Ares Capital : Why Harbourside Place developer is suing his ex-partner

Ares Capital : Why Harbourside Place developer is suing his ex-partner

Many of the restaurants and shops at Harbourside Place, Jupiter's new dining and entertainment destination, are open.

But there's still plenty of unfinished business between two men behind it.

Nicholas Mastroianni II, chief executive of Allied Capital and Development of South Florida and the public face of Harbourside, is in a legal war with a lesser-known figure: David Finkelstein, Allied's former chief financial officer.

In a lawsuit in Palm Beach County Circuit Court, Mastroianni's Allied Capital sued Finkelstein, seeking a judge's ruling that Finkelstein is not entitled to any ownership interest in Allied Capital and Harbourside.

Harbourside Place is a $150 million mixed-use center, at the northwest corner of U.S. 1 and Indiantown Road along the Intracoastal Waterway.

Last week marked a celebration of the 10-acre complex to tout the center's restaurants, stores and Wyndham Grand Hotel.

Harbourside Place has attracted national attention because it was built using the EB-5 Visa program, which allows wealthy foreigners to obtain U.S. citizenship by investing $500,000 in a project that will create 10 jobs per contribution.

Harbourside, along with Mastroianni and his Allied Capital, were featured in an October Fortune magazine article that described how Mastroianni now is a nationwide leader in EB-5 financing, an increasingly popular way for real estate developers to find money for projects. Mastroianni has said his firm used the program to raise $99.5 million for Harbourside, largely from Chinese investors.

But the Fortune article also detailed Mastroianni's history of lawsuits, judgments and conflicts with some people with whom he has done business including partners and outside firms.

In the Fortune article, Mike Villella, finance director for the town of Jupiter, called Mastroianni "a challenging individual "who" can be really difficult to work with."

"I go to church every Sunday thankful that (Harbourside) turned out the way it did," Villella told Fortune. "If you look at his past, you could be any one of those people on that list who were in litigation with him. I'm just glad we're not."

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Jupiter may have escaped litigation with Allied Capital and Mastroianni. But Finkelstein, Allied Capital's former chief financial officer until 2013, did not.

In June, Allied Capital and Harbourside sued Finkelstein over an ownership dispute.

Allied alleges Finkelstein was offered a 15 percent interest in both Allied Capital and Harbourside if he contributed $1.5 million in 2010. Allied Capital alleges Finkelstein didn't pony up the money. Finkelstein instead became chief financial officer in 2011. The lawsuit said Finkelstein was paid $3,000 a week.

The ownership dispute continued until February 2013, when the lawsuit alleges Finkelstein was offered 5 percent of Allied Capital, but again refused, seeking 10 percent.

At that point, the lawsuit says, Finkelstein resigned as chief financial officer, but still demanded he be paid 10 percent of the revenues that Allied Capital and Harbourside received, based on a claim he was a 10 percent owner.

Gerald Richman, the West Palm Beach attorney representing Finkelstein, declined to discuss the lawsuit, which he said is pending.

In an interview, Finkelstein also wouldn't talk about the lawsuit, but he said he was "instrumental in putting the whole EB-5 program" together for Harbourside.

"I was involved in the whole project from the beginning with Mr. Mastroianni," Finkelstein said.

State records show Mastroianni was listed as president and Finkelstein vice president of Allied Capital and Development of South Florida when it was formed in 2005. By 2008, however, an annual report did not include Finkelstein. Listed instead were Mastroianni and an entity called Mastroianni & Sons LLC.

Although ownership of Harbourside Place and Allied Capital of South Florida is in dispute, Finkelstein and Mastroianni were partners in other Florida entities, state records show.

For instance, Finkelstein and Mastroianni were partners in a company called Allied Capital and Development LLC. (This is not the same entity as Allied Capital and Development of South Florida LLC, Harbourside's developer.)

Allied Capital and Development built Marbella Villas in North Palm Beach. In 2007, owners at Marbella Villas sued Allied Capital and Park Marbella LLC for construction deficiencies. Although a default judgment was entered against the developers, the lawsuit was dismissed by a Palm Beach County Circuit Court judge in October 2011 after the homeowners association failed to appear at a status conference, court records show.

Mastroianni and Finkelstein also were partners in another project, some 67 acres in Cocoa Beach for a project dubbed Cocoa Landing. That project, which was not built, was the subject of a 2013 lawsuit filed in U.S. District Court.

In the federal lawsuit, Capstone ResDev LLC, sought to enforce personal guarantees from the men for $6.3 million on a loan originally made by Fidelity Federal Bank & Trust. Capstone settled first with Mastroianni, and then in October with Finkelstein, court records show.

Although some projects, such as Cocoa Landing, didn't pan out, Harbourside Place stands as a completed, high-profile development.

It not only shows off Mastroianni's prowess in raising EB-5 money, it also promises to be a festive gathering place for residents and visitors, featuring an inviting amphitheater, walkways and water views.

But getting to the finish line on Harbourside Place has not been easy for Mastroianni's Allied Capital and Development of South Florida. Allied Capital, and affiliated companies, have been the subject of lawsuits during Harbourside's construction.


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