Arbitrator Finds “Self-Dealing” NYC Developer Owes $22M

Developer Mitchel Maidman, who built the 32‑story tower at 556 Third Avenue in New York’s Murray Hill neighborhood, has been ordered to pay a hefty penalty after he was accused of using the property to enrich himself.

Maidman’s former business partner, Israeli developer Ofer Resles, alleged Maidman diverted proceeds from the sale of the building’s penthouses into entities he controlled, despite a 50-50 ownership agreement, Crain’s New York Business reported.

An arbitrator last month concluded that Maidman’s conduct “smack of self‑dealing” and described his testimony as contradictory and lacking candor. The arbitrator ordered Maidman to pay $22 million in damages.

Resles’ attorney, David Feuerstein, characterized the conduct as “tantamount to theft” and has now filed a lawsuit in New York County Supreme Court to enforce the award.

An attorney for Maidman declined to comment to Crain’s.

Court records indicate that Maidman transferred seven penthouses to an entity that included his family but excluded Resles, took out loans secured by those units and kept the proceeds. He also arranged for the jointly owned company to issue more than $20 million in interest‑free loans to Maidman‑controlled entities, while simultaneously collecting an 8.7 percent preferred return for managing the property.

Resles’ firm, Oxford Capital, said the maneuvers drained so much cash from the project that it never made a single dollar in distributions.

The ruling marks a significant setback for Maidman, whose family has been active in New York real estate since 1933 and owns about 1,000 rental units through its Townhouse Management Company, where Mitchel Maidman serves as CEO. Holdings include a Chelsea hotel and Upper East Side townhouses.

The family previously controlled a long‑vacant West 42nd Street site before the Durst Organization ultimately took over and developed the Bank of America Tower.

Murray Hill, on Manhattan’s East Side, has become a hotbed for residential development, including a 157-unit project from Brause Realty and a 137-unit luxury condo development from Continuum Company.

– Joel Russell