Ace Hotel president Brad Wilson accused of fraud by founder Calderwood’s family

George Sell By George Sell
19 October 2016 | Updated 19 October 2016

US: Ace Hotel president Brad Wilson has been accused of conspiracy to defraud Alex Calderwood’s estate in a multi-million dollar lawsuit.

US: Ace Hotel president Brad Wilson has been accused of conspiracy to defraud Alex Calderwood's estate in a multi-million dollar lawsuit.

Wilson is being sued for millions of dollars of damages by the estate of Ace founder Alexander Calderwood. The estate, administered by Calderwood's father, Thomas B. Calderwood, has filed a lawsuit in the Supreme Court of the State of New York against Wilson. According to the suit, Wilson's conduct has harmed the Calderwood Estate and it is seeking millions of dollars in damages.

Calderwood died, aged 47, in November 2013 at the group's London Hotel. He was the visionary behind the Ace brand of boutique hotels, growing it from a "flophouse" in a run-down part of Seattle into an international hotel chain with locations now in Seattle, Portland, New York, Palm Springs, Los Angeles, New Orleans, Pittsburgh, London, and Panama. Future Ace locations are planned for Chicago, The Bowery, Toronto, and Brooklyn.

On Calderwood's death, his elderly father, Tom, was appointed as the personal representative of Alex's estate. At the time of his death, Calderwood owned a 51.74 per cent interest in Ace, according to the lawsuit.

The suit filed claims that, in the wake of Alex Calderwood's death, Wilson conspired with Ecoplace, which is controlled by Calderwood's former business partner Stefanos Economou, to wrongfully exclude Tom Calderwood from the company. The suit alleges that Wilson conspired with Ecoplace by downplaying the financial condition of Ace so that Wilson and Ecoplace could acquire the estate's majority interest in Ace for far less than it was worth. The lawsuit also asserts that Wilson's actions are in breach of his Ace agreements, in breach of the implied covenant of good faith and fair dealing, and in breach of his fiduciary duties.

According to the lawsuit, Wilson allegedly attempted to extort and defraud the Calderwood Estate by:
• Using Ace assets to commission a bogus appraisal of Ace, valuing Ace at $200,000, for the purpose of convincing Tom Calderwood to give up the 51.74 percent majority interest in Ace or to sell that interest at a fraction of its true value by undervaluing Ace by many millions of dollars;
• Conspiring with Ecoplace to pay exorbitant bonuses ($1.5 million in aggregate) to himself and another Ace employee, and to make undisclosed distributions to Ecoplace of $2 million in self-dealing transactions intended to simultaneously make Ace appear less valuable, thereby facilitating a purchase of Calderwood's interest at a severely depressed valuation, while nevertheless providing Wilson and Ecoplace with financial benefits;
• Manipulating Ace's financial statements to hide Ace's true financial condition while also refusing to explain Ace's financial statements to the Calderwood Estate
• Deliberately failing to use his best efforts to manage and grow Ace and make Ace more profitable and valuable.

Jim McDermott, lead attorney for the Calderwood Estate, said: "We really wish it hadn't come to this, but Alex's estate is the majority owner of Ace. After countless days, months, and now years of trying to secure the estate's rightful claim to Ace, there was really no alternative but to pursue this litigation."

Neither Ace Hotels, Brad Wilson or Ecoplace has commented on the suit.

This is the third lawsuit filed against Ace. In the first, the Calderwood Estate filed suit against Ace, Ecoplace and Economou in March 2015 and that case is now pending in the Commercial Division of the Supreme Court of New York for New York County (amended complaint, second amended complaint). Then, in August 2016, Tungsten, a four per cent owner in Ace, filed suit against Ace, Ecoplace, and Economou alleging, among other things, that Wilson has mismanaged Ace in the wake of Calderwood's death. Tungsten further alleges that Wilson's mismanagement is either proof of incompetence or as a result of a "deliberate effort" to "stifle the growth of the Ace brand value during litigation with Alex Calderwood's estate" or both.

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