The brutal struggle of a wealthy New York family to sell a $258 million building on Madison Avenue

With his name on a building at Yale and linked to various investment companies and charitable foundations, the Slifka it’s the kind of New York family whose members regularly appear in party photos in Manhattan and the Hamptons.

But lately, they also appear on both sides in court documents.

Last week, Randy Slifka, one of the sons of Halcyon Capital Management founder Alan Slifka, and grandson of promoter Joseph Slifka, filed a lawsuit in New York State Court alleging that he and his brother were defrauded in the 2019 sale of one of the Joseph buildings, 477 Madison, for approximately $258 million. They are seeking more than $37 million in damages.

The defendant in the lawsuit is Michael Hechtan accountant who oversaw trusts for Randy and his siblings and their 93-year-old aunt, Barbara Slifka. According to Randy’s lawsuit, Hecht allowed Shorenstein, the property manager of the 24-story building at Madison Avenue and 51st Street, to influence the building’s valuation in ways that benefited Barbara. at the expense of his nephews.

Barbara, “who was 89 at the time of the sale in 2019 and in declining health, understood little, if any, how the money from the sale of 477 Madison was being distributed,” says Randy.

Hecht declined to comment on the lawsuit, as did his attorney, Gregory Clarick. A spokesperson for Shorenstein did not immediately respond to a request for comment.

But Randy’s approach to Hecht departs from previous claims he filed against Barbara herself. In September, he won an arbitration award of $16 million against Barbara, whom he accused of breaching his fiduciary duty in distributions to him and his brothers from the sale of the building. Barbara, however, won Randy’s lawsuit in 2017 challenging her authority to sell the building in the first place.

Randy, who runs Slifka Asset Management, is a renowned collector of modern art, while Barbara, a longtime fashion editor at Harper’s Bazaar, is a board member of the Solomon R. Guggenheim Foundation and the New York City Ballet and was previously a member of the Parrish Museum of Art in Southampton. Hecht is a trustee of Bennington College, the Trisha Brown Dance Company and the Lucille Lortel Theater Foundation.

The fight has been brewing since the death of Alan Slifka in 2011, but it has its roots in the will of his father, whose name adorns the Joseph Slifka Center for Jewish Life at Yale University.

According to Randy’s lawsuit, Joseph Slifka, who died in 1992, left the building in equal shares to Alan and Barbara with instructions that their interests similarly pass to their children. Upon his death, Alan’s interest was split between Randy and two other children, leaving Barbara with the larger share.

To complicate matters further, Joseph divided 477 Madison into interest on fees, ownership of the property itself, and lease, rights to rental income. Rental fees and interest were also split equally between Alan and Barbara, with the majority going to them personally, but significant percentages also going to trusts on their behalf.

The building was inaugurated in the 1950s with the Ford Foundation as anchor tenant and also became the magazine’s headquarters Vacation. But 477 Madison has fallen out of favor in recent years as tenants flocked to more modern buildings.

In 2013, Shorestein paid $33 million to acquire most of the rental rights that had belonged to Alan, according to Randy’s lawsuit. But those rights are due to expire in 2039, making it difficult for the property management company to secure funding for a much-needed renovation to the property. Meanwhile, the rental listing at 477 Madison has shrunk further. When it was sold, the building was only half full, says Randy.

Barbara informed her nephews in April 2017 that she intended to combine fee interest and lease and put the building up for sale. Randy and one of her brothers, Michael, objected and filed a lawsuit claiming she was not allowed to make this decision unilaterally. But a New York state judge ruled in favor of Barbara.

In Randy’s most recent lawsuit, he claims Hecht allowed Shorenstein access to the valuation process for the planned sale. Shorenstein would have urged them to cancel the initial appraisals which valued the land interests more than the interests on the rental income.

According to Randy, Newmark Group released a draft valuation in 2017 assessing the interest on fees at $173 million in comparison with $101 million for the lease. But two years later, just before the sale of the building to RFR Holdings, the allocations were reversed so that the interest on the fees was assessed at $73 million and the lease on $112 million, says the lawsuit. After the sale, Barbara would have allocated 40% of the proceeds to the first and 60% to the second.

Randy claims this benefited Barbara, who still held her rights to the rental income, and Shorenstein, who more than doubled her 2013 investment, while hurting her and her siblings’ position. The arbitration panel that sided with Randy in September called the sale a “tainted process.”

The lawsuit, which alleges that Hecht abdicated liability to the trusts created by Joseph Slifka by allowing this to happen, seeks to $37.6 million in damages, including interest, which would be shared between the two trusts.

Meanwhile, RFR, which is owned by Aby Rosen and Michael Fuchs and also owns the Chrysler and Seagram buildings in its Manhattan portfolio, renovated Joseph’s post-war estate to add garden terraces, larger windows and tenant amenities that include a clubhouse, wellness center, and lobby art. program which featured works by Jeff Koons and Roy Lichtenstein.

(c) 2023, The Washington Post

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