Chetrit’s Tides hotel on Ocean Drive faces $45M foreclosure lawsuit

(The Tides South Beach via Facebook)

(The Tides South Beach via Facebook)

Affiliates of the Chetrit Group are facing foreclosure of their long-shuttered hotel, The Tides South Beach.

SHEDDF3 VNB LLC, tied to Safe Harbor Equity, filed a foreclosure lawsuit against CG Tides and other companies linked to the New York-based Chetrit Group over the 11-story hotel at 1220 Ocean Drive, court records show.

Joseph Chetrit, a founding partner of the family owned company, did not immediately respond to a request for comment.

The Tides has been closed since Hurricane Irma hit South Florida in 2017, according to the Miami Herald.

The pandemic has wreaked havoc on the hotel industry nationwide, with some properties opting to stay closed until tourism rebounds.

The complaint alleges that the Chetrit entities and Cuesta Construction failed to satisfy the mortgage, which was due Dec. 20. Chetrit secured a $45 million mortgage for the hotel and an assemblage of properties behind the hotel in 2014. Ocean Bank was the lender. In January, Ocean Bank sold the debt to the Safe Harbor Equity affiliate.

According to the lawsuit, filed in Miami-Dade Circuit Court on Thursday, Chetrit secured more than half a dozen extensions until it allegedly missed its final payment.

In addition to allegedly failing to pay off the loan, the borrowers failed to maintain the minimum level of insurance required under the terms of the mortgage, the lawsuit alleges.

Safe Harbor is seeking the unpaid principal of nearly $42 million, plus interest, attorneys’ fees and other costs. A spokesperson for Safe Harbor said that the borrower has “made indications that [it’s] seeking to refinance the loan” but has not yet done so.

The properties include the Art Deco hotel on Ocean Drive, plus a mixed-use building fronting Collins Avenue that Chetrit redeveloped.

Chetrit has stalled on other projects in South Florida, including a major mixed-use development it planned along the Miami River. That project, valued at $1 billion, was expected to have about 1,700 residential units, 330 hotel rooms, 266,000 square feet of retail and office space, and more than 2,000 parking spaces.

It also owns a project under construction in Collins Park in Miami Beach and the shuttered Miami Beach Resort, an oceanfront hotel at 4833 Collins Avenue.

Henry Torres and Astor Companies allegedly owe broker $1M-plus commission: lawsuit

enry Torres, Roza Radkiewicz and Merrick Manor

Henry Torres, Roza Radkiewicz and Merrick Manor

A former top employee for Coral Gables-based developer Astor Companies is accusing its owner, Henry Torres, of creating a hostile work environment, of falsely accusing her of forging documents, and of not paying her roughly $1.1 million in commissions.

Roza Radkiewicz, who worked six years at Astor until December 2019, recently sued the company, three Astor affiliates, Torres and his wife Nilda Torres in Miami-Dade Circuit Court.

Astor’s attorney, Thomas Ward, said the company does not comment on pending litigation.

Radkiewicz’s lawyer, Michael Schlesinger, said in an emailed statement, “My client seeks to recover the sums that are long overdue for services she successfully rendered for the defendants.”

According to the lawsuit, Radkiewicz rose up in the company from a contracts administrator to in-house sales director and co-owner of Astor Real Estate Group, a brokerage she and Torres set up to sell units at residential projects built by Astor, including Merrick Manor, a 10-story, 227-unit condo building at 301 Altara Avenue in Coral Gables.

“Roza continued to work for the Astor Companies despite not being paid all commission she was owed,” the lawsuit claims. “As a loyal employee, and as a partner of AREG, Roza believed that the Astor Companies would honor its agreements and pay Roza the commissions she was owed.”

In addition to not paying her full commissions, Torres consistently made unilateral decisions to deduct her commissions, such as taking off $52,410 owed to her in order to pay another agent’s draws on Dec. 21, 2017, Radkiweicz alleges in the suit. Astor also allegedly failed to compensate her for unused paid time off, and Torres allegedly often rejected her PTO requests.

