April 30–Hotel and nightclub mogul Sam Nazarian has been named in a lawsuit that accuses him of cheating investors out of $8 million that was intended for upgrading and operating a Miami hotel.
A lawyer for Nazarian dismissed the allegations, calling them “baseless.”
“This frivolous lawsuit is utterly devoid of merit,” said Nazarian’s attorney, Alex M. Weingarten. “The plaintiffs are sophisticated businessmen who made a fully documented investment with the benefit of legal counsel. Unfortunately, that investment did not perform as well as they had hoped, but that is the risk they agreed to take.”
Nazarian, whose SBE Entertainment operates nightclubs in Los Angeles, a casino in Las Vegas and hotels in Beverly Hills, among other locations, became ensnared in controversy last year when a background investigation, as part of his effort to obtain a Nevada gaming license, unearthed cocaine use and about $3 million in payments to a felon with convictions for drug possession and money laundering
The lawsuit, filed in Superior Court in Los Angeles on behalf of an investment group called 4 Corners Holdings, alleges that Nazarian received $8 million from the group, along with funding from other investors, to overhaul and operate the SLS Hotel South Beach.
The suit claims that Nazarian promised a 10% return on the investment, but the investors in 4 Corners Holdings have yet to received any profits from the project. The lawsuit also says that the Miami hotel was expected to sell for $125 million in April, but the investors will get “peanuts” while Nazarian’s family members will receive their full investment in return.
The suit goes on to allege that Nazarian used inaccurate financial statements to “to make it appear as if the SLS Hotel South Beach is not profitable when in fact it is extremely profitable, as admitted by Nazarian.”
A lawyer for 4 Corners Holdings could not be reached for comment.
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