Photo: Patrick McMullan/Getty
Core Club, which runs members upward of $1,200 a month (that’s after the $50,000 initiation fee) and considers itself “a global community of unlike-minded individuals united by their courage to defy definitions,” has filed a lawsuit against real-estate developer Michael Shvo for allegedly defying definitions when it comes to its New York location at 711 Fifth Avenue. The suit alleges the space, 60,000 square feet advertised as the height of modern luxury, has bad lighting, broken-down kitchen appliances, and ongoing hot-water issues. “Poor craftsmanship was rampant throughout the club, with cabinet doors falling off hinges, door handles snapping off regularly, wallpaper peeling off, and water leaking from showers due to improper drain slopes,” the suit alleges. Moreover, the saunas and steam rooms were not completed until April 2024, six months after opening, “and well into the winter season, depriving members of these essential amenities during the coldest months of the year.”
Shvo, known for his love of trophy properties — recent projects include Aman New York, the Mandarin Oriental New York, the Raleigh in Miami, and the Transamerica Pyramid in San Francisco — is actually facing several lawsuits related to New York projects. One, also filed this week, is part of an ongoing feud between him and a former business partner, Turkish developer Serdar Bilgili. (It claims that Shvo sneakily diluted Bilgili’s interest in the Aman project.) Another, filed earlier this year by a couple who bought a condo at the Mandarin Oriental residences, alleges that their furnished apartment fell far short of the luxury standards promised, with off-center recessed lighting, missing stone in the bathroom, and only two place mats although the silverware service was for six. (What really pushed them over the edge, it seems, was being charged $100 per place mat to complete the set.)
In the Core lawsuit, founders Jennie and Dangene Enterprise claim that Shvo approached them in the spring of 2020, presenting himself “as a visionary who could provide critical support to CORE: as they navigated the economic uncertainty created by the COVID-19 pandemic.” The suit claims Shvo promised to invest $100 million in the Core Club’s expansion, delivering three new turnkey clubs in New York, San Francisco, and Milan, in exchange for a 50 percent ownership stake in the company. But, they say, Shvo duped them, failing to provide the necessary funds or support for the projects, at the same time that he played up the elite clubs’ presence in his buildings to lure other tenants. The founders are seeking $600 million in damages, a reduction in rent for the 60,000 square feet they lease at 711 Fifth Avenue, which the lawsuit characterizes as “exorbitant,” and to exit their lease at the Transamerica Pyramid.
The founders present a litany of complaints about Shvo’s involvement with the New York location of Core Club, which moved from its longtime home on East 55th Street to 711 Fifth Avenue last fall. Per the lawsuit, Shvo failed to obtain a temporary certificate of occupancy, “forcing them to scramble to extend their former lease so they could stay in their old location at the significant cost of $800,000.” When they complained that the hot water wasn’t connected, he allegedly told them to “hire illegals to wash the plates.” The kitchen equipment has been plagued by constant breakdowns, the suit alleges, further claiming that the bars were nonfunctional, and the acoustics and soundproofing in the restaurants bad. There are also, allegedly, ongoing hot-water issues “creating an unacceptable environment for members.” Insult to injury, per the suit: The club interiors don’t look anything like the renderings. The suit claims that Shvo eliminated the window dressings, the strip lighting, and ceiling-light covers from the project “leaving the club dimly lit and aesthetically unappealing, contrary to design drawings.”
Perhaps worst of all, the suit alleges that Shvo, who isn’t even a member, is a bad guest — racking up $80,000 in bills that he hasn’t paid, for, among other things, hosting an event for his child’s school during a busy holiday week, a kid’s birthday party, and weekly religious gatherings attended by ten to 15 people. He also uses the club “defiantly, as a de facto personal office” per the suit. (The latter, at least, would appear to be true — he did a recent interview for a Wall Street Journal article at the club, which dutifully noted that it was “a members-only spot nestled inside another of his premier properties in Manhattan.) Also, he doesn’t tip: Shvo has “refused to pay any gratuities to CORE”s hardworking staff.”
Shvo’s lawyers, meanwhile, characterized the suit as an attempt by Core’s owners to skip out on their debt and lease obligations — Shvo recently sued the Core Club over a $1 million loan that they allegedly defaulted on. “The lawsuit filed today is a desperate attempt to bail out the owners of Core Club from fulfilling the very clear obligations they committed to in a series of binding written agreements,” Morris Missry, a lawyer for Shvo, wrote in a statement. “We will not be threatened or pressured into providing rent reductions or other undeserved concessions and will aggressively defend this lawsuit.”
The Core Club and Shvo have been rumored to be at odds with each other for some time, not only over funding conflicts but also, it seems, over Shvo’s habit of using the club to burnish his reputation and hold court, practices which Core obviously feels it has not been adequately compensated for. In the Journal article last week, a spokesperson for Core told the paper that it was done with the developer: “Core is not interested in doing any more projects with Michael Shvo.”
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