Arbor Realty Trust is facing a lawsuit from scion Maurice Kaufman’s best friend, who alleges that he and his CEO father, Ivan Kaufman, violated an agreement entitling him to a $1-million finder’s fee for one of Chicago’s largest-ever multifamily deals.
The plaintiff, tech entrepreneur Adam Cooper, says he arranged for Moshe Wechsler’s Emerald Empire to borrow $417 million from Arbor for Emerald’ $600 million purchase of the former Pangea Properties multifamily portfolio on Chicago’s South and West sides that closed late last year, according to the suit filed in a New York court on March 30.
Arbor and Kaufman violated an agreement between the parties that emerged after Cooper introduced Wechsler to Kaufman and facilitated the investor borrowing nearly $1 billion from Arbor for several commercial real estate deals that began in November 2021, including the loan for the Pangea portfolio purchase, according to the filing.
Cooper and Kaufman have been friends for more than 20 years, according to the lawsuit.
“There’s a sense of trust here that was seriously abused by the Kaufman family. It’s unfortunate that they elected to put dollars ahead of relationships,” Cooper’s attorney, Larry Hutcher, told The Real Deal.
A spokesperson for Arbor declined to comment.
Cooper met Wechsler in 2020 and connected him with his friend, having Kaufman in mind as a prospective lender to Emerald. At that time, Kaufman was allegedly “ecstatic” about the possibility and agreed with Cooper that Arbor would pay him a finder’s fee if any deals were consummated, according to the lawsuit.
Cooper’s lawsuit says he worked regularly to resolve tensions between the two parties to make sure Arbor’s first loan to Emerald went through. The deal closed successfully and both parties went on to work on several subsequent deals, according to the suit.
In fall 2021, Cooper made a written agreement with Wechsler that Emerald would pay Cooper’s fee on bridge loans, with the caveat that Cooper would not be entitled to a fee on any deals procured using a mortgage broker so that Emerald would not have to pay both Cooper and the broker.
Cooper made a verbal agreement with Kaufman that Arbor would pay Cooper’s fees of 0.25 percent on any future agency loans. But Kaufman allegedly cautioned that financing terms differ and that they would figure out the appropriate percentage owed when Emerald procured its first agency loan from Arbor, according to the lawsuit.
When Wechsler was approached by broker Meridian Capital Group to buy the Pangea portfolio, Cooper’s lawsuit says he encouraged him to use Arbor for financing over Meridian’s lending arm, NewPoint Real Estate Capital, despite Meridian telling Wechsler they would be “offended” if he used Arbor. The resulting agency loan would have been the first deal that entitled Cooper to receive payment from Kaufman, according to his attorney.
When the deal was several months away from closing, Kaufman told Cooper that he did not have to pay a finder’s fee for the Chicago deal because a broker was involved in the deal, then later said the parties never came to an agreement on a finder’s fee, which “devastated” Cooper, according to the lawsuit.
The suit also states that an August 2022 email from Kaufman reveals that he was upset that Cooper’s fee would be more than his own compensation for the deal.
After the deal closed, Kaufman allegedly offered Cooper $100,000 if he waived all rights to future fees. Cooper refused, believing he was entitled to more than 10 times that amount and he knew future agency loans were already in the works between Emerald and Arbor, according to the suit.
Arbor is also facing other legal trouble in Houston, where the firm foreclosed on four low-income multifamily properties valued at $229 million, TRD reported earlier this month.