Prominent New York real estate developer Michael Shubo is being sued by a disgruntled couple who dropped $6.1 million on the Mandarin Oriental Fifth Avenue, who claim the luxury building is riddled with problems, including an “algae-filled” rooftop pool.
In a complaint filed Monday in New York State Supreme Court in Manhattan, John Goodman and his wife, Diane Johnson, argue that Schvo’s development at 685 Fifth Avenue is “plagued by construction defects, unfinished facilities, pervasive neglect and poor service that simply fails to live up to Mandarin Oriental’s five-star standards or Defendants’ hype.”
The couple paid a record amount for a one-bedroom apartment late last year, then filed a separate lawsuit against Schvoe, demanding repairs to the unfinished unit, The Washington Post reported.
The new complaint also names Mandarin Oriental Group and Shuvo’s foreign investors, who are seeking to recover their money to help the company steer clear of financial difficulties.
According to the lawsuit, the Goodmans said their 18th floor apartment “is now virtually worthless and that they have suffered shattered dreams, significant financial losses and a deep sense of betrayal.”
The much talked about building, where another buyer paid a record $3.88 million in cash for a small studio last December, is a disaster caused by fraud, the complaint states.
“The rooftop oasis remained open despite being transformed into a wasteland of dead leaves and an algae-filled swimming pool, posing health risks to residents,” the lawsuit alleges.
The Goodmans also claimed the property was a “virtual ghost town” and that after three years only 16 of the 64 units had been sold.
“After squeezing out the profits, Mr Schvo has effectively abandoned the building, leaving it financially and reputationally ruined, with the sponsors controlled by Mr Schvo facing imminent default,” the statement said, adding that it was “trapped in bleak conditions.”
The situation is so bad that the promised Michelin-starred Daniel Boulud private restaurant now closes at 5pm every day, “eliminating the possibility of enjoying a dining experience that was advertised as a major incentive amenity.”
The complaint accuses Schvo of orchestrating an “audacious scheme to defraud buyers.”
The allegations are the same as those in a complaint against Shubo filed by the owners of the Core Club, a members-only luxury hotel that filed a $600 million lawsuit against the developer earlier this month.
According to the Goodmans’ lawsuit, Schvo gave them “an alluring illusion of luxury and exclusivity.”
But instead of living a dream, they are living a nightmare.
Residents who have paid millions of dollars are walking around seeing dead plants and worse.
“The grand entrance, envisioned as a welcoming portal, remains an unfinished façade – an unsightly, half-painted temporary plywood canopy that should be bronze in color – an unpleasant visual reminder of the project’s stalled progress and lack of care,” the lawsuit states.
Schvo’s lawyers denied the latest allegations.
“This is a disgruntled buyer who has decided to declare war and is spending his days searching for withered flowers,” attorney Morris Misley of the law firm Wachtell Misley told The Post.
The Goodmans’ lawsuit, filed in December, alleged that their treasured home was riddled with problems, including warped woodwork, rippled wallpaper, chipped doors, a lack of warmth from heated floors, the wrong-sized furniture and the absence of promised custom turnkey parts, such as table mats.
Schvo’s lawyer previously told The Washington Post that the lawsuit was a “brazen attempt to use the courts and the press to extort money.”
At the same time, Page Six reported that Schvot described the building as “With blatant disregard for his own private propertyhosting disruptive events, monopolizing common areas, having guests stay in turnkey residences, and violating building rules with impunity.”
Shuvo is also being sued by his former business partner, Serdar Bilgili, for fraud and unjust enrichment in an unrelated incident at the Crown Building at 730 Fifth Avenue.
In 2018, Schvoe pleaded guilty to tax evasion and paid $3.5 million in back taxes and penalties.
