New York real estate magnate Charles Kushner is being accused by a former employee of diverting cash from the company’s $1.8 billion purchase of the devilish property at 666 Fifth Ave. Kushner denies all accusations of wrong doing.
Some $5 million of the money used from the financing of the deal is alleged to have gone to supporting The New York Observer. There’s a novel way to fix the ailing news business.
The Star-Ledger: One of the biggest commercial real estate deals in New York history was used by developer Charles Kushner to funnel more than $5 million into the New York Observer, the perennially money-losing newspaper run by his son Jared, according to a former top Kushner executive.
In a lawsuit filed in state Superior Court, Kevin Swill, the former president of Westminster Capital Associates — the financing arm of Kushner Cos. — charged the real estate transaction was used to help prop up the influential weekly, purchased by the family in 2006.
Swill also said Kushner paid at least $300,000 from the deal into a separate bank account for financier Mark O’Donnell, the live-in boyfriend of former Gov. James McGreevey and now an investment officer with Kushner’s companies.
Those payments, as well as others covering family loans and Kushner’s personal mortgage, allegedly amounted to a “wrongful diversion” of the proceeds from a complicated purchase of 666 Fifth Ave. in Manhattan. Charles and Jared Kushner “exerted undue influence and breached their duties” to the company and their partners, according to the lawsuit filed Nov. 25 in Bergen County.
So how was it done, exactly?
According to Swill’s lawsuit, the financing was provided through Barclays Capital, including a $1.2 billion mortgage and secondary loans of $585 million. Westminster received an $18 million commission. Of that, Swill claimed millions were used for personal Kushner expenditures, including $5 million to the Observer that went through the trust funds of Kushner’s children, another $1.1 million to pay the personal mortgage of Charles Kushner and $2.25 million to repay Kushner family loans.
Hat Tip: NY Mag