Another lawsuit has joined the family legal saga surrounding Flatiron Realty.
Steven Ostad is suing his older brothers, Michael and Edward Ostad, alleging the two unfairly excluded him from a real estate portfolio and lending business he invested in. Steven also alleges his brothers have been skimming money off their rental business, receiving at some points “bags of cash.”
The complaint, filed Thursday, is an escalation in the ongoing drama between the brothers. Michael and Edward sued Steven one year ago, and the brothers are facing foreclosure suits on $70 million of debt.
The Ostads together run a real estate portfolio of 10 rental properties in Manhattan, the Bronx and Queens, along with a lending arm called Flatiron Realty Capital.
Steven says he’s been unfairly cut out of both, despite an investment of more than $6 million in Flatiron Realty. The lending business primarily uses funds sourced from institutional investors, according to the complaint.
The two older brothers, both former urologists, originally sued Steven in April 2025. They hoped to dissolve companies the three were partners in, hoping to cash out, but said Steven was standing in the way.
The two older brothers also alleged Steven, who is a decade their junior, had “a lifelong history of serious personal issues and self-destructive behaviors.” An attorney for Steven said any issues are in the past and have no bearing on the current claims.
Now Steven is firing back, saying Michael and Edward were taking rents in cash, keeping them off the books and depositing them into personal accounts, artificially deflating property values.
“[T]he Brothers took the cash rents for themselves, on occasion literally having bags of cash delivered to them, all to Steven’s exclusion,” according to the complaint.
The two older brothers have also mismanaged funds, according to the complaint, by moving funds from one rental entity to another.
“Steven waited a full year after his brothers sued him over the real estate business to bring his own affirmative claims on the lending side of the business. That was an exercise in restraint – an exercise Steven continued by not attaching the photographs, employee affidavits and bank records he already has in his possession to this new complaint,” Christopher Milito of Morrison Cohen, who is representing Steven, said in a statement.
Terrence and Darren Oved of Oved & Oved, attorneys for Michael and Edward, denied the accusations.
“Our clients reject the complaint’s baseless allegations as a desperate and transparent cash grab which we are determined to expose and defeat,” they said in a statement.
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