Bathroom Dispute Sparks Allegations at Manhattan Co-op

A disagreement over a toilet drain has escalated into claims of corruption at a high-profile Manhattan co-op.

Angelo Chan and his husband, Frederick Wertheim, purchased a $5.2 million luxury co-op on Fifth Avenue in 2018, intending to remodel their 2,500-square-foot residence and add three bathrooms. Yet, for five years, they have had to manage with just one bathroom due to ongoing disputes over plumbing issues. This impasse has led to a fierce legal battle, resulting in two of their bathrooms being left without water.

While investigating the plumbing issues, focusing on the new pipe’s drain placement, their legal team claims to have uncovered something more troubling.

According to a lawsuit filed earlier this month in Manhattan Supreme Court, the building at 907 Fifth Ave. has not submitted audited financial statements since 2020. It also alleges that when requested, the building misrepresented information to hide the fact that it had incurred substantial legal fees over the bathroom dispute.

“A lie is a lie,” remarked attorney Steven Sladkas, representing Chan and Wertheim. He characterized the document falsification as “one of the most serious frauds I’ve encountered.”

The couple is suing the building’s board for fraud and breach of fiduciary duty, seeking damages for these breaches, along with punitive damages and retrospective accounting from December 31, 2019, the last date for which audited records are available.

“We have suffered tremendously,” Chan stated. “What we’ve experienced over the past five years is merely a reflection of a much larger issue connected to this cooperative.”

This co-op is known to be among the city’s elite. Established in 1916, it has a view of Central Park and is located at the corner of East 72nd Street. Notably, Martha Stewart has a pied-à-terre there, and the building was previously home to the elusive heiress Huguette Clark, who owned significant space and later saw those areas sell for $55 million after her passing in 2011. Just last year, the penthouse went for $37.5 million.

The lawsuit claims, “This was a document falsification scheme executed under the authority of one of Manhattan’s most prestigious co-ops,” aiming to deceive stakeholders in multimillion-dollar transactions. It seeks to expose and rectify this wrongdoing.

During the renovations in Chan and Wertheim’s apartment, issues with the bathroom pipes became apparent. A 2018 lawsuit indicated that a pipe in the kitchen had been damaged by a fastener used during drywall installation, causing extensive water damage to the downstairs unit occupied by Officer Andrew Chriseth and his wife, Abby.

The contention centered around another pipe responsible for draining bathroom waste. The proposed solutions included routing through the ceiling of the Chriss family unit below or adjusting the hallway floor in Chan and Wertheim’s unit, but neither was resolved for five years.

As this dispute continued, the couple’s two bathrooms remained without water. Court filings revealed the building had concerns about flooding from deteriorating pipes and took time to upgrade its plumbing.

Throughout the legal struggle, Sladkas requested the building’s financial statements, which took several weeks to obtain. He expressed frustration, noting, “We literally begged for a copy. Shareholders have the right to know the building’s financial health.”

The documents received were found to contain significant discrepancies, failing to disclose ongoing litigations. Although construction insurance had covered a portion of the legal fees, some charges remained blank, raising further concerns.

“The financial data laid out wasn’t communicated to current stakeholders or potential buyers,” Sladkas added, pointing out several hundred thousand dollars in unreported litigation costs.

According to court documents, the financial statements appeared fraudulent, with varying logos and lower reported maintenance fees than originally budgeted. For three years, the monthly maintenance income was listed as identical, to the dollar, raising eyebrows.

CBIZ, which took over Marks Paneth, labeled the documents as forged, asserting, “The report uses falsified signatures and letterhead and appears fraudulent.”

“Discovering this level of deceit was shocking,” Chan expressed, referring to the falsified documents associated with Marks Paneth.

A spokesperson for the co-op board characterized the lawsuit as groundless, asserting that the claims are part of a lengthy trend of frivolous lawsuits by entitled individuals who disregard the co-op’s regulations.

The statement indicated that the managing agent was responsible for the documents and clarified that the co-op board had no knowledge of the issues raised.

“This lawsuit will be vigorously defended, and we will seek all appropriate remedies against both the plaintiffs and their attorneys,” the board’s spokesperson added.

Management at Brown Harris Stevens and the attorney for the Chriss family declined to comment. However, Chan reiterated the necessity for shareholders to know the co-op’s true financial position. He stated, “We’re essentially whistleblowers, and it feels like there’s an attempt to intimidate those who call out serious misconduct.”