According to the lawsuit, Torres and his wife, Nilda, who is not an employee, created an extremely hostile and abusive work environment for Radkieweicz. Torres allegedly verbally abused Radkieweicz loudly in front of co-workers on numerous occasions and made a habit of slinging derogatory and insulting comments at her in front of employees, the lawsuit claims.

“These comments would often leave Roza, a partner of AREG, humiliated in front
of those who worked with and under her,” the lawsuit states. “Even more humiliating for Roza was having to constantly beg Torres to be paid the commissions she rightfully earned, especially as she was producing very well, and more importantly, as she was an equal partner of AREG.”

Things got so bad that Radkiweicz installed a camera on top of her desk to record her meetings and conversations with Torres. On Dec. 6, 2019, Radkiweicz was terminated via a company-wide email from Astor’s human resources manager and Torres’ sister Marlene Torre Muñoz. The lawsuit alleges that the email stated she was terminated for ‘falsification of records.’”

“This termination based upon false premises was clearly taken by Torres in
retaliation against Roza for her raising issues regarding the commission structures,” the lawsuit alleges.

Miami commercial brokerage alleges it was stiffed on medical office commission

ShareMD's John Bardis and Real Capital Partners' Otto Travieso with 7400 Southwest 87th Avenue, Miami (Linkedin, Google Maps)

ShareMD’s John Bardis and Real Capital Partners’ Otto Travieso with 7400 Southwest 87th Avenue, Miami (Linkedin, Google Maps)

A Miami-based commercial real estate brokerage alleges that a buyer and seller cut it out of its commission on a medical office deal.

The brokerage, Real Capital Partners, sued the buyer and seller of the three-building, 10-acre medical office campus at 7400, 7500 and 7800 Southwest 87th Avenue in Miami, according to the lawsuit filed last month in Miami-Dade Circuit Court.

Real Capital wants a “market rate commission” for the sale, and it alleges the sale price came out to more than $50 million, according to the suit. Industrywide, such commissions can be 3 percent, which would amount to 1.5 million, generally split among brokers.

The buyer of the medical campus is ShareMD, an owner and operator of medical coworking space based in Alpharetta, Georgia. ShareMD is led by CEO John Bardis.

SharedMD’s counsel, Danielle Gonzalez of Greenberg Traurig, told The Real Deal the company hasn’t been served with the lawsuit yet. She denied Real Capital’s allegations.

The sellers are affiliated companies of Pan American Cos., led by Carlos C. Lopez-Cantera, the father of Florida’s lieutenant governor from 2014 to 2019 under former Gov. Rick Scott.

Carlos M. Lopez-Cantera, the former lieutenant governor, told The Real Deal he was not involved in the deal. The elder Lopez-Cantera did not return a request for comment.

The price for the deal was not publicly disclosed, as ShareMD bought the medical campus by taking over the legal entities that own the buildings, according to the lawsuit. Those legal entities went from LLCs incorporated in Florida to LLCs incorporated in Delaware with addresses affiliated with ShareMD.

Real Capital, led by principal broker Otto Travieso, alleges that ShareMD bought the buildings for more than $50 million, and that Pan American wanted to sell them for about $60 million. The brokerage was enlisted by ShareMD as early as September 2019 to find South Florida properties for ShareMD to buy, according to the suit.

Real Capital introduced the buyer and seller, got information on the rent rolls and finances from the seller, and delivered a letter of intent from ShareMD to buy the properties, the suit states.

In February, Real Capital agreed to a $300,000 commission from Pan American if the 7400 and 7500 buildings sold for $36 million, according to the suit. A ShareMD representative orally agreed to a 3 percent commission for Real Capital, shared with another broker affiliated with the buyer, if the deal went through, the suit alleges.

Real Capital alleges that in April it asked a Pan American representative if the buyer and seller were under contract, which she denied. The company then learned in news reports that PanAmerica had sold the buildings to ShareMD.

Other recent lawsuits filed over commission disputes include Rose Bauer and her company Rivero Real Estate accusing two other Miami luxury brokers of depriving her of a 5 percent commission, or about $520,000, resulting from the sale of a four-bedroom, 4,904-square-foot unit at the boutique tower Palazzo Della Luna on Fisher Island.

