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
The Minorca condominium at 2030 Douglas Road in Coral Gables (iStock, CBRE, Illustration by Kevin Rebong for The Real Deal)
Ex-Venezuelan official tied to $1B fraud gets 4+ years, must forfeit Coral Gables condo
Ex-Venezuelan official tied to $1B fraud gets 4+ years, must forfeit Coral Gables condo
Hollywood Locations' Christopher Ursitti and 1400 Northwest 31st Avenue (Hollywood Locations, Google Maps)
Movie studio complex may rise on former incinerator site in Fort Lauderdale
Movie studio complex may rise on former incinerator site in Fort Lauderdale
Donald Trump and Grant Cardone (Cardone Enterprises)
Presidential surprise: Donald Trump kicks-off Grant Cardone’s 10X Growth Conference
Presidential surprise: Donald Trump kicks-off Grant Cardone’s 10X Growth Conference
McDowell wants to build 201 apartments near Homestead, puts land under contract
McDowell wants to build 201 apartments near Homestead, puts land under contract
McDowell wants to build 201 apartments near Homestead, puts land under contract
Jackie Soffer with 2750 Northeast 199th Street (Google Maps, Turnberry.com)
Jackie Soffer’s Turnberry proposes office/retail project near Aventura Mall
Jackie Soffer’s Turnberry proposes office/retail project near Aventura Mall
Kobi and Nancy Karp buy Walgreens-leased property in Delray Beach
Kobi and Nancy Karp buy Walgreens-leased property in Delray Beach
Kobi and Nancy Karp buy Walgreens-leased property in Delray Beach
Convicted house-flippers now face rent fraud charges
Convicted house-flippers now face rent fraud charges
Convicted house-flippers now face rent fraud charges
New York, Miami, Chicago, Los Angeles, San Francisco and Chicago (iStock)
As rent explodes nationally, Miami tops the charts
As rent explodes nationally, Miami tops the charts
arrow_forward_ios

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

Loading...