THE PARKING REIT LITIGATION
Arthur Magowski v. The Parking REIT, Inc. et al., No. 24-C-19- 003125 (Circuit Court for Baltimore City, Maryland)
Chimicles Schwartz Kriner & Donaldson-Smith LLP (“CSK&D”) filed a Class Action in the Circuit Court for Baltimore City on behalf of stockholders of The Parking REIT, Inc. (the “Company”) against the Company and certain of its directors, officers and affiliates, namely: MVP Realty Advisors LLC d/b/a The Parking REIT Advisors; Vestin Realty Mortgage I, Inc.; Vestin Realty Mortgage II, Inc.; Michael V. Shustek; David Chavez; John Dawson; Robert J. AAlberts; Nicholas Nilsen; Shawn Nelson; and William Wells.
The Complaint alleges that the Stockholders suffered injuries as a result of the internalization of the Company’s Advisor, in which Defendant Michael Shustek, the Company’s chief executive officer holds a considerable stake. Through a Contribution Agreement between the Company and the Advisor, the Company assumed the Advisor’s assets – which are alleged to have no meaningful value – along with its substantial debt. In exchange for these assets, the Company agreed to issue a total of 1,600,000 shares of its common stock to the Advisor, which, it is alleged, wrongfully deprives the Company’s Non-Controlling Stockholders of the full economic value and voting power of their shares. The Complaint alleges that the Company’s Directors and Advisor acted in bad faith and breached fiduciary duties owed to Non-Controlling Stockholders (the Class) when they caused the Company to enter into such Agreement and to issue stock to the Advisor without consideration to the Plaintiff and the Class. The parties have briefed a motion to dismiss and discovery in the case is ongoing.
CSK&D also served the Company’s Board of Directors with a formal demand letter asserting that the Board investigate alleged wrongdoing inflicted on the Company by Mr. Shustek and his affiliates and affiliated entities. In response to the demand, the Board stated that it established a demand review committee to investigate the allegations in the letter.
Please periodically check back for updates on both the class action and the demand.
Attorneys for this case:
Nicholas E. Chimicles
Alex M. Kashurba