Another fall from grace: How power and privilege catches up to real estate power players

In two very different corners of real estate, two familiar names returned to the headlines this week: Josh Schuster and the Alexander brothers. One faces charges of white-collar fraud, the other a web of sex trafficking allegations. Vastly different cases, but both show how power and reputation can shield, and how quickly that protection can shatter.

For years, whispers followed Josh Schuster around New York real estate. Lawsuits mounted. Business partners bailed. Investors complained of missing money. Yet the stories — private school tuition allegedly paid with investor funds, a chauffeur for networking events, unpaid debts — seemed to bounce off him. Until now.

On Wednesday, Schuster was arrested in South Florida and hit with federal wire and securities fraud charges, accused of running a “Ponzi-like” scheme. Prosecutors allege he misled investors, promising equity in sleek condo projects from Gramercy Park to Long Island City, but funneled their funds into credit card bills, gambling losses and repayments to earlier investors.

The SEC followed the same day with a civil suit focused on a failed Gramercy Park development, where three investors allegedly lost $6 million with nothing to show for it.

It’s a sharp fall for a developer once seen as a rising star, bolstered early by backing from Silverpeak, a $21 billion asset manager. When Silverpeak cut ties and kicked Schuster out of its Midtown office, the cracks became harder to ignore. Still, it took years, and a reinvention in Boca Raton, complete with a new company and claims of a $300 million portfolio, for the other shoe to drop.

Meanwhile, the federal case against Oren, Tal and Alon Alexander has moved at breakneck speed. After The Real Deal reported last June that two women had accused them of rape, more than two dozen others came forward. That cascade led to federal sex trafficking charges in December — and a superseding indictment this week added six more counts, including trafficking by force and allegations involving a minor.

The Alexanders, once fixtures of the high-end market in New York, Miami and L.A., have been held in Brooklyn since January. A judge denied their request for house arrest, calling them a danger to the community and a flight risk. Behind the scenes, 28 civil suits allege sexual assault across the globe over two decades, and prosecutors say they’ve interviewed more than 60 women. Video evidence was reportedly found during a raid.

The crimes alleged are nowhere near the same, so they shouldn’t be equated. But what they do share is a familiar arc: men whose reputations in real estate granted them access — to investors, to partners, to social circles and parties — and, crucially, to time. Time to continue operating while red flags accumulated.

But this week’s developments are a reminder that flashy offices, buzzy deals and prestigious addresses go a long way, but what’s lurking behind the curtain can be dark, messy and unsustainable.

There was plenty of other news to catch up on this week. Joel Schreiber and Starwood went another round, Compass narrowed its losses and The Real Deal’s NYC Forum brought out real estate heavyweights and political figures to discuss the city’s shifting development landscape. 

“It is a nasty business in Washington”: Steve Witkoff talks politics, real estate

Steve Witkoff kicked off the fun at TRD’s NYC Forum on Wednesday. He talked about handing over his company to son Alex, and how Alex, along with Witkoff partner and longtime president Scott Alper, is steering the family firm into new areas like data centers and crypto stablecoins. Floyd Mayweather Jr. discussed his unexpected journey into real estate, Eric Adams expressed his support for developers, Ankur Jain pitched Bilt Rewards to NYC landlords and plenty of other panel discussions highlighted the day.

Joel Schreiber decries Starwood’s “negative energy” 

Joel Schreiber, the controversial first investor in WeWork, is refusing to pay over $88 million in court judgments owed to Barry Sternlicht’s Starwood Capital. After nearly three years of legal battles, the debt stems from a $213 million loan tied to Schreiber’s stalled Broadway Trade Center project in Downtown Los Angeles, where Starwood claims Schreiber defaulted and then evaded repayment.

Compass posts $51M loss in banner quarter

Compass reported a net loss of $51 million in the first quarter, up from a $133 million loss in the same period in 2024. The firm’s revenue increased 29 percent to $1.4 billion, with just over 9 percent of the growth attributed to its acquisition of @properties and Christie’s International Real Estate

Bill Ackman finally closes on Howard Hughes investment

The “will they, won’t they” negotiations between Bill Ackman’s Pershing Square Capital Management and Howard Hughes Holdings finally reached a resolution. Pershing Square agreed to invest $900 million in the company known for master planned communities, and Ackman’s ownership in Howard Hughes will increase to almost 47 percent.

Adam Neumann’s Flow, Canada Global win approval for 675-unit Aventura mixed-use project

Adam Neumann’s Flow and Israel-based Canada Global just scored unanimous approval to build a mixed-use development in Aventura. The city commission signed off on a rezoning request that ups the site’s density from 50 to 70 units per acre and grants a 30% reduction in required parking.

Eli Sasson files for Chapter 11 bankruptcy to hold onto $88M Beverly Hills Home

Developer Eli Sasson has filed for Chapter 11 bankruptcy to stave off foreclosure on his $88 million Beverly Hills mansion in Trousdale Estates. Sasson, who completed the Paul McClean-designed home in 2020 and initially listed it for sale in 2022, took out a $25 million bridge loan from Axos Bank after the listing was pulled.

JC Griffin wins deal for Bronzeville site with big residential tower plan

JC Griffin is set to make a splash in Chicago real estate with a proposed $900 million residential tower next to the massive Bronzeville Lakefront development. Griffin Venture Group is under contract to buy the 6.5-acre King Sykes site at 26th Street and Martin Luther King Drive, a deal expected to close around $30 million.