It's a long and frustrating multimillion-dollar battle for Minnesota Vikings owners Zygi and Mark Wilf. And it has nothing to do with building a football stadium.
The day before Zygi Wilf appeared in Arden Hills last week to announce a stadium deal with Ramsey County, he was in a Morristown, N.J., courtroom for opening arguments in a 19-year-old case filed against his family that alleges breach of contract, fraud and racketeering.
The Wilfs are being sued by two business partners under New Jersey's RICO statute for allegedly cheating them out of more than $20 million over ownership of a 764-unit project called Rachel Gardens. The project is in Montville, N.J., not far from the family's business headquarters in Short Hills.
"The plaintiffs have alleged that the Wilfs stole tens of millions from the partnership in the form of various fees and expenses that they shouldn't have, without the knowledge or consent of the partners," said Alan Lebensfeld, a Red Bank, N.J., attorney representing one of the plaintiffs.
To hide wrongdoing, Lebensfeld said, plaintiffs charge that "the books were cooked."
Among other things to which money was illegally diverted, according to the complaint: "Airfare and football related expenses ... incurred by the Wilfs in connection with their ownership of the Minnesota Vikings, and other NFL related activities."
It's not unusual for developers like the Wilfs, who typically juggle several projects at once, to be taken to court over business differences. But this case has drawn special attention because of its unusual length, the millions at stake and the Wilfs' status as NFL team owners.
The Wilfs' lead attorney directed requests for comment to Lester Bagley, the Vikings' vice president of public affairs and stadium development. Bagley called it "a dispute between business partners. These plaintiffs have made these unwarranted and unfounded accusations in an attempt to force a settlement. It's not unusual to take these accusations public to use the press to affect a settlement, and that's what's going on."
Partnership started in 1985
According to court documents, Harry and Joseph Wilf formed a partnership in 1985 with Abe and Joe Halpern to develop the Rachel Gardens project. Both sets of brothers agreed to kick in $500,000, with the Wilfs jointly holding a 50 percent interest and the Halpern brothers each taking a 25 percent share in the project.
Abe Halpern eventually transferred his share to his sister Ada Reichmann, who was told in 1992 that she was being cut free of the partnership. According to the complaint, Zygi Wilf decided her financial help was no longer needed.
"The train had left the station," Wilf was quoted as telling her representative.
Reichmann sued in the fall of 1992, alleging that she had been illegally removed as partner and that the Wilfs had worked systematically to gain control of all assets and profits. A judge ruled in her favor after the case went to trial in October 1999.
Reichmann was denied damages when the court determined four years later that her share was worthless. But an appellate court said she was "entitled to an accounting" of the partnership, and sent the case back to the state trial court.
In 2009 Joe Halpern joined her suit, alleging that the Wilfs and their accountants had cheated him out of $7 million in connection with the project.
Halpern is seeking $10 million to $16 million, including compensatory and punitive damages plus interest. Reichmann is seeking $21 million to $28 million. If the Wilfs were convicted under the RICO statute, damages could triple.
The plaintiffs also seek legal and accounting fees, estimated to be in the millions.
Sheppard Guryan, the Wilfs' attorney, was quoted in the Newark Star-Ledger as saying the Wilfs had removed Reichmann from the partnership because she had failed to help with construction costs.
According to the Star-Ledger, Guryan said the Wilfs owe Reichmann only $430,000 and Halpern owes them $6 million. The allegations, he said, were "just another painful example of the attempt to get the Wilfs."
Said Lebensfeld, "It's a very complex case spanning a 21-year history of a 27-year partnership. It's been reversed in appellate court and took its time to wind through the courts. Four judges have heard it. Three have retired."
And it's far from over. Accountants took the stand this week, going over records in painstaking detail. The trial, which is being heard without a jury, is expected to take up to four months.
Kevin Duchschere • 612-673-4455