Also, this summer, a broker accused SL Green of shafting her on a $1.4 million commission on a New York deal, and a former agent alleged that Tomer Fridman, Kim Kardashian’s real estate agent of choice, withheld a split commission, according to a lawsuit filed in Los Angeles County Superior Court.

Triple Five, Terra, Starwood sue Miami-Dade property appraiser over tax bills

From left: David Martin, Barry Sternlicht, Don Ghermezian, and Pedro Garcia

From left: David Martin, Barry Sternlicht, Don Ghermezian, and Pedro Garcia

Affiliates of megamall developer Triple Five, along with Terra and Starwood Capital Group are crying foul over property tax bills from Miami-Dade County.

A number of developers and investment groups have recently filed lawsuits against Miami-Dade Property Appraiser Pedro J. Garcia for their tax appraisals for the 2019 tax year. Others include the owners of Aventura ParkSquare, the SunTrust office building on Brickell and the Delano South Beach.

The latest suits come as Miami-Dade issued preliminary taxable values for 2020 earlier this month, based on assessments and market conditions on Jan. 1. More such suits could arise, as businesses continue to lose money and commercial real estate values fall due to impacts of the coronavirus pandemic.

“A litigation showdown is looming between property owners and the government over property taxes,” said attorney Josh Migdal, a partner at the Miami law firm Mark Migdal & Hayden, who handles real estate cases.

“Property owners are faced with budget shortfalls due to decreased revenue,” Migdal added. “However, a decrease in tax revenue collection due to the virus will require the government to maximize its property tax collection to prevent its own budget shortfall.”

Florida is heavily reliant on property taxes since the state does not have a state income tax.

Overall, preliminary property tax values across Miami-Dade County rose in 2020 compared to the previous year. The estimated taxable value for Miami-Dade County properties totaled $324.36 million, up 5.1 percent from 2019, according to the property appraiser’s office.

The biggest increases were in West Miami (14.6 percent); Florida City (13.8 percent); Homestead (10.8 percent); Hialeah and North Miami (each up 10.4 percent). Much of the boost in appraised value is due to new construction, the property appraiser’s report shows.

Yet, the property appraiser’s office said falling prices for condos properties in Bal Harbour, North Bay Village, Key Biscayne and Aventura will have a negative impact on property taxes in 2020. It also says that coronavirus is starting to impact commercial real estate values.

“I will do everything within my authority to assist property owners who are struggling during these unprecedented times,” Garcia said in a statement. “As the real estate market changes during 2020, my office will consider these factors and make the necessary corrections permitted by law.”

The property appraiser’s office declined to comment on the recently filed suits. Among them, Triple Five, the Canadian developer, sued over the assessed value of its property in west Miami-Dade, where the group plans to build American Dream Miami mall.

The developer alleges the property appraiser gave an agricultural designation for 46.5 acres of its property, but denied the agriculture designation for two parcels totaling 38.32 acres. The properties were valued at $5.13 million and at $1.5 million, respectively, which the Triple Five alleges are “amounts in excess of their agricultural values.” The developer alleges the entire property should be classified as agricultural for the 2019 tax year, according to the complaint.

Developer Terra is also suing over a 11,865-square-foot parcel it owns at 2765 South Bayshore Drive in Coconut Grove. The company alleges the property is based on appraisal practices that are not “professionally accepted appraisal practices nor acceptable mass appraisal standards” in Miami-Dade County.

A company tied to Starwood Capital Group sued the property appraiser over a hotel it owns at 6700 Northwest 7th Street near Miami International Airport. The complaint alleges the $20 million assessment does not represent the value of Springhill Suites Miami Downtown/Medical Center because it exceeds the market value.

An affiliate of Integra Investments is suing the appraiser over Aventura ParkSquare, its mixed-use project in Aventura. The development group claims the property appraiser misappraised its property and it should not owe $106,629 in property taxes. The 1.2-million-square-foot project, at 2920 Northeast 207th Street, was completed in 2018. It includes a 131-unit luxury condo building, a 100,000-square-foot Class A office component, 55,000 square feet of ground-floor retail and restaurant space, and a hotel.

