Condo owners sue over New York skyscraper they say is riddled with ‘thousands of severe cracks'
Apartment owners at a luxury New York skyscraper are suing the building's developers over a 'far-reaching fraud' in which they allegedly hid structurally significant defects — including 'thousands' of severe cracks on the tower's facade.
The condo board at 432 Park Avenue, a super-skinny high-rise on Manhattan's Billionaire's Row, claims that real estate firm CIM Group failed to disclose the extent of damage that has resulted in flooding and impacted the value of their multimillion-dollar properties.
Filed at the state court in New York in late April, the lawsuit also names architecture and engineering companies involved in the project. Condo owners are collectively seeking more than $165 million in damages, according to the complaint.
Completed in 2015, the slender 1,396-foot-tall skyscraper has a 15:1 height-to-width ratio, putting it among the so-called 'pencil towers' now dotting midtown Manhattan's skyline. To protect against high winds, the building was designed with unoccupied floors that encourage airflow, anchors drilled deep into the bedrock and 'tuned mass dampers' that act like pendulums to counteract swaying.
Property developer Harry Macklowe — whose firm McGraw Hudson Construction Corp is also named in the suit — compared the tower to the Empire State Building, telling the New York Times in 2013 that it was 'the building of the 21st century.' Pop star Jennifer Lopez and Chinese businessman Ye Jianming are among those reported to have purchased units there for eight-figure sums.
But owners and residents have since complained of numerous construction issues, including more than 20 water leaks since 2017, according to the complaint. In 2021, the condo board filed a lawsuit alleging a range of defects, from malfunctioning elevators and poor energy efficiency to a trash chute that sounds 'like a bomb' when used.
The new lawsuit meanwhile claims that the tower's facade is 'plagued with thousands of severe cracks, spalling, and other forms of deterioration,' including a 10-inch-deep crack in the building's core. As well as causing flooding, the damage has corroded some of the steel in the tower's reinforced concrete columns, the complaint alleges.
While the 2021 complaint also detailed 'substantial cracking,' the condo board said it filed its most recent action after claiming it uncovered evidence that defendants had 'conspired' to conceal the extent and seriousness of the defects.
In statements provided to CNN, both CIM Group and SLCE Architects, the project's architect of record, said they 'vehemently' deny the claims and are moving to have the complaint dismissed. Engineering firm WSP declined to comment. McGraw Hudson Construction Corp did not respond to CNN's inquiries.
Related article
Construction of world's tallest abandoned skyscraper to resume after a decade
The lawsuit attributes cracking to the building's 'experimental' facade, which is made from white concrete. The material is, it says, 'typically used for aesthetic purposes' and had to be strengthened to withstand the supertall building's structural load — especially during high winds.
Among the suit's allegations are claims that CIM Group ignored concerns raised by various concrete consultants, as well as the project's late architect Rafael Viñoly about the strength of the concrete mix. The condo board claims that mockup tests showed the material's use would result in cracking. But CIM Group and its contractors 'bulled forward' with 'complete disregard for… the inevitable problems it would cause for the building and its future residents,' the suit adds.
The condo board alleges that, despite having knowledge of the facade's defects, SLCE Architects deceived condo owners by making 'materially false' claims in its offering plan, a document disclosing important information to potential buyers. (The lawsuit cites an alleged change in the document's wording, which went from claiming the concrete 'will' prevent water penetration to saying that it was only 'designed to' do so.)
Additionally, the lawsuit alleges that McGraw Hudson and WSP misled New York City Department of Buildings in a letter that 'misrepresented the nature, extent, and type of cracking.' It claims the letter failed to disclose the full findings of a survey that had discovered 1,893 defects.
