Manhattan Club Lawsuit

Only one word comes to mind...outrageous!

charlesm548 wrote:

Eichner may have had an in with Bloomberg, but maybe DeBlasio is willing to do something. Anyone on this thread know someone in the NY Mayor's office?

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Getting to know the creep ...

Where do you live now?

(Eichner) I’ve been living at 52 Park Avenue. I’m about to move into a new apartment at One Morton Square.

Do you have other homes?

(Eichner) In East Hampton, Las Vegas and South Beach.

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Property Mogul Poised to Take a Second Fall (2008)

Eichner in Talks to Surrender Casino to Deutsche Bank; 'Zero Will Stick to My Shoes' he said.

By JENNIFER S. FORSYTH Updated May 9, 2008 12:01 a.m. ET

LAS VEGAS -- Sixteen years ago, developer Ian Bruce Eichner was forced to give his lenders the keys to his newly finished office tower in Times Square. The empty building, a symbol of one of the worst downturns in U.S. commercial real-estate history, ultimately cost his lenders and partners about $200 million.

Mr. Eichner, a slender, fast-talking New Yorker, managed to stage a second act -- but it appears to be ending much like the first. Cosmopolitan Resort Casino, the casino-hotel complex he's building on the Las Vegas Strip, got caught last year in the capital-markets crisis and is headed toward foreclosure. Deutsche Bank AG has sunk nearly $1 billion into the project, and two other lenders have provided $175 million. It's unclear how much of it they'll be able to recoup.

Losing Hand

The News: Developer Ian Bruce Eichner is on the verge of losing control of his Las Vegas casino-resort project to his lenders. The Background: Commercial real-estate lenders have been growing more nervous about the market, which made it difficult for Mr. Eichner to get financing. What's Next: Talks under way now will determine who takes over the partially completed project. On Thursday, Mr. Eichner and representatives of Deutsche Bank were deep in discussions that are expected to end with the 62-year-old developer surrendering all involvement with the partially completed project, people familiar with the discussions say.

In an interview earlier this year, Mr. Eichner said he was a victim of the credit crisis, and that banks eventually would lend to him again. "It's probably pretty safe to say that somewhere in 2009 or 2010, Bruce Eichner will surface with another one, something," he says. "There's zero that will stick to my shoes."

Mr. Eichner's roller-coaster track record shows that in commercial real estate, failure on an epic scale need not be a career killer. Other prominent developers also had to surrender projects to lenders in the 1990s, only to borrow more money and fail again in the most recent cycle. Earlier this year, New York developer Harry Macklowe, who gave back several buildings more than a decade ago, defaulted on short-term loans he used last year to buy seven Manhattan skyscrapers for $7 billion, because he was unable to line up long-term financing.

The willingness of lenders to give such developers more money helped fuel the commercial real-estate boom that started in 2003 and reached its zenith in early 2007. Some of those lenders now face the potential for loan losses. Centro Properties Group, one of the largest shopping-center owners in the U.S. and Australia, for example, has been unable so far to repay $4.9 billion in short-term debt owed since December to creditors including J.P. Morgan Chase & Co., Bank of America Corp. and Commonwealth Bank of Australia.

Hardly anyone is predicting that souring commercial real-estate loans will cause the kind of banking crisis that struck in the late 1980s and early 1990s, when large banks in the U.S. and Japan had sizable chunks of their loan portfolios tied up in the collapsing sector. Although commercial real-estate values have softened in some markets, they haven't experienced the kind of free fall that occurred back then.

And this time around, lenders tried to spread the risk. They gathered loans into pools and sliced them up for sale to investors as commercial mortgage-backed securities, much as housing lenders did on the consumer side of the market. So far, securities backed by commercial mortgages are performing far better than their residential counterparts, whose implosion helped set off today's broader credit crunch.

