Real estate scion William Koeppel fears his inheritance may include more than just his late father’s apartment buildings: Namely, tens of millions of dollars in tax liabilities.
The longtime city landlord, who is engaged in a years-long legal dispute with his mother and sister over the properties, alleges “newly discovered fraud, self-dealing and other irregular activities,” by his estranged relatives who oversee the late Robert Koeppel’s estate.
According to the younger Koeppel’s attorney, there are outstanding questions about whether his mother, Roberta Koeppel, wrote checks to his two sisters from their father’s marital trust, a move that could trigger exorbitant estate taxes and penalties.
In a letter to attorneys representing Roberta Koeppel and her daughter Alexandra Koeppel, William Koeppel’s attorney alleges that an issue flagged by the Internal Revenue Service in 2001, a disbursement made from the trust, has not been settled. Specifically, Christopher Alvarado, the son’s attorney, said money issued to the daughters — two checks written in 1998 for $173,000 each — may not have been paid back as required under a prior settlement with the IRS. Additionally, records cited by Alvarado allegedly show that Roberta Koeppel wrote subsequent checks for $173,000 to each of her two daughters after the IRS settlement was reached.
The disbursements, Alvarado said, could mean estate taxes of between $40 million and $50 million, though he has not alerted the IRS.
“We believe there has been additional tax liability created by this newly discovered fraud, self-dealing and other irregular action by the Trustees,” he wrote in the letter. “We have been advised with interest and penalties that the liability could reach tens of millions of dollars. My client is not willing to inherit that liability.”
An attorney for Roberta Koeppel did not return a message seeking comment, and an attorney representing Alexandra Koeppel declined to discuss the case.
The potential eight-figure tax liability is the latest twist in a lawsuit brought by William Koeppel, who seeks to replace his mother and sister Alexandra as trustees of an entity overseeing 13 properties in Manhattan, Brooklyn and Long Island. William stands to inherit all but two of the properties upon his mother’s death, according to the terms of a trust created after the death of his father.
In the lawsuit, William alleges that the properties are in “a state of disrepair” and that the Manhattan and Brooklyn buildings have incurred 1,000 violations from various city agencies. The complaint highlights façade, boiler and elevator-related violations as particularly dangerous to tenants, and argues that neglect of the properties could reduce their value.
The lawsuit also contends that changes to the state’s rent law in 2019 “drastically reduced the value” of apartment buildings by limiting landlords’ abilities to increase rents on regulated units. Those circumstances may require the fees and commissions drawn by the trustees to be reduced, according to the complaint.
Succession disputes in real estate families can get ugly and personal. The Koeppel family feud has played out over three decades and has gone beyond business disputes.
In the 1990s, William Koeppel convinced the city’s Finance Department to investigate alleged tax evasion by his cousins, who ran their own real estate company, the New York Times reported at the time. William, who in court filings has alleged that his mother would lock him in dog crates when he was young, first sued her in 1997, the year after his father’s death, according to New York Magazine. The two have also accused each other of stealing money from the late Robert Koeppel’s estate.