At one point last summer, Kiran C. Patel, the owner of the Wyndham Grand Pittsburgh Downtown Hotel, held two lucrative offers for the high-profile property he brought out of bankruptcy two years ago.
But both proved to be too good to be true -- as he soon learned.
Robert Timothy Koger, a hotel broker, is accused of bilking Dr. Patel out of $2.5 million and trying to get $15 million more by using the names Rick Thompson and John Stern to make bogus bids on the property.
Mr. Koger, formerly the president and sole owner of Molinaro-Koger, a Virginia-based international hotel real estate brokerage and advisory firm, was arrested in September and charged with mail fraud in U.S. District Court in Alexandria, Va., in connection with the scheme.
He is being held in jail without bail, according to court records.
Dr. Patel, a Tampa, Fla., cardiologist and philanthropist, declined comment when reached earlier this week, citing the ongoing investigation.
According to an affidavit filed by FBI special agent Charles E. Price II, Dr. Patel's troubles began in May, when a Tampa attorney contacted the doctor and said his client, Mr. Thompson, was willing to pay $85 million to buy the Wyndham, a former Hilton infamously known for the long-stalled construction project at its front doorstep.
At the time, New York lender BlackRock Financial Management Inc. was interested in selling the $43 million promissory note that it held on the hotel property, one that Dr. Patel wanted to buy.
But the attorney told him that Mr. Thompson, through companies he was affiliated with, already had placed a $40 million confidential bid on the note and intended to acquire the hotel by alleging violation of loan covenants and foreclosing on the note, the affidavit stated.
The lawyer offered Dr. Patel a way out: In exchange for $2.5 million, Mr. Thompson would withdraw the bid on the note and buy the hotel for $87.5 million. The price included Dr. Patel's $2.5 million, which was to be placed in a trust account.
On July 3, Mr. Thompson signed a binding term sheet for the $87.5 million purchase. As part of the deal, an exclusivity requirement prohibited Dr. Patel from negotiating with or entertaining offers from other buyers. The same day, Dr. Patel transferred $2.5 million to the trust account -- one opened only a day earlier, the affidavit stated.
In the affidavit, the FBI's Mr. Price said he learned from BlackRock that it never received a bid on the note from Mr. Thompson or the companies he alleged he represented.
"Accordingly, the fundamental premise underlying Thompson's entire business dealings with Patel is simply a lie," he wrote.
To make matters worse, Dr. Patel's $2.5 million deposit never was placed in the trust account, the agent stated. Slightly more than $2.4 million was wired to the RBC Royal Bank of Bahamas and the current whereabouts of that money has not been determined. The affidavit stated $25,000 of Dr. Patel's money was traced to Mr. Koger's bank account.
A few weeks after Dr. Patel transferred the funds, he got a call from John Stern, who claimed to a member of the Mellon family. He indicated that the "Mellon Family Real Estate Trust" would pay $125 million to acquire the Wyndham Grand. He subsequently sent a FedEx package to Dr. Patel in Tampa with a letter of intent to buy the hotel.
Soon thereafter, Mr. Thompson contacted Dr. Patel and accused him of breaching the exclusivity clause in their July 3 agreement and demanded a "break-up" fee of $15 million.
In an Aug. 28 phone call monitored by the FBI, Mr. Thompson reduced the fee to $11 million but "demanded that the money be paid quickly," according to the affidavit. The next day, Mr. Stern met with Dr. Patel in Tampa and signed a $125 million purchase offer for the property.
A week later, Mr. Koger was arrested.
The FBI's Mr. Price said he used a variety of means to determine that Mr. Koger, whom he had met several times, was in fact Mr. Thompson and Mr. Stern. He said, for instance, the number Dr. Patel used to call Mr. Thompson was Mr. Koger's iPhone.
In addition, two videotapes involving meetings between Dr. Patel and Mr. Stern that were examined by Mr. Price led him to determine that Mr. Koger was posing as Mr. Stern.
And while the FedEx package Mr. Stern shipped to Dr. Patel with the letter of intent featured a Pittsburgh address, Mr. Price said a review of FedEx records showed that it actually was mailed from Vienna, Va., near Mr. Koger's home.
The affidavit does not say how Dr. Patel became involved with the FBI. But it indicated that he was working with Mr. Price in August.
It also stated that the "methods and means that Koger used to execute the Tampa frauds (e.g., the assumption of false identities and the creation of fictional email accounts, etc.) are consistent with the long-term pattern of criminal tradecraft Koger has used to execute multiple other similar fraud schemes." It claimed he has been involved in at least three types of frauds in which the aggregated losses exceeded $50 million.
Mr. Koger's attorney, Peter David Greenspun, didn't return calls for comment.
For Dr. Patel, the episode is the latest twist in his involvement with the Wyndham, which sits prominently at the entrance to Downtown from the Fort Pitt Bridge.
The hotel, under former owner Shubh Hotels Pittsburgh, ended up in bankruptcy in 2011 after Hilton terminated its franchise license agreement, triggering a mortgage default and prompting BlackRock to move to foreclose.
Dr. Patel got involved to protect more than $4 million in loans that he poured into the property to help keep it afloat while Shubh owned it. He spent another $15 million in cash or guarantees in his plan to reorganize the hotel to bring out of bankruptcy and paid a $10 million "settlement" fee to BlackRock to reduce the mortgage.
While Dr. Patel declined to discuss the case involving Mr. Koger, he said he was "not actively" seeking to sell the property, whose front door addition finally is nearing completion six years after it started.
Mark Belko: firstname.lastname@example.org or 412-263-1262. First Published October 10, 2013 8:00 PM