Investor Calls Fraud a Family Thing

     ATLANTA (CN) – Investors claim in court that they lost millions of dollars to a long-running, family-owned racketeering scheme that “if left unchecked, will continue indefinitely into the future.”
     SR 20 Lodging Inc. sued brothers Rajesh and Mike (Mukesh) Patel, three other Patels, four LLCs and a sixth man, Mit Amin, in Fulton County Superior Court.
     SR 20 claims it is part owner of a multimillion-dollar building that was supposedly going into foreclosure, but the conspirators who lured in the investors have transferred title of the property to a different owner.
     “Plaintiff SR 20 is among the latest victims of a racketeering scheme that has cost Georgia investors millions of dollars over the last several years as well as millions belonging to victims outside of Georgia,” the complaint states. “The defendant brothers, Rajesh Patel (‘RC Patel’) and Mukesh Patel (‘Mike Patel’) and their respective families, and their various entities, are the perpetrators of this racketeering scheme that is known to go back to 2001 and, if left unchecked, will continue indefinitely into the future.
     “The fundamental scheme engaged in by defendants is to: (1) identify an investment opportunity (usually hotels, restaurants or other real property); (2) create an entity to serve as a vehicle for the investment; (3) lure unsuspecting innocent investors (including their former immigration attorney, in-laws, and other former friends) into investing through the entity; (3) embezzling funds from the entity so that all value is siphoned off to defendants; (4) conceal the embezzlement through a series of phony transactions and loans; (5) claim the property is under water for valid market based reasons; (6) dispose of the property (sometimes, to an entity they control) at a fire sale price; and (7) short change or completely fail to pay any of the proceeds to the investors.
     “This is not the first case brought against these defendants and not even the first case alleging violations of a RICO statute. This case involves a building at 218 Peachtree Street, which is a parking deck and also houses certain restaurants, such as Pitty Pat’s Porch and Fires of Brazil. Plaintiff invested in the purchase of the building through a defendant created entity known as Diplomat NBD Hotels Inc. (‘Diplomat NBD’). Diplomat NBD then operated the building, but claimed that the rents were insufficient to maintain the debt service on the mortgage. Diplomat NBD refused to provide any detailed financial information to plaintiff, but informed plaintiff that 218 Peachtree was going to be foreclosed on by the mortgagor.
     “Plaintiffs have since learned that despite their objection, and despite numerous requests for information, Diplomat NBD conveyed 218 Peachtree to an entity known as 218 Capital Partners, LLC (‘218 Capital’). No foreclosure appears to have taken place. Instead, it appears that defendants, without consent of Diplomat NBD’s shareholders, simply conveyed the property. Upon information and belief, 218 Capital is controlled by Jay Patel, RC Patel’s son, and Mit Amin, another defendant, who is known in the Indian community to be a straw-horse for defendant RC Patel. Thus, 218 Peachtree was conveyed from the entity into which plaintiff invested, to an entity controlled by defendants all without notice, or consideration.”
     SR 20 adds: “218 Peachtree is worth in excess of $5 million and is now in imminent danger of being further conveyed.”
     Named as defendants are Rajesh Patel, Jay Patel, Mike Patel, Shama Patel, Hasmita Patel, Mit Amin, Diplomat NBD Hotels LLC, Chelsea Capital Management LLC, Chelsea Capital Partners LLC, and 218 Capital Partners LLC.
     SR 20 seeks equitable damages and punitive damages for embezzlement, self-dealing, conversion, fraudulent conveyance and RICO conspiracy, and wants a receiver appointed to manage the property.
     It is represented by Scott Bonder.

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