But like residential lenders, some commercial real-estate lenders, including Wall Street investment banks, were lulled by sharp increases in property values and projections for fat profits. Competition among lenders was so intense that developers were allowed to kick in less and less of their own money -- sometimes less than 1%.

Ideal Environment It proved to be an ideal environment for battered developers to stage their comebacks. To be sure, they couldn't do business with some of the lenders who backed them previously. But there were plenty of others.

"If I or anyone else needed money, you could call up the bank and they would send a Brinks truck over to your office," says Donald Trump, who admits to have put "some hurt on banks" in the early 1990s, during the prior cycle. "There was so much money flowing, so much money." Mr. Trump, having bounced back, in recent years built residential towers in Manhattan and forged lucrative licensing deals that added his name to dozens of luxury buildings around the world.

For Mr. Eichner, who brags that he finished last in his law-school class at the University of Cincinnati, the 1990s brought plenty of trouble. Besides giving back the Times Square building, called 1540 Broadway, he lost CitySpire, billed at the time as Manhattan's tallest apartment house, to his creditors in 1992. In 2000, subcontractors who hadn't been paid forced his Park Central Hotel, another New York project, into bankruptcy-court protection. Yet because Mr. Eichner relied heavily on debt and contributed little of his own money, the failure of the projects didn't lead to ruinous personal losses, people familiar with the projects say.

At least one lender vowed never to lend to Mr. Eichner. Bernd Knobloch, chief executive of Eurohypo AG, a bank based in Eschborn, Germany, recalls a meeting in the late 1990s in which Mr. Eichner handed him a book by Jerry Adler that chronicled the Times Square failure: "High Rise: How 1,000 Men and Women Worked Around the Clock for Five Years and Lost $200 Million Building a Skyscraper." Mr. Knobloch says he was astonished. "He handed me the book that talked about how he lost $200 million," he recalls. "To his prospective lender. I said to myself, 'This is not a man I'm going to work with.' He never saw me again."

Mr. Eichner says he doesn't recall meeting Mr. Knobloch. He concedes that some lenders likely blacklisted him. "The first couple of deals, I was under a microscope, and not surprisingly. There are people to this day who won't deal with Harry, won't deal with Donald, and won't deal with me."

Deutsche Bank's relationship with Mr. Eichner began tentatively. In 2000, Mr. Eichner needed a loan to build a condominium high-rise in Miami's South Beach. Deutsche Bank arranged for GMAC LLC to make the loan, with the bank promising to make GMAC whole if the project failed, according to two people familiar with the deal. The project, called the Continuum, sold well, GMAC's loan was paid on time, and Deutsche Bank earned a fee of close to $15 million. After that, Mr. Eichner says, "my stock was pretty high with the bank." A Deutsche Bank spokesman declined to comment.

Soaring Values By the middle of this decade, fueled by low-interest rates, easy credit and soaring values, commercial real estate was hot once again. Developers were building and selling at significant profits. And lenders were competing to make big loans that brought big fees. Charlotte, N.C.-based Wachovia Corp., for example, jumped from near the back of the pack in 2002 to take the lead in commercial lending by 2007, by combining attractive terms with aggressive marketing on loans of $50 million and up.

In 2003, Mr. Eichner began looking at a slim, eight-acre plot on the Las Vegas Strip, which he considered suitable for some kind of development. He had $10 million to invest. He lined up an additional $40 million in equity from Soros Fund Management, an investment group founded by George Soros, and approached Deutsche Bank for a $60 million loan to buy the land. The bank figured that with Soros money behind the deal, it was a relatively safe bet, according to a person knowledgeable about the bank's decision. It made the loan.

Before long, Mr. Eichner was aiming big: two 600-foot towers atop a casino, four floors of retail and five levels of underground parking. The project would be wedged between the Bellagio and MGM Grand's big new CityCenter project.

