A protracted dispute over a bathroom waste pipe at 907 Fifth Avenue, one of Manhattan's most exclusive cooperatives, has led to allegations of financial fraud. Angelo Chan and his husband, Frederick Wertheim, who purchased a $5.2 million apartment in 2018, claim the building's board of directors has failed to produce accurate audited financial documents since 2020, and instead provided falsified records.
The couple has been unable to use two of their three planned bathrooms for five years due to an impasse over the routing of a new bathroom waste pipe. The disagreement centers on whether the pipe should be routed through the ceiling of a downstairs unit, occupied by board member Andrew Crisses, or if the floor of the Chan-Wertheim unit should be raised to accommodate the pipe. The building cited concerns about flooding from ancient pipes as a reason for upgrading the plumbing system.
According to the lawsuit filed in Manhattan Supreme Court, when pressed for audited financial statements, the co-op provided documents that allegedly contained "glaring inconsistencies and oddities" and failed to disclose ongoing litigation. The lawsuit claims these documents, which bore different versions of the accounting firm Marks Paneth's logo, concealed hundreds of thousands of dollars spent on legal fees related to the bathroom pipe dispute. One line item for legal fees was reportedly blank, despite building insurance covering 45% of such costs.
CBIZ, which acquired Marks Paneth, stated in an email that the firm did not issue the reports and that they appeared to be fraudulent with forged signatures and letterhead. Chan described the situation as a "document forgery scheme" used to deceive shareholders, purchasers, and lenders.
The lawsuit, brought on behalf of the corporation, accuses the board of directors of fraud and breach of fiduciary duty. It seeks damages, punitive damages, and a retroactive accounting from December 31, 2019, the last date for which audited financial records are said to exist.
In response, a spokesperson for the co-op board called the lawsuit a "baseless stunt" and "sour grapes" by the plaintiffs and their counsel, stating that the core allegations are false. The board asserted that the building's managing agent, Brown Harris Stevens, was responsible for the documents in question. The board stated that the managing agent's general counsel had informed the plaintiffs that the co-op board had no knowledge of or involvement in the alleged issues, and that any inconsistencies were solely the managing agent's responsibility. Brown Harris Stevens declined to comment.
Chan stated that shareholders are entitled to know the co-op's true financial position and that he and his husband see themselves as whistleblowers attempting to expose wrongdoing. The building, constructed in 1916, overlooks Central Park and has been home to notable figures, including Martha Stewart. High-value units in the building have recently sold for tens of millions of dollars.
