– See more at: http://therealdeal.com/blog/2015/03/09/mitchell-maxwell-jackson-sues-state-for-destroying-reputation/#sthash.RFS7dhwv.dpuf UPDATED, 9:49 p.m., March 9: Mitchell Maxwell & Jackson, the real estate appraisal firm that was dragged through protracted litigation for allegedly affixing false signatures to appraisal documents before being vindicated last year, is now saying the state owes them $10 million as compensation for the ordeal and the havoc it caused.
Co-founder Steven Knobel claims that the state’s case ravaged his company’s reputation and was responsible for driving away most of its clients, including its biggest, Citibank. While the firm was once worth $9 million and had 30 employees, the complaint states, it has now lost the majority of its business and is down to a single employee.
An investigation was opened into Knobel and MMJ co-founder Jeffrey Jackson in 2010 when Marianne Mueller, a former star employee who was later terminated, complained to the New York Department of State that her signature had been placed on appraisals that she had not reviewed, under the direction of Knobel.
At the end of 2012, an administrative judge for the New York State Department of State decided to revoke appraisal licenses, despite what the firm calls a dearth of evidence and a disproportionate reliance on the testimony of a “disgruntled former employee” who stood to benefit from discrediting the firm because she was seeking to get out of a noncompete agreement.
According to the complaint, filed Jan. 29 in the New York Court of Claims, Mueller’s testimony was changeable and unreliable. “The state ignored this inconsistency and knowingly relied on incredible, if not perjured, testimony,” the complaint states. Additionally, Knobel claims that the state ignored a parade of appraiser witnesses who refuted Mueller’s claims and even failed to grant MMJ due process, as the complaint they were presented with was inscrutable.
This argument ultimately prevailed last year when a State Supreme Court Justice found that due process was indeed violated and that the licenses should not have been revoked. The court stated, “There was a complete paucity of proof here that Knobel and Jackson individually or jointly were behind this so-called nefarious scheme.”
Though Knobel and Jackson were able to delay the revocation of their licenses pending their appeal of the decision the damage to the company’s name was irreversible, they claim.
In a phone interview with The Real Deal Monday evening, Knobel said there was a need for an ombudsman who could step in if the state failed to do its duty and carry out a fair investigation.
“If I wasn’t a very successful appraiser who had the resources to fight this, I would have given up on Day One,” he said.
At the market’s peak, MMJ was one of New York City’s most-dominant appraisal firms, with about 3,000 clients. Now, Knobel wants retribution for the disproved accusation that unraveled a business he has run since 1991.
“Knobel lost his salary, appraisal commissions, the value of his interest in MMJ and related entities, and his very livelihood,” according to the complaint. A New York State representative declined to comment.
Hiten Samtani contributed reporting.