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Family Court deal: Some Obermayer lawyers knew about Rotwitt's codeveloper role

When real estate lawyer Jeffrey B. Rotwitt surfaced on both sides of a deal to develop a $200 million Family Court building in Center City, he was abruptly fired by his law partners.

While the firm's managing partners say they were kept in the dark, the attorney for lawyer Jeffrey B. Rotwitt said he had been talking openly about the structure of the deal as far back as '07.
While the firm's managing partners say they were kept in the dark, the attorney for lawyer Jeffrey B. Rotwitt said he had been talking openly about the structure of the deal as far back as '07.Read more

When real estate lawyer Jeffrey B. Rotwitt surfaced on both sides of a deal to develop a $200 million Family Court building in Center City, he was abruptly fired by his law partners.

They said they had no idea that Rotwitt, a longtime partner at Obermayer, Rebmann, Maxwell, & Hippel L.L.P., had also been earning fees as a codeveloper.

But some lawyers at the firm did know about Rotwitt's dual roles - and found out more than two years ago, an internal firm e-mail shows. In November 2007, when the project was still in its early stages, Rotwitt told several fellow Obermayer lawyers that he planned to become partners with developer Donald Pulver.

"The developer . . . will be a to-be-formed entity controlled by Don and me," Rotwitt wrote.

Obermayer partner Walter W. Cohen said the four lawyers who got that e-mail all worked under Rotwitt in the firm's corporate division. They assumed that he had permission to work on the other side of the deal, he said.

"No one on the management committee was aware of that," Cohen said.

The four Obermayer lawyers did not respond Friday to requests for comment. Cohen said he would speak for them and for the firm.

The e-mail, obtained by The Inquirer, is another example of how Rotwitt - hired by the courts to find a site for a new courthouse in Philadelphia - openly discussed his dealings with Pulver, the Conshohocken developer who owned the development rights to the site at 15th and Arch Streets.

In a prior interview, Rotwitt said he had no conflict because his work for the courts was done by the time he became codeveloper - another point he mentions in the November 2007 e-mail.

He said that Pennsylvania Chief Justice Ronald D. Castille, who supervised the project, and his partners at Obermayer knew about his relationship with Pulver.

"Yeah. I mean, everybody knows," Rotwitt said in an interview last month.

"I'm becoming their scapegoat," he said.

Rotwitt disclosed his plans to codevelop the project with Pulver in an e-mail to Warren Ayres, a colleague who handles tax cases and other business matters. Ayres was drawing up a proposal on the project's financial structure.

In the e-mail, Rotwitt laid out his idea to join Pulver, along with other details that were later approved by Castille.

He also sent it to Obermayer lawyers John Ryan, Hugh Sutherland, and Michael Weinstein. Ryan later ended up working on the deal.

"Importantly, there will be a large, but very fair, Tenant Representative Fee paid to [Obermayer] when this closes," Rotwitt wrote. He said that fee, and a developer fee, could be paid monthly.

Obermayer "will also, if I get my way, be the law firm that structures all this and does all the zoning and land development work for legal fees in addition to the Tenant Rep fee for the real estate and lobbying work which I've basically already completed," Rotwitt wrote.

Catherine M. Recker, Rotwitt's defense attorney, said the e-mail demonstrates that he was not trying to conceal anything.

"This document makes clear that as far back as '07, Jeff was talking openly about the structure of the deal, and it's been consistent with everyone since then," she said.

Through a spokesman, Pulver declined to comment.

Cohen said Rotwitt was the supervisor of all four lawyers receiving the e-mail.

He said they confirmed that they knew he had joined Pulver as a partner, but figured that the firm's leaders had blessed the arrangement.

"Jeff was the one who brought in the clients, and they were the ones who did the work," said Cohen, a former Pennsylvania acting attorney general. "They assumed he had appropriate approvals for whatever he wanted to do."

The knowledge never made it up the Obermayer ladder to Cohen, to firm chairman Martin Weinberg, or to Thomas A. Leonard, another influential dealmaker at Obermayer, Cohen said.

Beyond the Obermayer firm, the project's architects, construction manager, and others say they knew Rotwitt was working with Pulver - even though Obermayer's managing partners and Castille say he kept them in the dark.

The question of who knew what about Rotwitt is one focus of an FBI criminal investigation into whether anyone committed fraud in the now-busted deal.

On Castille's authorization, the courts paid $12 million in fees to Obermayer, Pulver, and others. Castille, who says he relied on Rotwitt's advice, says he may seek to get some of the money back.

Castille has hired William G. Chadwick, a lawyer and his former second-in-command at the Philadelphia District Attorney's Office, to review the deal. On Friday, a civic watchdog group said Chadwick should be replaced with an "independent investigator with full subpoena powers."

"The Supreme Court is under a dark cloud that won't be lifted until all the details of the project are fully disclosed," said Zachary Stalberg, president and chief executive officer of the Committee of Seventy.

Chadwick said he was conducting a review, not an investigation, and coordinating with the federal probe.

Obermayer, a firm known for its political connections and campaign contributions, was paid $1.3 million for the Family Court project. Before the deal blew up, the firm stood to earn a fee of $3.9 million. The state is now taking over the project.

Rotwitt was fired May 26, a day after Castille killed the development deal. In a statement, the firm said the management committee hadn't known about his dealings with Pulver until The Inquirer reported them.

Rotwitt, 59, a prominent real estate lawyer and Obermayer's biggest earner, was hired to find a courthouse location in February 2006 by then-Supreme Court Justice Sandra Schultz Newman.

A longtime advocate for a new Family Court building, Newman then had the role of overseeing the city's courts.

At the time, Newman's son Jonathan worked at Obermayer, where he was "of counsel." Five months after she hired Rotwitt, Newman began dating the firm's chairman, Weinberg. She says her personal ties to the firm had nothing to do with her decision to hire Rotwitt.

Rotwitt agreed to work for free and take his fee at the close of the deal.

By late 2007, Castille had settled on the 15th and Arch location and the state legislature was considering a $200 million appropriation to build it.

Ethics rules discourage lawyers from entering business deals on the other side of their clients. It's not permitted unless the attorney informs the client in writing, and gets a written waiver in return.

Rotwitt never made that written disclosure. But he contends that's because his role as Castille's "tenant's representative," not lawyer, had ended by the time he made his deal with Pulver.

Cohen said the other Obermayer lawyers assumed he had followed the disclosure rule.

"Hindsight is 20-20," he said.

In early 2008, Rotwitt and Pulver began meeting with construction firms as codevelopers, and they later hired the architectural firm of EwingCole to design the building. Executives for those firms have said they knew Rotwitt and Pulver were partners.

In October 2008, Obermayer started receiving $55,000 a month from the court, and Rotwitt says he and Pulver split another $55,000 a month in development fees. Rotwitt says he received about $500,000 from Pulver before the deal ended.

As Rotwitt predicted in the e-mail, Obermayer also went on to earn more than $225,000 in additional fees from the court on the Family Court deal. But it's not entirely clear whom those lawyers were representing.

Those bills were submitted through Pulver, then paid with court funds, along with fees for designers and other consultants. In permit applications sent to City Hall, an Obermayer lawyer is listed as representing Pulver's company, Northwest 15th Street Associates.

In a hearing before City Council, the lawyer said he represented the courts.

"As far as everybody knows," Cohen said, the other Obermayer lawyers were representing the courts. But he said that to his knowledge no one obtained the customary letter or formal contract retaining Obermayer to do the extra work.

Asked if there should have been one, Cohen said: "Maybe there should have been a lot of stuff that there wasn't."