King of Prussia-based Mitchell L. Morgan Management Inc. has sued American International Group Inc., accusing the troubled, taxpayer-backed insurance and investment giant of delaying payments on a $120 million apartment-renovation financing venture, reports today's Wall Street Journal here.
AIG, in turn, blames the Federal Reserve, which took over AIG in the waning days of the Bush administration and now runs the company under considerable pressure from Congress and an outraged public, for holding up payments and demanding more documentation.
Morgan, whose namesake operator is a leading Pennsylvania Republican activist, bought the AIG-financed apartments, mostly in PA and NJ, 2007 from the Kushner family, developers (and Democratic donors) in New York and New Jersey, the Journal said. Charles Kushner went to jail in 2005 for illegally funding former NJ Gov. McGreevy's campaign. Philly Deals reported on AIG's plan to cut back its real estate business, and its Morgan partnership, last fall, here.
In the suit, "Morgan contends that if its partnership with AIG can't pay contractors, it could file liens on the properties, which would trigger a default with the banks that provided the partners money to buy the apartments" for $2 billion two years ago, WSJ reports. Lenders include Wachovia Bank, now part of Wells Fargo & Co.