Robert N. DeBenedictis -- the businessman who since at least 1974 has been behind many of New York City's private clubs used by gay men as sex venues -- had a verdict returned against him for over $50 million by a California jury in a class action lawsuit involving his role at Global Vision Products, Inc. which until recently marketed and sold the hair loss remedy Avacor as reported by The Complex Litigator. The jury's verdict form reflecting its decision is here.
In 2003 Global Vision Products and others, including DeBenedictis, were sued for unsubstantiated, false and misleading statements in connection with Avacor. Download Class Action Complaint A verdict was returned in the amount of $36,979,373.00 after a four-week combined bench and jury trial in January 2008. However, that trial did not include DeBenedictis because the action against him, another co-defendant, and the company had been stayed due to an August 2007 filing for bankruptcy by Global Vision. After the stay was lifted, the plaintiff class proceeded to trial against DeBenedictis and his co-defendant, and last Friday the jury returned its verdict against them.
Winning a verdict is one thing; collecting on it may be another thing. In a September 2009 filing with the court, lawyers for the plaintiff alleged:
In 2007, DeBenedictis testified that he had approximately $70 million in assets. * * * He now claims less than $20 million. * * * DeBenedictis has given away as much as $50 million of his personal assets to his own foundation and his own trust in contemplation of an adverse judgment in this litigation. Moreover, DeBenedictis has transferred much of the remaining $20 million in corporate interests into limited liability companies so that the assets cannot be accessed by judgment creditors.
Lawyers for DeBenedictis responded: "While plaintiff's accusations and innuendo are not lost on defendant, defendant will note only that there is currently no outstanding Judgment against Mr. DeBenedictis relating to this lawsuit, and he is entitled to handle his finances and business interests as he sees fit in accordance with the law."
Of course, now that a jury has returned a verdict against DeBenedictis, the issue of the alleged asset transfers may become front and center. Earlier this month the class action lawyers filed an action against DeBenedictis and others under the Uniform Fraudulent Transfer Act "seeking to avoid and reverse certain transactions executed by" them, and further alleging that they "conspired to violate the UFTA."
While fending off the plaintiff class action lawyers, DeBenedicts also is defending against an adversary proceeding commenced by the bankruptcy trustee for Global Vision which alleges he and others engaged in "sustained and pervasive raiding of Global Vision's coffers." Download Adversary Proceeding The adversary proceeding was initiated following the filing of an April 25, 2008 report by an examiner appointed to investigate whether Global Vision's sales were in compliance with legal requirements and whether there were potential claims against company insiders. Download Examiner's Report
For decades DeBenedictis has been involved in the gay bar and nightclub industry in New York City including ownership interests in the Wall Street Sauna, the East Side Sauna a/k/a East Side Club and the West Side Club which according to prior press reports were frequented by gay men looking for action.
Wall Street Sauna
Wall Street Sauna, Inc. was incorporated by DeBenedictis and Anthony Mascioli in 1974, and then in 1978 Wall Street Sauna Club, Inc. was established with its initial directors identified as DeBenedictis, Masciolo and Roy Schillinger. The Wall Street Sauna operated at One Maiden Lane in the financial district, which Betty and Pansy's Severe Queer Review of New York stated was "owned by the same folks" who owned the East Side Club and the West Side Club, and was shuttered by city officials in 2004. A July 9, 2004 article ("Court Shuts New York Sauna Over Gay Sex") by Mark Goebel from PlanetOut Network states:
After reportedly ignoring warnings of high-risk sexual behavior on its premises, a New York City sauna frequented by gay men was ordered to close on Thursday. An appeals court in Manhattan granted a petition by the city to have the Wall Street Sauna shut down after undercover inspectors from the health department reported seeing more than 30 acts of high-risk sex in the club since June 2003, in violation of the city's health code. The current laws governing sexual activities in saunas and other public places were enacted more than a decade ago in response to the AIDS epidemic and resulted in the closing of numerous bathhouses and pornographic shops in the city. The city said the sex acts continued at the Wall Street Sauna even after it sent a warning letter to the sauna's owners in September 2003, the Associated Press reported. The health department first closed the sauna on Feb. 2, 2004, "as part of its ongoing efforts to combat AIDS." Part of the sauna was reopened on Feb. 11, 2004, on the condition set by the court that all sexual activity would be barred. However, in April a city health inspector reported seeing more high-risk sexual behavior at the sauna. "The closure of the entire facility represents an important win for New York's efforts to protect the health of its citizens," said city lawyer John Hogrogian. Thursday's ruling reversed a lower court order that allowed the partial reopening of the club, as long as the club owners promised to bar sexual activity onsite. In shutting the sauna completely, the appeals court said that previous legal proceedings "establish to our satisfaction that high-risk conduct was so pervasive at this establishment that the new management's promises cannot be deemed a sufficient safeguard against their continuation."
