Rosslyn-based real estate developer Mohamed A. Hadid and his behind-the-scenes financial backer, a brother-in-law of Saudi King Fahd, are having a bitter falling out over the Ritz-Carlton hotels they jointly own in Washington, New York, Houston and Aspen, Colo.
The fight between the flamboyant developer and the secretive Saudi investor recently erupted in a series of lawsuits that lifted the curtain on Abdulaziz bin Ibrahim al-Ibrahim's previously obscure role as Hadid's partner.
In court records here, Hadid and Ibrahim painted each other as the villain and themselves as victims of manipulation.
Ibrahim is trying to remove Hadid as managing partner of the Ritz-Carlton hotels in Washington and New York and the one now under construction at the base of the main ski mountain in Aspen.
In court papers, Ibrahim's companies have accused Hadid of misappropriating funds, allowing budgets "to skyrocket out of control," holding business records "hostage," and otherwise mismanaging their Washington, New York and Aspen joint ventures. Ibrahim already controls day-to-day management of the Houston hotel.
Hadid has not committed "any material amount" of money to the Aspen development while Ibrahim's company has brought $120 million to the project, Ibrahim said in a court filing.
Hadid, who developed office buildings in the Washington area before branching into the hotel business, was just another local developer until 1987, when he beat New York developer Donald Trump in competition for the Aspen hotel site.
At stake was a chance to develop the glitziest hotel at the Rocky Mountain resort most favored by Hollywood celebrities.
The deal boosted Hadid's reputation as a real estate mogul and made him a celebrity in Aspen, a town of fur coats, cowboy hats and diamond jewelry, where he skied and partied with the stars. More recently, a New York gossip columnist noted, he was seen in the company of model Marla Maples, who is better known for her relationship with Trump.
As it turned out, beating Trump on the land deal was easier than surmounting the political challenges that later stood in the way of Hadid's controversial hotel development plan. Many Aspen residents fought the project, saying it would clash with the local scenery.
Now that those travails are behind him and the hotel is half built, Hadid is alleging that "chicanery and manipulation" by Ibrahim have made it impossible for their Aspen hotel partnership to carry on. Ever since the two joined forces in January 1989, Hadid alleged, Ibrahim has been plotting to squeeze Hadid out of their Aspen partnership and gain control of Hadid's interest for less than its fair price.
Hadid has asked the U.S. District Court in Alexandria to order the Aspen hotel partnership dissolved and to name him to preside over the sale of the partnership's holdings, which also include dozens of acres of undeveloped Aspen land.
The Aspen Ritz was scheduled to open this year. But because Ibrahim has not kept enough money flowing to the project, the opening likely will be delayed beyond the end of the next ski season, Hadid said in court papers. Despite the dispute, construction continues.
In a pair of lawsuits, Hadid said Ibrahim owes him fees and business expenses of $6.6 million, including $545,913 related to the Houston hotel. Hadid is seeking additional compensatory damages of $92 million and punitive damages of $600 million.
Hadid, who is in his early forties, is a veteran of turmoil in the business arena. He began his career as a classic car dealer in Georgetown and then broadened his contacts in international trade before becoming a developer. Over the years, he has been dogged by disputes with associates and lawsuits by creditors demanding payments.
Last year, he lost an office building at 8500 Leesburg Pike in Tysons Corner through foreclosure after defaulting on a $20.5 million loan. Lenders were poised to seize his Aspen ski home and his estate on Maryland's Eastern shore, but Hadid averted foreclosure.
In an August interview, Hadid said his business affairs were on a strong financial footing but his personal finances -- "my homes, my cars, my airplanes" -- needed reorganizing. He said he had put himself on a "cash diet."
Ibrahim appeared to be Hadid's white knight two years ago when he entered the Aspen deal and teamed with Hadid to buy the New York and Washington Ritz-Carlton hotels out of bankruptcy.
At the time, the SAAR Foundation, a Herndon-based humanitarian foundation with Saudi roots, was unwinding a long-standing financial relationship with Hadid. SAAR had been a dependable source of investment money for Hadid's projects; Ibrahim filled the breach, keeping alive Hadid's Aspen plans.
Together, Ibrahim and his brother Khaled are worth $1 billion, according to Fortune magazine. They are sons of a former provincial governor in Saudi Arabia and are investment advisers to their nephew, the king's youngest son, according to published reports. The Ibrahim brothers made much of their money arranging Saudi purchases of British warplanes and Boeing passenger jets, according to various published reports.
On behalf of themselves and others, the Ibrahims made extensive investments in American real estate, the Los Angeles Times reported two years ago. Their purchases, masked by international chains of partnerships and corporations, include land near Disney World in Orlando, Fla., and various property interests in Marina del Rey, on the Southern California coast west of Los Angeles.
