By Casey Sullivan

NEW YORK, Dec 19 (Reuters) - A group of British investors have sued Cozen O'Connor and Blank Rome, claiming a former partner at the firms conspired with a landlord to "dupe" them into throwing tens of millions of dollars into a "fictitious" development project.

In a lawsuit filed Tuesday in Manhattan federal court, the investors claimed they were owed at least $27 million for a 2006 investment into a falsely advertised River City, Philadelphia, real estate development project. They said they were misled about the project's size and value by a group of promoters, including landlord Ravinder Chawla and business partner Richard Zeghibe, who used the lawyer Charles Naselsky as legal counsel.

Naselsky, a former Cozen O'Connor and Blank Rome real estate transactional partner, advised Chawla on various aspects of the River City project, including his presentation to investors and his purchase of the land, according to the lawsuit. The investors are suing Cozen O'Connor and Blank Rome for conspiracy to defraud and for aiding and abetting fraud in connection with Naseksly's alleged role in the River City project. Naselsky is not named as a defendant.

Naselsky is currently serving a nearly six-year prison sentence for tax evasion, wire fraud and obstruction of justice in a separate matter. He failed to report $365,000 in income in 2005 and 2006, according to the lawsuit.

In a statement Blank Rome said, "Blank Rome denies any fraud on the part of the Firm, and we intend to defend the action vigorously." Cozen O'Connor did not return a request for comment.

The UK investors, led by real estate investor Berish Berger, said in the lawsuit that they were "misled to believe that River City could and would be a 12-million-square-foot mixed-use development featuring multiple 600-foot-tall skyscrapers, when in fact the project was legally impermissible," according to the complaint.

BUILDING LIMITATION

The investors in 2008 sued a group of promoters of the real estate project for fraud in the Eastern District of Pennsylvania. In 2010, they received a judgment of more than $34 million in damages from Chawla and several others involved in the project. Naselsky was not named in the 2008 lawsuit.

In Tuesday's lawsuit, investors claimed Naselsky conspired with Chawla, Zeghibe and others to conceal from them a pending Philadelphia zone ordinance that, if approved, would put a 125-foot height limitation on buildings in the proposed River City construction area.

The lawsuit details emails sent by Naselsky in November 2006 to Chawla and Zeghibe saying that the ordinance put the project in "serious jeopardy." In December 2006, the Philadelphia city council approved the height ordinance, but the investors were not informed of the setback and proceeded to advance millions of dollars toward the project, the lawsuit says.

The UK investors also claimed that Naselsky knew that the real estate promoters had advertised the development at a higher value than it was worth. According to the lawsuit, Chawla and Zeghibe bought the River City site for $32.5 million in May 2006 but crafted a "sham contract" that showed a $50 million purchase of the property "to mislead investors as to the site's actual value."

"Naselsky knew that the $50 million contract was a sham because he had negotiated the true $32.5 million contract," the lawsuit said.

The investors are also suing the real estate services firm Cushman & Wakefield for work done on an appraisal that valued the River City site in August 2006 at $77 million, without factoring in the pending 125-foot height restriction. The investors, who relied on the appraisal as reliable information, claimed it was "erroneous" because it said the River City land was "not subject to any height limitation."

A Cushman & Wakefield spokesperson did not respond to a request for comment. Danielle Lesser and Brett Dockwell, lawyers representing the UK investors, did not return requests for comment.

The case is: Berish Berger v. Cushman & Wakefield of Pennsylvania, Inc, Blank Rome and Cozen O'Connor, U.S. District Court Southern District of New York, No. 12-CV-9224.

For the plaintiff: Danielle Lesser and Brett Dockwell of Morrison Cohen.

For the defendants: Not immediately available.

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