A California real estate executive pleaded guilty to participating in an extensive, multi-year conspiracy to manipulate financial statements.

Tyler Ross, 37 and formerly of Michigan, was the co-chief executive officer of Roco Real Estate and Roco Management, both based in Bloomfield Hills, Michigan, commercial real estate companies that focused on acquiring, managing, and selling multifamily residential properties in the midwest, the Department of Justice said in a press release.

According to court documents, Ross engaged in a scheme to falsify corporate records with the intent of deceiving lenders by inflating the income of Roco properties from 2015 to 2019. The fraudulent activities involved submitting false financial documents to mortgage-lending businesses for underperforming Roco properties, making the properties appear more profitable than they were.

Ross, who is also an attorney, falsified historical operating statements and directed others to create and submit fraudulent financial statements to lenders. They manipulated the statements by deleting or reducing actual expenses from historical operating statements for certain underperforming ROCO properties.

Ross pleaded guilty to conspiring to commit an offense against the United States and is set to be sentenced on March 12, 2024. He could face a maximum penalty of five years in prison, with the actual sentence determined by a federal judge after considering sentencing guidelines and other factors.

Prior to the pandemic, Roco, which was founded in 2012, was a rapidly expanding outfit that engaged in some high-profile deals. In 2019, the Chetrit Group bought from Roco a 55-property portfolio of more than 10,000 rental apartments with buildings in Alabama, Arkansas, Florida, Illinois, Indiana, Louisiana, Mississippi, Ohio, New York, Tennessee and Texas.

Chetrit financed the deal with a $481 million loan from JP Morgan Chase, according to Robert Verrone and Patrick Perone of Iron Hound Management Company, who arranged the debt. At a loan-to-value ratio of 84 percent, the purchase price worked out to nearly $573 million.

Roco currently has properties in Ohio, Michigan and Mississippi, according to its website.

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Even though he was sworn to uphold the law, Robert Kennedy, a former Boston-area police officer, was a nightmare tenant for at least three Massachusetts landlords over a period of 20 years.

But Kennedy’s actions recently caught up to him when he pleaded guilty in federal court to two counts of wire fraud after admitting to defrauding one of those landlords by providing false information during the tenant screening process and intentionally withholding rent payments, according to a press release from the Department of Justice.

During the rental application process, Kennedy provided the landlord with the date of birth and social security number of a relative who shared his first and last name, concealing Kennedy’s sketchy credit history of collections, delinquent payments, defaults and evictions.

The landlord, based on the false information Kennedy provided, approved the application and allowed Kennedy to move in. 

In addition to his first month’s rent and security deposit checks bouncing, Kennedy immediately began withholding rent payments, even though he made between $141,000 and $187,000 a year as a detective sergeant with the Stoneham Police Department. Kennedy lived in that apartment for four months, rent-free, by taking advantage of the slow eviction process, the release says. 

He still owes that landlord about $14,000 in back rent. The guilty plea requires Kennedy to pay the back rent, though prosecutors agreed not to pursue identity theft charges for the use of a relative’s social security number for a tenant screening.

Each wire fraud charge carries a sentence of up to 20 years in prison, up to three years of supervised release and a fine of up to $250,000. His sentencing is scheduled for Jan. 4. 

Kennedy, according to NBC10, had stiffed three landlords — including an elderly couple — out of at least $50,000 over two decades, even though evidence showed that he’d earned over half a million dollars over a three-year period.

While Kennedy is no longer on a police force, he was allowed to retire in June and begin collecting an annual $60,800 pension.

It’s unclear whether a legal challenge to the pension collecting would be successful. Massachusetts law only permits a public employee’s pension to be taken away if a conviction is related to the employee’s job.

Kennedy’s attorney, Brad Bailey, was already arguing that his client’s illegal conduct had nothing to do with his work as a police officer.

“It’s very important to point out that nothing to which he admitted today and accepted responsibility for is related to, pertained to, or is alleged to be in connection with the official performance of his duties and discharge of his duties as a public safety official,” Bailey told the outlet.

