Baseball legend Alex “A-Rod” Rodriguez is part of a six-year real estate battle with his ex-brother-in-law, Constantine Scurtis. The dispute involves a multifamily real estate venture and claims of continuing breach of fiduciary duty, conversion and breach of fiduciary duty. The plaintiff in the case, A-Rod’s ex-brother-in-law, recently amended the claims to include punitive damages.
Punitive damages are an additional financial penalty. The court uses this penalty to serve as additional punishment and further deter future, similar offenses.
What led to the dispute?
The partnership agreement began in the early 2000s. It stated that Rodriguez, who was new to the real estate business, would contribute the capital and retain 95% ownership. In exchange for Scurtis’ expertise and advice, Scurtis would receive 5% ownership.
The venture grew, ultimately operating over $1 billion in property. Scurtis claims Rodriguez began to cut him out, putting his own name on business documents instead of Scurtis’. As a result, he claims he is owed over $8 million.
In response, Rodriguez has filed a counter claim stating his ex-brother-in-law took money out of the partnership without authorization. This has led to additional claims the ex-brother-in-law also failed to report the income to the Internal Revenue Service (IRS). If true, the agency could pursue criminal charges for tax fraud.
What can others learn from this case?
This case provides an example of how a real estate venture can go awry. Once this happens, the case can snowball to include criminal allegations and tax crimes. Those interested in real estate ventures can reduce the risk of similar issues by seeking legal counsel.