo’s no good, very bad year are back with combined claims against the developer.
A new lawsuit accuses Shvo, who made a dramatic exit from a trophy Miami project and fended off lawsuits at a number of his developments, of being engaged in a yearslong Racketeer Influenced and Corrupt Organizations (RICO) conspiracy.
The lawsuit was filed by some familiar foes for Shvo, including the Core Club and its founder and CEO Jennie Enterprise, and two disgruntled residents at Shvo’s troubled Mandarin Oriental condo project at 685 Fifth Avenue in Manhattan.
The parties combined their claims in a lawsuit filed this week, which alleges that Shvo, along with a German government-backed pension fund, lured “investors, condo purchasers, tenants, and business partners into multi-million dollar transactions, the proceeds of which were diverted to enrich Shvo and his associates, and to fund their lavish lifestyles.”
The suit details the formation of a partnership, called BSD, between Shvo, the pension fund BVK and the Deutsche Finance Group, who are both also named as defendants, and Serdar Bilgili’s BLG Capital, which it claims left the venture after becoming suspicious of “millions of dollars in improper expenses” charged by the developer.
The complaint claims that Shvo charged personal expenses like private jet travel, a $30,000-per-month apartment and work done on his private yacht to the venture, which was responsible for developing projects around New York City and San Francisco.
The filing comes months after a a New York state judge decided the owners of Core Club owe Shvo nearly $1 million over a 2022 loan.
A lawyer for Shvo in a statement dismissed the suit as a “desperate attempt” by the Core owners “frantically trying to avoid paying more than $3.5 million in owed rent” and claimed a “third-party audit” had already probed their claims about expenses.
A partnership gone wrong
The complaint expands on the soured relationship between Core Club and its co-founder and CEO, Jennie Enterprise.
Enterprise agreed to move the club’s New York City headquarters to Shvo’s building at 711 Fifth Avenue, sign a lease at Shvo’s Transamerica Building and execute a promissory note and option agreement that could give Shvo a 50 percent stake in Core following being approached by Shvo in early 2020.
During this period, Enterprise was also pursuing a Milan expansion of the club, according to the complaint. Shvo said that he would fund all aspects of a three-club deal in New York, San Francisco and Milan and presented Core with a 10-year expansion strategy forecasting revenues of $159 million by 2030, according to the complaint. Shvo allegedly said he would contribute $100 million in capital to building out the clubs.
The lawsuit claims that despite Shvo assuring Enterprise that their interests were aligned, Shvo was set to receive a $27 million “promote” fee from the BSD Partnership contingent on Core signing a lease in New York.
In 2021, Core signed leases at Shvo’s New York and San Francisco properties and in 2022, took out a $1 million loan with an option for an entity tied to Shvo to purchase half of Core’s membership interests.
The complaint claims that Shvo had never intended to deliver the clubs as promised in San Francisco and Milan, with the team considering them “fake” projects and that the headquarters in New York was turned over late and “in an unfinished and highly defective condition.”
Core claims that a club member was trapped in an elevator and another was injured when a wooden beam collapsed.
The complaint also claims that Shvo took out complimentary memberships — which cost $100,000 — for himself, his wife, his attorney Morris Missry and his attorney’s wife, among others.
It also claims that Shvo forced Core to hold several private functions in the space, including the Commercial Observer Gala Reception on Sept. 19, 2023, and a dinner for his daughter’s Orthodox school community two months later. Core claims Shvo held 12 different Torah study and dinner events in 2024.
Shvo was also verbally abusive to club employees, calling an employee a “fucking idiot” when a server at the club’s restaurant led him to the wrong table, according to the lawsuit.
Because of the unexpected expenses incurred for Core as a result of Shvo’s alleged behavior, the club was forced to draw on its credit line with Shvo, triggering his ability to purchase 50 percent of the club’s membership interests, according to the lawsuit. Shvo has proposed a closing date of Nov. 21, the complaint states.
Disgruntled buyers
The other plaintiffs in the complaint, John and Diane Goodman, repeated claims made in state court that they were misled by Shvo on their way to purchase a unit at the Mandarin Oriental for $6.1 million.
The Goodmans filed a lawsuit last March claiming that Shvo failed to deliver on some of the unit’s finishing touches and refused to do so once alerted. A judge dismissed the claims against Shvo as an individual, but allowed the claims against the development entity to continue.
The Goodmans followed up with another lawsuit in July, claiming that the developers of the Mandarin Oriental delivered unfinished amenities and a rooftop “transformed into a wasteland of dead foliage and an algae-infested pool.”
Shvo was reported in September to be considering a bulk sale at the development, which had sold fewer than a third of its 65 units four years after launching. A spokesperson for the developer confirmed the potential bulk sale, a year after the project secured a $120 million inventory loan with only 15 units sold.
In the most recent complaint, the Goodmans claimed their unit was burglarized twice and that the condo building was infested with roaches traveling through the pipes of vacant units.
The Goodmans also claim that Shvo used the facilities at the Mandarin Oriental for personal reasons, including hosting a “loud, private late-night concert by Greek singer Antonis Remos” in the restaurant in June 2024.
Shvo’s attorneys responded to the July lawsuit by calling for its dismissal, and dismissed it as “a kitchen sink of frivolous claims” and “a public hit job.”