Investors seek to oust Siegel in property dispute


Prominent Las Vegas real estate investor Stephen Siegel has become embroiled in litigation with investors concerning several of the Siegel Suites.

In recent years Siegel, through an array of entities, has amassed a large portfolio of commercial properties, apartments and the 16 Siegel Suites properties around Las Vegas. Some he owns, some he manages for others.

Siegel Suites are probably most widely known because their large street signs bear his name, but he's also taken over and refurbished several small hotels that had fallen on hard times. They include the Resort on Mount Charleston and the downtown Gold Spike .

On Wednesday, the entities and individual owners of two properties Siegel manages, the Cambridge and Twain apartments about a mile east of the Strip, filed papers seeking a preliminary injunction in Clark County District Court, seeking to remove two Siegel entities from their properties.

The court action follows a letter sent March 19 aimed at ousting Siegel. That move was rebuffed by his attorney largely on grounds that no specific reason for the change was offered.

In court papers, however, the attorney for the property owners, Aviva Gordon, accused Siegel of a variety of financial transgressions, such as charging her clients more for security than he pays for at his own properties.

"It is clear that (Siegel) is using the (owners') money for the benefit of its own property," Gordon said in court papers, referring to the security arrangements. "At its core, this is embezzlement."

On a broader scale, Gordon wrote that Siegel had used as a "personal piggy bank" funds that should have stayed strictly with the properties. That money was used to cover items that were not included in previous management agreements -- everything from payments for off-site Siegel employees to purchases at a Speedee Mart convenience store to contributions to local politicians.

Siegel attorney Mark Ferrario declined to comment on the specific allegations. However, he said, "Based on the investigation conducted to date, we feel confident we will prevail."

An April 26 hearing has been set for the property owners' request for a preliminary injunction.

In an affidavit, investor Steve Eglash recounted that Stephen Siegel defends the practice of allocating some overhead costs, such as paying a general counsel, across a number of the properties under Siegel management. But the investors said their agreements governing the Cambridge and Twain prohibit this.

Some of the Cambridge and Twain owners also hold stakes in what was often called the Twain II, another suite property. Siegel managed that property until he was displaced by a court-appointed receiver on March 8.

Although not party to the lawsuit between a bank and owners of the Twain II, Siegel attorneys moved last month to be added to the action so they could collect unspecified management fees.

"The only issue is the fact that we are owed money for expenses we incurred from managing the property as a third party," wrote Siegel Group senior vice president Michael Crandall, in an email. "(W)e have been told that we are going to get paid."

Upon taking over the Twain II property, receiver Bellann Raile of Cordes & Co. told the court the property had numerous problems.

"It was apparent that there has been very little effort to keep the premises clean and in good condition," she said in an affidavit. Crandall denied that the property was in poor condition.

Gordon said in court papers that the Twain and Cambridge investors became concerned about Siegel's management practices earlier this year. Their worries "reached critical mass," they contend, when Siegel refused to provide any more information about what was going on with the finances at Twain II.

Contact reporter Tim O'Reiley at toreiley@reviewjournal.com or 702-387-5290.

 

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