Real Estate Developer Nailed For Evidence Tampering by LA Superior Court Judge Bruguera

In a civil case involving NMS Family Living Trust, and Margot and Neil Shekhter, Superior Court Judge Suzanne Bruguera found that NMS Properties and its owners, fabricated evidence, and destroyed or hid electronic evidence from the Court and the opposing parties.

For this reason, she entered a judgment imposing "Terminating Sanctions" against NMS, meaning that they lost the lawsuit and now have a default judgment against them. Terminating sanctions are unusual, though not unheard of, in civil litigation.

Update, 12/2: Judge Bruguera today ordered NMS properties to cede control of its Santa Monica, Los Angeles, and West Hollywood "LUXE" properties, to AEW Capital Management. She also imposed attorneys fees against NMS.

"In an 88-page opinion," says SMCLC, a neighborhood group "the Court detailed NMS' and Shekhter's orchestration of a fraudulent plot to cheat its partner on multiple Westside real estate properties. The Court found an elaborate NMS scheme of forgery, altering computer metadata, backdating Shekhter's home computer at least seventeen times, and destroying and hiding evidence. Judge Bruguera, a 35 year veteran of the LA Superior Court bench, call their conduct "shocking." http://smclc.net/NMS.CourtOpinion.pdf

The conduct concerned buildings owned and operated by NMS in Los Angeles, not Santa Monica, owned under a Joint Venture Agreement with AEWS and others. The contract included a 5 year buyout provision, but NMS contended it was a typo that had been modified by letter to a 3 year buyout provision.

Shekhter, whose company filed the lawsuit (i.e. NMS is among the plaintiff's), contended the JVA included only a 3 year buyout agreement, but this is not the plain language of the written contract. Local real estate has of course greatly increased in value in recent years, so millions of dollars that went to AEWS, would instead go to NMS if the buyout provision had in fact expired.

"The parties negotiated and agreed to a 5-year buy/sell provision, and Neil Sheckter was well aware of this," wrote Judge Bruguera.

On Sept. 8th, 2015, the Court ordered Defendants to "Immediately take steps to freeze all of their electronic documents, so that they cannot be modified or deleted." Other evidence, such as e mails, was also tampered with, the Court found.

Neil Shekhter provided the court with a "cover letter" correcting a typo in the agreement, that said it was a 3 year buyout term, not a 5 year buyout term. The court held that the document was a forgery, an attempted fraud upon the court perpetrated by Mr. Shekhter.

Expert testimony from Gerald LaPorte, from the Office of Investigative and Forensic Sciences at the US Dept. of Justice, examined the CPS code of the document, which Shekhter claimed he had kept in his safe since 2010. He testified that the "CPS" code, an anti counterfeiting code used by some printers, proved that "version 2 was first printed on a Xerox 7775 office printer on July 25, 2013, not at AEW's officer in September 2013."

The bottom line is that the Court found that Neil Shekhter attempted to present forged documents as evidence. This is an offense for which a person could be held criminally liable, i.e. for perjury. Paul Ceglia, for example, was sentenced in 2013 for falsifying documents and e mails to make it seem that he and Mark Zuckerberg had contracted to split profits for "The Facebook." https://en.wikipedia.org/wiki/Paul_Ceglia

Shekhter and NMS built 1000 units in Santa Monica, mostly in downtown on 6th and 7th Street. There, they rent 2 bedroom apartments for $6000 a month, mostly to Google, Snapchat, and other overpaid high tech employees in their 20's. It is unclear what, if any impact the decision will have on NMS' Santa Monica properties, or on NMS' status at City Hall as the City of Santa Monica's unofficial favorite developer. It's also unclear precisely how NMS became SM City Hall's favorite developer, though perhaps one day light will be shed on that as well.

NMS provided millions of dollars to oppose Measure LV, a grassroots anti-development measure in Santa Monica, that was defeated 45-55. The City Council members also unanimously opposed Measure LV, which would have limited "Pack and Stack" apartments, such as those built by NMS.