Court rules in favor of Florida hotel developer accused of fraud by his investors
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A Miami judge overseeing a lawsuit against hotel developer Rodrigo Azpurua has ruled in favor of the Venezuelan-American businessman, saying that the two dozen investors who filed the claim against him failed to prove any wrongdoing.
Miami-Dade Circuit Judge Lisa Walsh on Tuesday denied the investors’ motion to reconsider her previous ruling, which tossed aside claims introduced by investors accusing Azpurua and his wife, Dania Carmela Azpurua, of deliberately misappropriating funds provided by them for the development of a La Quinta hotel and a Tryp hotel in Orlando.
Describing the accusations made against him as slanderous, Azpurua insisted from the beginning that the hotel group’s woes were caused by the coronavirus pandemic.
The judge ratified her previous ruling, concluding that the plaintiffs “have not met their burden to ‘clearly prove’ fraud,” she ruled. The investors had asked the judge to name a receiver — a court-appointed expert to oversee the property.
“That the Hotels may not have been managed post-pandemic in the most efficient manner in terms of the per room expenses or operating expense ratio does not justify the extraordinary remedy of appointing a receiver,” the judge added. “Plaintiff adduced no evidence that Defendants stole, misappropriated, or misused funds or revenue in any way that warrants the appointment of a receiver.”
Celebrating the judge’s ruling, Azpurua said the decision will allow his company to proceed with the sale of the hotels and recoup as much money as possible for the investors.
“We understand the investors’ anxiety, as operating losses caused their equity to diminish. But as with virtually all real estate developments, this venture carried risk, and the drastic changed market conditions led to the loss in value,” he said in a statement.
“By their actions, including the lawsuit, the plaintiffs created a distress situation” with the projects’ bank, he added, which led to “a default on the construction loan and charge a higher interest rate. Also, the longer a sale is delayed, operating losses will continue to mount and the more that value will be lost.”
Azpurua, a Weston resident who frequented TV shows and wrote newspaper columns promoting his projects, raised millions of dollars from individual investors, ranging from $50,000 to a million dollars each. Some of the investors provided the money under the U.S. Citizenship and Immigration Service’s EB-5 Immigrant Investor Program, which encourages foreigners to invest and can lead to U.S. residency.
Azpurua, who has been involved in South Florida real estate since the mid-2000s, is the owner of Riviera Point, a company that raised tens of millions of dollars through the EB-5 visa program. During the past decade, the company completed the construction of five office buildings in Doral and Miramar through the program, which grants foreigners the right to reside in the U.S. if they invest at least $500,000 in job-creating projects.
In more recent years, Riviera Point entered the hotel building and management business, constructing La Quinta Del Sol Orlando Hotel in 2019, Tryp by Wyndham Orlando Hotel in 2020, La Quinta Inn & Suites Sebring Hotel in 2020 and the Radisson Red Miami Airport Hotel in 2021, according to the company’s website.
But the company was not able to complete all the projects. A second hotel that was scheduled for construction near Miami International Airport never got off the ground, even though the land had been purchased.
While the Orlando hotels were constructed and did begin operation, they soon ran into problems in the aftermath of the coronavirus outbreak, which affected the city’s tourism industry. Problems grew worse when the company found itself unable to comply with the terms of a $17.3 million loan obtained from Apollo Bank in Miami, which was later acquired by Seacoast Bank.
The COVID-19 outbreak was the final straw, Azpurua said.
“The cash flow problems at the hotels come from market conditions that began with the pandemic and were compounded by inflation and a weak hotel market in Central Florida – low occupancy, higher costs for labor, food and insurance, and the reality that market conditions make charging higher room rates impossible,” he said.
And matters were then made worse by the legal action undertaken by his investors, he added.
“Rather than accept the unfortunate facts of what caused the financial problems, the plaintiffs are pursuing the false narrative that they were caused by management siphoning off funds from the hotels. Nothing could be farther from the truth.”
