A $600 million lawsuit filed against a New York property magnate by the Core Club – the ultra-exclusive Fifth Avenue power mecca – is rotten to the core, according to the developer who’s getting sued.
Core owners Jennie and Dangene Enterprise claimed last month that real estate mogul Michael Shvo reneged on a supposed deal for him to invest $100 million in the club to bankroll outposts in other cities, including in San Francisco and Milan, Italy, in exchange for a 50% stake in the company.
They also claimed that Shvo, as part of a “sinister and fraudulent” scheme, botched the launch of Core Club’s Fifth Avenue flagship, forcing the Enterprises to dip into their own funds to get it open.
The club occupies four top floors at 711 Fifth Ave. Movers and shakers from the worlds of finance, real estate and media pay between $15,000 and $100,000 a year for different levels of access.
In a Manhattan Supreme Court filing, Shvo calls Core’s claims a “cynical ploy” to “litigate in the press” for a rent reduction and to get out of paying other bills, including for a $10 million construction cost overrun which its contract with Shvo obligates it to pay.
Shvo, who has asked a judge to toss the case, claims there was no written contract promising a $100 million investment — only a non-binding term sheet. Nor was there any mention of a Milan club at all in the contract, he claims.
In fact, Shvo alleges, the only written agreement was for $46 million to pay for the club’s buildouts in New York and San Francisco.
When the Enterprises — who “couldn’t attract enough members to stay afloat” — couldn’t finish the jobs, they begged him in January 2022 for a $1 million loan to which he “begrudgingly” assented, according to court papers.
Shvo claims the Enterprises’ suit — full of “vicious, unfounded attacks on Shvo’s character” — is so off-base that it mistakenly names three German banks as defendants although they had nothing to do with the claims against Shvo, according to the filing.
As for Core Club’s allegations in the lawsuit of trying to bill Shvo $80,000 for using the place for parties, Shvo says it makes no mention “of the Enterprises’ many requests that Shvo and his wife entertain at the club to assist them with attracting new members” in his filing.
Adam D. Glassman, the Enterprises’ lawyer, called Shvo’s move to toss the case “a predictable attempt to avoid accountability and to delay the legal process. The motion is riddled with distortions and mischaracterizations of facts.”
He said Shvo “used his position of trust to enrich himself at [the Enterprises’] expense, negotiating an unconscionable [New York] lease while acting as both a partner and a representative of the landlord” and “failing to fulfill his financial commitments.” Have we gotten comment from Shvo on this? It’s outside of the actual filings so it would be helpful to mitigate risk.
Glassman also called Shvo’s claim of a $50 million Core Club investment by him and affiliates “baseless” and “false.”
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