ST. GEORGE — The CEO of the New York Wheel was directly responsible for trying to force a leading investor out of the project while letting the tourism attraction's costs spiral out of control, the latest filing in a court battle claims.
Investor Eric Kaufman said CEO Rich Marin filed a lawsuit in August attempting to cut Kaufman and fellow investor Meir Laufer out of the project after they refused to pony up a combined $6.29 million to help cover $17 million in costs last year.
In his response filed on Thursday, Kaufman alleges that Marin abused the capital call process to increase his company Wheel Estate LLC's stake in the Ferris wheel — while minimizing Kaufman's company Vandelay Ventures LLC's share.
"Since the majority shareholders and CEO Rich Marin cannot deny that the budget for this project has already more than doubled on their watch, and they have never argued to the Court that they complied with their contract when they demanded that Mr. Kaufman contribute additional capital, we are confident that Mr. Kaufman will prevail in his claims," said Kaufman's lawyer Kevin Cyrulnik, of Kasowitz, Benson, Torres & Friedman.
According to the suit, the Wheel — which is expected to be the world's largest when it opens on St. George's waterfront — originally had a budget of $250 million but that grew to $350 million after it was approved by the City Council in 2013.
After Kaufman was removed as CFO, the budget grew again to $500 million, which Marin chalked up to engineering and landscaping costs when asked about it last year, according to the suit.
Marin did not want to comment on this story, but he told the Staten Island Advance that he hadn't been served with the countersuit yet.
"If this is coming from Vandelay, as far as I'm concerned it's going to get real interesting, real fast," Marin told the paper. "That's all I will say."
Infighting between board members of the Wheel project started after developers filed a suit in August to lower the ownership stake of Kaufman and Laufer after they did not pay for two separate capital calls.
In his suit, Kaufman said he did not put up the money because of a lack of transparency in the project and because developers did not follow protocol which dictates that they should try to get the money from outside sources first.
He also said that Wheel Estate knew it's other "extremely wealthy" investors would have no problem meeting the capital calls and others, like Kaufman, wouldn't be able to.
The 60-story Ferris wheel is expected to open in 2017.
