Rich Marin named in suit over New York Wheel cost overruns

New York Wheel CEO Rich Marin, the former Bear Stearns executive tasked with heading up plans for t

A rendering of the New York Wheel (inset: Rich Marin)

New York Wheel CEO Rich Marin, the former Bear Stearns executive tasked with heading up plans for the $500 million Staten Island observation wheel, has finally gotten tangled up in litigation among the project’s investment partners.

Marin, who has thus far watched the legal battle from the sidelines, was named as a defendant in an amended counterclaim filed by Eric Kaufman, one of the original founders of the wheel.

In the counterclaim, filed in response to a lawsuit brought last year by the wheel’s majority investors, Kaufman accuses Marin of conspiring with the project’s majority investors to improperly dilute his equity stake in the company. It also accuses him of breaching his fiduciary responsibility to serve the minority investors as CEO of the project.

Kaufman says Marin should be held accountable for the escalating costs of the wheel, which was initially slated to cost $250 million but is now budgeted at more than $500 million.

“The counterclaim adds CEO Richard Marin as a counterclaim defendant for his role in the ballooning expenses that have more than doubled the cost of the wheel and in the efforts to marginalize and ultimately drive Kaufman out of the company without any basis,” said Kevin Cyrulnik of Kasowitz, Benson, Torres & Friedman, Kaufman’s attorney.

Marin declined to comment on the latest legal filings. The Staten Island Advance first reported news of the counterclaim.

The dispute dates back to July 2015, when Wheel Estate LLC, an entity held by the wheel’s majority investments Lloyd Goldman, Joe Nakash, Andrew Ratner and Jay Anderson, asked a judge to approve reducing Kaufman’s stake to just 1.08 percent from the 4 percent laid out in the original operating agreement, saying he had failed to pony up the funds to satisfy several capital calls to the board.

They also wanted to reduce the stake held by Meir Laufer, the original brains behind the wheel, to just 11.08 percent from 33 percent.

Both Kaufman and Laufer argued that the capital calls breached the terms of the project’s operating agreement.

Marin is no stranger to controversy. He was allegedly dropped from his role managing several troubled hedge funds at Bear Stearns in 2007, and was unceremoniously fired from his next gig – helping Africa Israel USA rescue some of its assets amid the recession – after just two years.

Meanwhile, Laufer claims that the board is trying to oust him as chairman amid the chaos. He filed an injunction to stop the ouster.

Laufer declined several requests for comment via his attorney, Kenneth Rubinstein.

Source: The Real Deal