Suneet Singal, Chairman and CEO of the non-traded REIT known as First Capital Real Estate Trust, was recently charged by the Securities and Exchange Commission (SEC) with two separate charges of fraud. One of the SEC’s charges against Singal relates to his company’s REIT and the other one is related to another non-traded business development firm.
SEC Charge 1
According to SEC, the First Capital REIT CEO fraudulently claimed in 2015 that he owned 12 hotels which he actually didn’t so he could get a $15.2 million interest in his company’s REIT’s partnership. The SEC further stated that Singal then created “material misinterpretations in public SEC filings about First Capital REIT’s ownership of the hotels.” The SEC charges claim that Singal wanted to buy an interest in the company’s REIT but since he didn’t have the money to finance the venture he fraudulently pretended to own a dozen hotels and have the properties transferred to First Capital REIT for cash.
The SEC alleges that Singal had actually been negotiating for the hotels but had not bought them when he claimed to have done so. As a result of Singal’s fraudulent actions and deception, First Capital REIT ended up with inflated net value assets. Investors were then sold common shares at inflated prices thanks to Singal’s misrepresentations.
SEC Charge 2
In the other charge, SEC alleges that after Singal acquired an ownership interest in a brokerage firm formerly known as Coldwell Banker Commercial Advisors (BDC), he made the company provide two loans of $1.5 million each to another entity that he controlled. He then went ahead to pirate half of the loans’ proceeds for his personal use.
First Capital Real Estate actually acquired BDC in 2018 and renamed it Advisors Commercial Real Estate. By early 2019, the company had already gone under and all brokers were blaming Singal for BDC’s collapse. The SEC complaint does not specifically name the BDC but according to a report by DI Wire, the company in question is StHealth Capital Investment Corp, which was previously called First Capital Investment Corp.
In later developments regarding the cases, Suneet Singal resigned from his positions at the First Capital Real Estate Trust Inc. in December 2019 just a day after the SEC had announced fraud charges against him. The DI Wire reported that the SEC had charged Singal and three other entities with two separate charges of fraud. Singal resigned from all positions at the firm and other affiliated entities.
In his letter of resignation, the former CEO of First Capital wrote about his contribution to the company and even claimed to have found a buyer for the firm’s common and preferred shareholders as well as unit holders of the operating partnership.
In the letter, he stated that he had negotiated an exit price of $20 per share for the firm’s shareholders, which is actually a gain from the initial share price of $10.45 and $12.49 per share. As he stepped down, Singal requested the Forum Partners to form an interim management board and complete the company’s financial filings in the Q1 of 202 before the buyout.
How to Recover Losses From First Capital REIT
Investors that lost money in First Capital REIT can try to recover funds by filing a claim with FINRA. Investors are encouraged to call 1-888-628-5590 or visit Haselkorn & Thibaut’s website at www.InvestmentFraudLawyers.com for a free case evaluation.