Mauricio Umansky, the founder and CEO of luxury real estate firm The Agency is countersuing his former insurer, Western World, over a Malibu mansion he was hired to sell but ultimately co-invested in, and which resold for nearly $70 million — over double the amount he and his fellow investors purchased it for.
When the original seller complained about Umansky’s flip, Umansky turned to his Western World insurance policy to defend him, but the company took issues with the claim and sued him.
Specifically Umansky is being sued by Western World Insurance Co, an AIG subsidiary, for allegedly filing a misleading insurance application and then making an insurance claim pertaining to the sale of the property at 3620 Sweetwater Mesa in Malibu, as first reported last week by The Real Deal.
“Umansky’s misrepresentations and concealments in the application are material to Western World’s decision to issue the policy because, had Western World known that UMRO or Umansky’s responses to the application concealed facts and included misrepresentations, Western World would not have issued the policy, or would have issued the policy subject to materially different terms and conditions,” the amended Sept. 18 complaint reads.
Western World seeks to have its policy covering Umansky rescinded and to have him pay back any fees incurred on his behalf.
According to the complaint, the property in question was owned by Teodoro Nguema Obiang Mangue, the vice president of the Central Africa nation of Equatorial Guinea and the son of the president of Equatorial Guinea, Teodoro Obiang Nguema Mbasogo.
In 2014, the Department of Justice ordered Nguema Obiang to forfeit assets he obtained, “through relentless embezzlement and extortion.” Among those assets is the Malibu home, as well as Michael Jackson memorabilia and a Ferrari.
“After raking in millions in bribes and kickbacks, Nguema Obiang embarked on a corruption-fueled spending spree in the United States,” said Leslie Caldwell, assistant attorney general, in a prepared statement.
Umansky was retained as the sales agent for the property and facilitated its $32.5 million sale to Mauricio Oberfeld.
Western’s suit alleges that the $32.5 million sale price was below what the property could have fetched in a rapidly appreciating market and that Umansky failed to disclose that he was an investor in Oberfeld’s purchase of the property. Oberfeld and his investors – including Umansky – later sold the home for $69.9 million.
Nguema Obiang filed a written demand arguing that Umansky broke his fiduciary duty to himself and the United States by not ascertaining a fair market value for the home and not revealing he was an investor in the purchase until too late in the process.
Prior to the sale, Umansky allegedly filed an application for insurance errors and omissions liability insurance policy with Western World. Umansky then tendered Nguema Obiang to Western World for defense and indemnity under the policy he took out, demanding that Western World defend and settle the aforementioned claim, according to the complaint.
Western World, after reviewing the application, found issues with the claim, including Umansky saying that the largest sale of property he or The Agency had been involved in within the prior 12 months was $30 million. The Agency had represented multiple sales over $100 million – including the sale of the Playboy Mansion – and even the resale of the Malibu home for nearly $70 million, prior to the insurance claim, according to the complaint.
On August 30, Umansky filed a countersuit, alleging he did exactly what he was hired to do.
“The sale of the Sweetwater property was unique,” the countersuit reads. “The entire transaction was subject to the terms of a settlement agreement between the United States and the seller, and every aspect of the transaction was reviewed and approved by the United States Department of Justice.”
“Notwithstanding the restrictions of the settlement agreement and other strict conditions imposed by the seller, Mr. Umansky did exactly what he was retained to do,” the suit continues. “He sold the Sweetwater property with virtually no publicity, under a strict deadline, and at a price above the appraised value. Throughout the complex transaction process, Mr. Umansky met all fiduciary obligations.”
Umansky’s suit seeks for Western World to honor its insurance policy with him, and for attorney’s fees and compensatory damages to be determined in trial (appraised at $32 million in 2014).