Suit Against Morgans Hotel Group Management, LLC, Formerly Known
as Ian Schrager Hotel Management
|NEW YORK - Jan. 17, 2006 -- Philips South Beach, LLC ("Philips"), owner
of the Shore Club Hotel in Miami Beach, Florida, filed a multi-million
dollar suit today against Morgans Hotel Group Management, LLC ("Morgans"),
formerly known as Ian Schrager Hotel Management, and against Ian Schrager,
former CEO of Morgans; W. Edward Scheetz, the chief executive officer of
Morgans Hotel who directed the management of Morgans; and David T. Hamamoto,
who served as chairman of Morgans Hotel and also directed the management
The complaint alleges fraudulent and other improper actions by Morgans to siphon income, resources and celebrity cachet from the Shore Club for the benefit of the nearby Delano hotel, wholly owned by Morgans' affiliate, Morgans Hotel Group. The suit was filed in the Supreme Court of the State of New York, County of New York, by Shore Club attorneys Ben Brafman of Brafman & Associates and co-counsel Kenneth A. Zitter.
Over more than a three-year period, according to the complaint, Morgans
engaged in a deliberate, fraudulent scheme to transfer Shore Club income
to the Delano and Delano expenses to the Shore Club. Among other actions,
Philips asserts that Morgans redirected guests from the Shore Club to the
Delano, falsely advised guests that rooms were not available at the Shore
Club in order to book them at the Delano, and directed Morgans' employees
to change the venue of high-profile special events from the Shore Club
to the Delano. In facilitating this, Philips claims that Morgans covered
up its actions by destroying documents that proved the shifting of revenues
and expenses, specifically altering information in monthly management reports.
Since its opening in August 2001, the Shore Club has become a highly coveted destination in South Beach with such restaurant and club assets as Nobu, Ago and Skybar Miami Beach, as well as a singular elegance and sophistication. In July 2002, Philips hired Ian Schrager Hotel Management, LLC (subsequently known as Morgans Hotel Group Management, LLC) to manage the Shore Club.
Philips South Beach is principally owned by Philips SB Associates, LLC and Clark SB II, LLC.
For Shore Club
|Also See:||Hip South Beach Hotel, The Shore Club, Abandons Plans to Convert to a Condo-hotel, Project Falls Apart After Ian Schrager Quit as CEO of Morgans Hotel Group, the Operator / August 2005|
|Ian Schrager and Partner Aby Rosen Acquire Three Riande Continental Hotels in Florida / December 2005|