Investors Sue OKO Group For Fraud Over Stalled Fort Lauderdale Tower
OKO Group, a development firm led by Russian billionaire Vlad Doronin, is being sued for fraud and breach of contract over a Fort Lauderdale apartment project that was supposed to start construction three years ago but still has no general contractor.
OKO and its partner, London-based Cain International, landed nearly $100M in construction financing in June 2022 for a 34-story, 251-unit project dubbed One River. But investors in the project claim OKO has failed to advance construction and develop the property as required, according to a lawsuit filed last month in Broward County Circuit Court.
The suit names Miami-based OKO Group and the investment vehicle it set up to raise equity in the project via the CrowdStreet crowdfunding platform, claiming it “has been nothing more than a vehicle to raise money from investors and enrich defendants.”
Dozens of investors, who each put between $25K and $400K into the project starting in December 2021, filed the suit against OKO and its affiliates for fraud and breach of contract. Combined, the plaintiffs invested more than $3M into the project, according to the suit.
OKO didn't respond to Bisnow's request for comment. On Tuesday, it filed a response to the complaint, denying any wrongdoing.
Gary Menzer, a partner at Menzer & Hill representing the investors, didn't respond to a request for comment.
Cain International wasn't named as a defendant. A spokesperson for the firm declined to comment.
Doronin's firm purchased the site at 629 SE Fifth Ave. as part of a 6.7-acre assemblage in Downtown Fort Lauderdale for a total of $63M in 2020, according to The Real Deal, which first reported the suit.
After landing $97M in construction loans from Bank OZK and JVP Management in June 2022, the developer broke ground the following month. The tower was initially supposed to deliver in September 2024.
But OKO never landed a general contractor, according to documents submitted with the complaint. In an update sent to CrowdStreet investors at the beginning of this year, OKO said it was finalizing a construction agreement, but financing costs had risen and it anticipated a need for more funding before the project could commence.
“Due to higher financing costs and the latest feedback from the construction market, the sponsor anticipates an increase to the total budget, which will likely require future capital contributions from the partnership,” according to the project summary cited in the suit. “Details around the future capital needs will be communicated in a later update when the costs have been reviewed, leveled and validated based on discussions with various contractors.”
CrowdStreet has been shrouded in scandal since 2023, when it was revealed that Nightingale Properties CEO Elie Schwartz used the platform to defraud more than 800 investors out of $63M intended for properties in Miami Beach and Atlanta. Schwartz pleaded guilty to wire fraud in February and is serving a seven-year prison sentence.
The Austin, Texas-based company was hit with a $1B class-action suit in March from investors in the deal who claim it didn't do enough to prevent Schwartz from swindling them out of millions. That suit was paused in August to allow individual arbitration, Law360 reported.
OKO and Cain are best known in South Florida for co-developing the 830 Brickell office tower, which lured Citadel and Microsoft's first Miami offices and shattered office rent records.
Doronin also owns the Aman luxury resort brand and is developing the Aman Miami Beach, a 56-key hotel with 22 condo units scheduled to deliver in 2027.