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The oldest community bank in the U.S. agreed last week to pay $9 million to settle claims that it discriminated against Black and Hispanic Rhode Island residents who sought mortgages.

For at least six years dating back to 2016, during its expansion throughout Rhode Island, Washington Trust Co. allegedly redlined, turning away lenders from majority-Black and Hispanic neighborhoods, according to a press release from the Department of Justice.

Washington Trust also never opened a branch in those neighborhoods and only used loan officers who worked out of majority-white neighborhoods to generate loan applications, the department alleged. The bank also did not train its staff or do any outreach in Black- or Hispanic-majority neighborhoods or to advertise to these communities to make up for the lack of branches in those areas.

Other banks received nearly four times as many loan applications from majority-Black and Hispanic Rhode Island neighborhoods as Washington Trust each year from 2016 to 2021. The applications that did come in from Black- and Hispanic-majority neighborhoods were disproportionately from white residents, the DOJ alleges.

A judge still has to approve the proposed agreement. If approved, Washington Trust agreed to:

Invest at least $7 million in a loan subsidy fund to increase access to home mortgage, home improvement, home refinance and home equity loans and lines of credit for residents of majority-Black and Hispanic neighborhoods in Rhode Island;

Spend $1 million on community partnerships to provide services that increase residential mortgage credit access for residents of those neighborhoods;

Spend $1 million on advertising, outreach, consumer financial education and credit counseling focused on majority-Black and Hispanic neighborhoods;

Open two new branches in majority-Black and Hispanic neighborhoods in Rhode Island and ensure at least two mortgage loan officers are dedicated to serving those neighborhoods; 

Employ a director of community lending who will oversee the lending in communities of color

Washington Trust also agreed to complete a community credit needs assessment, to assess and report on its fair lending program; and to train staff on the bank’s obligations under the consent order. Washington Trust worked cooperatively with the department to resolve and remedy the redlining concerns that were identified and agreed to settle this matter without contested litigation.

“Everyone who pursues the American dream has the right to expect to be treated equally and with dignity, regardless of their race, their background, or zip code. When communities are denied access to fair lending, families are denied the opportunity to build stability and financial success,” said Zachary Cunha, U.S. attorney on the case.

The Justice Department has focused on redlining in recent years.

In January, City National Bank agreed to pay $31 million, a record for redlining settlements, related to claims that the bank systematically discriminated against Black and Hispanic Los Angeles residents who wanted mortgages.

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The Massachusetts Port Authority has finalized plans for an unusual, if not unique, $170 million affordable housing project in Boston’s Seaport district, the city’s most affluent neighborhood. 

The 224,000-square-foot project calls for the construction of a 15-story tower with 200 apartments, all of which will be below-market rate, the Boston Globe reported.

The project is a joint venture between Boston-based housing developer The Community Builders and the Black-owned development firm Menkiti Group from Washington, D.C. The tower will feature 15,000 square feet for child care and retail, employ all-electric systems, and sport solar panels on its roof.

Efforts have been underway to increase housing stock in Boston as well as bring rents under control. A rent-control measure was blocked by the State House last spring. But earlier this month, state Rep. Mike Connolly’s petition to lift the 1994 statewide ban on rent control was certified by the Massachusetts attorney general. Voters will now have the opportunity to weigh in on the matter in an upcoming election.

The income-restricted apartments will be available at four different income tiers, from 30 percent of the area median income (approximately $44,520 for a family of four) to 120 percent (about $178,080). Monthly rents are expected to range from $950 to over $3,000, depending on household income and size.

The authority, a major landowner in the Seaport area, has played a pivotal role in the neighborhood’s rapid development. Its initiative to engage affordable housing developers began nearly two years ago, as Boston grapples with a growing affordability crisis.

In selecting The Community Builders, Massport emphasized diversity, project design, and programming. In addition, Massport prioritized the project’s affordability over its financial return, it said.

Securing permits and financing could take up to three years, according to Andrew Hargens, Massport’s chief development officer. The project is likely to seek state and federal affordable housing subsidies.

— Ted Glanzer

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Nuveen is selling (or sold) the 801 Brickell office building in Miami for about $250 million. The deal will likely set a record for South Florida investment sales this year.