Aspen Enterprises Inc. and other companies that Hadid described as shell companies for Ibrahim became Hadid's partners in the four Ritz-Carlton hotels. Ibrihim-Hadid partnerships owned the hotels and paid the Ritz-Carlton Hotel Co. to operate the properties. Hadid managed the day-to-day affairs of the Washington, New York and Aspen partnerships. Originally, the Hadid companies and the Ibrahim companies were equal partners in each hotel. Who owns what today is a matter of dispute.
Howard J. Rubinroit, a Los Angeles lawyer who represents Ibrahim's businesses in the litigation, said Hadid's share has been diluted to about 15 percent in the Aspen Ritz project and to about a third in each of the others. In court papers, Hadid said his share of the Aspen project was reduced wrongfully.
In lawsuits filed in U.S. District Court in Washington and in Arlington Circuit Court, the Ibrahim companies challenged the character and competence of the developer Ibrahim once stood behind.
Hadid, who earns a fee that is a percentage of the development cost, has "intentionally or negligently" caused the budget for the Aspen project to balloon from $70 million to more than $150 million, without approval, Ibrahim alleged. Hadid has allowed the budgets for renovation of the Washington and New York hotels to increase from $24 million to more than $50 million, Ibrahim said in court papers.
One of Ibrahim's executives stated in court documents that his company financed construction of the Aspen hotel after Hadid failed to deliver promised financing from another source.
One of the lawsuits alleged that a Hadid "shell" company "usurped" funds that belong to the hotel partnership, including $100,000 transferred to a friend of Hadid against Ibrahim's instructions. Ibrihim also alleged that Hadid had a conflict of interest with the Ritz-Carlton Hotel Co. that resulted in financial damage to Ibrihim's Aspen joint venture with Hadid. Ibrihim said Hadid was working on other deals with Ritz that created an incentive for Hadid to acquiese to the demands of Ritz.
Ibrahim said his partnership agreement with Hadid gave him the right to relieve Hadid of authority for the daily management of their joint ventures if Hadid's conduct warranted it. In late December, Ibrahim's organization notified Hadid that it was removing him from day-to-day management of the Aspen, Washington and New York businesses.
But Hadid would not be removed, the lawsuits said. He denied Ibrahim's people timely access to their mutual business records, the lawsuits said, thus preventing his designated replacement, Tishman Realty Corp. of California, from doing its job.
Ibrahim has asked the courts to declare that he was justified in removing Hadid from the day-to-day management of the three hotel partnerships. On Dec. 28, the same day the lawsuits were filed, Hadid consented to a court order that prohibits him from tampering with partnership records and requires him to grant Ibrahim's side access to the records.
Mark London, a Washington lawyer who represents Hadid in the litigation, declined to comment on allegations against Hadid. Hadid's spokesman referred questions to London.
In two lawsuits of his own against Ibrahim, Hadid told a very different story. He accused Ibrahim and his companies of "using their financial clout to crunch Mr. Hadid." Hadid said Ibrahim turned down favorable outside offers to finance the Aspen project so that his companies could lend the money themselves. Ibrahim then tried to use the influence that flowed from being the lender to force Hadid out of the partnership, Hadid said.
Ibrahim "arbitrarily and capriciously" refused to enter into construction contracts or pay contractors' bills, Hadid said. Ibrahim also refused to consider a purchase offer for the unfinished project that would have netted the partners a $100 million profit, Hadid said.
Further, Hadid accused Ibrahim of hiring a lawyer who also represented Hadid to obtain confidential information about the developer that could be used against him.
Hadid said his agreement with Ibrahim entitled him to fees equal to 3 percent of the total development cost of the Aspen Ritz. Thus, the more the project cost, the more he would get paid. Ibrahim has refused to pay Hadid about $2.8 million due for fees and overhead expenses on the Aspen project, Hadid said.
But that is only a fraction of the money Hadid claims he is owed. Hadid said he is due additional millions for his work on the other hotels. And he said he is owed another $480,000 for services in connection with several of Ibrahim's personal real estate projects, including a shopping center in Saudi Arabia and "palatial residences" in Marbella, Spain; Bel-Air, Calif.; Casablanca, Morocco; and Aspen.
Rubinroit, the lawyer for Ibrahim, denied the allegations against Ibrahim in Hadid's lawsuits.
The rhetoric in the lawsuits reflects the degree of ill will that has developed between the two. Hadid said he believed Ibrahim when the Saudi said, in essence, "Trust me, I am a man of my word."
Now, in a lawsuit, Hadid concludes, "He never intended to be a man of his word."