Article Courtesy of The Florida Bulldog
By Francisco Alvarado
Published August 12, 2016
For the past four years, about 40 investors and snowbirds
who own 42 rooms in a landmark oceanfront art deco hotel have been locked in
a pitched court battle with one of Miami Beach’s most politically connected
families to keep their units.
An ongoing civil lawsuit in Miami-Dade Circuit Court alleges that Miami
Beach developer Russell Galbut, along with relatives and business
associates, broke Florida condo association laws by passing nearly $30
million in illegal assessments for renovations at what is now the Shelborne
Wyndham Grand South Beach. That works out to roughly $107,142 per room.
The group, 10 of whom
spoke with a reporter but asked that their names not be
used, claim Galbut stacked the condo association’s board
with flunkies and is trying to take control of the entire
building by initiating foreclosure proceedings against them
for refusing to pay what they believe are outrageous
assessments. They also alleged that their rooms were
demolished without their consent during the renovations,
resulting in the City of Miami Beach revoking their
certificates of occupancy until they fixed their units.
“They are using the old game of charging us exorbitant
assessments to push us out,” said one New Yorker who
purchased two rooms in the late 1990s as an investment.
“There is a conspiracy to take our deeds for peanuts. Their
end game is to own all the units.”
Galbut is not a defendant in the case, but a Galbut company
that owns 100 rooms and 57 commercial spaces at the
Shelborne is a defendant. Other defendants with Shelborne
Property Associates are four shell companies Galbut
controls, his cousins Keith Menin and Joan Brent and the
Sherborne Ocean Beach Hotel Condominium Association.
The Shelborne Wyndham Grand South Beach.
Ronald M. Rosengarten of the Greenberg Traurig law firm
represents Shelborne Property Associates.
“While it is true that friends and supporters of the Galbut family projects
may sit on the board, the Galbut family does not ‘control’ their votes,”
Rosengarten said. “Currently, Galbut family related entities only have a
minority interest in the Shelborne, owning less than one sixth of the units
and certainly do not control the units.”
Rosengarten said court records also show the Galbuts’ renovation of the
Shelborne “has been a financial boon for the unit-owners and not a fraud.”
Built in 1940, the iconic hotel at 1801 Collins Avenue was entirely owned by
Galbut and his relatives in the 1980s. A decade later, the Galbuts began
selling some of their units to outside investors when the property was
converted to a condo-hotel, according to the 10 owners and Rosegarten. The
new owners were allowed to rent their rooms to tourists through a Galbut
entity that managed the hotel or other companies that provided booking
Galbut family big political contributors
Galbut family members and companies they control have contributed tens of
thousands of dollars to political committees supporting Miami Beach city
commission candidates. Through six companies he controls, Russell Galbut
also has raised $10,000 for a PAC supporting Miami-Dade Mayor Carlos
Gimenez’s re-election. Three Galbut family members have contributed a
combined $15,100 this year to Republican congressional candidates including
Sen. Marco Rubio, and Republican U.S. Reps. Carlos Curbelo and Ileana
Things began going awry in 2010, a year after management of the Shelborne
was handed over to Menin Hotels, a company controlled by Galbut and his
cousin, Keith Menin, the lawsuit states. From 2006 through the beginning of
2015, Menin also served on the condo association board. The lawsuit alleges
Menin and the board voted in favor of a $15 million renovation in 2011 to
redo the Shelborne’s common areas, from the hotel hallways to the lobby to
the pool deck without obtaining approval from at least 75 percent of the
unit owners as required by state law.
Yet the non-Galbut owners still got a bill for the $15 million through a
series of special assessments between 2011 and 2012.
“Keith Menin knows the Menin Alterations are unlawful,” the lawsuit states.
“But he caused or allowed the partnership to make them anyway.”
The lawsuit also claims that Joan Brent, the other Galbut cousin who served
on the condo association’s board from November 2011 and June 2013, knew the
Menin Hotels renovation was unlawful.