Alliance Re Holdings, the investment group that owns the SunTrust building at 777 Brickell Avenue is suing the property appraiser over its appraised value at the office tower. The group, led by Adolfo Geo Filho, who is tied to Brazilian construction company Construtora ARG, alleges it should not owe $2.2 million in property taxes. Alliance Re Holdings alleges the “Property Appraiser’s assessment of the property is arbitrarily based on appraisal practices.” The Filho-led group purchased the SunTrust building for $140 million in February 2015. Tenants include SunTrust, Truluck’s and Quest Workspaces.

The owner of the Delano South Beach is suing the property appraiser’s office over the hotel’s $172,905 tax bill. A company tied to SBE Entertainment Group, led by Sam Nazarian, also alleges the property assessment is arbitrarily based on appraisal practices that are not professionally accepted nor acceptable in Miami-Dade County.

Feds seek to seize 11 properties in Palm Beach County allegedly tied to money laundering

A few of the properties in Palm Beach County (Credit: Google Maps)

A few of the properties in Palm Beach County (Credit: Google Maps)

The federal government is seeking to seize 11 properties in Palm Beach County that were allegedly tied to a money laundering scheme.

Federal prosecutors allege Laura Luz Maria Torres operated businesses in which she sought to defraud the USCIS through the submission of at least 1,000 fraudulent asylum and work permit applications between 2012 and 2020.

Torres used the money from the scheme to buy properties she owned or controlled, according to federal prosecutors. The government is now seeking to seize 10 properties in West Palm Beach, including: 5211 Kim Court, 807 Belvedere Road, 1103 Green Pine Boulevard B-1, 3331 Lake Avenue, 1408 Parterre Drive, 621 Hudson Road, 716 Briggs Street, 911 Green Street, 732 Forest Hill Boulevard, and 4524 Gun Club Road Suite 103.

She also owned and controlled a property in Lake Worth at 1229 Creekside Drive, an affidavit shows.

According to the alleged scheme, undocumented immigrants came to Torres to apply for asylum. Torres would allegedly make up laws that they could apply for, but the immigrants were largely ineligible for asylum since they had been in the U.S. for over a year, according to prosecutors. Torres would tell the clients that she could get them work permits and ultimately legal status. Once the immigrant would pay the fee, Torres would submit an application to the USCIS.

She charged each person between $2,000 and $4,500 in fees to start the process, according to an affidavit. Torres allegedly made up fake narratives on their applications about persecution the clients faced in their home countries such as drug cartels invading their villages and forcing them to sell drugs.

Torres would use local addresses for the immigrants’ applications at properties that she personally owned or controlled, according to prosecutors. When she received the work permits from USCIS she allegedly would demand additional fees and tell the immigrants that they could be deported if they did not pay her more.

Torres has operated her businesses under a variety of names, including El Latino Multiservices, M&K Multiservices, L & L Document Services and AYE Services.

The federal government alleges fraudulent tax filings were filed in the names of the asylum seekers to the U.S. Treasury. The government alleges between 2015 and 2017 more than 202 U.S. Treasury checks, totaling $945,000 were issued, with most going to addresses owned or controlled by Torres.

Torres was arrested June 29 on charges of conspiracy to make false statements, conspiracy to launder money and identity theft. A call to Torres’ attorney was not immediately returned.

The South Florida Business Journal first reported the news.

South Florida is no stranger to money laundering. Federal prosecutors are currently seeking to seize a penthouse in a luxury condo tower in downtown Miami that allegedly was used by the Republic of the Congo’s president’s son to embezzle money.

In 2018, wealthy, politically connected Venezuelans allegedly laundered money out of the country’s state oil company and into assets throughout the world, including real estate assets in South Florida. The assets included a condo in the Porsche Design Tower in Sunny Isles Beach, a condo in Related Group’s Icon Brickell and two homes in Coral Gables’ Cocoplum neighborhood.

Harvey Hernandez’s firm alleges RealPage stole trade secrets, poached employees

Harvey Hernandez and RealPage CEO Steve Winn

Harvey Hernandez and RealPage CEO Steve Winn

Fresh off of a settlement with Airbnb, Miami real estate developer Harvey Hernandez’s NGD Homesharing is suing RealPage, alleging the popular property management software company stole trade secrets and employees from Hernandez’s firm.

