STATEN ISLAND — The New York Wheel is being built with no business plan and costs that are spiralling way over budget, a lawsuit charges.
Developers Wheel Estate LLC filed a lawsuit in August to cut early investors Eric Kaufman and Meir Laufer out of the project after they refused to pony up a combined $6.29 million to cover $17 million costs last year, even though others like CEO Rich Marin gave the funds, according to court documents.
Kaufman also fired back last week, claiming Wheel Estate LLC did not follow protocol in asking for the money and has been trying to push out early supporters to get more profit for themselves.
"Wheel Estate has engaged in an egregious scheme, in breach of its contractual obligations, to deprive the originators of the groundbreaking New York Wheel attraction of their rightful ownership interest in the project," Kaufman's lawyer, Marc Kasowitz, said in statement.
"We are confident that this litigation will finally put an end to Wheel Estate’s abusive pattern of withholding critical financial information and attempting to improperly increase its own financial interest at the expense of the originators."
Marin declined to comment for this story.
Kaufman said that he didn't give the money last year because of the lack of transparency to board members, a "lack of a coherent business plan and effective management," cost overruns and the ability to get outside investors, according to an email he sent to other investors in June 2014.
In his suit, Kaufman argues that the developers did not follow protocol before asking for extra money — like trying to get it from outside sources first — and he was excluded from board meetings after declining.
The Real Deal reported that the New York Wheel expects to make $127.85 million in 2017, more than the Empire State Building, and Kaufman claims the developers have tried to push him out to get a bigger share of that money.
In the original suit filed by developers, they asked the court to lower the owning stake in the property of Kaufman, under Vandelay Ventures, from 4 percent to 1.078 percent because he did not pay the required $680,000 for the capital calls.
They also asked to lessen Laufer's stake, under 57 NYW LLC, from 33 percent to 11.084 percent because he only paid $580,000 of the $5.4 million required last year.
The 60-story ferris wheel is expected to open in 2017.