Lawsuit Sidelines Plantation's $300M 321 North Project

The long-awaited face-lift and transformation of the shuttered Fashion Mall in Plantation into a $300 million mixed-use project has hit a major snag.

The majority owner of the mall, Tangshan Ganglu Iron & Steel Co. Ltd., has filed suit against the minority owner and manager, Wei Chen, accusing him of misappropriating $49 million. Tangshan wants a federal judge to appoint a custodian to oversee management of the project and dissolve the company set up to oversee the project, Mapuche LLC.

The suit comes just months after construction began on the redevelopment project, which is to feature a branded hotel, conference center, condominium tower and office space. The goal was to start leasing space in the seven-story building by the first quarter of 2015.

The lawsuit was  filed May 7.

“The mall project has been thwarted and stymied by the actions of defendant Chen, Mapuche’s manager, who has defrauded Mapuche, abandoned his managerial duties and has sought to serve and benefit only himself,” the complaint alleged.

Tangshan has an 80 percent interest in the company, according to the complaint.

Chen misappropriated $48.65 million of $50 million lent to Mapuche from March to September 2012 for the redevelopment project, and Tangshan is the guarantor, the suit states. Chen fraudulently used one of his companies, WCH Hospitality LLC, to purchase the last parcel needed to assemble the project, where a Sheraton Hotel is located, the suit alleges.

Another allegation is that Chen fraudulently took credit for $1.3 million of the $1.8 million deposit Tangshan paid on the parcel. The closing is set for June 2. Additionally, Tangshan claims Chen has allowed the properties to deteriorate and cited $50,000 worth in penalties on city code citations.

“Chen has damaged the reputation of Mapuche and has caused a loss of confidence in Mapuche’s ability to complete the mall project,” states the complaint. “Chen has either not maintained adequate books and records for Mapuche or is in the process of disappearing or destroying the existing books and records such that it will be impossible to trace the inflow and outflow of monies to the company.” No police report has been filed, Rodriguez-Taseff said.

The mall once anchored by Lord & Taylor and Macy’s opened in 1988. The Macy’s remained open until 2006 when Hurricane Wilma caused significant damage. The mall officially closed the following year.

In 2007, Mapuche and its holding company, US Capital Holdings Group, announced plans to redevelop the mall. The plan calls for most of the mall to be demolished, and stores to be added facing University Drive. However, the recession, multiple foreclosures and other legal problems stalled the project.

Construction crews finally began work in January on a $10 million plan to upgrade an office tower on the site into Class A space.  In addition, Jennifer Moran was named Director of Leasing for the project in April.

Limited construction work is continuing, said Rodriguez-Taseff. However, the project cannot be completed unless the Chinese owner produces more cash.

“The only way this project succeeds as planned is if we take it over and put the needed cash into it for the benefit of the community,” she said.

 
Source:  DBR