18-04-2025
- Business
- Wall Street Journal
A Bankrupt Developer, Actor Kevin James and a $14 Million Fixer-Upper
Kevin James is a stand-up comedian, starred in the long-running sitcom 'King of Queens' and the movie 'Paul Blart: Mall Cop,' and played a lead role in the movie 'Hitch' and many others. In recent years, he played a new, not-so-coveted role: the owner of a $14 million mansion that turned out to be sort of a lemon.
James has been thrust into the bankruptcy of National Realty Investment Advisors, a real-estate developer that filed for chapter 11 protection in 2022. The company developed and managed residential and other projects for more than a decade, raising roughly $650 million from more than 2,000 investors who learned of the business through the company's radio and TV advertisements.
National's creditors continue to go after what's left of the Secaucus, N.J.-based firm's assets. One of those assets is a portion of the proceeds from a 2021 sale of the Delray Beach, Fla., mansion to James.
A trustee charged with retrieving National's assets is suing James to get back some money that was put aside to make repairs to the mansion upon the sale's closing. But, the trustee alleges, James didn't make the repairs, the escrowed cash wasn't spent, and James has since sold the property. James, according to a court filing, says the cash is his.
James didn't respond to requests for comment. His lawyer, Stephen Padula, declined to comment. Ice Miller lawyers representing a trust for National creditors didn't respond to requests for comment.
The James saga started in October 2017, when National, via an affiliated entity called N. Ocean Capital 344 (NOC 344), bought the property for $7.1 million as an investment.
Even then, the 18,900-square-foot home had a troubled past. The mansion was previously owned by Al Rabil, now chief executive of $37 billion asset-investment firm Kayne Anderson. He purchased the property in 2013 and had a new home built on the site, but in 2016 he sued the general contractor, Seaside Builders, and eventually others, over allegedly defective construction, including a subcontractor's improperly built concrete slabs.
Rabil and his family moved out of the house, saying in the lawsuit that they feared for their safety. An engineer who evaluated the home, for example, found that the concrete and bolts couldn't properly support loads, the suit said. The city eventually deemed the home an unsafe structure, warning against entering it or trespassing on the property. Rabil and Seaside settled the suit.
Seaside placed a lien against the Rabils' property in 2016 and filed a complaint to foreclose on it, seeking what it said was $270,000 still owed to the company. It alleged that Rabil ordered substantial modifications and additions to the work that resulted in more than 170 change orders. Seaside said it was fired without cause and denied that there were defects. The lien was released and the foreclosure complaint was eventually dismissed when Seaside missed a legal deadline to file suit to block the lien's release.
In a 2023 deposition that was part of the bankruptcy proceedings, U.S. Construction Inc., a contractor hired by NOC 344, said that upon NOC 344's purchase of the property from Rabil in 2017, an engineer was hired to assess what needed to be fixed to make the house compliant with city codes. The repair estimate came in at around $200,000. The improvements were made, according to the lawsuit, and the house was back on the market in May 2020.
A listing from that time described the mansion as having six bedrooms, a five-car garage, a guesthouse and T-shaped pool with a 12-foot deep end. The primary suite took up the entire third floor. The home was priced at nearly $16 million, and the listing described it as 'completely renovated, redesigned and upgraded,' including with improved structural and mechanical systems.
In early December 2020, the Knipfing family trust—Knipfing is James's given surname—signed the sales contract, agreeing to buy the property 'as is.' After a presale inspection of the property, an addendum was added to the contract in late January 2021 in which NOC 344 acknowledged that certain repairs were needed. They included the three-stop elevator, which needed a new door; the patio tiles were damaged; and the garage door leaked. The seller and the Knipfing family trust agreed that $250,000 of the $14 million purchase price would be held in escrow to be used to pay for the various repairs after the sale to James closed, which it did in late January 2021. A lawyer for U.S. Construction Inc. said the company completed all the repairs on the pre-sale inspection punch list.
In mid-February 2021, James posted a YouTube video of a chat with fellow comedian David Spade, in which he told Spade that he had moved into the home and was 'sleeping on the floor, trying to set it up.'
In June 2022, National filed for bankruptcy with a $225 million portfolio of investment properties in four Eastern states, including Florida. Portfolio manager Thomas Nicholas Salzano, who the Justice Department called the company's 'shadow chief executive,' was sentenced last November to 12 years in prison and three years of supervised release after pleading guilty to securities fraud and other crimes.
The trustee for National's creditors filed its lawsuit against James this past February, alleging that many repairs listed in the sales contract addendum never happened and seeking the return of the $250,000 that remained in escrow, even after he sold the home—also 'as is'—for $12.7 million in May 2023.
The James lawsuit is among more than 30 cases that the trustee has filed against parties that also include a New Jersey town, accountants and former company insiders. Also named as a defendant in the James lawsuit is the title company holding the escrowed funds.
The trustee says that allowing James to have the $250,000 would penalize National's creditors 'and provide a windfall to the Knipfing trust.' James's camp, in an exhibit that is part of the trustee lawsuit, laid out in 2021 how a litany of defects dwarfed the fixes that NOC 344 agreed to in the sale agreement.
A roughly 150-page home-assessment report done a few months after James bought the home has dozens of photos of flaws large and small that purport to show that the property was a giant home-improvement project. James bought the property believing that 'all of the required remedial work to the previously condemned structure had been remediated,' the home-assessment report said.
Among the allegations in the report: a faulty lift system had trapped people inside the elevator; it took four minutes for the water to get hot in the kitchen sink; the faucet in the primary bathroom bathtub was too far from the tub, allowing water to fall on the floor; the roof leaked; gas-grill fumes invaded the garage; and the lighting in the wine room didn't work. In total, the consultant hired by James estimated that the cost of repairs would be roughly $1.4 million. A lawyer for U.S. Construction said it completed, or had been willing to complete, the repairs found post-sale, and said that the damages listed by the inspector were 'woefully overstated.'
It looks like the drama may soon come to an end. On March 28, a report filed by the trustee indicated that a settlement with James had been 'reached in principle.' Tentative terms weren't specified. Until it is finalized, a pretrial conference in the James lawsuit is scheduled for May in the bankruptcy court in Newark, N.J.
Meanwhile, the property's current owner, a limited liability company, is seeking a building permit from the city of Delray Beach to make a host of improvements throughout the interior and exterior of the property. They include enclosing the balconies and doing work on windows, doors and toilets. The application for the permit estimates that the cost of the improvements is $200,000.
Kishore Mirchandani, who is identified as the property owner or agent on the LLC's building permit application, as well as manager on the LLC's state incorporation records, didn't respond to requests for comment.
Gina Carter, spokeswoman for the city of Delray Beach, said the city is awaiting more information from the owner that would support the repair estimates.
Write to Becky Yerak at
