Relitigating the Wheel
The moment I knew I would have to encounter is coming tomorrow. The litigation between the The New York Wheel and its primary contractor, called the Design/Build Team (DBT) has gotten to the point where I am being deposed tomorrow. Due to some quirk, the deposition will be held here in San Diego, so it will be relatively easy to get to, but it will be the standard “up to 7 hours” deposition that all of my expert witness work has accustomed me to. Naturally, being a fact witness that was “in the room where it happened” is very different than being an expert witness that is reading evidence and relying on domain expertise to opine of various topics and perhaps even required to address hypotheticals (something a fact witness does not have to do). I have been in contact with this litigator representing The New York Wheel over the past year or two on a very episodic basis, and only when he reaches out to me. I’ve known the date of this deposition for a few months and I was given a deposition prep session today for what was scheduled for two hours by Zoom and only really lasted an hour and a half. I was given the pleadings (claim and counterclaim filings) so I could see what is at issue on both sides and those long documents started the process of reawakening my memory of this project.
Let’s review the timeline I am dealing with here. I was first approached about this project in December, 2010 when it was reported in some NYC paper or another that I had just parted ways with my employer of two years, AFI (USA), a troubled real estate developer with $3 billion of properties (22 trophy properties all around the country and in Panama). Let’s be frank, I was fired as the Chairman and CEO after having succeeded in salvaging all 22 properties as requested and recapturing some $750 million in equity value for the Israeli parent company…all because the global CEO (actually the 54% owner, a diamond-merchant who lived in Moscow and was one of Putin’s Oligarch pals and is now on the U.S. Government OFAC “no-fly” sanctions list) didn’t want to pay me the second year bonus they had agreed to pay and they felt they didn’t need me any more. Anyway, these guys working a wheel project wanted to enlist me to work with them on the project. I was at loose ends suddenly, so I agreed to get unofficially involved.
One thing led to another and before I knew it in early 2011, I was being billed to the City of New York’s Economic Development Corporation (EDC) as the President of New York Wheel even though I was not officially a part of any entity and was actually just lending a hand (as it turns out, an air of respectability). Imagine how surprised I was in that first EDC meeting when my team turned to me to “take it away” and present the project on its merits. The rest was history that went from winning a Request for Expressions of Interest (RFEI), to negotiating a pre-development agreement and then going out to solicit funding for the project as envisioned. In August, 2012 I secured seed funding with the condition that I actually be the CEO of record and a Board Member along with my two initiating buddies and four seats for the funders (thereby giving them the control and majority to do with the project as they wished for the most part). I was the one and only CEO of The New York Wheel in perpetuity per the Operating Agreement and that’s exactly how it turned out until the project was terminated finally and in full in 2017. I was technically CEO full-time for 5 years and if you figure I put in a year’s worth of work getting it that seed funding moment in 2012, I dedicated 6 years of my post-career, but pre-retirement life to this endeavor.
If anyone wanted to know why I did that, I take you to a dinner I had with my family in NYC in 2012 when my daughter Carolyn presented me with a gift of an infant’s onesie with the message printed on it that “My grandpa is building the New York Wheel” as her way of telling me I was to be a grandfather. In other words, it seemed like a fun thing to do after a long Wall Street career which was rewarding and challenging, but not really “fun”. Little did I know at that decision point just how challenging this project would become. In 1917 I wrote a book of vignettes about retirement called Gulag 401(k), and in that book’s last chapter I talk about my wheel experience in general terms. The chapter is titled Prince Albert in the Can, to symbolize via double-entendre my titular role in running a big project that I didn’t have the final say on things, more and more as the investor’s stake kept rising. I end that chapter by saying:
“When I ponder what makes this project most interesting and
rewarding to me, I find myself thinking that it has most to do with
how much of my skill sets and capabilities are used in the project. I
believe it’s fair to say that I have used every ounce of what I have to
give and that I have used every single skill set I own. That is a very
powerful thought in my view. I can think of nothing as meaningful as
emptying oneself in a worthwhile effort.”
The debatable part of that sentiment is whether The New York Wheel was ever a “worthwhile effort”. I like to think that changing the skyline of one of the world’s greatest cities and perhaps helping the most downtrodden borough in that city is worthwhile, but others might disagree.
The project had plenty of bumps, but until early 2017, we managed to get it down the road towards completion and were $450 million into a budgeted (many times revised) $610 million project. Then the DBT, which was a kluge of experienced operators from the Netherlands, decided they couldn’t do the job they had committed to do for the money they had guaranteed to do it for, and the shenanigans began. It was the classic case of them walking off and us terminating them (a sort of chicken or egg situation). Now, six years later, the litigation maneuvering by both sides has brought us to the deposition stage and as you can imagine, the one and only CEO is needed as a witness, so as the song says, “here I go again on my own…going down the only road I’ve ever known…”
The other side probably doesn’t know how much I like or care about the New York Wheel owners (I hold them in very high regard and believe them to be very honorable) and they may hope to find some space between me and the owners, which I doubt they will find. I also have a VERY clear recollection of the events and view of who did what to whom. And then I got a download of old documents tonight with a sudden rush-rush need to review them before tomorrow. This all reminded me of why this was such a challenging project. The complexity and details involved with this sort of project was the subject of a course I taught at both the Cornell and University of San Diego business schools. These were full semester courses, so you can imagine what it’s like to refresh one’s memory of those details. Luckily, I won’t need to be so full-recall for the deposition, but if this goes to trial, you can bet the trial prep will be far greater.
This was a tough deal to live through and fall short on. It is and even tougher deal for me to be relitigating the wheel after so many years, but what can one say? It is what it is.