The complaint claims that developers then 'repeatedly rejected' recommendations on how to address issues that arose. A suggestion that an opaque elastomeric covering could be applied to the facade to prevent air and water infiltration, for instance, was ignored because it would 'significantly alter' the building's appearance and make it less appealing to 'the world's billionaires,' the lawsuit alleges.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Upturn
4 hours ago
- Business Upturn
Backblaze Investor News: If You Have Suffered Losses in Backblaze, Inc. (NASDAQ: BLZE), You Are Encouraged to Contact The Rosen Law Firm About Your Rights
NEW YORK, June 15, 2025 (GLOBE NEWSWIRE) — WHY: Rosen Law Firm, a global investor rights law firm, announces an investigation of potential securities claims on behalf of shareholders of Backblaze, Inc. (NASDAQ: BLZE) resulting from allegations that Backblaze may have issued materially misleading business information to the investing public. SO WHAT: If you purchased Backblaze securities you may be entitled to compensation without payment of any out of pocket fees or costs through a contingency fee arrangement. The Rosen Law Firm is preparing a class action seeking recovery of investor losses. WHAT TO DO NEXT: To join the prospective class action, go to or call Phillip Kim, Esq. toll-free at 866-767-3653 or email [email protected] for information on the class action. WHAT IS THIS ABOUT: On April 24, 2024, during market hours, issued an article entitled, 'Backblaze stock plunges amid Morpheus Research report.' This article stated that Backblaze 'saw its shares plummet' as a result of a 'scathing short report from Morpheus Research. The report detailed a series of alleged financial missteps and questionable practices since the company's initial public offering (IPO) in November 2021.' The article further noted that Morpheus's report 'highlights questionable accounting practices, including financial manipulations and inflated forecasts to pass audit thresholds.' On this news, Backblaze stock fell 2.1% on April 24, 2025. WHY ROSEN LAW: We encourage investors to select qualified counsel with a track record of success in leadership roles. Often, firms issuing notices do not have comparable experience, resources, or any meaningful peer recognition. Many of these firms do not actually litigate securities class actions. Be wise in selecting counsel. The Rosen Law Firm represents investors throughout the globe, concentrating its practice in securities class actions and shareholder derivative litigation. Rosen Law Firm achieved the largest ever securities class action settlement against a Chinese Company at the time. Rosen Law Firm was Ranked No. 1 by ISS Securities Class Action Services for number of securities class action settlements in 2017. The firm has been ranked in the top 4 each year since 2013 and has recovered hundreds of millions of dollars for investors. In 2019 alone the firm secured over $438 million for investors. In 2020, founding partner Laurence Rosen was named by law360 as a Titan of Plaintiffs' Bar. Many of the firm's attorneys have been recognized by Lawdragon and Super Lawyers. Follow us for updates on LinkedIn: on Twitter: or on Facebook: Attorney Advertising. Prior results do not guarantee a similar outcome. ——————————- Contact Information: Laurence Rosen, Esq. Phillip Kim, Esq. The Rosen Law Firm, P.A. 275 Madison Avenue, 40th Floor New York, NY 10016 Tel: (212) 686-1060 Toll Free: (866) 767-3653 Fax: (212) 202-3827 [email protected]
New York Post
5 hours ago
- New York Post
Inside the battle to control the world's supply of rare earths
Back in 2009, Jim Kennedy, a consultant and entrepreneur of rare earths — a group of 17 metallic elements, including 15 lanthanides, crucial for modern technology — met with a top official at the Pentagon to discuss the future of these precious minerals. 'He was almost indifferent to the issue,' Kennedy tells The Post. 'His dispassion was staggering. It was one of the most disappointing meetings in my life.' Sixteen years later, that indifference has widely disappeared. Rare earths — used for everything from smartphones, electric cars and airplane engines to medical equipment, wind turbines and military applications like missiles and fighter jets — have become one of the most in-demand and politically contested industries in the world. 10 A miner carrying a heavy bag of rare earth-filled mud in China, which controls many of the most crucial rare earth elements now required for the sophisticated technology that powers everything from cellphones to fighter jets. REUTERS Rare earths 'enjoy an unusual level of bipartisan political support because they are vital both to economic development and national security,' says Melissa Sanderson, a former president and current board director at American Rare Earths, an Australian company focused on developing rare earth projects, including one in Wyoming. Rare earths aren't just a big part of modern technology; they're in many ways the most critical components. They're used as heat-absorbing agents in wind turbine motors, as strengthening and anti-glare agents in iPhones and fighter jets and as clarifying agents in MRIs. They're also almost completely controlled by China. Between 2020 and 2023, 70% of our rare earth imports came from China, according to Statista. That number jumped to 80% last year. And the US is 100% reliant on China imports of Yttrium, a rare earth metal used in everything from cellphones to TVs to radiation therapy used to treat liver cancer. 10 Rare earths 'enjoy an unusual level of bipartisan political support because they are vital both to economic development and national security,' says Melissa Sanderson, a former president and current board director at American Rare Earths. China has been fickle about granting export licenses for rare earths, although their grip has shown recent signs of weakening. President Trump had a lengthy (and rare) phone call with Chinese President Xi Jinping on June 5 and in a social media post after the call, Trump wrote 'there should no longer be any questions respecting the complexity of Rare Earth products.' The next day, China granted temporary export licenses to rare-earth suppliers of the top three US automakers. The irony is that for much of the mid-20th century, the US was a global leader of rare earth elements. But 'demand was exponentially lower at the time,' says Sanderson. 