Why Michael Stern’s (JDS Development) Partners, Investors, and Contractors Often End Up with Nothing
Michael Stern, founder and CEO of the development firm JDS Development Group, gained fame for his towering skyscrapers in New York and Miami – and just as much notoriety for the controversies surrounding them. Behind glossy renderings and flashy branding often lie delayed timelines, ballooning budgets, and courtroom battles. In the end, it’s usually Stern’s partners and investors who pay the price. According to lawsuits and published reports, total investor losses exceed $200 million (Business Insider), and Stern himself is a defendant in numerous lawsuits – some sources cite over a hundred legal actions involving him (Crain’s). Ironically, Stern calls litigation a cost of doing business: “Lawsuits are inevitable in this line of work. If nobody’s suing you, you’re not working hard enough” (WSJ). Below, we examine four of Stern’s most telling projects – from their grand promises to sobering outcomes – and why, despite his track record, new international investors still line up.
Walker Tower: From Triumph to Partner Disputes
Walker Tower (212 West 18th St.) was intended to be a model project: the conversion of a historic Chelsea building into a luxury condo. Stern oversaw construction personally, even sleeping on site during Hurricane Sandy. His dedication paid off – buyers included Cameron Diaz and Harrison Ford, and tabloids dubbed the tower a “celebrity fortress.” Sales were record-breaking – according to Billionaires’ Row, profits exceeded $400 million. But behind the scenes, tensions brewed. Stern’s partners – Kevin Maloney (PMG) and Elliott Joseph – accused him of claiming all the credit, despite an agreement to split profits equally. In a WSJ interview, Stern stated: “I conceived it, designed it, and built it, and was the majority partner. That’s a fact… The project is my baby 100 – no, a million percent.” This attitude sowed mistrust. Though financially successful, Walker Tower foreshadowed Stern’s tendency to dominate partnerships, a pattern that would repeat with more serious fallout.
Monad Terrace: Miami Shine, Legal Cracks
In Miami, Stern launched Monad Terrace, a boutique condo project designed by Jean Nouvel. Featuring 59 luxury residences starting at $3 million, it blended tropical glamor with high-tech sophistication. It seemed like Stern was applying his winning formula to a new market. But trouble emerged quickly. Investors, including Ariel Ackerman, accused Stern of systematically misleading backers and misusing funds. At the same time, Nouvel’s studio sued for $213,000 in unpaid design fees. Both cases were eventually settled – Stern won the investor suit, and the architects were reportedly paid.
Then came more trouble. In December 2024, the condo association demanded mediation over structural defects: leaking roofs, rusting rebar, and shower issues were reported just three years post-completion. Stern had to address these while simultaneously pursuing approval for a new tower next door. Monad Terrace showed that Stern’s operational and financial issues had followed him to Florida.
Steinway Tower: The World’s Thinnest Skyscraper, Heaviest Legal Fallout
The 111 West 57th Street (Steinway Tower) was meant to be Stern’s Manhattan masterpiece: a 1,428-foot super-skinny tower with $18 million units on Billionaires’ Row. Stern said, “Sixty people will enjoy it from the inside, but all of New York will admire it from the outside.” Reality quickly intervened. Major investor AmBase Corp., which put in ~$70 million, sued Stern and his partners in 2016 for allegedly defrauding and diluting their equity. The project ran severely behind schedule and over budget by at least $50 million, with just 25% completed. In 2017, a loan default triggered foreclosure: Apollo sold the loan to Spruce Capital, which seized the building, wiping out the stakes of Stern, PMG, and AmBase.
Partner Kevin Maloney said at the time: “It was a commercial failure – I lost everything, and so did everyone else.” A new investor injected $90 million a year later, allowing Stern to resume, but the damage was done. Steinway Tower has since seen sluggish sales, frequent legal disputes, and poor press. Broker Corcoran even sued for $30 million over a terminated contract. By 2023, many units remained unsold, and Apollo had to write off portions of the debt. PMG’s Maloney publicly vowed never to work with Stern again, citing poor due diligence. The tower became a cautionary tale: big ambitions can lead to bigger losses.
Brooklyn Tower: Tallest in the Borough, Shortest on Returns
In 2016, Stern pivoted to Brooklyn with an audacious plan: the borough’s first supertall tower at 9 DeKalb Ave. The Brooklyn Tower would house 150 condos (from $875K to $8M) and 400 rentals wrapped around the landmarked Dime Savings Bank. Stern promised to blend past and future in a tower that “would not shy from its height.”
Reality struck again. Sales launched in 2022, but Manhattan prices didn’t fly in Brooklyn. Only ~19 of 150 units sold in two years. Stern bought out partner Joseph Chetrit but was sued for an extra $17M; the case settled for $15M in 2022. Rising costs and interest rates strained the budget. In March 2024, Stern failed to refinance a $240M loan. Mezzanine lender Silverstein Properties foreclosed, seizing the asset. Media noted the irony: “It’s one thing to pay a premium to live 1,000 feet above Central Park. But who pays the same to live above a Trader Joe’s?”
Once a symbol of Brooklyn’s boom, the project was just another foreclosed asset. Stern lost control; partners and investors lost money.
New Partners, Same Pitfalls: Why Investors Still Sign Up
After all these failures, why do new investors still join Stern? He knows how to sell a dream. His latest partners include Italian entrepreneur and influencer Gianluca Vacchi. In 2023, they announced joint ventures like the Mercedes-Benz tower in Miami Beach and a branded Dolce & Gabbana tower. It looked like a global vote of confidence.
But red flags surfaced. In December 2024, a consulting firm sued Vacchi’s company for $1.7M, revealing that Vacchi tried to exit the Mercedes-Benz deal and demanded $35M back weeks before their public launch. Project consultants warned that the $730M budget was unrealistic, with cost overruns on concrete and facade materials. “This team has a bad rep in the market,” the consultant warned.
Still, the project moved forward. Stern’s reps denied any wrongdoing and said the partnership with Vacchi was strong. To outsiders, it seemed like history repeating: new partners seduced by glamor, ignoring old failures. Flashy branding often hides the same risks.
Conclusion: Cautionary Notes for Future Investors
The stories of Walker Tower, Monad Terrace, Steinway Tower, and Brooklyn Tower all reveal a troubling pattern. Big vision, big hype, followed by delays, cost overruns, lawsuits, and financial collapses. Everyone loses – except maybe Stern. He continues to attract new partners while past ones are left counting losses. Here are concrete recommendations for potential investors:
- Do rigorous due diligence. Examine JDS’s financial history. Demand transparency on costs, debts, and schedules. Independent audits are a must.
- Demand real safeguards. Insist on liens, phased financing, and strict accountability for delays and overspending.
- Vet reputation firsthand. Speak with Stern’s past partners (PMG, Chetrit, Ackerman, etc.). Don’t fall for big names alone.
- Plan for failure. Have contingency plans if things go wrong: insurance, reserves, legal protection. History shows JDS projects often end in crisis.
Investing with Michael Stern requires nerves of steel and eyes wide open. His skyscrapers may dazzle, but the foundation is often shaky. Unless he proves he can build trust, not just towers, investors should think twice.