Location Ventures ex-CFO alleges Rishi Kapoor’s firm made improper payments to One Sotheby’s

In court deposition, Greg Brooks claims Coconut Grove project’s funds paid commissions for units sold at other developments, among other revelations

Location Ventures Ex-CFO Questioned Vendor Agreements
Rishi Kapoor and a rendering of the Urbin Coconut Grove project

Location Ventures allegedly used funds earmarked for a Coconut Grove co-living and co-working project to pay One Sotheby’s International Realty commissions for sales generated at another completed development, according to former CFO Greg Brooks.

Brooks, serving as a witness for a group of minority partners in that Coconut Grove project, recounted the allegedly improper payments during a video deposition last month, posted in a court transcript. Those partners have a pending lawsuit against the Location Ventures affiliate developing the Coconut Grove project. Their complaint alleges numerous improperities by Rishi Kapoor, the embattled developer who stepped down as Location Ventures CEO last month after leading the firm since 2016.

“There actually was another instance [when] Coconut Grove paid an amount that was related to another project,” Brooks testified. “[It] was paid to One Sotheby’s; $100,000 as a result of negotiations for commissions that had to do with another project, Villa Valencia.” 

One Sotheby’s, a Miami-based brokerage led by Mayi and Daniel de la Vega, was the exclusive agent for various Location Ventures projects, including the proposed Coconut Grove project and Villa Valencia, a 13-story Coral Gables condominium finished last year. 

The company has terminated its relationship with Location Ventures, a One Sotheby’s spokesperson said in an emailed statement. The brokerage also disputed Brooks’ testimony. “One Sotheby’s has only been paid commissions on projects that it is due commissions from,” the spokesperson said. “And the company is still due substantial commissions from Location Ventures and its development entities.” 

Location Ventures’ lawyers Brian Goodkind and Kenneth Florio did not respond to email requests for comment. 

During his deposition, Brooks claimed he has been contacted by three federal agencies investigating Kapoor: the FBI, the Securities and Exchange Commission and the Internal Revenue Service. He also recounted how Kapoor allegedly leveraged the Coconut Grove project to obtain $12 million in loans, and then used most of the funds to partially pay back Location Ventures investors Diana Ulis and Alex Kleyner. The married couple sued Kapoor and a Location Ventures affiliate last month to recoup $25 million in equity they placed with the company and three of its projects. 

With regard to One Sotheby’s, Kapoor allegedly sought to resolve a dispute over Villa Valencia commissions owed to the brokerage by making bonus payments from sales at the Coconut Grove project and another co-living development Location Ventures proposed in Miami Beach, Brooks testified. 

“Rishi made an agreement with them that in addition to whatever monies they agreed were owed on Villa Valencia, Urbin Coconut Grove and Urbin Miami Beach would each make a $100,000 bonus payment to One Sotheby’s in order to tie up that negotiation, to resolve that negotiation,” Brooks said under oath. “But they also had an arrangement where a certain portion of their commission was supposed to be set aside and essentially invested into the project as equity.”

According to Brooks, Location Ventures was supposed to withhold 1 percent of the commissions paid to One Sotheby’s on the Coconut Grove project, and apply it to the brokerage’s equity stake in the project. In total, One Sotheby’s was supposed to get a $250,000 stake. 

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“This was a subject of repeated and lengthy confusion,” Brooks said. “I’ll say that I don’t know if it ever got resolved. So I don’t know if they ever ended up getting their equity in the project or not because there were all kinds of different interpretations of what the agreement was supposed to be.”

The One Sotheby’s spokesperson said the brokerage does not have an equity position in the Coconut Grove project. 

Brooks also claimed that Location Ventures entered into an agreement with Winmar Construction, the general contractor managing the firm’s projects, that raised red flags. The two firms had an arrangement in which “essentially all of Winmar’s employees, even though they didn’t come on [Location Ventures’] payroll, became employees of [Location Ventures],” Brooks testified.

The idea was that Location Ventures would pay Winmar at cost for its employees and materials, and then the two companies would evenly split a 6 percent fee charged to the development entities, Brooks alleged. 

“I never heard or seen an arrangement like that before,” Brooks testified. “It wasn’t communicated to any of the investors.”

He was also concerned that the Coconut Grove project’s development entity paid nearly $1 million for Winmar’s overhead when no construction activity was happening at the site, Brooks said.

“There were a couple of other projects that were in the same situation where, because Winmar had to pay its people even though they weren’t working because that was the deal,” Brooks said. “So, you know there were some significant payments being made to Winmar for work that wasn’t being done.”

Winmar CEO Edwin Villegas did not respond to a phone message seeking comment.