Barely a year later, Galbut and his alleged surrogates signed an agreement
with Wyndham Hotel Management allowing them to market 125 rooms and the
common areas of the hotel under the Wyndham brand, the lawsuit states. The
non-Galbut owned-rooms were not part of the deal.
Despite just finishing the $15 million update to the building, the condo
board initiated another renovation project in the summer of 2014 in order to
meet Wyndham standards, the lawsuit states. This time, the non-Galbut owners
were assessed a combined $28.7 million, according to the complaint.
Again, the condo board did not obtain consent from 75 percent of the owners,
the lawsuit alleges. It also says Galbut, Brent, Menin and their allies on
the board devised a plan to lie to the non-Galbut owners about the extent of
the renovations – saying only that they were replacing the Shelborne’s
windows and making repairs required by the City of Miami Beach.
In the ensuing months, the lawsuit say, the non-Galbut owners learned that
the scope of the work was much bigger than they were told and that the
developer and his cohorts barred them from entering the hotel, preventing
them from seeing what was actually happening in the building.
“While the property was closed, the conspirators caused or allowed the
structure to be completely gutted,” the lawsuit states. “By closing the
property, the unit owners were simultaneously deprived of the use and income
generated by their residential units.
Many Shelborne owners “forced to sell”
Predictably, many members could not afford this wave of special assessments
with or without the building being closed so they were forced to sell their
The lawsuit also notes that Shelborne Property Associates obtained a $125
million loan around the same time the deal with Wyndham was signed. The
proceeds were used to buy rooms from non-Galbut owners who wanted out, the
lawsuit alleges. Court and property records confirm that Galbut-owned shell
companies purchased 120 units at the Shelborne since 2012, the complaint
“There were not $125 million worth of units for sale when Shelborne Property
Associates obtained this financing,” the lawsuit alleges. “But SPA knew that
the association was about to levy tens of millions of dollars of additional
special assessments against its members, and close the condominium property
for over a year.”
The purchases gave Galbut controlled entities 75 percent ownership of the
Shelborne, and the board the necessary majority to approve the Wyndham
renovation after the construction had already begun.
A non-Galbut owner who identified himself as “Jackie” said Galbut and his
accomplices are squeezing them out because they don’t want to pay them fair
market value for their rooms. “They saw that Miami Beach real estate in
general was skyrocketing, especially beachfront hotels,” Jackie said. “Rooms
have been going for $700,000 to $800,000 a room. That was the case with
Raleigh Hotel, the SLS South Beach and the Shore Club.”
According to a review of some of the Shelborne units purchased by Galbut-related
entities in the last four years shows rooms have sold for an average between
$150,000 and $250,000. Rosengarten countered that non-Galbut owners who sold
rooms to his client got good deals.
“Property records evidence that the overwhelming majority of transfers
occurred in sales whereby the owners received vastly greater prices for the
units they sold compared to what they paid for them,” Rosengarten said. “In
other words, the condo owners were not victims but were beneficiaries of the
increasing valuation which resulted from maintaining and improving the
Adding insult to injury, construction workers entered their units without
their consent and destroyed their rooms, the non-Galbut owners allege. “When
we finally gained access to our units, we found our rooms completely
wrecked,” said the New Yorker who owns two rooms. “They demolished my
kitchen, my bathroom and my living room. They never repaired the damages.”
The owner said city inspectors flagged his units for 20 life safety
violations and told him he couldn’t use the rooms until he fixed it. He
spent close to $25,000 per room after paying nearly $40,000 in special
assessments, he said.
Another owner, a retiree who lives in Atlanta, said she had to dip into her
401K to finance her repairs. She had plans to live out her retirement in her
“In anticipation of losing my unit, I tried to buy a house,” she said. “But
I was denied a mortgage when the bank saw I was shelling out these huge sums
of money and that my income had dropped to $50,000 a year. All because of