Cottage International Development Group LLC sought to convert one of the hotel towers at Trump Plaza in Atlantic City to condominiums.
The company, which is headquartered in Yonkers, New York, says it put down a $1 million deposit toward the ambitious project with Orlando-based Buena Vista Corp.
The trouble was Buena Vista didn’t own the high rise. The $1 million now is the subject of a May 9 amended complaint filed in U.S. District Court in Fort Lauderdale.
The complaint also names two law firms that handled the escrow as defendants: Gregg J. Pomeroy & Associates of Deerfield Beach and Alan B. Taylor & Associates of Orlando.
The lawsuit claims Pomeroy disbursed $700,000 of the deposit to Taylor, and he forward $300,000 to Buena Vista.
"My client believed its funds were safe and secure with a Florida-licensed attorney," said Cottage attorney Scott Cagan, a GrayRobinson partner in Miami. "Unfortunately, that attorney disbursed and transferred the funds to others over the express objection of my client."
Gregg Pomeroy did not return a phone call for comment by deadline. Neither did Alan Taylor, who according to the lawsuit is believed to hold the $700,000.
The lawsuit claims the deposit was sent to Pomeroy in two installments after Cottage signed a letter of intent to purchase Trump Tower East from Buena Vista last November. A consultant for Buena Vista said the company was "under contract" to acquire the Trump Plaza, the lawsuit states.
The letter of intent provided to New York-based Cottage offered an inspection period that lasted until February.
"Cottage then discovered that BVC did not own the Trump Plaza, nor did it have any enforceable agreement with the owner (Trump Plaza Associates LLC) to purchase it," the lawsuit states.
BVC sent Cottage a copy of a nonbinding letter of intent to buy the building from Trump Associates, the complaint said.
"To this day, BVC (Buena Vista Corp.) has never provided Cottage with any evidence of its contractual right to buy the Trump Plaza," the lawsuit states.
Buena Vista’s phone number in Orlando and a personal phone number for company president Sham Maharaj have been disconnected. At one time Buena Vista owned Orlando’s professional indoor soccer team, the Sharks.
The lawsuit lists claims of fraud, fraud in the inducement, breach of fiduciary duty, unjust enrichment, conversion and other counts. Besides Buena Vista and Maharaj, it names CEO Rohan Kuldip and COO William J. Schwartz as defendants. They could not be reached for comment by deadline.
Show Me The Money
After Cottage learned Buena Vista didn’t own Trump Tower East, it had its attorney, Michael Jacobson, contact Pomeroy in January and asked for the return of the deposit. Jacobson is a partner with Cooper Levenson April Niedelman & Wagenheim in Atlantic City.
Pomeroy told Jacobson a conflict of interest arose around the time Cottage terminated its letter of intent and he no longer represented Buena Vista. Pomeroy said he would either deposit the money in a court registry or transfer it to another law firm associated with Buena Vista.
Cottage insisted he should hold onto the money, the lawsuit states.
Schwartz told Jacobson that it was up to Maharaj whether the money would be returned, the lawsuit states.
Pomeroy told Jacobson in April that there was no "clear escrow agreement," and he transferred the funds to the Taylor Law Firm.
The letter of intent states Cottage had the right to cancel the purchase agreement during the inspection period if it was not satisfied.
Despite the expiration of the letter of intent, Pomeroy told Jacobson that he transferred $700,000, the lawsuit claims. The lawyer said he sent $300,000 to BVC so it could try to facilitate a transaction with Trump, the complaint states.
The case is assigned to U.S. District Judge William P. Dimitrouleas in Fort Lauderdale.