SEC accuses developer who had Miami mayor on payroll of fleecing millions from investors
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The Securities and Exchange Commission has frozen the bank accounts of a politically connected developer and accused him in a lawsuit of fleecing millions of dollars from dozens of investors in his South Florida real estate projects, as well as failing to pay more than $1 million in federal payroll taxes.
The federal agency filed suit against former Location Ventures CEO Rishi Kapoor under seal in Miami on Dec. 27 and then quietly obtained a judge’s order freezing his bank accounts and properties to preserve his remaining assets to help pay back investors who sank tens of millions of dollars into residential projects near downtown Coral Gables, Coconut Grove and Miami Beach.
The order, unsealed on Tuesday by U.S. District Judge Cecilia Altonaga at the request of the SEC, restrains Kapoor from accessing his five accounts at Bank of America, JP Morgan Chase and Ally Bank as well as any other financial holdings, including investments. Her order also requires Kapoor — once considered a rising development star who had Miami Mayor Francis Suarez on his company’s payroll — to provide the court with a “sworn accounting” of all of his funds, assets and other property, which includes a $6 million waterfront home in Cocoplum already facing foreclosure.
In her five-page order, Altonaga found “good cause to believe” that without the freezing of his assets, Kapoor “could dissipate, conceal, or transfer” them out of South Florida — noting that even if they’re preserved he doesn’t have enough funds to pay a possible SEC financial judgment that would compensate investors.
The judge also is expected to grant the SEC’s request to appoint a receiver to take control of Location Ventures and its various affiliates named as defendants in the lawsuit, in the agency’s effort to repay creditors, including investors.
Kapoor, who has two weeks to respond to the judge’s order to account for his assets, told the Miami Herald Wednesday that he was “disappointed” with the SEC’s civil action, saying it was “rash” and “unfounded.”
“After months of cooperation with the SEC, and then silence for quite some time, we are deeply disappointed that they have taken this rash action without further opportunity for dialogue,” Kapoor said in a statement. He added that the agency’s lawyers did not send him a notice in advance to address the allegations or conduct interviews of “unbiased stakeholders.”
“The allegations, put forward by a limited set of adverse relationships, are unfounded, twisted and/or flat out false,” he said in the statement, asserting “this is all the result of a select few actors weaponizing and manipulating a government agency for their own agendas.”
In its emergency motion to freeze his assets, the Miami-based SEC regional office said that Kapoor “shuffled investor funds” between different development projects and “misappropriated at least $6 million — $4.3 million of which Kapoor misappropriated for himself.”
SEC lawyers accused Kapoor of using Location Ventures and various other affiliates in a “scheme to defraud investors” while falsely claiming that he, his business partner and family members put $13 million of their own money into the umbrella company. The SEC asserted that he sold “investment contracts” in individual projects that were actually “securities” subject to federal regulation, placing him in the agency’s cross hairs.
The SEC also highlighted Kapoor’s annual salary of $350,000 — pointing out that it wasn’t supposed to rise above $400,000 without the approval of Location Ventures board of directors. In 2022, according to the SEC, Kapoor paid himself $1,686,303 as compensation without board approval; the previous year, he also paid himself $629,600 without approval.
Calling his conduct as an executive “fraudulent,” SEC lawyers noted that during this period Kapoor purchased a 2023 68-foot Princess yacht for more than $5 million, bought a marina slip at the Cocoplum Yacht Club for $695,000, leased a 2020 600LT Spider McLaren sports car and paid a private chef $10,000 a month.
Notably absent from the the SEC’s motion to freeze Kapoor’s assets and civil complaint was any mention of his hiring Mayor Suarez as a $10,000-a-month consultant while one of Location Ventures’ affiliates was seeking approval from City Hall for a residential and retail project at Commodore Plaza in Coconut Grove. Suarez, featured last month in the Herald investigative series “Shakedown City,” was not mentioned at all.
The SEC allegations
The SEC’s civil action suing Kapoor and freezing his assets caps a year-long investigation into his financial dealings at Location Ventures, the firm’s affiliate, URBIN, and numerous other corporate entities named as defendants. The regulatory agency’s civil investigation was first reported in June by the Miami Herald in a story that also revealed the FBI was examining his relationship with Suarez in a parallel criminal probe. The following month, Kapoor, a 39-year-old Atlanta transplant who obtained a business degree from the University of Miami, was forced out as the head of Location Ventures.
In removing Kapoor as manager of the company on July 14, the Location Ventures board of directors accused him of putting “his personal interests before the interests of the members and the company by taking millions of dollars from the company” without authorization in any approved budget.
The board’s resolution, cited in the SEC’s court filing, noted that “in certain instances, he has admitted to taking some of these actions to some members of the board.”
“Rishi has misappropriated and misused assets of the company and/or company affiliates,” the resolution stated, according to the SEC’s motion to freeze Kapoor’s assets. “Rishi has caused the company and company affiliates to be under investigation by the United States Federal Bureau of Investigation and the United States Securities and Exchange Commission.”
At the time, sources said SEC investigators were digging deeper into whether Kapoor and his company were selling investment contracts without registering them as securities, misrepresenting potential profits to investors or misappropriating funds for personal expenses.
