Ruling Allows SPI Holdings to Take Control of Santa Monica Luxury Apartment Buildings

A Los Angeles County Superior Court judge today cleared the way for new owners to take control of nine luxury apartment buildings, marking a turning point in a byzantine, multi-year and multi-case dispute that has involved court findings of forgery, perjury and the destruction of evidence by a Santa Monica-based developer, Neil Shekhter, and companies affiliated with him.

The ruling allows San Francisco investor Dennis Wong, a part-owner of the Los Angeles Clippers, and his ownership group, including SPI Holdings, to finally take possession of the properties they acquired in 2016.

“SPI has waited patiently for this legal process to play out,” said Elliot Peters, a partner in the San Francisco law firm of Keker, Van Nest & Peters, which represented Wong’s SPI Holdings. “The misconduct of NMS has been confirmed. SPI is now the unquestioned owner of these terrific properties.”

In 2016, SPI acquired nine luxury rental properties from a joint venture group for more than $400 million. The members of the joint venture group, P6 LA MF Holdings SPE, LLC and NMS Capital Partners I, LLC, have been embroiled in a long-running dispute over the properties. NMS Capital Partners, owned by Shekhter, sued to invalidate the sale of the properties to SPI.

In November 2016, a Los Angeles County Superior Court judge entered terminating sanctions against Shekhter, NMS Capital Partners and various affiliates in the lawsuit against P6 LA MF Holdings, finding that they had engaged in “egregious” and “reprehensible” misconduct, including the destruction of documents, forgery and perjury.

Shekhter and his companies appealed and the Court of Appeal affirmed the judgment against NMS Capital Partners, finding that its “acts of intentional destruction and suppression of evidence and perjury constituted discovery abuse that is egregious and intolerable and infects the entire proceedings.” The California Supreme Court recently denied NMS Capital Partners’ petition for a review of the Court of Appeal decision.

While the litigation-misconduct saga played out in the appellate courts, the litigation between NMS and SPI was stayed and eight of the nine properties were managed by a court-appointed third-party property manager on an interim basis. Now, two years after acquiring the properties, SPI and its affiliates will be allowed to take possession and operate them.

In an order issued this morning, Judge Gerald Rosenberg found that SPI and its affiliates are “free to manage and own the properties, including to collect and disburse revenues therefrom, as they see fit.”

“I am thrilled that Judge Rosenberg has put an end to the baseless litigation against us,” Wong said. “These are premier properties and we look forward to taking control of them and delivering an outstanding residential experience, which our tenants expect and deserve.”

View source version on businesswire.com: https://www.businesswire.com/news/home/20181115006069/en/