A legal battle that's been ongoing for about 18 months between upscale membership club CORE and SHVO, the developer behind the revamp of the Transamerica Building, appeared to escalate this week.

We first learned about this dispute in June 2024, involving the New York-based CORE club and SHVO, the real estate firm led by developer Michael Shvo, which purchased the Transamerica Pyramid in early 2020 for $700 million — with the help of German pension fund Bayerische Versorgungskammer, which was a primary investor. CORE, which charges annual membership fees in the range of $100,000, was supposed to be a marquee tenant at the renovated building, occupying its first four floors, and featuring a private restaurant for members.

CORE, which has a location in New York and one either opened or planned in Milan, was supposed to debut in San Francisco in 2023, but the opening was later postponed until 2025, and then indefinitely.

CORE and Shvo had inked a deal in which, as previously reported, Shvo would take a 50% stake in CORE's business, and CORE was accusing Shvo of fraud and "self-dealings," and failing to follow through on some obligations. Meanwhile, Shvo's attorneys said the lawsuit was a "desperate attempt to bail out the owners of the CORE Club from fulfilling the very clear obligations they committed to in a series of binding written agreements."

This week, CORE escalated things with a legal complaint that accuses Shvo and the German investor of engaging in "a massive illegal enterprise in violation of, among other things, the Racketeer Influenced and Corrupt Organizations Act ('RICO')."

The complaint continues from the earlier complaint, and accuses Shvo of failing to meet various obligations with regard to both the New York and SF locations of CORE, and reneging on the buildout of the SF club after cost estimates for an approved design came in at $35 million, and he allegedly wanted that cut to $15 million. "As these problems escalated, Shvo’s team effectively walked away from the project, bringing it to a halt," the complaint says.

It further accuses Shvo of billing design work for his personal yacht to accounts relating to CORE's New York location and a building at 685 Fifth Avenue, and, along with his wife and lawyer, treating the NY club "like his personal playground," racking up charges and mistreating staff.

A spokesperson for SHVO has responded to the complaint, saying, "This is a desperate attempt to distract from the real story here: Core Club is failing, frantically trying to avoid paying more than $3.5 million in owed rent. The very same judge already rejected their assertions of fraud and this is an illegitimate effort to put lipstick on a pig."

The statement adds, "Regarding Core’s newest strategy of rehashing false, unrelated claims about expenses — a third-party audit concluded long ago that those claims have zero merit. Begging the media to write articles doesn’t change the facts and these claims, like the two earlier attempts, will also fail."

The SF Business Times notes that the amended suit, which is still awaiting court approval, is attempting to "paint a broader picture of what it alleges is illegal and fraudulent behavior" by Shvo and his partners. The suit is seeking $250 million in compensatory damages, and other unspecified damages — up from a previous $100 million.

And, as the Business Times reports, this amended complaint follows on a suit brought by SHVO against CORE in San Francisco Superior Court in August, seeking to recoup the entire $178.8 million value of CORE's 20-year lease at the Transamerica Building.

Suffice it to say, it doesn't sound like there will be a fancy membership club at the Transamerica Building, at least not one called CORE.

Previously: Legal Dispute Could Impact Opening of Ultra-Luxe Private Club at Transamerica Pyramid

Top image: Photo by Joseph Barrientos