Mr. Eichner and his wife, Leslie, who advises him on interior design, began brainstorming. They hired Miami-based architect firm Arquitectonica to come up with an edgy design. Ms. Eichner envisioned some rooms with leopard-skin-patterned wallpaper and others with see-through glass around the bathtubs. "You can come here with your husband, with someone else's husband, whatever," says Mr. Eichner. (such integrity!)

For the retail space, they ordered up a pair of 28-foot industrial robots programmed to box, to dance to "Disco Inferno," and to play 12-foot Fender Stratocaster guitars. On the roof above the casino and stores, they planned a five-acre "beach" with sand, cabanas and a pool with artificial tides.

Mr. Eichner says condo buyers were enthusiastic about the plans, with buyers putting down nonrefundable deposits totaling nearly $280 million, representing almost $1.4 billion in sales.

But the bank declined to give Mr. Eichner more money unless he put a lot more cash into the deal -- either his own or money raised from investors, according to the person knowledgeable about the bank's approach.

By early this year, Deutsche Bank's loans for the project stood at $760 million. A spokesman for the bank declines to comment on whether any slices of the loan were sold off to other lenders.

On Jan. 15, unable to raise the equity needed to get a larger loan, Mr. Eichner defaulted. That in turn triggered defaults on his financing from Hyatt and Marathon. The project was only about one-third completed.

WHERE WAS THIS INTERVIEW PUBLISHED? eichner has a pair of cubes (not to sound too graphic) like no other i'm aware of. he tells us all basically how wealthy he is and what a grand lifestyle he can afford, while we owners just sit on the pile of manure he gives us. he sure is an in-your-face guy, and has a way of slipping through legal cracks almost like a magical illusion. got to admit, he's slyly amazing.............and a SOB to boot.

looking forward to schneiderman and the court to sealing those legal cracks and let eichner be shown as he really is: a wealthy, grand-living fraud.............hmm, any resemblance to mr madoff or whatever his name is? not quite the high stakes or the exact scheme involved, but nevertheless, one needn't look to far to note obvious similarities. hopw the court sees the issues this way.

The above Eichner interview was conducted by JENNIFER S. FORSYTH and published in the Wall Street Journal.

I was totally unaware of this legal action until I decided to call TMC today to tell them I will not be paying my $2200 dues for next year. I wanted to walk away from this since I no longer go there. Now I definitely will not pay my dues and see what the AG does.

vanessa175 wrote:

Chris V,

Write another letter or same letter with copy of new maintenance fees for 2015. Most of us are in the same boat enormous fees. I have not inquired what the new fee is for my unit this year. I won't be paying it. Not until the NY AG's office figures out what they are going to do with Eichner and his corrupt cronies and what's been happening at TMC for years.

elainef88 wrote:

I was totally unaware of this legal action until I decided to call TMC today to tell them I will not be paying my $2200 dues for next year. I wanted to walk away from this since I no longer go there. Now I definitely will not pay my dues and see what the AG does.

vanessa175 wrote:

Chris V,

Write another letter or same letter with copy of new maintenance fees for 2015. Most of us are in the same boat enormous fees. I have not inquired what the new fee is for my unit this year. I won't be paying it. Not until the NY AG's office figures out what they are going to do with Eichner and his corrupt cronies and what's been happening at TMC for years.

hi vanessa , i own 2 weeks at TMC. just got my bill for one of the weeks for &2,500 PLUS NYC/NYS MUNICIPAL TAX. at these rates we could stay at the plaza, essex house, waldorf, et al............well, ok, not with a 2 bath suite.............but close to TMC's accommodations. too bad i like TMC so much; other than eichner and his henchmen, i think TMC is a wonderful place for a weekend. we go there from june thru december, each month for 1 or two nights, and use our 14 days that way, but we don't get even close to exact dates requested..............ALWAYS PUT ON THEIR INFAMOUS WAIT-LIST! we're fortunate enough to live on long island, about an hour's (+/-) drive from TMC.......hmmm, getting carried away here..... are you recommending that i send a copy of my TMC maintenance/tax bill to ERIC SCHNEIDERMAN? i think that's a great idea and will work on it this week.

keep in touch.

chris

I could use some guidance here. We are behind in our timeshare charges and taxes (3 years) with the Manhattan Club. We have finished paying off for this property that we cannot use. The company is offering an "amnesty" if we agree to lose the three years of timeshare weeks. We would begin paying for the $2,200 in charges for next year. We just want out of this whole mess. I am not sure what we should do. They sent us a bunch of forms that look like a mortgage signing that need to be notarized and sent back to them within a week. If there is a class action suit going on here, I would like to find out more about it.

