October 5–12, 2000

cover story

Cold City

In a bind: These binders in the office of attorney Eli Gabay are filled with documents pertaining to properties owned by Hadad and Ben-Or. photo: Ron Coalson

Together, Eli Hadad and Gershon Ben-Or amassed a valuable portfolio of Old City real estate. Now the former business partners are doing battle in the courts.

by Gwen Shaffer

part 1 | part 2 | part 3

The bailiff scans the listings sheet, then looks up to call the next case. "City of Philadelphia vs. Eli Hadad."

Two middle-aged men, flanked by their attorneys, make the short journey from the courtroom pews to the judge’s bench. Both men are dressed in dark suits.

The defendant, Hadad, is heavyset, his dark curly hair thinning on top. His 5 o’clock shadow is already evident, though it is not yet noon. His posture is stiff, his hands clenched.

The other man, Gershon Ben-Or, looks older, more solemn. Ben-Or’s hairline is receding, and what’s left of his remaining locks is closely shaven. His eyes are pale blue, his teeth yellowed from smoking.

Over the past two years, Hadad and Ben-Or have met with attorneys scores of times to close deals for their jointly owned business, Philly Real Estate. That’s when they were still partners and friends — before their messy divorce, so to speak, in March.

Acquaintances say that, before the falling out, the men had a yin-yang relationship — Ben-Or, 49, was the level-headed one who helped calm Hadad’s turbulent personality. Hadad, 42, took care of the nitty-gritty, meeting with city building inspectors and tenants. Meanwhile Ben-Or pumped hands with bank managers and private investors, making it possible to acquire more and more properties.

For more than two years, the arrangement between the partners appeared to be working out well. In this brief span of time, they built up an impressive portfolio of prime real estate in Old City.

Their holdings include buildings that house Envy nightclub, Gourmet of Olde City, Olde City Seafood and the former 2nd Street restaurant Prego (which closed in January and has been under construction for a planned restaurant called Cuba Libre).

Combined, the properties are estimated to be worth up to $9 million.

But this morning, Sept. 22, Ben-Or and Hadad stand on opposing sides of a courtroom.

On the afternoon of June 26, Hadad was arrested for attempting to grab files out of Ben-Or’s arms as he left his attorney’s office at 17th and Market streets. The arrest report also says that between Feb. 21 and Feb. 24, Hadad left "numerous phone messages" threatening to rape Ben-Or’s "mother, wife and daughter," as well as to put Ben-Or "in the trunk of his car."

The District Attorney’s office initially charged Hadad with robbery, simple assault, harassing threats, harassment and reckless endangerment of another person. Hadad was released after posting 10 percent of a $10,000 bail.

The Commonwealth dropped the robbery charge last month, leaving all the misdemeanors. Now, attorneys for both Hadad and Gershon agree they would like a continuance in this criminal case. They are currently settling a bitter civil suit, filed by Hadad, and a counter claim, filed by Ben-Or.

Municipal Judge Seamus McCaffery is overseeing the criminal case. He is well-known as a magistrate who doesn’t mince words.

"Stay away from each other," McCaffery orders during the hearing. He notes that Hadad and Ben-Or live in the same Center City condominium building. If you cross one another’s path, he tells them, turn in the opposite direction.

"I’ll put you in jail so fast your heads will spin," McCaffery warns. "I’ll do it with a smile. I don’t like people who violate our laws. Wanna test me?"

After a dramatic pause, the judge challenges, "Go for it."

On that note, the bailiff announces the next hearing date — March 14, 2001. If Hadad leaves Ben-Or alone until then, the charges will be dismissed.

McCaffery bangs his gavel and the hearing is adjourned.

Hadad grins as he saunters out of the courtroom. The pensive expression crossing Ben-Or’s face is much more difficult to read.

While the criminal case is on hold, the ongoing civil suits will resolve fundamental questions about the ownership of Philly Real Estate’s Old City properties.

Even if Hadad and Ben-Or resolve the civil dispute, they are not home free. Former tenants and other creditors are claiming in lawsuits that Philly Real Estate and its sister companies owe them tens of thousands of dollars. And while some of these problems are being worked through in court, others haven’t been as easy to resolve.

And then there’s the question of the company’s long-range effect on Old City. While some tenants dislike Hadad and Ben-Or, and the Old City Civic Association regularly criticizes them, supporters of the pair argue that their real estate savvy has made a positive difference for the area.

Ask business owners in Old City about Eli Hadad and Gershon Ben-Or, and they’re likely to have an opinion. It seems the entire neighborhood is familiar with them.

