Indian-origin real estate developer charged with perpetuating USD 93 million fraud scheme

New York: An Indian-origin real estate developer has been charged by federal authorities in the US with perpetuating a USD 93 million fraud scheme.

Rishi Kapoor, a Miami-based developer, faces charges filed by the Securities and Exchange Commission Wednesday.

The SEC announced that it obtained an asset freeze and other emergency relief concerning the alleged USD 93 million real estate investment fraud perpetrated by Kapoor. The SEC also charged real estate company Location Ventures, its affiliate Urbin and 20 other related entities in connection with the fraud scheme, a statement said.

According to the SEC’s complaint, from approximately January 2018, until at least March 2023, Kapoor and certain of the defendant entities solicited investors by, among other things, making several material misrepresentations and omissions regarding Kapoor, Location Ventures, Urbin, and their real estate developments.

The false statements allegedly included misrepresenting Kapoor’s compensation; his cash contribution to the capitalization of Location Ventures; the corporate governance of Location Ventures and Urbin; the use of investor funds; and Kapoor’s background.

The SEC’s investigation found that Kapoor allegedly misappropriated at least USD 4.3 million of investor funds and improperly commingled approximately USD 60 million of investor capital between Location Ventures, Urbin, and some of the other charged entities.

The complaint also alleges that Kapoor caused some entities to pay excessive fees and to represent higher returns to investors by significantly understating cost estimates.

The complaint alleges that among other things, Kapoor and other insiders misappropriated at least USD 6 million of investor funds - USD 4.3 million of which Kapoor misappropriated for himself. He purchased a 68.7 foot yacht for five million dollars and leased an uber-luxury sportscar.

“As alleged in our complaint, Kapoor was the architect of a multi-pronged real estate offering fraud that misappropriated millions from more than 50 investors,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office.

The SEC’s complaint, filed in the U.S. District Court for the Southern District of Florida, charges Kapoor, Location Ventures, Urbin, and the 20 related entities with violating provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934.

The SEC seeks permanent injunctions, civil monetary penalties, an officer-and-director bar against Kapoor, and disgorgement of ill-gotten gains with prejudgment interest against Kapoor and certain of the charged entities.