Real Estate Business Gets Ugly in NYC
MANHATTAN (CN) - A man who pleaded guilty to securities fraud in 1998 wants a state court to put a stop to lawsuits that he claims threaten his life and the well-being of his wife and two children.
Salvatore Lauria, who once worked as a consultant for Bayrock Group, a Manhattan-based luxury real estate developer, claims in court that a onetime executive of the firm exposed his criminal past "in a relentless, extortionate, billion-dollar shakedown."
Former chief financial officer Jody Kriss filed frivolous lawsuits that disclosed court-sealed information, putting him and his family "in grave danger," Lauria says in a 31-page complaint in New York County Supreme Court.
One of the documents revealed that Lauria cooperated with the government against organized crime figures, and that led to a public beating and death threat in 2012, Lauria claims.
"Kriss is a predator with a veneer of legitimacy, a wolf masquerading as a shepherd, a Tom Hagen," Lauria contends, invoking the name of the mob confidante, or consigliere, played by Robert Duvall in "The Godfather" films.
"His use and abuse of the judicial system to steal, pressure and extort Lauria and other defendants show that mobsters and extortionists do not always pack a gun, carry a bat or threaten physical violence. Sometimes they wear suits and have fancy degrees from Ivy League schools like Wharton," Lauria says in the lawsuit.
He seeks $5 million and punitive damages for intentional infliction of emotional distress.
Kriss's association with Bayrock dates to the early 2000s, according to the complaint, when he and his father, attorney Ronald Kriss, "masterminded a plan to take over" the company.
Bayrock specializes in high-end residential, commercial, resort and hotel projects in New York, Florida and Arizona, according to press reports. In Manhattan, it was a development partner in Trump SoHo, a luxury 46-story hotel condominium with a penthouse unit that hit the market last fall at $50 million, according to the New York Business Journal.
Jody Kriss worked as a "low-level analyst" at Bayrock before being named chief financial officer as the company sought to downplay the criminal histories of Lauria and others in order to raise money from banks and outside investors for its projects, the lawsuit claims.
Kriss, who started at Bayrock in 2003 and was fired in 2008, allegedly encouraged the hiring of his Ivy League-educated father as outside general counsel to help the effort. In turn, the elder Kriss advised making his son the public face of the company because he had a finance degree from the Wharton School at the University of Pennsylvania and no criminal past, according to the complaint.
"Together at the helm, Jody and Ronald Kriss paid themselves millions of dollars in commissions and legal fees for several years posing as the figureheads at Bayrock," Lauria says.
But the real goal, he claims, "was to eventually turn on the very criminals they were covering up for, and to extort them for hundreds of times the money they made in fees as the CFO and general counsel of Bayrock."
The complaint cites a deal Lauria brokered in 2007 as the turning point.
Up to then, the lawsuit says, Jody Kriss "was intrigued" by Lauria's guilty plea to a "pump and dump" scheme that involved a Russian and Italian brokerage.
But Kriss became incensed "that a convicted criminal like Lauria" would earn a $2.5 million commission on a deal that saw an Icelandic company invest $85 million in Bayrock, the complaint states.
"So Kriss embarked on a crusade to extort an additional bonus from Bayrock for the transaction," on which he had advised, according to the complaint. That allegedly included threats to publicly disclose the criminal histories of Lauria and others.
Bayrock authorized a $500,000 bonus for Kriss, but he wanted more - $1.5 million of Lauria's $2.5 million commission, according to the complaint. Bayrock refused.
A year later, Kriss was fired. That's when he "took to the courts for his extortion," Lauria claims, filing his first lawsuit against Bayrock and others.
The case was dismissed in 2010, but a new avenue soon opened: A stolen computer hard drive was provided to Kriss that contained court-sealed documents and privileged communication between Bayrock and its attorneys. "This gave Kriss the leverage he needed to wage his billion-dollar extortion campaign against Bayrock and other defendants," Lauria says in the complaint.
From 2008 to 2013, Kriss filed four lawsuits, two seeking $100 million in damages and one asking for $1 billion in damages. Attached to the pleadings - and made public - were the sealed documents and client-attorney communications.
Lauria and Bayrock were consistently named in the actions, as were other employees and company principals. But the list of defendants grew "bizarre," Lauria says, and at times included white-shoe law firms, celebrities Donald and Ivanka Trump, and Assistant U.S. Attorney Todd Kaminsky.
The goal of having the bold-face names "was obvious," Lauria says: to shake down the famous "who might have something to lose if they were associated with former criminals."
But Kriss "did the unthinkable," the complaint states, when he disclosed the sealed information identifying Lauria as cooperating with the government "to a famous criminal lawyer who had represented the very members of the Mafia that Lauria had cooperated against."
That led to a 2012 beating in a Brooklyn restaurant by "one of the members of the Mafia" who threatened to kill him, Lauria claims.
"Events such as this - spawned by Kriss's merciless quest for a payday - show that the actual merits of Kriss's claims are beside the point. Kriss's only goal is to extort money from Lauria, whether through litigation or fear of death," according to the complaint.
These tactics "have caused Lauria and his family to live in extreme fear and emotional distress."
Lauria says he is depressed and unable to sleep, and that relations are strained with his wife and children, which has caused him "even further emotional distress."
Lauria seeks damages for the "severe emotional distress" that he and his family have been put through "after their lives were put in grave danger."
He also seeks attorneys' fees and costs incurred from the Kriss lawsuits and for bringing his own action.
And he wants Kriss barred from filing any more lawsuits against him without court approval.
He is represented by Nader Mobargha with Beys Stein Mobargha & Berland.
Kriss, now a principal in residential real estate developer East River Partners in Manhattan, could not be reached for comment.
The New York Post quoted a statement from him that characterized the Lauria lawsuit as "bullying tactics."