|By Lorraine Mirabella, The Baltimore Sun
Knight Ridder/Tribune Business News
Aug. 18, 2005 - A developer of Baltimore's Ritz-Carlton Residences who has been accused of fraud by his partners filed a lawsuit in return yesterday, saying they cheated him out of his ownership interest in the $250 million luxury condo project under construction at the foot of Federal Hill.
Edward V. Giannasca II, in a nine-count lawsuit that two attorneys said was filed yesterday in U.S. District Court in Baltimore, accused owners of New York-based Midtown Equities LLC and its Midtown Baltimore LLC unit of fraud, breach of contract, invasion of privacy, interference with business and contractual relationships and civil conspiracy. It seeks $250 million in damages.
The lawsuit, which largely disputes the suit filed July 27 by Midtown Baltimore, marks the latest tangle in a project long dogged by financial and legal disputes.
Giannasca, who took over the Ritz project in 2000 after an initial partnership fell through, brought in Midtown Equities as an investor in 2002. He became an employee of Midtown Baltimore before leaving under disputed circumstances last month.
Responding to Midtown Baltimore's allegations, Giannasca says he was not fired on July 11 but resigned from the project on July 5 after discovering accounting irregularities. He also contends that his partners used offensive racial slurs and that they tried to break into Giannasca's private computer files.
Jack Cayre, senior vice president of Midtown Baltimore, said he was unaware of the lawsuit. But "based on how he's conducted himself in the past, I wouldn't be surprised with any allegations he's made," Cayre said of Giannasca.
Midtown Baltimore's attorney, Thomas M. Wood IV, declined to comment because he hadn't seen the Giannasca lawsuit. Giannasca's attorney, Marc Seldin Rosen, also declined to comment.
The lawsuit says Joseph Cayre and Jack Cayre of Midtown Equities misled Giannasca into giving up valuable equity interests in the Ritz and never gave Giannasca interests in projects in Long Island and Miami as promised. The Cayres are negotiating to sell the Ritz project, according to the suit, and "needed an excuse to cut the Giannasca interest out of the Baltimore project."
Giannasca said in his lawsuit that he was introduced to the Cayre family in the summer of 2002 and that Midtown proposed a deal for the Baltimore Ritz: Midtown would own half and Giannasca and a partner would each own 25 percent. Giannasca agreed to reduce his ownership to 10 percent in exchange for becoming a part of the Midtown Group and working on multiple projects, including the local Ritz, a Ritz in Long Island and another Midtown project in Miami, his lawsuit contends.
"The Cayre family and Midtown schemed from the very beginning to take advantage of...Giannasca's good will, skills, hard work, relationships, and experience in Baltimore; entice and ensnare him with an interest in the New York and Miami Projects, then cut him out of the Miami and New York projects and use the same method to first diminish and then cheat him out of his interest in the Baltimore Ritz Carlton project," the suit said.
Over the course of the project, the suit says, Giannasca became aware of sloppy bookkeeping and accounting irregularities. "Personal services and other expenses (such as costs for helicopters, Gulfstream jets, limousines and other luxury items) were booked as costs of the Ritz Carlton Project," the suit said.
Midtown's July complaint, which seeks more than $20 million in damages, claims Giannasca defrauded Midtown by spending time and using Midtown resources to develop a New Orleans condo project rather than working full time on overseeing sales, marketing and construction of the Baltimore Ritz.
Giannasca counters in his lawsuit that he managed the day to day operations of the Ritz far beyond 40 hours a week and never competed with the Ritz. He said there was no agreement that prohibited him from going into other business ventures.
Jack Cayre said that about half of the Ritz's 178 condos have sold, with units priced from $1.9 million to $2.2 million the best sellers so far. Condos are priced up to $5 million.
He said the first phase of construction, including putting in bulkheads, should be completed this month. The second phase, including excavation and foundations, should start after Labor Day.
The Ritz, originally envisioned as an upscale hotel, was first planned by Florida developer Stuart C. "Neil" Fisher on its current site, an abandoned Bethlehem Steel propeller yard on Key Highway.
Fisher stepped aside as the developer in January 2000 after reports surfaced that he had no apparent assets, was refusing to pay a fraud judgment, and that past developments in which he was involved had ended in lawsuits and bankruptcies.
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