Sothebys real estate division has been hit with a $1.1 billion federal lawsuit accusing the company of defrauding investors and defrauduing clients.
The lawsuit, filed on Monday, alleges Sothebros investors had to shell out more than $1 billion for properties in the late 1990s and early 2000s, when the company was a public company, while the company’s directors and executives were also in positions of high-level management.
Sothemans is accused of defrauded investors by undervaluing the value of the properties and understating the value they would bring in, the lawsuit alleges.
Sonthebys realtor, Jonathan Fink, is a former partner at the law firm Sullivan & Cromwell, where he also worked.
S&C attorney James Fink said his firm has received a number of complaints regarding the Sothemore property.
Fink added that his firm will defend the allegations and will not be commenting on specific claims in the lawsuit.
He added that Sothebyn’s attorney has not yet filed a response.
Sothorn Real Estate, a division of Sothebrokers, is accused in the suit of selling a home worth about $2.3 million to a buyer who then spent $500,000 more than what he was supposed to pay.
The buyer’s attorney declined to comment on the suit.
Fitch Ratings said in a statement on Monday that it has not been notified of any pending litigation and has no comment.
The SotheBYS Real Estate Division is headquartered in New York City.