[NEW YORK] In a ruling that illustrates the difficulty of unraveling shell companies, a federal judge rejected an effort by JPMorgan Chase to investigate the ownership of a Time Warner Center apartment.
The condo is registered under the name NYC Real Estate Opportunities, a Delaware company with a Singapore address.
A series of articles in The New York Times in February about the use of shell companies to buy luxury real estate raised questions about whether an Indian developer, Kabul Chawla, is the true owner of the condo, a five-bedroom unit overlooking Central Park that cost $19.4 million when it was purchased in 2012. Chawla's New Delhi company, BPTP, is the target of hundreds of complaints from consumers who say he has failed to deliver on promised apartments.
Citing one of the Times articles, Harbour Victoria Investment Holdings, a JPMorgan Chase unit that had invested in Mr Chawla's operations, filed suit in March in an attempt to collect on a US$90 million judgment against Mr Chawla and his companies.
A Manhattan state court judge issued a temporary order barring the sale of the unit, but lawyers for Mr Chawla moved the case to federal court, where judges have not looked favorably on JPMorgan's efforts.
A US district judge, Alison J. Nathan, ruled June 29 that Harbour Victoria appeared to be engaged in a fishing expedition as it tried to collect money from Mr Chawla. The ruling blocked efforts by the company to subpoena documents that might have proven the identity of the condo's beneficial owner.
In an earlier ruling in the case, another Manhattan federal judge said that the Times article had "raised potentially intriguing questions" about the ownership of NYC Real Estate Opportunities, nevertheless finding that the evidence tying the condo to Mr Chawla was insufficient to warrant its attachment, as the JPMorgan unit had sought.
Among evidence cited by the article was an email among brokers selling the apartment referring to "Kabul"; an interview with a real estate executive in which he acknowledged that Chawla was involved in the deal; and a person close to the Time Warner Center tying the unit to Chawla.
Lawyers for Mr Chawla said in court that Mr Chawla leases the condo for $56,000 a month from his cousin, a Dubai hedge fund trader named Aneil Anand.
In an interview with The Times in December 2013, Mr Chawla made no mention of such a lease, instead saying that he had used the apartment frequently because he and Anand were family.