Sources also told the Herald that the FBI’s investigation centered on a total of $170,000 in monthly payments that Location Ventures made to Suarez between September 2021 and March 2023. Special agents with the FBI’s public corruption squad began questioning witnesses over the summer, according to sources, zeroing in on whether the payments constituted bribes in exchange for securing permits or other favors from the mayor for the mixed-use project in Coconut Grove.
Suarez, a part-time mayor who is paid $130,000 a year, said his task for Location Ventures was to find investors and denied doing any political favors for Kapoor or his development company — though public records show his mayoral staff helped the developer obtain zoning permits for URBIN’s Coconut Grove project in 2022.
When Altonaga, the federal judge overseeing the SEC case, unsealed the 340-page motion with exhibits to freeze Kapoor’s assets, she kept some parts under wraps at the request of the agency. Then on Wednesday, she unsealed the SEC’s civil complaint, which names Kapoor and more than 20 corporate defendants, including Location Ventures.
The accompanying motion mirrors the 1,515-page complaint with exhibits. Together, they allege Kapoor, Location Ventures and its affiliates violated several anti-fraud provisions of federal securities laws. Among them: Kapoor is accused of “fraudulent” activities, including using Location Ventures, URBIN and other affiliates to raise about $93 million from more than 50 investors to invest in luxury condo and mixed-use projects in Miami, Miami Beach, Coral Gables and Fort Lauderdale between January 2018 and March 2023.
“To induce investors, Kapoor represented that he and his partner made a $13 million cash investment in [Location Ventures] through Patriots United, LLC, a company owned by Kapoor, his partner and members of Kapoor’s family,” the SEC motion says. “At no point during the relevant period, however, did Patriots United contribute any cash to [Location Ventures].”
In his statement provided to the Herald, Kapoor disputed this particular accusation: “With respect meant, the SEC has acted without corroborating these allegations, for example claiming myself, my family and founding partner didn’t invest a dollar — a statement that is both laughable and reckless in its lack of accuracy.”
But the SEC’s lawyers allege in both the lawsuit and motion to freeze his assets that “Kapoor’s claims about his investment was just one in a series of material misrepresentations and omissions [that he and other defendants] made to investors.”
For instance, SEC lawyer Russell O’Brien wrote that in the budget estimates for each of his projects, “Kapoor intentionally understated construction and other estimated costs in the pro formas to represent higher returns to prospective investors.” O’Brien added that when actual construction costs greatly exceeded those forecast in the budgets, “Kapoor withheld that and other information from investors, directed employees to revise or remove financial data from reports and minutes, and, in some instances, continued to use the pro formas to raise additional capital.”
In addition, Kapoor told investors that each of his development projects “were separate and distinct,” with their own corporate identities, investors and lenders, according to the SEC motion to freeze his assets. But Kapoor “regularly ignored corporate formalities and commingled investor funds,” including transferring more than $60 million between the various corporations set up for each development project, the motion states. For example, a $14 million transfer from Location Ventures to URBIN — two separate entities — was “recorded internally as an intercompany loan.”
In another example of what SEC lawyers called a “complete disregard for corporate formalities,” Kapoor used about $4.5 million of customer sales deposits on condo purchases “for purposes other than the construction and development” of URBIN projects in Coconut Grove and Miami Beach, the SEC’s motion states.
At Kapoor’s direction in October 2022, Location Ventures’ URBIN affiliate received about $1.2 million from customer sales deposits held in an escrow account for condo buyers at Commodore Plaza in Coconut Grove, according to the SEC’s filing. A few days later, the SEC alleges, the URBIN Grove entity transferred $1 million to URBIN, which used that money to pay down its intercompany loan from Location Ventures.
Payroll tax allegations
The SEC filing also said that “in addition to inflating his [real estate] portfolio,” Kapoor’s biography also highlighted his business degrees in finance, management and his central role “identifying unique opportunities ... while working closely with the development team on proper execution.”
“Kapoor failed to disclose, however, that his previous marketing business incurred federal tax liens for failing to remit federal payroll taxes — a practice that continued at [Location Ventures], where he failed to remit approximately $1.375 million in federal payroll taxes despite deducting those amounts from employee compensation,” SEC lawyers said in their filing.
The agency’s complaint is the latest in a series of lawsuits filed by investors, lenders and condo buyers who claim they were stiffed by Kapoor and Location Ventures. In October, U.S. marshals, armed with a federal judge’s order requested by a bank, seized Kapoor’s 68-foot Princess motor yacht while he and his wife were aboard. Another lender is seeking to foreclose on his waterfront home in Cocoplum.
Meanwhile, a former Miami-Dade circuit court judge hired by Location Ventures board has been liquidating the company’s assets to help pay back creditors.
One of Kapoor’s luxury condo high-rises known as Villa Valencia near downtown Coral Gables has been nearly completed and occupied, though it remains entangled in liens and litigation. His handful of other residential projects in Coral Gables, Miami, Miami Beach and Fort Lauderdale have stalled for lack of funding or permits, but could be revived by some current investors with deep pockets.
