Steven Ostad Accuses Brothers of Fraud, to His Exclusion

A battle among brothers for a New York real estate firm is getting ugly.

Steven, Michael and Edward Ostad are duking it out over investments in companies and portfolios. But a year-long legal fight over business lines and equity has devolved into explosive personal attacks, with Steven and his brothers both alleging bad behavior.

Steven Ostad has now said his brothers have been conducting fraud with cash rents, blank checks and forged documents, all while excluding him from management and ownership. Court filings show he’s provided photographs he alleges back up his claim, while his brothers have in turn painted him as an unsavory and untrustworthy character, prone to addiction.

The allegations on both sides are in some ways peripheral to Steven’s claim that he was unfairly cut out of the business. But they’ve made an acrimonious situation even more hostile.

“In April 2026, Steven’s prior counsel informed The Real Deal that he was exercising restraint — that he possessed photographs, affidavits and other records but was choosing not to file them,” Leo Jacobs, Steven’s attorney, wrote in a statement. “That restraint has been lifted.”

Bad blood

At their core, the disputes among the Ostad brothers are about money.

The brothers own a portfolio of partially rent-stabilized properties, a management company called Tristar Management Associates, and a lending arm called Flatiron Realty Capital.

Michael and Edward Ostad, urologists by trade, filed in 2025 to dissolve a portfolio of 10 partially rent-stabilized properties. Standing in the way was Steven, younger than the two by more than a decade.

The two sides went into mediation, and the issue fell off the court’s calendar.

Then, earlier this year, Steven filed a lawsuit claiming he had been unfairly cut out of managing the real estate portfolio, as well as ownership of Tristar and Flatiron. Steven had made a $6.5 million investment in Flatiron under assurances that he would be a part owner. He received distributions, but was excluded from the operating agreement and from equity in the lender.

His brothers moved to dismiss the suit, and provided operating agreements that showed Steven as included on the real estate portfolio but not Flatiron.

Steven then switched lawyers, selecting brash bankruptcy attorney Leo Jacobs. He filed several incendiary documents and amended his complaint to focus on alleged fraud schemes at Tristar.

Amram Tehrani, a former employee of Tristar Management Associates, told the court that the company regularly collected rents from commercial tenants across Manhattan, the Bronx and Queens in cash. Although the properties were owned by separate entities, Edward and Michael would treat the cash as fungible from one entity to the next, and not record the cash as income, Tehrani wrote.

The affidavit includes photos of stacks of cash, which Tehrani claimed were in the Tristar offices.

Photo from the affadavit of Amram Tehrani — Photo from the affidavit of Amram Tehrani

Edward and Michael also lied to the state to falsely establish apartments as market-rate instead of rent-stabilized, Tehrani said. In 2022, the two brothers purchased a new building, 817-819 Ninth Avenue in Manhattan. Tristar employees, under Edward’s direction, falsified tenant records and submitted them to the state. They used names and information from tenants in other Ostad properties and forged signatures directly.

An attorney for Tehrani declined further comment on the allegations.

In his complaint, Steven describes further fraud. Tenants who paid by check, he says, were instructed to submit checks with the recipient name blank. That allowed employees to deposit the checks in whatever account they preferred.

“The defendants want this seen as a family disagreement because it diminishes what the complaint alleges — financial fraud inside an enterprise large enough to carry a reported billion-dollar UBS credit line,” Jacobs said in a statement.

Steven is claiming that the fraud represents a breach of fiduciary duty. But the fraud allegations are in some ways just incidental to Steven’s core claims of being unfairly cut out of ownership of Flatiron and the portfolio. The allegations do however stand to impact the way the Ostads are able to do business. Several properties are in foreclosure proceedings, with lenders looking to collect.

The brothers respond

Terry Oved, an attorney for Michael and Edward with Oved & Oved, denied the fraud allegations and cast them as a last-ditch effort by Steven to win a settlement from his brothers.

“Unsurprisingly, once defendants exposed the fatal flaws in plaintiff’s complaint, plaintiff repurposed them with sensational and demonstrably false allegations in a desperate attempt to extract an undeserved settlement,” Oved said in a statement. “But new packaging does not change stale contents.”

Michael and Edward have yet to address the affidavit and amended complaint in court. But for their part, they’ve also brought in their own peripheral allegations about Steven and his character.

“The unfortunate context of this litigation is that Steven has dissipated whatever resources he once possessed due to his well and publicly documented gambling addiction, substance abuse problems, and association with sex offenders,” Michael Ostad wrote to the court.

In the 2025 dissolution case, an attorney for the brothers made allusions to alleged connections between Steven and disgraced real estate brokers Tal and Oren Alexander, who were convicted on federal sex trafficking charges this year.

(A spokesperson for Steve said he has “no involvement in that matter — none to explain, none to answer for, nothing,” and that the allusions have no connection to the litigation.)

“We have gotten text messages from ex-girlfriends talking about how she can’t get in touch with him because he is on a drug-fueled bender,” Brian Belowich, an attorney for the brothers, said in oral argument last August. “There are all sorts of problems that impact the business and the ability for these businesses to continue operating.

The Ostad companies paid more than $200,000 to “hard money” lenders on Steven’s behalf, the brothers said in a complaint.

Oved, whose firm is representing the brothers in the new case, pointed to Steven’s past legal trouble.

“As a defendant in over 20 civil lawsuits coupled with chronic unpaid obligations and repeated financial defaults, Steven’s disastrous track record exposes the true motivation for his latest filing which the court will recognize and reject,” he said in a statement.

Steven’s legal team argues that any character allegations, true or false, don’t directly relate to his claim to part of Flatiron.

“Steven’s character is not the question; their conduct is,” Jacobs said in a statement. “This was never a claim on their money. It is an accounting for his.”

But they do turn up the heat on a case that had already become bitter.

“They don’t like Steven. Maybe good reason, maybe not, I don’t know,” the judge in the Ostad’s dissolution case told attorneys. “But it has nothing to do with the statute and the standard to show — to get a judicial dissolution of the companies.”

It will be up to that same judge to wade through what is a distraction and what is worth considering. And the Ostad brothers will be left to pick up the pieces of their dispute.