Investors Allege $80M Fraud Against Kohan Properties Ltd. as Lender Completes UCC Sale of 345 Seventh Avenue
A group of 17 investors sued landlord Mike Kohan's entities in New York State Supreme Court, alleging he used fraudulent operating agreements to conceal their equity stakes in real estate holding companies -- including the entity that owns the Garment District office tower at 345 Seventh Avenue -- while pledging that same equity to lenders without disclosure. The same investors separately sued mezzanine lender The Davis Companies over the building's UCC Article 9 foreclosure sale process, which Davis completed anyway on September 29, 2026, the same week Kohan was removed from his executive and board roles at Kohan Properties Ltd. amid allegations of undisclosed loans and misused Israeli bond proceeds.
Why it matters
The dispute is a pointed reminder that equity interests in a single-purpose property-holding LLC are not self-enforcing against a lender who was never told they existed, and that a UCC Article 9 secured-party sale can draw a commercially-reasonable-sale challenge once a competing equity claim surfaces, even when that claim's validity is itself contested. For sponsors tapping cross-border capital markets to fund U.S. acquisitions, the case shows how a bond-disclosure failure can cascade quickly into parallel private litigation from the sponsor's own equity investors.
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