Is there an attorney who is handling any kind of class action suit against the Manhattan Club? Should I be paying the timeshare charges or wait until this situation is resolved with the Attorney General's office?

How do I join the class action suit? bob figman

davide380 wrote:

We have requested membership to the yahoo group and are enthusiastic for the class action suit to be underway. It has been a horrible situation with the mc. We bought in 2001. A few good days and then years of frustration. What a terrible scam. We love NYC. To be taken advantage of in this manner of overselling and renting rooms to the public is outrageous (not to mention the fees!). We have passed this information on to our friends who are also trapped by these scoundrels of greed. Sher

What yahoo group?

eileenm, i'm no attorney or "legal eagle" but i wouldn't pay the manhattan club a penny in maintenance fees until the current lawsuit per the NYSAG is settled, and we have some legal ground to stand on. HOWEVER, i believe, since you're a deeded owner of a share or shares in TMC, you MUST PAY YOUR CITY/STATE TAX ON YOUR PROPERTY. ALSO, DO NOT SIGN AND SEND ANY PAPERS TO THE PRINCIPALS OF THE MANHATTAN CLUB INCLUDING ANY OF ITS SUBSIDIARIES ( THERE ARE PROBABLY MANY IF TMC'S COVERT HOLDINGS THAT MAY LOOK LEGAL TO YOU. I WOULD PUT NOTHING, LEGAL OR ILLEGAL PAST IAN BRUCE EICHNER.

hope this opinion proves helpful. keep in touch.

chris

eileenm241 wrote:

I could use some guidance here. We are behind in our timeshare charges and taxes (3 years) with the Manhattan Club. We have finished paying off for this property that we cannot use. The company is offering an "amnesty" if we agree to lose the three years of timeshare weeks. We would begin paying for the $2,200 in charges for next year. We just want out of this whole mess. I am not sure what we should do. They sent us a bunch of forms that look like a mortgage signing that need to be notarized and sent back to them within a week. If there is a class action suit going on here, I would like to find out more about it.

eileenm241 wrote:

Is there an attorney who is handling any kind of class action suit against the Manhattan Club? Should I be paying the timeshare charges or wait until this situation is resolved with the Attorney General's office?

EILEEN, PLEASE WAIT...................TAXES ARE DUE, BUT MAINTENANCE IS STILL A FOGGY ISSUE, SO DON'T PAT IT.

robertf788 wrote:

How do I join the class action suit? bob figman robertf,

my experiential opinion: a class action lawsuit is a waste; it was tried and it failed twice. you won't get enough owners AND little or no support for the suit. keep up the the pressure on the NEW YORK STATE ATTORNEY GENERAL, ERIC SCHNEIDERMAN. HE'S AN ELECTED OFFICIAL AND SHOULD BE WORKING FOR ALL INTERESTS IN THE STATE OF NEW YORK, INCLUDING MANHATTAN CLUB SHAREOWNERS. IT'S HIS JOB TO PROTECT ALL OF OUR INTERESTS AND TO STOP EICHNER FROM CREATING ANY MORE FRAUDULENT ENTERPRISES, AND FOR US OWNERS TO BE COMPLETELY REMUNERATED FOR ALL THE COLLECTIVE MILLIONS OF DOLLARS EICHNER HAS BILKED OUT OF US.

davide380 wrote:

We have requested membership to the yahoo group and are enthusiastic for the class action suit to be underway. It has been a horrible situation with the mc. We bought in 2001. A few good days and then years of frustration. What a terrible scam. We love NYC. To be taken advantage of in this manner of overselling and renting rooms to the public is outrageous (not to mention the fees!). We have passed this information on to our friends who are also trapped by these scoundrels of greed. Sher

We received our maintenance bill for TMC, 2015- over $2600.00! Any suggestions as to how we should handle this? I've read in previous posts to pay the real estate taxes but put the money owed for maintenance fees in an escrow account. Should all of us also send these updated maintenance bills to Eric Schneiderman and his assistants as follow-up? All advice is welcome!! Thanks. Rosemary G.

We received our 2015 maintenance bill last week. It is now $2,500 for 1 bdrm suite. We did not pay for 2014, and they are threating increased fees with late payment etc. We will not pay them another dime until AG's office determines what they are going to do with Eichner and his management crew. We have paid for last nine years and haven't been able to go there any time we didn't trade (3 times/years) We only traded bc when we didn't we couldn't get our seven nights, and lost 3-4 nights each time and that is not how it should have worked out. We were sold "flex plan" like many others. Accommodation did not turn out to be flexible at ALL!! You cannot use seven nights within a year for 1,2,or 3 night stays. That is what we were told when we purchased and that has not been the case for most all of us in this situation. I don't know how any of the owners are able to use their time?

How can I stop main thence fees they charge to my credit card automatically?

I have owned the Manhattan club for over two years and have never been able to make reservations. Every time I request I am told not available. What should I do. HELP,

I purchases a 1 bedroom approx. 8 years ago and I I have not been able to get in. I can't believe I have not heard of the lawsuit but I am 100% on board.

janicef119 wrote:

I have owned the Manhattan club for over two years and have never been able to make reservations. Every time I request I am told not available. What should I do. HELP,

I am on board in helping out any way I can. I have never stayed there since I purchased it 8 yrs ago.

One very smart owner clarified the details of the stipulation about notifying owners. Owners only have to be notified after the AG's office accepts their proposed 89th amendment. Then owners have to be notified of the 89th amendment.

TMC doesn't have to do anything in 30 days except try to send papers to the AG.

The So Ordered Stipulation is dated October 20, 2014 (Steven Leibman incorrectly stamped it 2013 but it's obvious that's an error) so 30 days aren't even up yet. Note there is a different stipulation dated October 22, 2014 but that does not address the 30 days.

TMC had to "use best efforts" to submit a proposed 89th amendment to the offering plan to the AG's office. All TMC has to do is do their best to get a proposed 89th amendment to the AG's office within 30 days, TMC doesn't have to notify owners of anything within 30 days of the stipulation.

Once the AG's office reviews the amendment for deficiencies (no time frame is given for the AG to review the amendment) the AG then sends it back to TMC to "cure" or fix the deficiencies. There's no time frame ordered for TMC to fix the amendment.

Once TMC files a corrected amendment AND the AG accepts the amendment then, and only then after that filing, does TMC have to "distribute the amendment to all current owners." As the AG has an open ended time limit to review the proposed 89th amendment and TMC has an open ended time limit to make corrections there is no way to pinpoint a date by which TMC has to distribute the amendment to the owners and the 89th amendment is the only thing TMC has to distribute to owners.

Hi Irene:

How can I get involved? I am sick over reading all this -starting from page one. I stopped paying the charges and have only stayed at the Manhattan Club once from the time we bought it in 2005. I just finished paying off the loan we used to purchase it. We owe nearly $6,000 in back charges and late fees. I was going to set up a payment plan to get up to date when I stumbled on this site, the AG action and the FB site. I am not sure what I should do. I just want to be done with this nightmare. The MC has offered an amnesty to me if I agree to forego the three years of weeks I did not pay the charges for. They sent me a great deal of legal paperwork to sign which I do not really understand. Do you have any advice?