NGD Homesharing is suing RealPage, an affiliate and three of Hernandez’s employees for allegedly misappropriating NGD’s proprietary technology and trade secrets to benefit RealPage’s competing business, according to a complaint filed in federal court this week.

The suit alleges the “defendants engaged in a wrongful pattern of conduct and tortuous activity intentionally designed to gut NGD of its good will, proprietary technology, employees and to unlawfully usurp NGD’s business.”

The lawsuit involves a business opportunity gone wrong between NGD Homesharing and Dallas-based RealPage, according to the complaint. A spokesperson from RealPage declined to comment, citing pending litigation.

NGD develops technology for owners and operators of multifamily communities that’s designed to help tenants and owners rent out their apartments or condos on home-sharing platforms such as Airbnb.

The complaint alleges Hernandez and RealPage CEO Stephen Winn began discussing business opportunities for this technology in November at a meeting at RealPage’s office. In order to move forward with NGD, RealPage and its affiliate signed a non disclosure agreement, according to the complaint.

As a result of the agreement, NGD then began sharing confidential information about its technology with RealPage, according to the complaint. An executive from RealPage then sent a memo to Hernandez in December, outlining possibilities for Niido, an NGD platform.

It was at this time that RealPage previewed its “unlawful plan to poach and usurp NGD’s employees, and valuable goodwill and technology,” according to the complaint.

The complaint also alleges that three former employees, Todd Butler, then-NGD’s chief technology officer; Kayla Neller, vice president of program management; and Collin Ross, an independent consultant, “conspired and worked together to attempt to undermine NGD’s business.”

NGD alleges the employees disseminated NGD’s technology, software and confidential financial information, a breach of their contracts.

On February 15, RealPage submitted an offer for NGD’s intellectual property and software for its Niido platform, which NGD declined. RealPage advised it also wanted to extend employment offers to NGD’s key employees and technical team, according to the complaint.

NGD alleges RealPage’s offer “was not made in good faith” and that it was really an attempt by RealPage to create a “false trail of interest in pursuing an acquisition of NGD’s technology, when RealPage’s true motivation was to allegedly steal trade secrets and proprietary information, and to poach the employees who created the technology.”

The former employees are now working for RealPage, according to the suit.

NGD is seeking compensation, temporary and permanent injunctive relief and attorney fees and costs.

The lawsuit was filed just three months after NGD settled litigation with Airbnb relating to a separate partnership to develop and operate Airbnb-branded apartments. Airbnb filed a lawsuit in January, claiming it invested $11 million into the partnership and alleging that Hernandez siphoned off $1 million into another one of his projects and disguised it as a loan. A week later, NGD Homesharing filed a counter suit, alleging that Airbnb engaged in a pattern of bad faith actions.

Hernandez and companies tied to the Miami developer have been tied to even more litigation. Just last month, a lender sued Hernandez after his company allegedly defaulted on a $2 million loan for its downtown Miami condo tower, seeking to foreclose on nine condo units.

And last year, a judge awarded the Brickell House condo association $40.6 million from Hernandez’s development firm a after the robotic car garage technology malfunctioned and left residents without a working garage at the luxury condo tower that Hernandez developed.

Landlords sue Big Retail as missed rent payments pile up

A growing number of retail landlords are suing to get unpaid rent from “credit tenants” like H&M, Urban Outfitters, and Gap that have been battered by the coronavirus. (Getty)

A growing number of retail landlords are suing to get unpaid rent from “credit tenants” like H&M, Urban Outfitters, and Gap that have been battered by the coronavirus. (Getty)

Before the coronavirus, retailers like H&M and Urban Outfitters were the kinds of companies that landlords targeted. Owners laid out pricey incentive packages and heavily courted these “credit-worthy” tenants — the kind with hefty balance sheets and a history of always paying rent.

Now, as a number of those formerly blue-chip businesses have continued to withhold their monthly payments even after stay-at-home orders lifted, a growing number of landlords have been taking them to court.