'Therefore, the output from our sole producer — Mountain Pass Materials, known as MP Materials now — was sufficient to satisfy a large percentage of then-existing demand.' The Las Vegas-Nevada-based company still operates the only rare earth mine and processing facility in the United States. 10 President Trump and President Zelensky meet in the Oval Office in February. Soon after this meeting a deal was made for Ukraine to supply vital rare earths to the United States. AFP via Getty Images America's rare earths lead came to an end in 1980, brought on by changes to US regulations. Because processing rare earth minerals involves the separation and removal of uranium and thorium, it can lead to radioactive waste and other contaminants. 'The US was concerned about the environmental impact, since particularly with the technology of the time, there were significant impacts to air, water and even ground quality that would not have met US standards,' says Sanderson. It wasn't the same story in China, who were more willing to accept the dangerous pollutants 'as a price for achieving its market dominance,' she says. China's monopoly of rare earths doesn't just give them an economic advantage. 'China has been 'weaponizing' its market hegemony for many years, in increasingly sophisticated and legal ways,' says Sanderson. 10 Pres. Trump with Chinese leader Xi Jinping. Having conceded its lead on rare earth mining, the US is playing a serious game of catch-up with the Chinese. REUTERS The country first flexed their power in 2010, blocking rare earth exports to Japan, a major producer of permanent metal magnets. 'That decision was overturned by the World Trade Organization, so China does not exert its control as overtly now,' says Sanderson. But in the current trade tussle with the US, 'China has identified seven crucial elements under its export control regime which it will not sell to the US,' says Sanderson. 'Due to concerns that while suitable for civilian economic use, they could also be used for military purposes.' While President Trump's tariffs are often blamed for exacerbating the tensions, Kennedy, who serves as president of ThREE Consulting, a rare earths consultancy, says the tariffs are actually 'forcing China to reveal the magnitude of this threat. Absent Trump's tariffs, China would never have shown its hand until it was too late.' 10 The US is 100% reliant on China imports of Yttrium, a rare earth metal used in everything from cellphones to TVs to radiation therapy used to treat liver cancer. REUTERS Just how bad could it get? Kennedy believes that if left unchecked, and China was allowed to continue their embargo without consequences, 'the non-Chinese world would need to shut down and re-engineer most everything that comes off an assembly line,' says Kennedy. 'This is not an overstatement.' The stand-off with China may be at the forefront, but it's not the only way Trump is maneuvering to protect the nation from rare earth depletion. Greenland contains (by some estimates) about a quarter of the world's rare earth minerals, and Trump has suggested that the US could annex the autonomous territory in Denmark. 10 A chunk of Ytrium, once of the most important rare earth elements. Phil Degginger/imageBROKER/Shutterstock The US also recently inked a landmark deal with Ukraine, which has approximately 5% of the total global mineral reserves. Although Trump declared in February that Ukraine would be providing 'the equivalent of like $500 billion worth of rare earth [minerals],' the exact amount wasn't specified in the deal, other than that the US and Ukraine would be splitting profits 50/50. There have also been efforts to mine rare earths from an entirely new source — the bottom of the Pacific Ocean. 10 Consultant Jim Kennedy was one of the first industry insiders to raise the alarm around the rarity — and potential global conflict — surrounding rare earths. It's called the 'Clarion Clipperton Zone,' a remote area of the Pacific between Hawaii and Mexico, roughly half the size of the contiguous US. This seabed region is rich in polymetallic nodules, the rock-like formations that contain some of the most sought-after rare earths in the world. It's a veritable goldmine waiting to be unearthed. In fact, the US Geological Survey recently estimated that the Clarion Clipperton Zone contains more nickel, cobalt and manganese than all terrestrial reserves combined. The Metals Company, a Canadian firm with US investment ties, is already making strides to become the first to mine commercially in the region. They conducted a field test back in 2022, and the company is currently applying for 'exploration licenses and commercial recovery permits' from the US. There are legal hurdles that could slow down their ambitions. Despite a 1980 law passed by Congress to regulate seabed mining, the Clarion Clipperton Zone technically falls under the jurisdiction of the International Seabed Authority, which operates under the United Nations Convention on the Law of the Sea. Whether the ISA has exclusive authority over the region remains open to debate. 10 Gerard Barron, CEO of The Metals Company, has dismissed some of the concerns about potential environmental damage surrounding rare earth mining efforts. AFP via Getty Images There are also environmental concerns. Arlo Hemphill, a Senior Oceans Campaigner at Greenpeace, warns that any move to mine the Pacific 'would be an ecological disaster. Scientists have not even had a chance to fully explore and understand the wonders of the deep, but a greedy corporation wants to tear up this ecosystem and cause immense ecological damage.' Gerard Barron, CEO of The Metals Company, dismisses these concerns, pointing out during a recent interview that Indonesia regularly mines in biodiverse rainforest regions. 'For some reason,' he said during the interview, 'people think it's okay to go digging up rainforests to get the metals underneath them, yet we're debating whether we should be going to pick up these rocks that sit on the abyssal plain?' (Barron did not respond to the Post's request for comment.) There are other options, but many are just as controversial. Sanderson believes the key will come down to strengthening our relationship with allies like Canada and Australia. 