The sale, as first reported by my colleague Lidia Dinkova, could be an indicator of the strength of Miami’s Brickell office market at a time when not many trophy office buildings are trading in major cities across the country. 

It could also be the largest office investment sale this year for the top markets, including New York, San Francisco and Los Angeles, Dinkova tells me. I-sales have slowed down over the past year because of the sharp rise in interest rates and return-to-office woes in many major U.S. cities. 

To be clear, the buyers of 801 Brickell, Monarch and Tourmaline, are not acquiring a distressed piece of real estate: 801 Brickell is more than 90 percent leased, and tenants include investment firm Selvatra, Cassel Salpeter and Swiss Re Group. Groot Hospitality’s Komodo restaurant is a retail tenant. 

The 695,000-square-foot building, which includes about 415,000 square feet of offices, is trading for about $600 per square foot. That’s not the highest price per foot we’ve seen in recent years, but it’s up there. 

Monarch and Tourmaline are financing about 60 percent of the purchase price, which is favorable in today’s environment, sources tell Dinkova. 

And Brickell has emerged as a much stronger office market than others since the pandemic began. Billionaire Ken Griffin selected Brickell as the location for a new skyscraper, where his Citadel and Citadel Securities will be based. (Griffin also acquired the 28-story building at 1221 Brickell Avenue for $286.5 million, or about $700 per square foot, last year.) 

But according to one source, the sale of 801 Brickell is probably not an indicator of more to come this year. 

What we’re thinking about: I’m still thinking about this construction accident at the site of Related Companies and Swire Properties’ planned supertall office project, where a chunk of the existing building fell onto Brickell Avenue. How does something like that happen, and what protections should be in place? Send me a note at kk@therealdeal.com. 

CLOSING TIME 

Residential: Real estate power couple Craig Robins and Jackie Soffer sold their waterfront Miami Beach mansion at 2511 Lake Avenue for $36 million, about 20 percent off the original price. A Delaware entity purchased the home. 

Commercial: Principal Asset Management sold Lyons Technology Center, a six-building warehouse portfolio in Coconut Creek to Stockbridge Capital Group for $48.9 million. The deal included the buildings at 4611-4661 and 4701 Johnson Road, as well as at 4811 and 4911 Lyons Technology Parkway. 

— Research by Kate Hinsche

327 East Rivo Alto Drive (via Morgan Blittner of Brown Harris Stevens)

NEW TO THE MARKET 

A waterfront Venetian Islands estate that sold three years ago for $9.5 million hit the market last week for about three times that price. The 5,500-square-foot, six-bedroom, six-and-a-half-bathroom home at 327 East Rivo Alto Drive is asking $30.6 million. It has 90 feet of water frontage, an outdoor kitchen, pool and dock. Morgan Blittner of Brown Harris Stevens is the listing agent. 

A thing we’ve learned 

Waterfront land has become so scarce in Miami Beach that one developer plans to split a large lot into three and build homes for his children — the eldest is currently 12. That developer is Jamie LeFrak, who moved from New York City in 2019. 

Elsewhere in Florida 

Widely feared (this is a good thing in journalism) Florida journalist Lucy Morgan died at 82 from complications related to a fall. Morgan, who began her career at the Ocala Star-Banner, was once sentenced to eight months in jail for refusing to disclose her sources for a series she covered about public corruption for the then-St. Petersburg Times.

A law invalidating Miami-Dade County’s ban on pit bulls goes into effect today. Residential communities will still be able to ban specific dog breeds, but municipalities will not, Local 10 reports. Gov. Ron DeSantis signed Florida State Bill 942 and Florida House Bill 941 into law in June. 

DeSantis pulled funding for scholarships to four private schools in the state because he said they have ties to the Chinese Communist Party, according to USA Today. The schools include two outside of Fort Lauderdale and two in Winter Park, near Orlando. An administrator at one of the schools said it had no ties to any government. 

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A New York real estate broker was handed a nine-month house-arrest sentence last week for her involvement in a bribery scheme that spanned several years.

