Sam Altman claims developer peddled him $27M “lemon” in San Francisco

For AI pioneer Sam Altman, there’s nothing artificial about the sour taste of paying $27 million for a “lemon” mansion on San Francisco’s Russian Hill.

The head of locally based OpenAI has sued Greg Malin and his Troon Pacific, accusing the developer of a fraudulent scheme to sell the home at 950 Lombard Street “plagued by shoddy construction,” the San Francisco Standard and Forbes reported.

The named plaintiff is 950 Lombard, a limited liability company tied to Altman, which bought the 9,500-square-foot home in March 2020, after shaving $18 million off its $45 million initial asking price.

The six-bedroom, seven-bathroom mansion, designed in 1907 by Willis Polk, was extensively reconstructed by Malin. The city accused him of demolishing parts of the historic house without a permit and Troon paid a $400,000 settlement while admitting no wrongdoing.

Forbes estimates Altman’s worth at $1 billion. His affiliate bought the three-story San Francisco estate with a separate “wellness cottage” and a garage with a “turntable” for cars that zoom out of a “Batcave” tunnel. 

The Russian Hill estate has an interior elevator, garden with century-old olive trees and an infinity-edge pool with sweeping views of the bay.

But the pool sprung a leak, causing a massive flood of the mansion last August, according to the lawsuit.

Other construction defects emerged, including an improperly installed line dumping raw sewage on the property, according to the lawsuit. Then there was the incident in which bags were jammed into a sewer line by a disgruntled, unpaid contractor.

Altman accuses Malin and his firm of being aware of the design and construction flaws, but misrepresenting that they had been addressed in order to sell the home more quickly, according to the lawsuit.

The lawsuit alleges repair costs to the property will exceed $4 million. A permit filed with the city in February lists a $250,000 cost for exploratory demolition work related to a leak investigation.

The Altman affiliate seeks unspecified damages, including interest and attorneys’ fees, according to the Standard. The San Francisco Chronicle first reported the lawsuit but didn’t name the owner.

The complaint comes a week after a judge backed an arbitrator who ruled that Malin and his Troon Pacific must pay more than $50 million in damages and legal fees to investors who had accused him of squandering tens of millions through self-dealing, fraud and embezzlement in a separate development deal to build five spec mansions.

— Dana Bartholomew

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