Here’s how embattled Rishi Kapoor recruited — and alienated — his biggest investors

Alex Kleyner opened up about his and his wife Diane Ulis’ volatile dealings with the developer during 2023 interview with SEC officials

Alex Kleyner On Volatile Relationship With Rishi Kapoor
Photo illustration of Rishi Kapoor and Alex Kleyner (Getty; Illustration by Kevin Rebong for The Real Deal)

By August 2022, a once promising business relationship involving Miami Beach-based real estate investors Alex Kleyner and Diana Ulis and Coral Gables-based developer Rishi Kapoor was quickly unraveling. 

Kleyner and Ulis, who invested $45 million into Kapoor’s Location Ventures and two of the firm’s planned projects, had discovered Kapoor received $1.3 million in alleged unauthorized fees on top of his annual $350,000 salary. 

In May of last year, during an interview with a team from the U.S. Securities and Exchange Commission, or SEC, Kleyner told them Kapoor had insisted that he was entitled to the payments for the work he was putting in at Location Ventures. 

“His response was, ‘How do you expect me to live for less than two, two and a half million dollars a year?’” Kleyner said during the SEC sit-down. “I was stunned by that statement.” 

In an email to The Real Deal, Kapoor’s attorney Fred Schwartz alleged Kleyner lied to the SEC. “The comment is clearly a fabrication of the Kleyners’ public relations team,” Schwartz wrote. “It never occurred. Mr. Kapoor rejects its accuracy.” 

Yet, Kleyner’s recollection captured the tension between him, his wife Ulis and Kapoor over alleged misappropriation of investor funds for Location Ventures’ real estate projects. 

Kleyner and the SEC

Alex Kleyner

Kleyner spent hours recalling his dealings with Kapoor to SEC officials, who used his testimony to help build their civil case against the embattled founder of Location Ventures, which is now under the control of a court-appointed receiver after the firm imploded last year. 

In late December, the SEC sued Kapoor, Location Ventures, its subsidiary Urbin and other affiliate companies for allegedly violating federal securities laws. The complaint alleges Kapoor defrauded more than 50 investors who contributed $93 million for his real estate projects, including Kleyner and Ulis, who also have a pending civil lawsuit against their former business partner.

A transcript of Kleyner’s May 31 interview is among the exhibits in the SEC lawsuit. Kleyner’s account provides a stark view into how Kapoor recruited and later alienated his two biggest investors. Kapoor has maintained that the SEC lawsuit is “the result of a few actors weaponizing and manipulating a government agency for their own agendas.”

Edward Shohat, Kleyner’s attorney, told TRD that his client is among many victims of Kapoor’s alleged misconduct. “We do not know how the SEC investigation was initiated,” Shohat said. “But it was not initiated by Alex Kleyner.”

The SEC afforded Kapoor an opportunity to refute his alleged wrongdoing, including the claims by Kleyner. But during his Aug. 22 meeting with the same SEC team, Kapoor refused to answer more than two dozen questions by exercising his right against self-incrimination, according to a transcript attached to the lawsuit. Kapoor did mention that “Alex Kleyner has, multiple times, threatened my life,” but he declined to provide SEC investigators with more specifics. 

In his response to TRD, Kapoor’s attorney Schwartz also declined to comment about the alleged death threats. 

Kapoor’s death threat allegations are “absolutely false,” Kleyner’s attorney Shohat said. 

“It is seriously defamatory,” Shohat added. “In light of Kapoor’s refusal to answer the [SEC’s] follow-up questions about the allegation, we believe that it will be irresponsible and defamatory for your story to include such an allegation.”

Kleyner and Ulis meet Kapoor for the first time

In 2020, Kleyner and Ulis were introduced to Kapoor by Dimitri Levkov, a New York-based Colliers broker who specializes in finding investors for real estate projects across the U.S., according to the Kleyner transcript. 

During their first meeting at Location Ventures’ corporate office in Coral Gables. Kapoor told the couple his backstory, including how his father didn’t speak to him for about two years after he got his law degree from the University of Miami, Kleyner said. 

“Real estate was his passion and calling,” Kleyner said. “I think he mentioned his mom might have [given] him some start-up capital, like the first $5,000.” 

(Schwartz, Kapoor’s attorney, disputed Kleyner’s claims: “Starting in early 2016, Mr. Kapoor’s father supported the company and its initial projects with many millions of dollars of cumulative investment.”) 

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Kapoor pitched Kleyner and Ulis an Urbin co-living project he planned in Miami Beach. “He was very big on Urbin,” Kleyner said. “Under the Urbin business model, micro-units [would] become affordable for people who can’t afford the neighborhood where they work. That was kind of his big vision.”