'They have significant natural resources and experienced and large mining companies,' she says. 'Cooperation with these countries is vital for filling the knowledge gap. The US doesn't have nearly enough experienced chemical and process engineers, as just one example.' 10 Rare earths are also crucial components of military fighter jets. Soonthorn – It took half a century for China to achieve its market position, she says, and the US needs an integrated supply chain from mine to magnet, but we're essentially starting from scratch. The US also needs to reform its mining regulatory system, which has a dysfunctional permitting process and some of the longest lead times for new mine production in the world. 'On average, companies wait anywhere from eight to fifteen years from when a deposit is initially determined to be economically interesting to when production can start,' says Sanderson, 'and some have waited significantly longer than that.' New mining projects are also frequently litigated, 'multiple times from multiple angles,' says Sanderson, which can add even more years to the wait time. With the return on investment horizon so long and the prospects so uncertain, many companies 'have difficulty attracting the investment necessary to support the high costs of building a mine,' she says. 10 Miners of rare earths such as these in China are increasingly at the forefront of the global race to control many of the elements that will determine our technological future. REUTERS Kennedy, however, is hopeful for the future. His company, Caldera Holding LLC, is collaborating with federal labs to refashion a former iron ore mine in Missouri to focus on rare earth minerals. He believes his mine is the only one that can provide 'geopolitically significant quantities' of rare earths.' But the ball, says Kennedy, is very much in Trump's court. His trade war has caused uncertainty, but the president's actions 'strongly suggest that delinking from China is real. This can be helpful, but follow-through is critical.' It's now up to the Trump administration to provide low-cost loans, grants and production tax credits to US-based mining companies that have (at least until now) faced almost insurmountable obstacles. 'Failure to support integrated projects,' says Kennedy, 'will result in many slow-motion train wrecks.'
CNBC
6 hours ago
- CNBC
China's personal delivery market is on the rise. Only some are already making money
China's large labor force and internet ecosystem have supported fleets of couriers delivering an increasing range of products on demand. U.S.-listed BingEx has taken a unique strategy by dedicating one delivery person for each order, becoming "a pioneer in the dedicated courier service industry," Deutsche Bank analyst Jessie Xu said in a June 10 report that initiated coverage on the stock with a buy rating. By using the Chinese company's app, someone in China can have their suitcase transported across town, or have the courier buy a specific cake and deliver it to a party. The business operates under the brand "FlashEx" or "Shan Song," which means "delivery in a flash" in Mandarin. The brand's name has become a local way to describe the service, just like Kleenex. FlashEx "started recording positive unit operating profit from 3Q23 and has been profitable since then," Deutsche Bank's Xu said, pointing out that most of its competitors still operate at a loss in the one-on-one courier business. On-demand delivery has become a competitive market that logistics companies and e-commerce platforms have expanded into, often with heavy subsidies and piling several orders onto one courier. But even Alibaba expects consumers will want to buy on demand, and in the last several weeks has rolled out a channel for people to buy food, clothes and other products on e-commerce platform Taobao — and get it delivered in as quickly as 30 minutes. Most of FlashEx's competitors are subsidiaries of larger companies with other business lines. U.S.-listed Dada , which was previously a Walmart-backed supermarket delivery business separate from was absorbed into the Chinese e-commerce giant over the last few years. Dada reported loss from operations rose to 2.16 billion yuan in 2024, up from 2.11 billion yuan a year earlier. Earlier this year, launched a campaign in on-demand delivery to compete with food delivery giant Meituan. Both companies reported operating losses for "new" initiatives in the first quarter. Chinese logistics giant SF Holdings has a small intra-city on-demand delivery unit, which contributed to just over 3% of total revenue last year. The segment's revenue rose by 22% from a year ago, while its net profit more than doubled to 132 million yuan . The on-demand delivery market is expected to grow by an average of 13% a year through 2028, a slowdown from 20% annual growth from 2019 to 2023, Xu said in the report. "This growth should be supported by the rapid expansion of Online-to-Offline (O2O) retail, food delivery services, and increasing demand for personalized delivery options." But personal, one-on-one courier services still represents only 4% to 5% of that delivery market, Xu said, predicting 10% annual growth in the next three years. She pointed out that as of the end of 2024, FlashEx had 2.8 million riders serving over 100 million registered customers in 295 cities. U.S.-traded shares of BingEx closed at $3.87 a piece on Friday, for 21% upside to Deutsche Bank's price target of $4.70. However, the stock has plunged more than 50% so far this year after the company grappled with more competition and tepid Chinese consumer spending in the last several months. "FlashEx has strategically exited some 2B businesses since 2H24, as the company is focused more on" unit economics," Xu said. "Management made it clear that the company will not chase pure volume market share gains at the cost of profitability. … This set a positive tone for the company's sustainable growth and profitability in the mid-to-long run." — CNBC's Michael Bloom contributed to this report.