Sheina Levin, 61, who owned a Brooklyn-based real estate company, paid Victor Rivera, a prominent shelter operator, over $830,000 in kickbacks to secure leases for properties under her control, the New York Times reported.

The scheme came to light when Rivera, the former CEO of the Bronx Parent Housing Network, pleaded guilty to federal crimes the previous year and was sentenced to 27 months in federal prison. 

Rivera’s financial ties with Levin and allegations of sexual assault and harassment against him were exposed in a Times investigation in 2021.

Levin’s sentencing followed her guilty plea in March to one count of conspiracy to commit honest services wire fraud for her role in the pay-to-play scheme, which operated from 2019 to 2021.

In court filings, Levin revealed that Rivera initially solicited bribes during their collaboration to sublease several Bronx buildings as homeless shelters. Rivera insisted on a portion of Levin’s rental profits, and she complied, knowing these payments were improper. Levin concealed the payments to Rivera by disguising them as consulting fees to a fictitious company owned by Rivera’s son, who, in turn, used the kickbacks to cover mortgage payments.

Rivera, who founded the Bronx Parent Housing Network two decades ago, amassed $274 million in city funds from 2017 to 2021. During this time, Rivera began living large, receiving a salary of more than $450,000, leasing a luxury car through Housing Network and  doling out contracts to close associates, including Levin, as well as commingling nonprofit work with for-profit companies.. Rivera also demanded kickbacks from other associates, but the payments from Levin were the most substantial.

Levin faced a maximum penalty of 20 years in prison for the felony charge but received a sentence of house arrest and two years of supervised release, with prosecutors citing her cooperation in aiding the investigation into Rivera. Additionally, she agreed to forfeit more than $790,000 and pay over $838,000 to the Bronx Parent Housing Network.

In a statement, Levin’s lawyer acknowledged her wrongdoing, stating that Rivera manipulated her commitment to serving the homeless population for personal gain. Levin is committed to making amends for her actions, according to her attorney.

— Ted Glanzer

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The “Cash Flow King” is allegedly nothing more than a court jester.

On Monday, the Securities and Exchange Commission charged podcast host Matthew Motil with running an $11 million Ponzi scheme. The Ohio man allegedly defrauded more than 50 investors in a real estate scheme.

Motil promised low-risk, high-return promissory notes supposedly collateralized by first mortgages on homes in Ohio, according to the complaint. He allegedly promoted the investments on his website and podcast, where he said any potential investor could become a “real estate investing badass.”

Motil said he would pay investor returns from profits that came from flipping and renting the involved properties, according to the complaint. But Motil didn’t secure first lien positions as promised, the SEC alleged, and instead proceeded to sell multiple promissory notes he said were secured by the properties to multiple investors.

Among his alleged misdeeds, Motil once sold more than $1 million in promissory notes to 20 investors, each note purportedly collateralized by a property he acquired for $47,000. The complaint alleges Motil passed on doing renovations to instead make payments to previous investors and fund his own lavish lifestyle, renting a lakeside mansion, buying courtside NBA season tickets and making $400,000 in credit card payments for his wife, a relief defendant in the case.

Motil’s alleged targets included an armed forces officer and a cancer researcher, among others. In addition to the fraud accusations, Motil also faces allegations of forging signatures and misusing a notary’s seal, a crime in Ohio, according to CNBC.

Motil kept his scheme going despite filing for bankruptcy in Ohio last March, according to the regulator. His bankruptcy case is being contested by the U.S. Trustee as Motil seeks to discharge money owed to investors.

The SEC is seeking injunctive relief, penalties on the profit Motil allegedly made plus prejudgment interest and civil monetary penalties. The regulator also wants to implement an officer and director bar.

Read more

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Duncan Crabtree-Ireland, the lead negotiator for SAG-AFTRA, will be a key player as the guild begins talks with the studios again on Monday.

Gideon Cody, who orchestrated a widely criticized raid on The Marion County Record, was suspended indefinitely, a city official said on Saturday.

There is recourse for customers who arrive at a hotel and are surprised to find a boisterous picket line waiting to greet them.