Belvedere Hotel bidder denies any wrongdoing

August 16, 1991|By Edward Gunts

The Hertz Group, whose aborted attempt last fall to buy the former Belvedere Hotel is being investigated by a local attorney, has denied there was anything improper about its actions or its vTC relationship with the group that finally bought the midtown landmark.

Developer Judah Hertz said in a prepared statement this week that his organization "has done nothing illegal and will defend itself vigorously" against recent suggestions that his organization may have defrauded the U.S. Bankruptcy Court.

Kenneth Davies, the court-appointed trustee for a limited partnership that owned the hotel until a foreclosure sale last December, said in documents filed with the bankruptcy court this month that he believes the Hertz Group, which backed out of an agreement to purchase the hotel last fall for $5.5 million, may have turned around and worked with Belvedere Realty Corp.which bought it in March for $3.8 million.and is converting it to condominiums.

Mr. Davies, a Baltimore lawyer, asked Bankruptcy Judge James Schneider to halt sales of Belvedere condominiums until he can complete his investigation of the two groups. The judge has not ruled on that request.

David Fishman, an attorney who represents the Hertz Group, said that "there is no question" that Mr. Hertz and Elliott Sharaby, head of Belvedere Realty Corp., know each other and have worked together on other projects.

He said it was the Hertz Group that brought the Belvedere sale to Mr. Sharaby's attention when the Hertz Group was unable to obtain financing to buy the property last fall. And he said it is possible that former Hertz employees may be working as part of the Belvedere Realty Corp.'s sales team in Baltimore.

But Mr. Fishman said that neither Mr. Hertz nor the Hertz Group have any direct ownership interest in Belvedere Realty Corp. or in the hotel itself.

Mr. Sharaby also denied through an attorney yesterday that Mr. Hertz has any ownership interest in the Belvedere.

The Hertz Group has no connection to the car rental agency with the same name.

Mr. Fishman said that even if the Hertz Group did have a stake in Belvedere Realty, he does not believe it would be illegal or would violate any orders issued last year by Judge Schneider.

"We're saying 'So what?' " to many of Mr. Davies's charges, Mr. Fishman said. "We don't believe there's anything wrong. . . Mr. Hertz as an individual and the Hertz Group as a corporation are two different things."

Mr. Fishman explained that Judge Schneider ordered the Hertz Group, a corporate entity, to proceed with its planned acquisition of the hotel last year, which it did not do. But he said that the order did not extend to Mr. Hertz as an individual.

He added that although Mr. Davies asked the judge to forbid Mr. Hertz or his associates from buying the hotel at a Dec. 27 auction, the judge did not do so. Nevertheless, Mr. Fishman said, Hertz "stayed away from the auction."

When Meritor Savings Bank bought the building at auction and subsequently put it up for sale, he said, there was no restriction against Mr. Hertz attempting to buy it because it was "on the open market following foreclosure" and Meritor invited bids "from the world at large."

The Hertz Group eventually decided not to purchase the property, according to Mr. Fishman.

It was during that period, however, that the Hertz Group assisted Mr. Sharaby's Belvedere Realty in obtaining financing from the bankHertz was going to use. Belvedere Realty was also helped in getting in touch with attorneys who had already done work in connection with the condominium conversion.

That assistance may have resulted in some of the interrelationships that Mr. Davies has observed, Mr. Fishman said, but it is not a sign of any illegal activity.

Asked whether the Hertz Group profited in any way from helping Belvedere Realty buy the hotel, Mr. Fishman said he did not know the answer. But he promised that issue would be addressed in a subsequent filing with the bankruptcy court.

Mr. Davies said that he would have no comment on the Hertz Group's statement while his investigation was under way.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.