Hadad can often be seen pacing the sidewalk in front of his office at 11 N. 2nd Street, barking into his cell phone. He’s nearly always dressed in solid black. Whether he’s speaking in English or in Hebrew, his volume tends to stay at one level: loud.

When Ben-Or was still a partner, he also spent much of his time at the office. He drank countless mugs of coffee and finished off one pack of Marlboros after another. He addressed the girls as "sweetheart."

Everyone in the neighborhood seems to have heard about the falling out between Hadad and Ben-Or — both of whom immigrated to the Philadelphia region from Israel more than a donzen years ago — but no one is quite sure what caused it.

The pair met about four years ago through relatives. At that time, Hadad owned two businesses on N. Broad Street — Sal Lube Oil Change and a used car dealership called Import Auto. Prior to that, Hadad and his brother, Eric, owned Temple Auto Repair. That business went into bankruptcy and closed.

	Face value: Renovations on 216 Market Street, owned by Mirmor Corp., were delayed when a Historical Commission committee objected to façade changes. photo: Ron Coalson

Ben-Or had worked various jobs over the preceding years: he managed a car wash, cooked in an Italian restaurant and opened a $10 clothing store in Manhattan that went under. When Ben-Or met Hadad in 1996, he was driving a limousine.

Hadad asked him to run Sal Lube and he accepted the offer.

That was around the time Hadad had just begun to dabble in real estate. He used money from the sale of his car lot to purchase his first few buildings in North Philly.

Hadad speculated that the Old City market would soon be heating up.

"I came here and I saw lots of opportunity, lots of vacant buildings," he says, sitting in a burgundy leather chair in his office. Numerous cards from Hadad’s children dot his walls, declaring him "#1 Dad."

In September 1997, Hadad — in the name of Philly Real Estate — bought 10 and 12-14 S. 2nd Street for $200,000. By the end of that year, he had also purchased 229 Market Street for $140,000 and 134 Chestnut Street for $122,500. In January 1998, he bought 107 Chestnut Street for $100,000.

Hadad wanted to acquire additional properties, but that was beyond his means. He needed a partner with access to capital.

Luckily, he had a close friend with a valuable connection.

Ben-Or met emergency room physician Tina Blair in 1996. Two years later, in February 1998, Blair agreed to invest $100,000 in Philly Real Estate. The money bought her a 50 percent share in the company, while Hadad owned the other 50 percent.

Blair authorized Ben-Or to work as her agent. His name appears on all the mortgages and deeds — not hers. (In fact, as a result of refinancing, Ben-Or’s name appears on many of the properties that Hadad initially bought on his own.)

In March 1998, Blair loaned $600,000 to "Milo Investors," another name in which Hadad and Ben-Or incorporated their real estate business.

In successive years, Blair invested and loaned "substantial" funds to Daisy Real Estate; Milo Investors; Mirmor Corp.; Nikita, Inc.; and Sal Real Estate, as well as others, according to her court affidavit.

Hadad and Ben-Or’s business is comprised of those five companies, plus at least five others: 11-15 North 2nd Street Associates; 36 North 3rd Street, LP; Olde City Real Estate; and Sheba Real Estate. City tax and court records show these companies owning 28 Old City buildings, including some adjacent buildings joined to make single properties.

Most of the corporate titles are named after pets, including Ben-Or’s pitbull. Appropriate, considering the dogfight that’s ensued.

Hadad asserts that when he met Ben-Or, the guy had $10 in his pocket and needed a place to stay. "He slept in my house for three months, and I gave him an ’88 Lincoln."

The big split between the partners occurred in late February of thisyenar, Hadad says, because Ben-Or "got too greedy." Hadad is vague on details, but says he and Ben-Or "sold some property for big money" and Ben-Or demanded more than his fair share of the profit.

"Gershon is a pig, he wants too much," Hadad says. "I am a lion, king of the jungle. You can’t eat lion."

After this dispute, Hadad flew to Miami for the weekend. When he arrived back at work on the morning of Feb. 21, he saw that Ben-Or had literally emptied the office. Books, financial records, property deeds, computers and furniture were gone. Ben-Or took everything — "including the toilet paper," Hadad contends.

Hadad immediately filed a lawsuit in Common Pleas Court. According to the Feb. 25 complaint, Hadad was seeking court protection from what he called Ben-Or’s "self-dealing, unethical, unlawful and improper conduct."

