Former Owners of Hotel Chelsea Sued for $4.15M by Joseph Chetrit - The Jewish Voice
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Tuesday, March 21, 2023

Former Owners of Hotel Chelsea Sued for $4.15M by Joseph Chetrit

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The Hotel Chelsea is being Sued by Joseph Chetrit.
The Hotel Chelsea is being Sued by Joseph Chetrit.
The storied legacy of Manhattan’s Hotel Chelsea now includes a $4.15 lawsuit filed against it by real estate mega-mogul Joseph Chetrit of the Cherit Group. On March 5th, Chetrit filed the suit in State Supreme Court against the hotel’s former owners, Chelsea 23rd Street Corporation The 14 page document, alleges that both the sellers and former hotel manager Stanley Bard, who was ousted in 2007 from the bohemian diggs, misrepresented elements of the property—including the valuable artwork included and the descriptions of some of the apartment units—during the sale.

Back in 2011, it has been reported that Chetrit paid $78.5 million for the hotel and now because of the “defendants’ fraudulent misrepresentation and concealment,” Chetrit, is currently spearheading massive, contentious, Gene Kaufman-designed renovations at the historic artists’ enclave that will result in an upscale hotel. Chetrit is asking Bard and Co. for $2.15 million to make up for “non-existent assets” that he claims he paid for in the selling price plus damages he also had to hand out, plus an extra $2 million on top for punitive damages. Chetrit says in the lawsuit that he was “defrauded” and “deliberately lied” to, and that Bard and Chelsea 23rd’s “illicit effort” was “outrageous, fraudulent, shocking to the consequence and deliberate.”

The suit goes on to detail every piece of artwork that Chetrit says that he was led to believe was his, because they were gifted to the hotel by the artists or the hotel had bought them. But after ownership changed hands, artists and their affiliates (widows, foundations, etc.) kept materializing to claim works as their own. As a case in point, Arthur Alan Weinstein’s widow asserted her claim to 22 of Chetrit pieces worth as much as $500,000 and claimed that some were damaged when they were returned. According to the lawsuit, Bard admitted in writing that Chelsea 23rd never actually owned Weinstein’s work. Others stepped forward to take back their work, including the Larry Rivers Foundation on behalf of the late Larry Rivers, as well as artist Philip Taaffe himself.

Moreover, in his lawsuit, Chetrit describes which of the 88 apartments at the hotel and which tenants’ rental statuses were misrepresented to him before the sale. For one, there’s a closet on the hotel’s first floor that Chetrit thought he could lease or use after the sale, but a tenant proclaimed it to be his own. It would appear that Chelsea 23rd inflated the monthly rents that some tenants were paying, and the seller didn’t inform Chetrit about some rent-stabilized apartments or other tenants’ rights to the roof, thus deflating the total value of Chetrit’s purchase. In sum, the suit proclaims, “Had plaintiff known of defendants’ fraud regarding the artwork and apartment units, plaintiff never would have paid $78.5 million for the purchase of the Chelsea Hotel.”

Since Chetrit has been managing the day to day operations of the Hotel Chelsea, he has been involved in several instances of legal wrangling. The troubles include stop-work orders at the construction site to rooftop addition drama to complaints by tenants over renovation-induced health hazards and 10 attempted evictions.

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