Recession revisited: CBRE settles class action suit for $100M

In the financial crisis-era scheme, plaintiffs said CBRE helped Cabot Investment Properties steal money from elderly real estate investors in Florida

National /
Sep.September 05, 2018 02:30 PM

CBRE CEO Robert E. Sulentic (Credit: iStock)

CBRE settled a class action lawsuit for $100 million over a recession-era embezzlement scheme that involved Florida office properties and scores of elderly investors.

The class action lawsuit was settled last month with 179 plaintiffs, according to Law360.

The case stemmed from a scheme in which Cabot Investment Properties executives Carlton Cabot and Timothy Kroll swindled money from the victims who invested in a tenant-in-common structure involving six Florida office buildings. Four of the properties are in South Florida, one is in Orlando and one in Jacksonville.

In 2016, Cabot and Kroll pleaded guilty to having stolen about $17 million of investor funds to pay for personal and business expenses, according to the U.S. Department of Justice, which prosecuted the case. The two further concealed the fraud from investors by manipulating financial statements. Both are now in prison.

According to the class action lawsuit, CBRE and its employee Gloria Hernandez helped Cabot and Kroll embezzle the funds. CBRE and Hernandez denied any involvement in the embezzlement. In a motion earlier this year, CBRE said that it and Hernandez had no contract with the plaintiffs and never saw the quarterly reports to investors.

LeaseCos, the subsidiary asset manager for each property, hired CBRE to manage the properties. Hernandez also worked for CBRE as a property manager at some of the properties.

In total, the plaintiffs claimed they lost more than $139 million from the crime, with the initial embezzlement causing mounting financial hardships.

In a statement to Law360, a CBRE spokesperson said the company “settled the class action litigation to avoid the time, cost and uncertainty associated with a lengthy jury trial and years of appellate proceedings — regardless of the verdict.” [Law360] — Keith Larsen


Related Articles

arrow_forward_ios
Johnny Mansilla (Nest Seekers, Realtor, Zillow)
Nest Seekers falsely claims exclusivity on Miami listings, feeds bad information to Zillow and Realtor.com
Nest Seekers falsely claims exclusivity on Miami listings, feeds bad information to Zillow and Realtor.com
Photo courtesy of David Iglesias
Boca Beach House condo project scores $43M construction loan
Boca Beach House condo project scores $43M construction loan
Nick Rojo and Jeff Burns (Affiliated, iStock)
Affiliated Development launches $125M workforce housing fund
Affiliated Development launches $125M workforce housing fund
Tom Cabrerizo and 6790-6880 Southwest 80th Street (Google Maps)
Developers score $15M construction loan for Miami townhouse development
Developers score $15M construction loan for Miami townhouse development
Triton Center (iStock)
Questions surround $50M in EB-5 investments tied to former INS building: lawsuit
Questions surround $50M in EB-5 investments tied to former INS building: lawsuit
Michael S. Liebowitz and Russell Galbut (Linkedin)
Russell Galbut and partner launch blank check company, plan to raise $100M
Russell Galbut and partner launch blank check company, plan to raise $100M
Southland Mall, 20505 South Dixie Highway in Cutler Bay with JLL's Tom Hall and Danny Finkle (Google Maps, JLL)
Southland Mall’s troubled $65M CMBS loan for sale
Southland Mall’s troubled $65M CMBS loan for sale
Alan Ojeda and 8894 NW 44 Street in Sunrise (Google Maps)
Rilea Group scores $46M construction loan for Sunrise apartments
Rilea Group scores $46M construction loan for Sunrise apartments
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...