In the complaint, Hadad charges that Ben-Or had illegally drained a corporate account at Crusader Bank and illegally seized a Mercedes leased by the company. He requests that all joint and personal belongings be immediately returned. The complaint also asked for an order that would bar Ben-Or from selling or transferring any company stock.

A counterclaim filed by Ben-Or on March 21 paints a different picture of the situation. He contends that Hadad spent millions of dollars rightfully belonging to the business, in order to support his lavish lifestyle. He claims to have escaped the partnership so dramatically because, after months of discussions, Hadad was unwilling to split their assets fairly.

Hadad was dragging his reputation and credit through the mud by overdrawing accounts, violating building requirements and disregarding bills, Ben-Or alleges in legal papers.

Although he was joint owner of the companies, Hadad "exercised virtually exclusive control over the management and operation of the companies," Ben-Or’s brief says.

In his suit, Ben-Or claims Hadad performed a daily ritual. Ben-Or claims Hadad called the banks each morning to get a current balance for the business’ accounts. He then withdrew funds "to the full extent of the balance of the accounts," regardless of the fact that numerous outstanding checks would have to be paid against the accounts.

"Indeed, in the past two years, Mr. Hadad has caused more than 200 checks of the business to ‘bounce,’" the counterclaim states. As a result, it continues, the business has incurred "substantial fees from the banks and recipients of the checks, causing harm to the credit-worthiness and reputation of the business, causing banks to close the business’ accounts and causing numerous third parties to refuse to do business with the business."

The court papers allege that Hadad forged Ben-Or’s signature on checks and documents without his approval. Among the most egregious of these incidents, Ben-Or charges in the affidavit, was the forging of his name on a loan for $125,000 "for a luxury boat" purchased by Hadad’s son in Miami.

Ben-Or also accuses Hadad in the lawsuit of paying for weekly first-class flights between Philadelphia and Miami with corporate money.

Hadad and Ben-Or brokered a settlement agreement in April.

As part of that settlement, Hadad agreed to buy Ben-Or’s 50 percent share in the business by handing over to Ben-Or his interests in eight buildings Hadad owns with other partners, valued at about $2 million. Developers Daniel Katz and Doran Gelfand own the remaining shares of those properties. Six of them are in Old City, one is in West Philly and one is in the Northeast.

Even though Ben-Or has sold Hadad his share of Philly Real Estate, he is not yet free of his involvement with the company. It is his name, not Hadad’s, that appears on the mortgages for all the Old City properties he and Hadad jointly own.

Ben-Or wants his name off the mortgages, thus releasing him from a $9 million debt.

In order to pay them off, Hadad has no choice but to sell their entire portfolio of Old City properties. If he fails to do so by Oct. 12, a judge could determine that all the joint holdings belong to Ben-Or.

If Hadad succeeds in selling these assets by Oct. 12, he must not only pay off the mortgages, but he must also repay Tina Blair approximately $1.5 million for her investment in the company.

"The exact amount is being determined by an independent [court-appointed] accountant," says Glenn Hing, Blair’s attorney. "Her money has to be returned to her, then she’s willing to part amicably [with Hadad]. We’re on the sidelines waiting to see what happens."

Ben-Or declined to comment on the record for this story. City Paper also spoke with two of his attorneys, who chose not to comment.

Hadad is now negotiating to sell the entire portfolio to Michael Yaron, another Old City developer. Hadad says an agreement of sale is pending, and that Yaron is "an angel sent to help me." A source familiar with the negotiations says Hadad hopes to remain a 50 percent partner in the company by simply getting the mortgages transferred from Ben-Or’s name to Yaron’s name.

Yaron did not respond to two written requests for an interview left at his office.

This is Hadad’s second serious attempt to sell the properties.

Realtor David Grasso also bid on the entire portfolio over the summer. Grasso lowered his initial bid after deciding the properties needed extensive repairs, he says. Hadad refused his proposal last month.

Grasso offered $7.5 million for the properties, a source involved in the deal says. A confidentiality agreement prevents Grasso from confirming or denying the figure, he says.

Ben-Or is reportedly anxious to be bought out so he may move on with his life. He and a new partner are already buying up property in Northern Liberties.

In January, Hadad moved his wife and six kids — ranging in age from 2 to 20 — to a $1.3 million home in Miami. (Ben-Or’s name is on the mortgage, although Hadad is responsible for the monthly payments.) Currently, he flies there every Thursday afternoon and returns to Philadelphia Sunday evenings.

But Hadad swears he’s not going anywhere.

"I love Philadelphia," he says. "I’ll stay here for all my life."

part 1 | part 2 | part 3