Though Related CEO drops claim against seven named (aggrieved) EB-5 investors, harassment said to continue, so lawsuit amended to target various "John Does"
I wrote Oct. 11, Related CEO's lawsuit claiming harassment by (aggrieved) EB-5 investors dropped--against all but one. Was there a settlement?
However, that apparently didn't stop other EB-5 investors crowding around his residence and sending email making demands, and continuing "loud, disruptive and threatening demonstrations."
So, on Oct. 23, Blau filed an amended complaint, naming as defendants "John Does 1-100," without identifying any. (The complaint, in the caption, also names the original seven defendants, but the text does not mention them.) Here's the case file.
Instead of saying the defendants had "orchestrated and conducted" acts "of harassment, intimidation and abuse," the amended complaint says the defendants have "orchestrated, aided, abetted, and conducted" those acts "against Plaintiff, his wife, and minor children, outside of Plaintiff’s residence and place of business for over eight months starting in January 2024, continuing through the present, and with specific written threats to continue into the indefinite future."
As I've written, the conduct is hardly defensible, but it also brings to light questionable business practices by Related.
At issue
The defendants invested $500,000 in Hudson Yards, starting in 2014, under the federal EB-5 program, which delivers green cards for a purportedly job-creating enterprise. Investors forego interest, as the enterprise gets low-cost capital.
But the investors also expect their money back, and are often told they should get it back in five to seven years.
In this case, according to Blau's lawsuit, the defendants got their green cards and "are demanding the immediate return of their $500,000 capital investments, despite not having any right or entitlement to such payments ahead of other investors."
It does not clarify when the investment was made, whether and how any of the investors were told they'd be repaid, and whether the documents prohibit repayment for some without repayment for all. Hudson Yards raised at least $1.2 billion from EB-5 investors, in various tranches.
Without seeing the contractual documents, it's hard to tell, but one investor told Bisnow that an intermediary firm that recruited investors promised “risk-free” returns and guaranteed that their capital would be returned within five years.
Note that marketing of EB-5 investments, as with Atlantic Yards, can be at odds with the underlying contractual documents, which may be challenging for unsophisticated investors working outside their native language. See The EB-5 Marketing from 2014 Looks Even Worse Now.
In some cases--and I don't if it's the case here--EB-5 investors are represented by lawyers recommended by the "regional center" middleman in the investment, which can represent a conflict.
Outside the court system
Meanwhile, according to Blau's lawsuit, the Hudson Yards entity "has separately commenced arbitration against certain Defendants in accordance with the requirements of the LLC Agreement."
The lawsuit stresses that the governing agreement and EB-5 program regulations do not require repayment, given that the investments were “[p]referred units are not loans."
Other EB-5 investments, as with Atlantic Yards/Pacific Park, were structured more like loans, with a due date, which is why there's a foreclosure action. That is expected to lead to six railyard sites taken over by a joint venture that includes... Related.
(It's no small irony that, had the current Atlantic Yards/Pacific Park master developer, Greenland USA, structured its EB-5 investments the way Related did with Hudson Yards, it might not have put its collateral at risk and lost control of valuable development sites.)
More from the complaint
Blau's complaint charges that the unnamed defendants work together, given "coordinated messages to Plaintiff: on the signs they wave outside Plaintiff’s home, in email communications from various members and subsets of Defendants’ Group, in letters, on social media posts, and in text messages—it is not a coincidence that dozens of different individuals are all repeating the same demands and threats."
The amended complain notes that demonstrations continue "outside of Plaintiff’s home, and despite the fact that several former members have renounced the behavior of those involved with Defendants’ Group, other members who had not previously demonstrated have resolved to continue what the others started, in their absence."
To stop the harassment, the lawsuit, among other things, seeks a court order enjoining from trespassing and blocking Blau and his family's access to the home, and enjoining them from continuing to threaten and intimidate him, as well as aiding and abetting others.
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