Brook Lenfest accused of cheating partners

Posted: March 21, 2013

The court-appointed receiver for an investment partnership has sued developer Brook Lenfest, former head of the group, saying he cheated the other partners in a land deal by not disclosing that the parcel was slated for a new Center City hotel.

In a lawsuit filed Thursday in Common Pleas Court, receiver Davin S. Lamm contends that Lenfest defrauded Mariner Chestnut Partners L.P., which included Lamm and Marc Wiser, when he sold the land on behalf of the partnership to himself at auction for an amount substantially lower than the half-acre parcel at Broad and Chestnut Streets was worth.

The suit says Lenfest failed to disclose that he had a pending deal with Starwood Hotels and Resorts Worldwide Inc. to build a $280 million hotel on the land, thus greatly undervaluing it at the time of the auction.

In interviews, Lamm's lawyer, Oliver Griffin of Kutak Rock L.L.P., said the partners want their fair share of the land's value, perhaps as much as $100 million with the Starwood deal.

Lenfest "forgot to tell everybody that he had struck a deal with Starwood months before the auction," Griffin said. "He knew that he cut his limited partners out of the Starwood deal and bought the property essentially from himself for a song."

Lenfest's attorney, Michael S. Hino of Pepper Hamilton L.L.P., said of the complaint, "We plan to vigorously contest it. If you review the record, we filed extensive objections."

Brook Lenfest is the son of businessman and philanthropist H.F. "Gerry" Lenfest, a partner in Interstate General Media Inc., owner of The Inquirer, the Daily News, and Philly.com.

Proposed for the site, now a parking lot, is a 50-story, dual-branded W/Element hotel still securing financing. Starwood's website lists late spring or early summer for ground-breaking.

Griffin said a report compiled by a liquidating trustee after a one-year investigation resulted in a judge's ruling in September to grant Lamm receiver powers "to go and get any assets back to the partnership that were sold at the auction."

The lawsuit is the latest twist in the property's tortured history. In October 2008, Timothy J. Mahoney III, of Mariner Commercial Properties Inc. of Ardmore, announced plans to convert it into a 58-story Waldorf-Astoria operated by Hilton Hotels Corp. But the recession hit, and financing dried up. By spring 2009, the project was put on ice.

In 2010, Mahoney sold his 50 percent stake to Chestlen Development Group L.P. of Bala Cynwyd, which gave Lenfest an 84 percent interest and Lamm and Wiser 7.5 percent each. At the Oct. 5, 2010, auction, Lenfest emerged as the highest bidder at $12 million.

The complaint's six counts include breach of fudiciary duty, fraud, and usurpation of a corporate opportunity. Lamm is seeking an amount in excess of $50,000 on each count.


Contact Suzette Parmley at 215-854-2855 or sparmley@phillynews.com.

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