The saga of troubled luxury skyscraper The One has taken a new turn with allegations that the project’s original developer, Sam Mizrahi, overpaid his own firm millions and kept commissions from defaulted sales to buyers, including a convicted U.S. fraudster and a Princess of Liechtenstein.
After receiver Alvarez & Marsal removed him from the project over allegations of management failures last March, Mizrahi said he was owed $11 million for outstanding fees and costs of labour and construction management, including amounts owed to subcontractors who undertook work for the project.
But in new court filings released on Oct. 18 Alvarez & Marsal claims that Mizrahi owes The One’s lenders more: $58.8 million for excess labour charges and breach of contract.
Since seizing control of the project, the receiver has made allegations in court filings that suggest Mizrahi bit off more than he could chew when he attempted to build Canada’s second tallest mixed-use tower.
“Mizrahi had little or no prior experience developing, marketing or building real estate that approaches the size, scope and complexity of the project,” the receiver wrote in a court document.
“Every experienced professional that the receiver has consulted with in respect of Mizrahi’s performance as general contractor of the project has identified significant issues,” it added.
In an email to the Star, Mizrahi said he “strongly rejects the false allegations” made by the receiver, adding that every payment Mizrahi Inc. (MI) — a corporation owned and controlled by Mizrahi — received was approved by “the project’s lenders, their administrators, independent consultants and other project stakeholders.”
“MI has been pressing to have the court determine its entitlement to be paid for past services by the project and to answer all of the receiver’s false allegations.”
The much delayed condo project is currently 74 floors tall (the total height will be 85 floors) and is now expected to be completed in the second half of 2027. It has already grown by 34 levels since it was forced into receivership a year ago.
Mizrahi allegedly owes the lenders $49.3 million in labour fees that “significantly exceeded” rates charged by other construction managers for similar services, while his performance “did not justify above-market compensation,” the receiver wrote.
Skygrid, the construction manager hired to replace Mizrahi Developments, has since charged about $1 million less per month than Mizrahi invoiced. Alvarez & Marsal is also investigating whether Mizrahi billed the lenders for work that was never done by subcontractors on the project.
Out of the total $58.8 million, the receiver says Mizrahi owes about $9.5 million in breaches of contract, including refusing to return $1.8 million in commissions collected from condo sales whose buyers defaulted — in part or entirely — on their deposits.
The court filings included descriptions of some unit purchasers the receiver says have defaulted on deposits including a resident of the U.S. who pleaded guilty to fraud, a Princess of Liechtenstein and an Iranian family who bought the units on the eve before Ottawa’s “Prohibition on the Purchase of Residential Property by Non-Canadians Act” came into effect.
While the combined value of these five units surpasses $63 million, Mizrahi only collected $40,000 in deposits, or 0.06 per cent of the aggregate purchase price.
After The One was placed into receivership, trouble at several other of Mizrahi’s developments quickly followed: 128 Hazelton, a luxury condo in Yorkville, and 180 Steeles Avenue West, a pre-development in Vaughan, are now also under receivership. And just two weeks ago, one of his condo developments on 1451 Wellington St. W. in Ottawa was granted creditor protection by a court.
Last summer, The One was listed for sale by its receiver with a current asking price that is about double what the development is actually worth, industry sources told the Star. The “Coco Parties” — including paving tycoon Jenny Coco — objected to the sale process, saying it has “been intentionally designed to fail” and produce no bids, which would result in senior lender KEB Hana Bank taking control of the project and financing construction to completion.
As of mid-October, the receiver had not received any qualified acquisition or investment proposals, while it is currently considering a proposal from a potential developer for the project.
