Saturday, May 7, 2011

Ex-CEO Sues Africa Israel

Saturday, May 7, 2011

A behind-closed-doors dispute involving the company that owns the famed Apthorp apartment building and the developer's fired chief executive has spilled over into the public arena.

Richard Marin, who was terminated as chairman and CEO of Africa Israel USA in December, filed a lawsuit Thursday in New York state Supreme Court alleging breach of contract, according to court documents. The suit asks for $1.25 million, which Mr. Marin says he was owed by Africa Israel as a bonus, plus unspecified damages.

"This is a case of a company firing an executive in order to cover up wrongdoing that the executive discovered and reported," the complaint asserts.

An attorney for Africa Israel USA, a unit of the Israel-based AFI Group, said the charges were false. Y. David Scharf said that the developer would be filing a motion to dismiss the suit and will ask the court to impose sanctions for "filing frivolous and scandalous pleadings."

He says that Mr. Marin filed the suit because he doesn't want to pay back a $500,000 loan that he owes the company.

In the suit, Mr. Marin alleges he was promised a $1.25 million bonus for his work in 2010, which he says was approved by the parent company's chief executive, Izzy Cohen. The suit says that the company's board issued a news release last year praising Mr. Marin for his work in debt restructuring and assembling a strong team.

When the 2009 bonus hadn't been paid by May last year, Mr. Marin asked the company for a loan. Africa Israel agreed to lend him $500,000, his complaint said.

The complaint also says that Mr. Marin objected to some of the company's business practices. For example, the suit says that Africa Israel had been managing a building at 23 Wall Street for the Hong Kong-based holding company China Sonangol, which acquired the property from Africa Israel in 2008. That lucrative management contract was transferred by executives in Israel to two companies—one run by a former Africa Israel employee and the other founded by Africa Israel Chairman Lev Leviev, the complaint states.

"Mr. Marin alleges there was no legitimate business reason to do that from Africa Israel's USA's perspective," says John Crossman, his attorney.

Mr. Scharf says that Africa Israel senior management transferred the building management responsibility away from Africa Israel USA because China Sonangol "was extremely displeased with the property management services."

Mr. Marin, a finance veteran who worked at Deutsche Bank and Bear Stearns, was hired by Africa Israel in December 2008 when many of its projects were in trouble. Africa Israel also bought the former New York Times headquarters building at the top of the market and eventually had to restructure its debt and bring in a partner.

Africa Israel was part of a group that bought the Apthorp for $426 million in 2007 with an eye of converting the rental apartment building into condos. It was one of the highest prices ever paid for a residential building and became one of the city's most contentious condo conversion projects.

This week Africa Israel filed documents in Israel saying it agreed to sell the Clock Tower building near Madison Square Park for $170 million. People familiar with the matter said the buyers were fashion designer Tommy Hilfiger and his partner JSR Capital. A few days before that, Africa Israel agreed to sell the top 11 floors of the former Times building to Blackstone Group for $160 million.

Write to Craig Karmin at

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