This is an archival story that predates current editorial management.
This archival content was written, edited, and published prior to LAist's acquisition by its current owner, Southern California Public Radio ("SCPR"). Content, such as language choice and subject matter, in archival articles therefore may not align with SCPR's current editorial standards. To learn more about those standards and why we make this distinction, please click here.
Dustin Hoffman And Son Suing Paul Manafort's Son-In-Law Over Possible Real Estate Ponzi Scheme
Looks like L.A. real estate is a headache for all — even the wealthiest Angelenos. Actor Dustin Hoffman and his son Jacob Hoffman are currently embroiled in legal proceedings over a $3 million investment made to develop a property along Blue Jay Way in the Hollywood Hills' ritzy Bird Streets neighborhood. The developer of the property in question? None other than Paul Manafort's son-in-law, Jeffrey Yohai.
According to The Real Deal, four of Yohai's LLCs that own properties in L.A. filed for bankruptcy in December." It remains unclear if the Chapter 11 filings are related to a suit brought against Yohai a month earlier over claims that his developments in Brooklyn are part of a Ponzi scheme.
Beyond the Hoffmans, Yohai secured some $4.7 million from his father-in-law, Paul Manafort, for investment in properties that include a Bel Air spread at Stradella Road, reports the Los Angeles Times.
As you'll recall, Manafort was the former chairman of Donald Trump's presidential campaign, until he resigned in August over allegations of improper dealings with Russian officials (how prescient). Manafort is now facing his own scandal over a series of real estate transactions made in New York.
According to WNYC, various law enforcement and "real estate experts" have confirmed that Manafort's behavior merits scrutiny. "Some said the purchases follow a pattern used by money launderers: buying properties with all cash through shell companies, then using the properties to obtain 'clean' money through bank loans. In addition, given that Manafort is already under investigation for his foreign financial and political ties, his New York property transactions should also be reviewed, multiple experts said," reports WNYC.
While there is absolutely no evidence that the Hoffmans are cleaning foreign money, their suit against Yohai centers around the claim that "certain project funds" would not be spent without their consent, yet Yohai withdrew money without the Hoffmans' “prior knowledge or approval.”
Guy Aroch, who filed suit against Yohai in New York, claims Yohai “'promises his investors a quick and large return on their investments,' but when 'financial performance fails to materialize and investors express their concerns,' he recruits new investors and uses their funds to repay earlier ones. 'In this regard, Yohai is believed to be operating a Ponzi scheme'," according to the L.A. Times.
In December, Yohai's attorney called to dismiss the Ponzi scheme claim as “scandalous, immaterial and impertinent matter," adding that it is “extremely derogatory."
As we patiently await to see how this tangle of claims unravels, may we remind you that in October, Yohai and wife Jessica were sued for allegedly running an illegal AirBnB scheme out of their three SoHo apartments?