Jacob Garlick is feeling the pressure.
The millennial who came out of nowhere to win a bidding war for the iconic Flatiron Building, then pushed the property back a few days later failure to pay deposit Because of it, he is now being sued by his higher bidder.
The building’s majority owners, a group led by Jeffrey Gural who had hoped to take the property at auction, sued Garrick on Friday, claiming his winning bid of $190 million was the “Fraud”.
Garlick never had the money to pay the $19 million deposit despite his contrary claim, the plaintiffs claimed. Now, they are asking the court to award them that amount, as well as additional damages from Garlick and his investment firm, Abraham Trust.
“He has to pay for his disguise, and that’s the whole point of the lawsuit,” said Richard Dolan, co-founder of the law firm Schlam Stone & Dolan, which is representing the plaintiffs.
The lawsuit accuses Garlick of breach of contract, requiring a 10 percent down payment within two days. It also provided more details about a bizarre sequence of events following the auction, when Garlick’s lawyers repeatedly assured him he had the money to close the deal.
“Garlick’s high bid for the Flatiron Building earned him and the Abraham Trust 15 minutes of fame,” the complaint states, referring to two news articles, one of which was published in real deal.
Shortly after winning the dramatic live auction in March, Garlick, his beat still in hand, addressed a small crowd in front of the New York County Courthouse in lower Manhattan.
According to the complaint, he told those around him that he had spent hours with Nathan Silverstein the day before — his “distant relative” and the building’s small owners, whose dispute with Gural led to the property being auctioned off. (Silverstein, who owns a 25 percent stake in the Flatiron Building, is neither a plaintiff nor a defendant in the suit.)
Over the next two days, Garlick’s lawyers at the Palo Alto-based Cooley law firm known for its tech and venture capital ties assured the building’s owners that Garlick had secured a $19 million deposit and wire transfers. In progress. The March 24 deadline has passed. Money never showed up.
Not to worry, Garlick’s lawyer said. The transfer never went through due to unspecified issues at two different banks, Truist Bank and PNC Bank. The Abraham Trust sought a one-day extension and promised the money would be wired to the referee on March 27, the complaint said. But Gural said Garlick first needed to prove he had enough money.
“Defendants’ representations that they have sufficient funds to make the required down payment are false,” the complaint states.
Gural previously told TRD Garlick asked if he could pay a $19 million deposit in exchange for a 10 percent stake in the vacant building.
“It’s a pretty ridiculous proposition,” Gulal said. “It worries me. He has no money, and that’s a red flag.”
On March 30, Gural Group received an option to acquire the property with a final bid of $189.5 million, which was rejected. Garlick saw an opportunity to re-enter. On the same day, he requested a 30-day deferment of the down payment, according to the complaint.
In early April, Garlick’s attorneys provided a redacted bank statement from Byline Bank in Chicago that showed a closing balance of about $12 million, but failed to identify the account holder, the lawsuit said.
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The lawyers then provided redacted lists of properties in Aspen, Colorado, and Napa, California, valued at $50 million and $75 million, respectively. Lawyers allege that both materials could have been used by the Abraham Trust for the purchase, but these again failed to identify the owner of the property.
The court-appointed referee decided to reschedule the auction. It’s scheduled for May 23, with the added stipulation that the winning bidder must pay a $100,000 deposit on the spot. Given the low barriers to entry, there has been speculation that Garlick may be on the mend again.
Garlick and the Abraham Trust did not respond to requests for comment.
