Core Club’s Fraud Claims Against Michael Shvo Dismissed

Members-only New York social club Core accused the embattled developer Michael Shvo of fraud. But it couldn’t convince the court.

A New York judge dismissed several of Core Club’s legal complaints against the developer, including accusations of fraud.

It’s a win for Shvo, whom Core Club sued in 2024 after a partnership between the two parties deteriorated. Despite many of the claims being dismissed, a judge let some of Core’s legal complaints survive, including accusations that Shvo had unjustly enriched himself by using the club’s facilities.

Core Club, owned by spouses Jennie and Dangene Enterprise, has circled the real estate industry for years. It has counted some notable real estate figures among its members, including RFR’s Aby Rosen and Blackstone’s Stephen Schwarzman, prompting the New York Times to dub the club “portals to power.”

The case stems from a 2022 agreement between the parties. Shvo had approached the Enterprises with a promise to develop three new Core Club locations, in New York, San Francisco and Milan, investing about $100 million. This would replace Core’s single location in RFR’s 66 East 55th Street. Core Club and Shvo signed an option agreement and a promissory note for $1 million that Shvo loaned Core.

Then things fell apart.

“Shvo reneged on his commitment to fund the Milan club,” Judge Andrea Masley wrote in her order on the motion. “Similarly, Shvo failed to deliver the San Francisco club, despite publicly

advertising the opening of the club in the summer of 2024.” The New York club opened in 2024, but was plagued by delays and shoddy construction, the plaintiffs said.

Core Club accused Shvo of a scheme to wrest ownership of the club away from the Enterprises using fraud. They said he never intended to spend $100 million to expand Core Club.

However, the judge said that even if Shvo wasn’t committed to keeping his promise, that doesn’t meet the legal standard for fraud. Fraud means misrepresenting material facts in the present, not hopes for the future. Furthermore, the judge said the Enterprises failed to show they did any work to try to verify Shvo’s claims.

The judge also tossed out Core Club’s complaints of breach of contract, breach of fiduciary duties, negligent misrepresentation, coercion and usury. She similarly rejected attempts by Core to bring down the cost of its New York lease in Shvo’s 711 Fifth Avenue.

However, several claims survived and will proceed through litigation, including claims that Shvo enriched himself by using Core Club facilities and that the defendants breached an agreement about plans to construct a new New York Core Club. The plaintiffs said Shvo has racked up an $80,000 tab at Core Club’s New York location, including by holding a children’s birthday party, an event for his child’s school, and weekly religious group meetings.

Shvo’s attorneys counted the judge’s decision as a win.

“The core of their case was always the meritless fraud claims that were dismissed and the rest of their case is just as weak,” Bradley Bobroff, a Proskauer Rose attorney representing Shvo, said in a statement.

An attorney for Core Club said the judge’s decision addressed a complaint that was submitted by a previous, and terminated, legal team for the plaintiffs. Core Club has filed another complaint, this one accusing Shvo and partners of racketeering. The judge has so far not granted leave for Core Club’s attorneys to file that complaint.

“That proposed amended complaint alleges a corrupt pattern of fraud and abuse that caused extraordinary harm to our clients,” Marc Kasowitz, an attorney for Core with Kasowitz LLP, said in a statement. “The truth will come out in Court, and CORE will prevail.”

Recently released emails between the Enterprises and disgraced financier Jeffrey Epstein illuminate the financial challenges Core has faced since its opening in 2005. In 2014, the private club asked its founding members to cancel their promissory notes in the hopes of securing a debt restructuring opportunity. A few years later, the Enterprises pursued a partnership with investor Nathan Myhrvold, who was referred to them by Epstein. That pursuit also fell through.

The emails also revealed that the Enterprises maintained a warm and effusive relationship with Epstein, even after he was accused of sexually abusing dozens of children.