The Sheldrake Organization has been removed as a managing member of the ownership of Riverhouse, the 264-unit condo building at 1 River Terrace overlooking Rockefeller Park in Battery Park City, according to an article by Joey Arak today at curbed.com
The article said that "whispers about money troubles have been floating around all month" and "that speculation was bolstered by the $48 million lis pendens (a pre-foreclosure legal move) filed by PNC Bank on the property in early February."
"The real drama," the article continued, "has nothing to do with bankruptcy or shaky financial footing, but rather a power struggle between the sponsors - local developer the Sheldrake Organization and what remains of Lehman Brothers' real estate partnership....Lehman alleges that Sheldrake, and its president J. Christopher Daly, misappropriated $12 million in Riverhouse funds meant to go towards things like PILOT payments (the land-lease fees given to the Battery Park City Authority) and construction expenses."
"Lehman," it continued, "claims Sheldrake pulled this off by creating and submitting false invoices to a German-based lender, and the money was steered out of Riverhouse's coffers and into other, more personal accounts. According to court documents, Lehman claims to have uncovered all this during an inspection of Riverhouse's financial books and records at the end of January. Soon after, Sheldrake was hit with a 'Notice of Removal' from Lehman booting the developer from its day-to-day management role, citing 'fraud and/or willful misconduct.'"
The article noted that Mr. Daly in a affidavit said that Lehman's investigation "did not reveal any information that Lehman had not been aware of, and had acquiesced in, for two or three years" and Daly denied the fraud and misconduct claims, maintaining that the Notice of Removal was "no more than a veiled attempt by Lehman to steal the project from Sheldrake."
"Sheldrake," the article continued, "also argued that its reputation 'would suffer irreparable injury' if it got ousted as administrative member, but in the end - we've just been told - the court has done just that."
The 31-story building, which is bounded by Murray and Vesey Streets and North End Avenue, was designed by the Polshek Partnership and Ismael Levy and is north of the Irish Hunger memorial and it is a "green" building with a gold LEED certification. The building contains the Poets House, a not-for-profit library.
The article said that "whispers about money troubles have been floating around all month" and "that speculation was bolstered by the $48 million lis pendens (a pre-foreclosure legal move) filed by PNC Bank on the property in early February."
"The real drama," the article continued, "has nothing to do with bankruptcy or shaky financial footing, but rather a power struggle between the sponsors - local developer the Sheldrake Organization and what remains of Lehman Brothers' real estate partnership....Lehman alleges that Sheldrake, and its president J. Christopher Daly, misappropriated $12 million in Riverhouse funds meant to go towards things like PILOT payments (the land-lease fees given to the Battery Park City Authority) and construction expenses."
"Lehman," it continued, "claims Sheldrake pulled this off by creating and submitting false invoices to a German-based lender, and the money was steered out of Riverhouse's coffers and into other, more personal accounts. According to court documents, Lehman claims to have uncovered all this during an inspection of Riverhouse's financial books and records at the end of January. Soon after, Sheldrake was hit with a 'Notice of Removal' from Lehman booting the developer from its day-to-day management role, citing 'fraud and/or willful misconduct.'"
The article noted that Mr. Daly in a affidavit said that Lehman's investigation "did not reveal any information that Lehman had not been aware of, and had acquiesced in, for two or three years" and Daly denied the fraud and misconduct claims, maintaining that the Notice of Removal was "no more than a veiled attempt by Lehman to steal the project from Sheldrake."
"Sheldrake," the article continued, "also argued that its reputation 'would suffer irreparable injury' if it got ousted as administrative member, but in the end - we've just been told - the court has done just that."
The 31-story building, which is bounded by Murray and Vesey Streets and North End Avenue, was designed by the Polshek Partnership and Ismael Levy and is north of the Irish Hunger memorial and it is a "green" building with a gold LEED certification. The building contains the Poets House, a not-for-profit library.
Architecture Critic
Carter Horsley
Since 1997, Carter B. Horsley has been the editorial director of CityRealty. He began his journalistic career at The New York Times in 1961 where he spent 26 years as a reporter specializing in real estate & architectural news. In 1987, he became the architecture critic and real estate editor of The New York Post.
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