Omnibuild, the former construction manager for embattled developer HFZ’s XI project, is suing the real estate firm for roughly $350 million in a sweeping lawsuit that claims it was ignored and rebuffed at every turn when it tried to bring up financial problems at the luxury condo development.
The Manhattan District Attorney’s office recently indicted multiple employees at Omnibuild for allegedly being part of a criminal conspiracy orchestrated by former HFZ executive Nir Meir. But the Omnibuild lawsuit claims the company was “wrongfully indicted” in that case and was warning about possible financial issues at the XI dating back to 2019. The company said it only continued working on the project because of assurances from HFZ that ultimately proved to be false.
“As we have said since the beginning of this investigation, Omnibuild is a victim of HFZ’s criminal theft and the negligence of multiple parties put in place to protect us,” said Omnibuild spokesman Josh Vlasto. “The contents of this lawsuit prove just that.”
HFZ hired Omnibuild to be the construction manager for the XI, located by the High Line at 76 11th Ave., in 2016 and was falling behind on its payments by spring 2019, according to Omnibuild’s lawsuit, filed Friday in Manhattan state Supreme Court. Omnibuild sent its first written notice about this to HFZ that May, also noting that the project appeared to be going over budget with no plan to address the shortfall.
Omnibuild did not get a response to this notice or a second one, so the firm sent a third one to HFZ and the lenders that June, the lawsuit says. However, this one also sparked “no meaningful response whatsoever,” according to the suit.
The construction firm sent several more default notices over the ensuing months and were “baffled by the complete lack of response,” the lawsuit says. In April 2020, Omnibuild warned all subcontractors on the project about HFZ’s defaults and recommended they not deal with the developer directly, and in May, an Omnibuild principal demanded Meir stop pressuring their accountant Kevin Stewart to sign documents on Omnibuild’s behalf. (Stewart and Omnibuild co-CEO John Mingione were both indicted in the Manhattan District Attorney’s investigation.)
In all, Omnibuild sent 16 notices of default to HFZ and the lenders between May 2019 and June 2020 and warned in its final one that HFZ could be “subject to criminal sanctions” if they were found to be inappropriately using the funds at issue, according to the lawsuit.
“This is a serious matter which cannot simply be brushed aside based upon the undocumented and unsubstantiated claims of the owner,” Omnibuild wrote, according to the lawsuit.
Omnibuild sued HFZ for roughly $100 million worth of missing payments soon after its final default notice.
The Manhattan District Attorney’s office indicted Meir earlier this year over “the precise illegal activity” Omnibuild had reported in its 2019 and 2020 notices, its lawsuit says. The construction firm would have stopped working on the project almost immediately after these defaults started, allowing it to mitigate its losses and avoid being criminally indicted, if not for repeated false statements about its finances from HFZ and the lenders, according to the lawsuit.
Omnibuild is suing HFZ and the project lenders for fraud, negligence and breach of contract.
Omnibuild’s $100 million claim against HFZ during the summer of 2020 was one of the first lawsuits to hit the company. An avalanche of additional ones soon followed, and the once-prominent developer is now essentially defunct. Ziel Feldman, who ran the firm along with Meir, has placed the blame for the company’s problems squarely on Meir and is not expected to be charged in the criminal case. He is, however, named as a defendant in the Omnibuild suit.
Feldman and a representative for the Manhattan District Attorney’s Office declined to comment. A representative for Meir did not respond to a request for comment by press time.
The Manhattan District Attorney’s office has accused Meir of orchestrating an $86 million scheme that included using money for the XI for other developments and forging bank statements to make it seem like HFZ had more money than it did. Officials have accused Omnibuild of taking part by making it seem like they were further along on the XI than they actually were, causing the project’s lender to release more funds.
Mingione and Stewart were arraigned and released in the criminal case on Feb. 7, while Meir was arraigned on Feb. 21 and held on $5 million cash bail. They are next due in court on May 7.
Eddie Small , 2024-04-19 19:25:08
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