East Side Sauna
East Side Sauna Inc. was incorporated in 1976, and its certificate of incorporation does not identify its incorporator, shareholders or directors; rather, it simply identifies Patrick Simonetti at 162-49 Crossbay Boulevard in Howard Beach, NY as the agent for service of process. However, in a document filed with the court in the class action proceeding against him, DeBenedictis admitted that he had an ownership interest in East Side Sauna Inc., and that the company now is East Side Club, LLC. The Operating Agreement of East Side Club, LLC, filed in the UFTA action against DeBenedictis, identifies its capital contributing members as Robert DeBenedictis, Anthony Mascioli, George Bohot, Angelo Sperrazza, Charles Vozzi, Bruce Fogel, Ancil Brown, Robert Castillo, and Anthony Fernandes. The East Side Club operates at 227 East 56th Street in New York City which is a property in which DeBenedictis has held an ownership interest since 1981.
It has been widely reported that the East Side Club has been used as a meeting place for gay men to have sex. For example, a September 13, 2006 article from Reuters states:
Nearing midnight on a Saturday at the East Side Club, dozens of middle-aged men roamed the labyrinthine hallways, hoping to have anonymous sex. Downstairs, five men waited to get in from the lobby, looking as ordinary as any group of suburban fathers waiting at a dental office. Peter (57) a construction manager with silver hair, goes to the East Side Club once every two weeks and has for years. "You have that itch, and it feels good to scratch it," said Peter, who also did not want to give his last name. "There is still a place to go for it. You should see this place at 6pm before all of the guys go home to their wives."
Business at the East Side Club must be good. As of 2002 the East Side Sauna, Inc. was paying nearly $500,000 annually in rent.
West Side Club
West Side Club, Inc. was incorporated in 1994 by Robert N. DeBenedictis and William Hudson, and in 2009 was changed to West Side Club, LLC. In a document filed with the court in the class action proceeding against him, DeBenedictis identifies its "owners, officers or directors" as himself together with David Moyal, Anon Brown and Paul Gallucio. The West Side Club operates at 27 West 20th Street, and a January 12, 2004 article ("The Beast in the Bathhouse: Crystal Meth Use by Gay Men Threaten To Reignite an Epidemic") by Andrew Jacobs from the New York Times states:
Bob looked haggard but was feeling fabulous. Chewing gum at a manic clip, circling the layyrinthine halls of the West Side Club on a recent Sunday afternoon, he had been awake since Friday, thanks to a glassine pouch of crystalline powder he had tucked beneath the mattress of a room he rented in this Chelsea bathhouse. The powder, known as methamphetamine, or crystal meth, had helped Bob conquer a half-dozen sex partners during a 35-hour binge. Like many of the men cruising the two-level club lined with closet-size cubicles, Bob, a 37-year-old advertising copywriter, was "tweaking," high on a wildly addictive stimulant that has been sweeping through Manhattan's gay ghettos. "The stuff is a wonder," he said, taking a pause from his prowling, his scrawny frame wrapped in a white towel. Asked about condoms and the niceties of safe sex, Bob shrugged. "Whatever," he said, turning away. At the club, there were plenty of condoms for the taking, courtesy of the management, but in conversations with a dozen patrons who acknowledged using crystal, only two men said they were following the rules of engagement in the age of AIDS. "Some guys just throw you out of the room if you pull one out," said one of the men, James, who, like everyone else, would not give his full name. "To them, rubbers are a killjoy."
El Mirage
El Mirage Corp. was incorporated in 1999, and although the certificate of incorporation does not establish any affiliation between the company and Robert N. DeBenedictis its principal executive office and address for service of process is identified c/o the accounting group at 227 East 56th Street which, of course, is the same building in which DeBenedictis has an ownership interest and out of which the East Side Club operates.
In a twist of irony given the status of DeBenedictis as a defendant in a class action, El Mirage operated at 253 Houston Street in a building owned by Paul D. Young who until recently was a partner in the class action law firm Milberg Weiss. El Mirage was shut down by New York City in 2006. A July 27, 2007 article ("The Attorney and The Sex Club") by Roger Parloff from Fortune magazine states:
A gay S&M sex club, closed down in November by New York City health authorities for allegedly constituting a criminal nuisance, operated for seven years out of a small Lower East Side building co-owned by a Milberg Weiss attorney, who also lived on the premises. * * * In 1999, Young and Hochschild leased out the basement and first floor to a newly formed tenant called the El Mirage, which held itself out to be a male nudist club. According to health authorities, it was a place where men went to have anonymous sex with one other. A club membership cost $40, each admission cost $22, and the fee for the mandatory clothes-check was $3, according to the affidavit of an undercover health inspector that was later filed in court. * * * That the El Mirage was a sex club was a fairly open secret, and blog entries and online gay tourism guides have been describing it as such since at least 2001. Several pornographic gay S&M movies have been promoted as having been filmed there. Culture critic Michael Musto of the Village Voice reviewed the El Mirage as a "sex club" in December 2005. Musto wrote that upon paying his fees he was handed a "frequent f—er's card" that would entitle him to one free admission after 18 visits.
From gay clubs to hair restoration: no word on whether DeBenedictis is a customer at the establishments or of the products.