“I’ve never been in a situation where these so-called credit tenants didn’t pay rent,” said Albert Laboz of United American Land, who sued H&M last week for not paying rent at his Downtown Brooklyn space. “That’s why we pay broker commissions and pay [tenant improvement packages] and do tenant build-outs. The whole practice is set up so we don’t have these issues.”

Landlords also prize credit tenants because their leases allow owners to get favorable financing from lenders. It’s not quite clear how tenants’ decisions to withhold rent will affect their relationships with landlords in the future.

Another H&M landlord — JEMB Realty — recently sued the fast fashion retailer at its Herald Square location in Manhattan. But not all of H&M’s landlords have been so quick to pull the trigger.

H&M has 17 locations in New York City’s five boroughs. Its largest landlord in the city, mall REIT Macerich, has them in three locations in Brooklyn, Queens and Harlem.

Industry experts said large mall operators like Macerich, Westfield and Brookfield — each of which leases to H&M in New York — could be more patient with non-paying tenants than smaller landlords. Those smaller owners rely more directly on rent payments to cover mortgage expenses and taxes. But Macerich has also been scrambling to negotiate leases during the pandemic The Santa Monica, California-based company collected just 26 percent of April rent from tenants across the 47 shopping centers in its portfolio, it has said.

Similarly, landlords leasing out spaces to small businesses may be more flexible with providing deferrals or negotiating other deals with tenants, according to David Wander, bankruptcy partner at Davidoff Hutcher & Citron.

“The legal defenses may apply to someone small because you might be put out of business, you may not have the money,” Wander said. “But if you are a public company and you have sufficient funds, it simply means you’ll earn less money. Your stock will go down.”

Justin Brasch, a real estate attorney with his own practice in New York, expects to see more lawsuits as landlords are forced to decide between suing their tenants or renegotiating contracts in order to pay their bills.

“It’s just unsustainable that tenants don’t pay rent for an extended period of time,” Brasch said. “These landlords deal with these situations in very different ways depending on their personalities, their risk tolerance and their values.”

Last month, there were 15 national retailers that didn’t pay any May rent, according to a report by Datex Property Solutions. They include Bed Bath & Beyond, H&M, Century City, AMC Theaters, Regal Cinemas, Party City and The Gap.

The Gap is the largest in-line tenant for the country’s largest mall operator, Simon Property Group, which sued the retailer last week for $66 million in unpaid rent across its properties.

Having tenants begin to pay rent, especially as New York City reopens, is vital to bringing landlords to the table for negotiations, said attorney David Rosenbaum. He is senior partner at Borah, Goldstein in New York, and heads up the firm’s commercial landlord and tenant litigation division.

“I’m praying that retailers can start earning revenue to be able to start paying their rents, or even a portion of their rent, to show good faith to their landlords,” Rosenbaum said.

Some companies, including 24 Hour Fitness, AMC Theaters and Pier One Imports, have either announced potential bankruptcy or plans to liquidate assets. Although a declaration of bankruptcy would typically mean that retailers would have to continue paying rent, a court ruling, which approved Modell’s Sporting Goods’ request to pause its bankruptcy, has set a precedent to allow retailers to forego even that obligation.

“So Modell’s Sporting Goods is an example [of bankruptcy judges] constructively pushing the envelope, but if you’re a landlord, you’re screaming bloody murder,” Wander said.

Contact Rich Bockmann at [email protected] or 908-415-5229. Contact Sasha Jones at [email protected]

China City’s Brickell development site under new ownership

1420 South Miami Avenue (Credit: Google Maps)

1420 South Miami Avenue (Credit: Google Maps)

A full block of vacant land in Brickell is under new ownership, court records show.

The development site, at 1420 South Miami Avenue, was previously owned by CCCC International USA, an affiliate of China City Construction Holding Group Co. It is now controlled by entities tied to Rega Group, a California developer.

The land has been vacant since before the Chinese company acquired the 2.78-acre property in 2014 for nearly $75 million.

A lawsuit filed by Champ Prestige International against both companies, Rega Center Miami Holdings LLC and Rega Center LLC, was dismissed on April 3, according to the South Florida Business Journal. A lis pendens that was blocking the property from being sold was dissolved by Judge Michael Hanzman.

