A Russian billionaire senator is accusing his Manhattan contractor of overbilling him and attempting to extort a multimillion-dollar contract for work at his $16 million Time Warner Center apartment.
Vitaly Malkin, 60, filed the $600,000 suit Jan. 25 in New York State Supreme Court against New York City construction management firm Katselnik & Katselnik Group (K&K), multiple news outlets report.
Former banker Vitaly Malkin is a senator in Russia's Federation Council.
K&K did not respond Friday (Feb. 1) to a request for comment. The company's lawyer said in other published reports that he did not comment on civil litigation.
K&K was Malkin's pre-construction manager for demolition of his 3,200-square-foot duplex on the 74th and 75th floors of the luxurious Time Warner Center. The suit accuses K&K of trying to extort a subsequent contract to build out the space after the lawmaker decided to go with another contractor, reports say.
The complaint alleges that K&K put a $170,000 lien on Malkin’s apartment after performing unauthorized work and overbilling at the site, but offered to make the lien "go away" if Malkin granted K&K the lucrative renovation contract, multiple reports said. The lien dispute is being litigated separately.
|OptimumPX via Wikimedia Commons|
Malkin's 3,200-square-foot apartment occupies the 74th and 75th floors of the Time Warner Center in Manhattan.
“They were acting as our New York rep in connection with this project,” Joshua Bernstein, an attorney for Malkin, told Business Insider. “What we allege [is] that K&K, seeking an opportunity to make money off a wealthy foreign investor, took advantage of the confidence that had been reposed of him.”
'Out of Whack'
Malkin bought the property in August 2010 for more than $15.6 million and hired K&K the following year to handle demolition and pre-construction work.
In October 2011, reports said, K&K hired CCS Architecture to design the new interior. But by March 2012, Business Insider reported, K&K offered to become the general contractor on the renovation.
|CCS Architecture (left); K&K Group (right)|
K&K Group was Malkin's pre-construction manager, before the billionaire hired CCS Architecture for additional work, the suit alleges. These photos are from the firms' portfolios, not from the Malkin project.
However, Malkin and K&K were unable to agree on the terms of the contract, according to court filings.
“Their prices were out of whack, and they had demands that we were not willing to meet,” Bernstein told The Real Deal, a New York real estate publication.
The suit alleges that K&K's demands included asking Malkin to deposit the entire construction amount into a domestic escrow account. The company then is accused of sending a new invoice May 30 for $170,000 for a range of construction services, including electrical, carpentry, HVAC, drywall and other services that the complaint says were never authorized.
The complaint says Malkin contacted one contractor, New York Cooling Towers, and was told that a $27,5000 invoice was actually for $10,500 worth of work and that K&K was overbilling.