An L.A. Superior Court judge has sanctioned prominent Santa Monica developer Neil Shekhter of NMS Properties over his actions stemming from a 2010 deal forming a joint real estate venture to finance and develop nine multifamily residential properties, mostly on the Westside.
As part of the deal, Shekhter was to provide development expertise to Boston’s AEW Capital Management, which would provide some $60 million in upfront capital.
However, a Nov. 22 ruling detailed the stunning collapse of the transaction, which includes findings of forgery, evidence destruction, and perjury.
Los Angeles Superior Court Judge Suzanne Bruguera dismissed Shekhter’s lawsuit and ordered the developer and his company to pay attorneys’ fees and costs for the defendant, Boston-based AEW.
“Plaintiffs fabricated evidence, submitted perjury about the same, and destroyed evidence, while simultaneously representing to the Court that they were proffering authentic documents and that they had preserved evidence,” Bruguera’s order reads.
Shekhter initially filed the case in 2014 claiming AEW owed him $720 million for violating the terms of a joint venture agreement.
The case, for all its drama, is essentially a contract dispute over the terms of the deal. Shekhter claims that the terms allowed him to buy out AEW after three years – something he attempted to do in 2013 – while AEW claims there was a five-year term. After extensive forensic investigation and testimony, the judge ruled that a document submitted by Shekhter to prove his claim was not authentic.
During the investigation, Shekhter also switched out his personal computer’s hard drive, violating a court order, something his attorney, Louis “Skip” Miller of Century City’s Miller Barondess, said his client admitted was a mistake.
Miller added that he vehemently disagreed with the sanctions and Bruguera’s decision to dismiss the case.
“The ruling is wrong as a matter of law and will be overturned on appeal,” Miller said.
AEW’s attorney, James Fogelman of Gibson Dunn & Crutcher in Century City, said he and his colleagues were pleased with the judge’s order.
“We are grateful that the Court gave this matter the attention it deserved and came to the right result under these extraordinary circumstances,” Fogelman said in a statement.
Three-Pointer
Hulu’s acquisition of Structured Data Intelligence and its Video Genome Project metadata aggregation operation on Nov. 15 represented a rare Santa Monica trifecta in the local deal-making world.
Both companies are headquartered in Santa Monica, as is Structured Data Intelligence’s backer, Segel Group Ltd., the family office of investor David Segel.
The deal is part of Hulu’s attempts to personalize its online streaming platform for users. The Video Genome Project’s data aggregation model creates highly specified recommendations based on viewing history, something that has become a priority for Hulu and competitor Netflix as they seek to keep subscribers engaged with their content.
“The future of television is not just going to be about where and how you watch, it’s going to be about how personal your viewing experience can be,” Ben Smith, head of experience at Hulu, said in a statement. “With this strategic acquisition of The VGP’s technology, we’re gaining important data and personalization capabilities that will allow us to serve our users even better as we expand into live programming.”
Hulu said it expects to fully integrate the company by the end of 2017’s first quarter. Terms of the deal were not disclosed.
Healthy Market
While the election of Donald Trump has left patients reliant on the Affordable Care Act feeling green, a Trump administration could leave Southern California’s health care dealmakers seeing it.
The uncertainty about what – if any – provisions of Obamacare will survive, combined with an already aging populace, means the market will be rife with companies looking for transactional targets.
“There are a lot of companies in health care services, especially in Southern California, that are mid-sized or smaller-sized and need scale in order to stay profitable,” said Jim Freedman, chairman and managing director of Intrepid Investment Bank in Brentwood. “With this whole Obamacare thing now in question, it’s going to have some interesting effects in the deal business.”
Freedman and other players in Los Angeles said multiple acquisitions could be in the cards next year given the cluster of middle-market health care companies in the region.
Glendale-based Apollo Medical Holdings Inc. could be getting the party started early. The publicly-traded company announced Nov. 16 it had acquired San Francisco-based Bay Area Hospitalist Associates for an undisclosed sum.
Staff reporter Henry Meier can be reached at [email protected] or (323) 549-5225, ext. 221.
