Exclusive | How a bathroom pipe fiasco led to allegations of financial fraud at one of NYC’s most exclusive co-ops

It’s a stinker.

A fight over a bathroom waste pipe has exploded into allegations of putrid dealings at a storied Manhattan co-op.

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When Angelo Chan and his husband Frederick Wertheim spent $5.2 million for their home in a fancy Fifth Avenue co-op in 2018 — where Martha Stewart owns a pied-à-terre — they envisioned having three luxurious bathrooms after renovating their 2,500-square-footunit.

But for five years, they’ve been making do with just one — all due to a lengthy impasse over the location of a bathroom pipe that has devolved into a vicious court battle, allegations of fraud, and kept the water to the couple’s two other bathrooms turned off.

While investigating the pipe issue — namely, the location of a new pipe to drain bathroom waste — their attorney claims to have discovered something far more smelly.

Since 2020, the building — 907 Fifth Ave. — has failed to produce audited financial documents, alleges a lawsuit filed in Manhattan Supreme Court earlier this month.

The lawsuit further alleges that when pressed to produce the documents, it produced fakes — concealing the fact that the building was spending hundreds of thousands of dollars on legal fees over the bathroom battle.

“A lie is a lie,” said Steven Sladkus, the lawyer who is representing Chan and Wertheim. He called the falsification of such documents “one of the gravest injustices I’ve ever had to deal with.”

On behalf of the corporation, the two men are suing the building’s board of directors for fraud and breach of fiduciary duty.

Their lawsuit seeks damages for breach of fiduciary duty as well as punitive damages, and retroactive accounting from Dec. 31, 2019, the last date for which audited financial records exist.

“We have suffered a great deal, and what we have experienced in the last five years is just a symptom of much bigger, fundamental issues in relation to this co-op,” said Chan.

The co-op is known as one of the city’s most exclusive. Constructed in 1916, it overlooks Central Park at the corner of East 72nd Street.

Alongside Martha Stewart, the building was once home to the reclusive heiress Huguette Clark, who owned a floor and a half, with those spaces listing for $55 million after her 2011 death. Last year, the penthouse sold for $37.5 million.

“It is a document forgery scheme carried out under the imprimatur of one of Manhattan’s most storied residential cooperatives,” the complaint alleges, and “was used to deceive shareholders, purchasers and lenders in millions of dollars of transactions … This action will expose, remedy and hold the wrongdoers accountable for that misconduct.”

The dispute began during the renovation of the Chan-Wertheim apartment.

According to court papers in the first lawsuit, filed five years ago, a kitchen pipe “was penetrated with a fastener during installation of drywall,” causing major water damage in the apartment downstairs, occupied by board member Andrew Crisses and his wife Abby.

They have been residents since 2003, and several years later combined their unit with an adjacent one.

After that, the parties began arguing over the location of a different pipe, this one draining bathroom waste.

The bathroom pipe could be routed through the ceiling of the Crisses’ unit downstairs, replacing the original pipe, which would require breaking into the Crisses’ ceiling. Or it could be situated on the floor of the Chan-Wertheim unit upstairs, which would necessitate raising the floor of their L-shaped hallway, with a step up and a step down. For five years, the parties have remained at loggerheads.

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Meanwhile, the water to two bathrooms in the Chan-Wertheim home remains off. The building is concerned about the risk of flooding from ancient, corroded pipes, and has over time been working on decommissioning the old pipes and upgrading its plumbing system, according to court papers filed in the first lawsuit.

As the bitter bathroom battle raged on, Sladkus sought copies of the building’s audited financial statements. Obtaining the documents took weeks, he told The Post.

“We literally begged for copies,” Sladkus said. “In order to know the financial status of the building, shareholders are entitled to receive copies, and it is normal corporate practice for co-ops and condos to prepare these statements every year.”

When the documents arrived, they allegedly contained “glaring inconsistencies and oddities,” according to the complaint, and “failed to disclose ongoing litigation.” Though building insurance covered 45% of the legal fees, one line item for legal fees was blank.

“The money spent on litigation wasn’t being reported to current shareholders and prospective purchasers,” Sladkus claimed. “It is hundreds of thousands of dollars.”

Numbers contained in the documents — which were headed with different versions of the accounting firm Marks Paneth’s logo — also allegedly included lower maintenance income than reported in the building’s budget documents. For three years, the building’s income from monthly maintenance was listed as exactly the same, down to the dollar.

The documents appeared to be fake, according to CBIZ, which bought Marks Paneth. “Marks Paneth did not issue the reports,” CBIZ’s general counsel wrote in an email. “The reports appear to be fraudulent, with forged signatures and letterhead.”

“It was a stunning discovery when I realized the seriousness of the situation. It was not just cooking the books, but fabricating the documents and impersonation of an auditing firm,” Chan claimed to The Post, referring to the documents bearing Marks Paneth’s name.

In a statement to The Post, a spokesperson for the co-op board wrote: “This lawsuit is a baseless stunt by plaintiffs and their counsel, who filed it despite knowing that its core allegations are false.

“It is nothing more than sour grapes and the latest chapter in a years‑long pattern of meritless litigation by the same entitled individuals who are upset they have had to adhere to the same standards and requirements as other shareholders in the building and refuse to abide by the Board’s directives concerning their alteration.”

The statement further says that the managing agent from Brown Harris Stevens was responsible for the documents in question.

“Before this complaint was filed, the managing agent’s general counsel made clear to the plaintiffs and their counsel that the co‑op board had no knowledge of or involvement in the issues now being alleged, and that any inconsistencies in the documents were solely the managing agent’s doing and responsibility.

“We will vigorously defend against this action and pursue all appropriate remedies against both the plaintiffs and their counsel for abusing the legal process.”

The management company, Brown Harris Stevens, declined to comment, as did the Crisses’ lawyer.

“Shareholders are entitled to know what the true financial position of a cooperative is,” Chan said. “We want an injunction to prevent these board members from doing this again. We are basically whistleblowers here. I feel this is an attempt to silence and intimidate people who step up to call out an egregious wrongdoing.”

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