Leon Cohen, the Miami Beach developer who proposed a 93-story skyscraper in downtown Miami, faces default judgment in New York State Supreme Court over fraud allegations related to a former hotel redevelopment project.
New York Judge Walter Tolub wrote the decision against Cohen, his father Maurice Cohen and other defendants on Wednesday in connection with alleged fraud at the Flatotel in midtown Manhattan.
According Tolub’s ruling, the “defendants’ long-standing patterns of default, lateness, and abject failure to comply with court orders amounts to willful … conduct which not only warrants but necessitates … award of default judgment.”
Cohen received initial approval from a Miami panel in January for the Empire World Towers project, slated to have 1,557 residential units. At the time, real estate analysts questioned the project because of hurricane codes, height restrictions, the ongoing credit market crunch and the downturn in real estate markets.
The impact of Wednesday’s decision in New York was not immediately apparent. Miami spokeswoman Kelly Penton said no one at the city had heard about the New York case.
Cohen’s New York attorney, John Gleason of Gleason & Koatz, declined to comment on Friday.
The plaintiff in the suit against Cohen is a French lender, CDR Creances, represented by Douglas A. Kellner of Kellner Herlihy Getty.
Court documents show Cohen, his family and their companies borrowed $92 million in 1991 to fund acquisition of the Flatotel. CDR received a security interest as part of consideration for the loan. The suit alleges that Maurice Cohen orchestrated the unauthorized transfer and eventual sale of shares of stock in which CDR held a security interest, without CDR’s knowledge.
According to Kellner, the Cohens “sold the New York Flatotel to a Bahamian company controlled by hotelier Simon Elias in 2000 without disclosing the transaction to CDR and without making any payment on the loan.”
The details behind the case involve foreign bank accounts and “extremely complicated business transactions,” the judge noted.
Kellner told the Business Journal of Friday that he plans to file a motion seeking $264 million in actual damages from Cohen and punitive damages of $2.5 billion.
Kellner said he is very interested in Cohen’s Florida company, Maclee Development, and its funding to pursue the Empire World Towers project.
“Where those funds came from to acquire his property has been of great interest to us,” he said.
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Empire World Towers developer faces default judgment
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