Developer Kapoor resolves liability in SEC securities violations case; civil fine pending
A once-rising developer who gained notoriety after he hired Miami’s mayor as a consultant has reached a settlement agreement with the U.S. Securities and Exchange Commission to resolve a lawsuit claiming he defrauded investors of millions of dollars.
In federal court papers, developer Rishi Kapoor admitted liability in a consent judgment with the SEC without admitting or denying the agency’s allegations that he misappropriated $4.3 million for himself while raising about $93 million from more than 50 investors in his South Florida real estate projects.
According to the agreement filed Wednesday in federal court, Kapoor will be barred for five years from serving as an officer or director of any company that sells security investments.
A federal judge will determine how much Kapoor, 40, the former CEO of Location Ventures, must pay back to his development company’s investors as part of the settlement. U.S. District Judge Jacqueline Becerra will also have to give her final approval.
“We are pleased to have reached a settlement in this case between Mr. Kapoor and the SEC regarding liability,” the former developer’s attorney, Fred Schwartz, said in a statement. “We had a professional and productive relationship with the SEC counsel and are grateful to the Commission for approving the settlement.”
Kapoor’s troubles with the feds are not over, however. The developer, a University of Miami business and law school grad whose personal assets have been frozen, is still under investigation by the FBI, IRS and U.S. Attorney’s Office for allegedly fleecing investors and for hiring Miami Mayor Francis Suarez as a $10,000-a-month consultant for one of his companies.
Last December, the SEC filed suit against Kapoor and then obtained a federal judge’s order freezing his bank accounts and other properties to preserve his remaining assets to help pay back investors in his firm’s residential projects near downtown Coral Gables, Coconut Grove and Miami Beach. The judge also appointed a receiver to assume control of Location Ventures and its subsidiary, URBIN, and to liquidate its assets, a process that is still ongoing.
In an 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, led by attorney Russell O’Brien, asserted that Kapoor 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. Kapoor, who is married, also bought a waterfront home in the exclusive Cocoplum area of Coral Gables for $6 million — one of several assets that he must sell to pay back lenders and investors, according to a judge’s order.
Notably absent from the SEC’s motion to freeze Kapoor’s assets and its civil complaint was any mention of his hiring Suarez as a consultant for URBIN while the Location Ventures’ affiliates was seeking approval from City Hall for a residential and retail project at Commodore Plaza in Coconut Grove. Suarez, featured in the Herald investigative series “Shakedown City,” was not mentioned at all.
URBIN ended up paying Suarez more than $200,000 from July 2021 through at least March 2023, according to corporate records and sources familiar with the payments. The payments continued until Suarez’s involvement in the company was revealed in a lawsuit by a former chief financial officer for Locations Ventures, who raised questions about URBIN’s monthly payments to Suarez and other alleged irregularities.
Suarez, who denied any wrongdoing, was subpoenaed this year by the SEC to testify in Kapoor’s case about his relationship with the developer and his duties as a consultant for URBIN, which involved raising funds from potential investors.
The regulatory agency’s civil investigation of Kapoor was first reported in June 2023 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, an Atlanta transplant, was forced out as the head of Location Ventures.
This story was originally published November 15, 2024 at 5:30 AM.