That prime piece of Brickell real estate has sat vacant for years, with CCCC International allegedly failing to make any effort to develop the property, according to a previous lawsuit. The land is a block away from Related Group’s SLS Brickell tower and other high-rise developments.

The lawsuit alleged that China City Construction agreed to buy back Champ Prestige’s shares if China City failed to raise money through the EB-5 visa program. Champ Prestige paid $40.51 million for a 45 percent stake in CCCC International in 2015, with a deadline to raise the funds by the first quarter of 2017, according to the lawsuit.

The Rega LLCs were added to the lawsuit at a later date. The companies are tied to Sen Wang, head of the Covina, California-based real estate firm Rega Group. CCCC International sold 55 percent of the interest in a new company to Rega Center LLC, which Champ Prestige had alleged was a “fraudulent transfer.”

Last year, China City sold a separate development site in North Beach for $40 million. [SFBJ]Katherine Kallergis

Russian Bay Harbor developers ran California cannabis business into the ground, lawsuit alleges

Paul King, Roman Temkin, and renderings of Pearl House and Le Jardin

Paul King, Roman Temkin, and renderings of Pearl House and Le Jardin

After he was sued for allegedly not repaying a $3 million loan, Sunny Isles Beach cannabis entrepreneur Paul King is accusing the Russian developers who lent him the money of ruining his California marijuana venture.

Last week, King filed a lawsuit in California’s Monterey County against Roman Temkin and Dimitry Romantsoff, five other individuals and six corporations tied to the two men. In the complaint, King alleges Temkin and Romantsoff engaged in fraud during the three years they wooed him with a promise to raise $21 million for his budding cannabis empire.

Court documents indicate Temkin and Romantsoff — who also uses the spelling Romantsov — are the true owners of Verzasca Group, a firm that developed two boutique condo projects in By Harbor Islands, and Gia Investments, the company that lent the $3 million to King’s companies, California New Wave and Cannafornia. Gia Investments sued King in Miami-Dade Circuit Court on April 9 for nonpayment of the loan.

King declined comment and his attorney did not respond to a request for comment. Eric Ostroff, the lawyer for Gia Investments, said King’s California lawsuit is based on false allegations. “The timing of this lawsuit strongly suggests that it was filed to retaliate against the lawsuit filed against Paul King in Florida,” Ostroff said. “We look forward to disproving these allegations in court.”

Temkin and Romantsoff are separately suing King for defamation, alleging he emailed false statements about them to one of their financial backers and that he created and posted a Youtube video falsely accusing the two Russians of defrauding U.S. citizens in a Miami real estate scheme. That complaint, filed on March 26, states Temkin’s and Romantsoff’s “real estate development efforts include several multimillion condominium projects, including but not limited to certain projects commonly known Pearl House and Le Jardin [Residences], both in Bay Harbor Islands.”

The projects are being developed by Verzasca Group, a company that on state corporate records lists former NHL player Darius Kasparaitis as president, and Tim Lobanov as managing director. They have been the public faces of Verzasca Group since the company was formed in 2015. But Linkedin and Zoominfo profiles for Temkin and Romantsoff list them as partners in Verzasca Group. In February, the firm avoided a foreclosure on Le Jardin after a federal judge approved a bankruptcy plan for the project.

In King’s California lawsuit, the cannabis entrepreneur, who is a Sunny Isles Beach resident, claims he met Temkin and Romanstoff through a longtime family friend in November 2017. They told him they were interested in helping him scale up Cannafornia and could assist him by investing their own capital and raising funds from wealthy Russian investors. King claims he was also convinced into giving Romantsoff a managerial role in Cannafornia. The Russians touted their years of experience in real estate development in their home country, according to the suit.

“King saw this as a unique opportunity to learn from experienced and wealthy businessmen and to make his dream a reality,” the lawsuit states.

Instead, throughout 2018 and into 2019, Temkin and Romantsoff attempted a hostile takeover of Cannafornia by installing themselves and their relatives into key positions of the company, including hiring Romantsoff’s step-son and sister, according to the suit.

“By doing this, Romantsoff, Temkin and their relatives were able to engage in widespread fraud and embezzlement, converting funds and goods belonging to Cannafornia on a massive scale,” the lawsuit alleges.