Kapoor boasted that Urbin would eventually develop hundreds of co-living projects across the U.S. and the globe, Kleyner said. “I thought it was a stupid concept,” Kleyner said. “And we kind of told him politely.” 

Kleyner and Ulis invest in Location Ventures

A few weeks later, Kapoor convinced his wife and him to invest in a waterfront parcel in Fort Lauderdale that Location Ventures planned to develop into a condo-hotel branded under Marriott’s The Edition flag. “We thought his exit assumptions were reasonable,” Kleyner said. “I think he was projecting something like maybe $950 a foot.”

In early 2021, Kleyner and Ulis invested $6.3 million into the Location Ventures’ affiliate that was under contract to buy the development site at 551 Bayshore Drive in Fort Lauderdale. They subsequently invested $10.2 million in a Coral Gables development site that Location Ventures was buying, as well as $28.5 million for an ownership interest in Kapoor’s company. 

Other investors who sat on Location Venture’s board spoke highly of Kapoor, but cautioned that he could be too ambitious at times, Kleyner said. “That was one of the risks that pretty much we heard consistently from everyone,” Kleyner said. “You’ve got to make sure you give him checks and balances, and kind of [rein] in his ambitions.”

Kleyner and Ulis also quickly figured out that Kapoor had the final word. “Very few things happened without Rishi giving an approval,” Kleyner said “Like there’s no independent thinkers in that company.”

But they were impressed by Kapoor telling them that he, his family and Location Ventures’ executive Daniel Motha had invested $13 million into the company, Kleyner said. “We wanted to invest in a company that had [an] owner with real skin in the game versus just a hired gun,” Kleyner said. “We felt $13 million was a big number for somebody to have in the company [and] to genuinely care about building a business.”

(A financial audit commissioned by the SEC found no records or evidence that Kapoor, his family and Motha actually invested hard dollars into Location Ventures). 

The relationship starts to fall apart 

In early 2022, Kleyner and Ulis began to have their first doubts about Kapoor when the estimated budget for the Edition branded condo-hotel in Fort Lauderdale ballooned by $40 million. The projected cost was roughly $100 million when Kapoor had initially pitched the project, Kleyner said. 

Kapoor and his team allegedly came up with various excuses for the increase, including that they had found additional square footage on the site that they could develop, Kleyner said. Kapoor assured Kleyner and Ulis that Location Ventures could now make a profit of $1,500 a square foot instead of $950 a square foot, Kleyner said. 

“Yeah, we started getting uncomfortable,” Kleyner said. “You can’t miraculously fix your expense side by miraculously increasing your exit price.” 

Things got worse when he and his wife found out that Kapoor lent Urbin money with Location Ventures funds, Kleyner said. “That was never approved by anybody,” Kleyner said. “So that’s when we met and we said, ‘Consider this strike one.’ We were furious.”

The couple then learned about the alleged $1.3 million in unauthorized payments after they had their accountant analyze bank account records for Location Ventures, Urbin and the entities developing the projects. 

After Kapoor’s alleged statement about not being able to live on less than $2 million a year, he allegedly sent Kleyner and Ulis an email about living “a humble lifestyle” because he leased a McLaren sports car instead of outright buying it, and had to finance the purchase of a yacht, Kleyner said. 

“Respectfully, that was nonsense,” Kleyner recalled. “We said, ‘Rishi, stop insulting our intelligence. Like just, you know, stop the dance.’”

Kapoor’s lawyer responds

In his response to TRD, Kapoor’s attorney Schwartz said the escalating construction costs for the Fort Lauderdale project were necessary. “As a reminder, South Florida’s real estate market took off with a pandemic boom,” Schwartz wrote. “And as a result, pricing for the project needed to be reevaluated.”

In early 2022, Location Ventures also signed the branding agreement with Marriott’s The Edition, which justified “multiple fully approved project adjustments,” Schwartz said. He also noted that Kleyner and Ulis purchased the Fort Lauderdale development site for $30 million after Kapoor left Location Ventures, and that they recently obtained site plan approval for a 13-story, 83-unit condominium — which has two more stories and 18 additional units than the initially conceived project. 

“If the Kleyners did not believe in the project, they would not have subsequently bought out [Location Venture’s] interests in the project,” Schwartz wrote. “They would not have closed on the land, and they would not be pursuing the development as they are now doing.”

Kleyner and Ulis were also fully aware that Location Ventures owned a majority stake in Urbin, and that the subsidiary’s projects represented a significant portion of the development team’s workload, Schwartz said. 

“If the Kleyners believed Urbin was ‘stupid,’ why would they have invested … in the Location Ventures parent company [and] the largest owner of Urbin?” Schwartz wrote. “These actions speak louder than any revisionist history attempting to paint Mr. Kapoor negatively.”