winner777 Dozens of condo buyers who lost millions in Kapoor’s Miami Beach project seek judge’s help

Updated:2024-10-14 02:43    Views:110

Miami Mayor Francis Suarez speaks at the Miami Beach launch of URBIN, developer Rishi Kapoor’s project, company website shows. Company records show the developer paid Suarez at least $170,000 since 2021. URBIN website

As the U.S. economy started to rebound after the pandemic, countless people from Latin America began looking to Miami again as a safe haven for investing their money in the real estate market.

A planned condo project on gentrifying Washington Avenue just a few blocks from South Beach caught the attention of Jose Maria Carmona and his wife, Georgina. Using most of their nest egg, the Argentine couple signed contracts with the Miami Beach project’s developer in 2022 and paid in full for two studio apartments — $351,900 for one and $358,000 for the other.

All the money was placed in an escrow account with a guaranteed 7% interest return on their investment — or so they thought.

But rather than celebrating their smart purchases, the Carmonas — along with many other similar condo buyers in the Miami Beach project — have been crushed by the downfall of its developer, URBIN LLC, and its parent firm, Location Ventures. The former Coral Gables-based companies are now under the control of a federal court-appointed receiver, who is liquidating their assets as part of the Securities and Exchange Commission’s lawsuit against Location Ventures’ former CEO, Rishi Kapoor.

READ MORE: He dreamed of being Miami’s next condo king. His implosion triggered a political scandal

The Miami Beach property is the next asset on the receiver’s auction block, a move that Carmona and his lawyer say could spell ruin for URBIN’s condo buyers unless a judge comes to their rescue at a critical hearing Monday in Miami federal court.

SEC accusations against Kapoor

“To be honest, we never thought this would happen here,” Jose Carmona, 53, an information technology specialist, told the Miami Herald. “We put our life savings in this Miami Beach project.”

In late 2023, the SEC accused Kapoor of using his companies “to operate a real estate scheme” in violation of anti-fraud securities laws when he raised about $93 million from investors between 2018 and 2023.

Kapoor, 40, who has been forced to sell his $6 million Cocoplum home under a court order, is accused of misappropriating millions of dollars from his former businesses — including buyers’ condo deposits. He’s accused of pocketing some of the money and moving it between his various projects in Miami, Miami Beach and Coral Gables.

Kapoor, through his defense lawyer, has said he “defrauded no one.”

After the Herald story was published on Saturday, Kapoor’s attorney, Fred Schwartz, filed a response in Miami federal court, saying the “collapse” of his client’s companies “was caused by the greed and threats of a select few Location Ventures investors and employees.”

In the filing, Kapoor said he “deeply empathizes with the buyers” of condo units in URBIN’s Miami Beach project. Kapoor also said he “did not meet with nor communicate with any buyer directly and made no false nor fraudulent promises as a part of any promotion.”

Separately, Kapoor is facing a federal criminal investigation led by the FBI and U.S. Attorney’s Office, which are not only focusing on him but on his relationship with Miami Mayor Francis Suarez. Kapoor hired Suarez in July 2021 and paid him more than $200,000 over two years as a consultant tasked with raising money from investors, the Herald has reported. Suarez, who attended the groundbreaking ceremonies for URBIN’s two mixed-use condo projects in Miami Beach and Miami’s Coconut Grove, has denied any wrongdoing.

Miami Mayor Francis Suarez, right, with Coral Gables developer Rishi Kapoor. URBIN website

The Carmonas are not the only victims of Kapoor’s defunct real estate ventures. The couple and more than 30 other Latin American condo buyers at URBIN’s Miami Beach project have lost about $10 million in deposits, according to lawsuits filed in Miami-Dade Circuit Court. Dozens of other foreign buyers also lost millions of dollars in condo deposits at another URBIN project in Coconut Grove, other lawsuits say.

If sold, condo buyers wouldn’t get much

On Monday, a federal judge will consider whether to approve the sale of URBIN’s two properties at 1234-1260 Washington Ave. for $17.5 million to a Fort Lauderdale-based developer, Pakman Miami Beach LLC, headed by Kash Patel. If the sale is approved, most of the proceeds would go to URBIN’s primary secured lender and possibly some to the project’s original investors.

But the condo buyers like the Carmonas stand to receive nothing, which is why their lawyer wants the judge to postpone the sale in the hopes of generating some compensation for his clients.

“If this sale goes through, we’re done,” attorney Jay Tome told the Herald, recognizing that the receiver’s goal in the SEC case is to recover money for secured lenders and investors in Location Ventures and URBIN, not the condo buyers.

This week, Tome filed a motion to delay the receiver’s proposed sale of URBIN’s Miami Beach property, asking a federal judge to let the “defrauded victims” have their “voices” heard. Their goal: to recover millions of dollars in deposits or have that money applied to the construction of purchased condo units.

URBIN’s Miami Beach project was slated to include 69 units, including studios as small as 275 square feet and two- to four-bedroom units larger than 1,300 square feet. In November 2022, Location Ventures held a groundbreaking ceremony and announced all of the units had been sold at prices ranging from $400,000 to $2.4 million.

In addition to the living areas, the seven-story design featured a pool, wellness center and ground-floor food and drink offerings, all touted by Kapoor as a way to “infuse living, working and wellness into a singular location.”

Project stopped due to no permits

By early last year, construction was under way — even though the city had not yet granted permits for the work. Miami Beach officials ordered work to stop in June 2023 after the Herald inquired about parts of the foundation and columns being built at the Washington Avenue site.

The project, already saddled with liens by contractors and other vendors, was shut down in late June 2023 by city officials for lacking permits.

In July 2023, one of Location Ventures’ largest lenders sued to recover $15 million due on a loan that was used to buy the two parcels for URBIN’s Miami Beach project. It was the first suit filed by a lender after Kapoor lost control of his real estate company and stepped down as its CEO that July.

The complaint — filed by 1234 Washington Acquisition, LLC, headed by private lender Robert Gutlohn — says the loan deal with URBINwas struck in 2021 and revised the following year but that the entire principal with interest was not paid by a June 1, 2023, deadline. Total due: $15,355,312.50

If U.S. District Judge Jacqueline Becerra approves the proposed sale of the Miami Beach property, Gutlohn will likely receive almost all of the proceeds.

To Carmona and other condo buyers at URBIN’s defunct project, that doesn’t seem right.

“The worst part is, we are not getting anything,” Carmona said. “I can’t believe the judge would allow this to happen. … I don’t think that’s fair.”

The URBIN Miami Beach project site at 1260 Washington Ave. is pictured June 27, 2023. The city of Miami Beach issued a stop-work order for unpermitted construction there. Aaron Leibowitz [email protected]

This story was originally published September 21winner777, 2024, 5:00 AM.

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