Even though Temkin and Romantsoff had only brought in $4 million of the $21 million they had committed to raising, King claims Temkin convinced him to lease two more properties in Salinas to expand Cannafornia’s operation. Temkin promised King he would use the proceeds, roughly $15 million, from the sale of a project in Saint Petersburg, Russia, to finance Cannafornia’s expansion, the lawsuit claims.

“Plaintiffs never received the additional $15 million in funding that Temkin promised and upon which plaintiffs had relied in leasing the [two properties],” the lawsuit states. “This was a huge blow to Cannafornia’s business and placed an incredible amount of stress on King as Cannafornia did not have money to meet its obligations for the rent and build-out of these new properties.”

Judge’s panel rules over Beach Towing and Deco Capital Group’s fight over Sunset Harbour project

Bradley Colmer, a Sunset Park rendering and 1349 Dade Boulevard (Credit: Domo Architecture and Design and Google Maps)

Bradley Colmer, a Sunset Park rendering and 1349 Dade Boulevard (Credit: Domo Architecture and Design and Google Maps)

As Deco Capital Group and Beach Towing battle over the development of a retail and residential project in Miami Beach’s Sunset Harbour neighborhood, a panel of judges has issued new rulings.

In the latest move, the panel of three Miami-Dade Circuit Court judges last week rejected a petition to overturn decisions by Miami Beach officials allowing automobile and truck storage on Beach Towing’s property at 1349 Dade Boulevard. The petition was filed by Sunset Land Associates and SH Owner, two development entities managed by Deco Capital.

Two other orders in recent months sided with the development firm managed by Bradley Colmer and Marc Rowan, a New York City-based billionaire builder. The panel tossed petitions filed by Beach Towing challenging decisions by the Miami Beach planning board and design review board approving Deco Capital’s Sunset Park, a planned 67,000-square-foot mixed-use project at 1733-1769 Purdy Avenue and 1730 Bay Road, allowing the project to move forward.

The development site is across the street from Beach Towing. Beach Towing has sought to stop the project, while Deco Capital Group has attempted to shut down the towing company’s tow yard.

The battle between Deco Capital and Beach Towing dates back to 2015, when the towing company opposed a height increase for the proposed development site. A year later, the developer sued Beach Towing and the Lofts at South Beach Condominium, which also opposed the height increase. Deco Capital also sent a legal memo to Miami Beach officials that asserted the tow yard was a violation of Miami Beach zoning regulations for Sunset Harbour.

The latest court stand-off was the result of a Miami Beach Board of Adjustment vote last March denying Deco Capital Group’s appeal arguing the city’s zoning director Thomas Mooney wrongly determined Beach Towing is allowed to store automobiles and trucks on its property. In an August 2018 memo, Mooney noted that a 1989 revision to the city code no longer allows tow services in Sunset Harbour, where Beach Towing and the proposed development are located.

However, Mooney also concluded Beach Towing has been grandfathered in since the company had been at its current location since 1986 and has provided towing services for more than three decades.

Deco Capital Group sued the city to overturn the adjustment board’s 6-0 vote. The three-judge panel determined “Beach Towing’s storage facility fits within the defined permitted use” and found “no error in the city’s determination,” last week’s order states.

“We fail to see how storage of cars and trucks on paved land surrounded by a six-foot wall can be fairly characterized as vacant land,” the judges wrote.

On Jan. 16, the panel denied Beach Towing’s petitions after determining the planning board and the design review board votes were “supported by competent, substantial evidence.” In August of last year, the Third District of Appeals also rejected Beach Towing’s appeal of a lawsuit it lost against Sunset Land Associates.

Ralph Andrade, Beach Towing’s attorney, said the Feb. 26 denial last week of Deco Capital’s petition was a “victory of the little guy.”

“The court’s well-reasoned ruling puts an end to the developer’s antics and tantrums to put us out of business,” Andrade said. “We stood up to a greedy bully developer and won.”

Jeffrey Bass, the attorney representing the Deco Capital entities, noted his client won three out of the four recent court cases. “Last time I checked, 25 percent is a failing grade,” Bass said. “We forcibly dispatched their very specious challenge to our wonderful project.”