Sheepshead Bay Developer Forced To Fork Over $5.45 Million For Defrauding Investors

A real estate tycoon who went after a local blogger over revelations he had been sued by investors involved in his developments in Sheepshead Bay, Gerritsen Beach and Mill Basin has been forced pay out $5.45 million after the case was settled in a Texas court last month, PR Newswire reports.

A jury in Dallas concluded that the developer, Stephen S. Jemal, defrauded two Texas firms, Gerritsen Beach Investments Ltd. and SSST Riviera Investments Ltd., by overstating the value of his fortune, according to the news service.

Evidence presented at trial showed that Jemal conspired to misrepresent his holdings at the Dallas-based company Southwest Securities Inc. in order to deceive lenders and investors, reports PR Newswire.

The lawsuit was first uncovered in 2008 by writers at GerritsenBeach.net, who tangled briefly with Jemal’s lawyers after receiving a cease-and-desist letter claiming the article had defamed the developer. The letter, citing content about shady business deals by Jemal’s family described by the Sheepshead Bay-Plumb Beach Civic Association, demanded the post be removed from the website and any site referencing it. The letter also included a non-disparagement agreement guaranteeing there would be no more negative articles about Jemal and a request for $20,000 to cover his legal fees.

Even weirder, shortly before receiving the letter, GerritsenBeach.net got hit with a Denial of Service (DoS) attack, which temporarily shut down the website. After tracing the attack back to someone associated with Jemal, the lawyers claimed it was the work of a “‘renegade employee’ who acted without knowledge or authorization of Mr. Jemal,” the website reported.

Jemal, who was once the subject of a fawning profile in the Daily News over his developments around Sheepshead Bay’s waterfront, comes from a family that built an empire on the Nobody Beats the Wiz electronics stores, known for their low prices and aggressive advertising. The company has since gone bankrupt, and Jemal’s older brother Marvin was convicted last year of fraud and sentenced to three years in prison, the Daily News reports.

Seems to have been a long fall for Stephen Jemal, who the Daily News once touted as a “genius.” Perhaps nobody beats the Wiz, but no one messes with Texas.