Legal fallout over St. Regis Aspen sell-off |

Legal fallout over St. Regis Aspen sell-off

Nearly one-fifth of the St. Regis Aspen resort hotel has sold for $18 million through digital tokens last fall. A former employee of Elevated Returns filed suit last week claiming he was squeezed out of any cut on the deal.

Last fall’s digitalized token sale of nearly one-fifth of the St. Regis Aspen Hotel has sparked a lawsuit from an individual who claims he was refused compensation by a business partnership that led him along with a “string of lies and deceptions.”

Plaintiff Jason Kirschenbaum’s complaint accuses Elevated Returns, a New York-based assets manager that sold 18.9% of the 179-room hotel for $18 million in digital tokens in October, of breaching the contract it had with the former managing director. The suit was filed June 5 in the Supreme Court of New York.

The suit also names Elevated CEO Stephane De Baets as a defendant, as well as others associated with the St. Regis Aspen and the October sell-off.

Jeffrey W. Schneider, a spokesman for Elevated Returns, said Monday the dispute has no bearing on the operations of the Aspen resort hotel and the defendants will contest the accusations.

“The claims in the filing are specious and the allegations don’t comport with reality,” he said in a statement. “If served, we plan to vigorously contest this meritless suit.”

Elevated Returns owns 81.1% of the St. Regis Aspen after dealing off the remaining portion through digitalized coins last fall, which came after Elevated Returns shelved plans to sell half of the hotel through an initial public offering on the New York Stock Exchange, which had been scheduled March 2018.

Through the IPO, as much as 49% of the Aspen Mountain hotel would have been sold as a single-asset real estate investment trust, or REIT, if all had gone according to plan, which was to raise about $33.5 million.

Responding to a March 7 letter from Kirschenbaum’s counsel regarding a buyout, De Baets’ attorney wrote that the St. Regis Aspen IPO was abandoned because the costs associated with it were “more than double those predicted by Kirschenbaum.” The letter, which Schneider provided to The Aspen Times, also noted that Kirschenbaum, who was earning an annual salary of $140,000 as of March 2018 for Elevated Returns, was rude to fellow employees while his work performance became “irregular and unsatisfactory.”

“Your client has no basis whatsoever for his claim of a right to be bought out by a company in which he was simply an employee,” stated the letter from New York attorney Richard Menaker and dated March 26.

According to the suit’s allegations, Kirschenbaum floated the idea of a single-investment REIT to De Baets and Elevated partner and billionaire Thosapong Juruthavee, who also is a defendant, around early 2016.

Those talks led to an agreement whereby Kirschenbaum would get 25% equity partnership through the creation of a single-asset REIT using the Sunset Tower Hotel in Los Angeles “and other future deals,” the suit says. The Sunset Tower Hotel sold for approximately $95 million in March 2017, with Elevated paying $20,000 to Kirschenbaum for his involvement in the deal, the suit says.

In the meantime, the St. Regis Aspen would be used in a future REIT deal involving Elevated and Kirschenbaum, the suit says. Kirschenbaum also “contributed approximately ($1 million) to ensure the deal could get done.” That money went toward the creation of Aspen Coin, a securitized token design Kirschenbaum created specifically for the sale of the St. Regis Aspen, the suit alleges.

“Defendant shook (Kirschenbaum’s) hands and affirmed their partnership,” the suit says.

Schneider, the spokesman for De Baets, said Kirschenbaum’s claims are unfounded, in large part because the St. Regis Aspen never went to an IPO and Kirschenbaum worked as employee, not an investor, for Elevated.

“Mr. Kirschenbaum was never a partner in any of the ventures referred to in his complaint as is explicitly shown in the contract attached to his filing,” Schneider said. “Indeed, that contract clearly states, ‘nothing in this letter is intended to create a partnership or joint venture between the parties hereto nor is it intended to make either party the agent of the other for any purpose whatsoever.’”

Represented by De Baets’ Bangkok-based OptAsia Capital Co. Ltd, 315 Dean Associates Inc. acquired the five-star St. Regis for $70 million in September 2010 during the recession. De Baets also controls Elevated Returns, which manages 315 Dean Associates.

The hotel opened in 1992 as a Ritz-Carlton Hotel before being converted to the St. Regis in 1998. It currently is operated by the asset management arm of Elevated Returns.