Shaya Prager Cites Handshake Deals in NJ Investors Lawsuit

On the seventh day, God told Dr. Lalit Patel to stop giving Shaya Prager money.

That’s what Prager is telling the Superior Court of New Jersey.

Responding to a lawsuit by preferred equity investors seeking $10 million, Prager, the embattled New Jersey real estate dealmaker, said he sent that amount, and in return Patel, who managed the group, was supposed to invest another $25 million with him.

But acting on a “message from God,” Patel never did, according to Prager.

Sorting this out could be an unholy mess for the Superior Court of New Jersey because the two men never wrote anything down, working on handshakes instead.

Prager is demanding a trial, citing “the potential embezzlement of the $10 million.” The investors group, of which Patel is the managing member, had asked the court for a summary judgment.

Patel has syndicated investments for Prager since 2021, so the pair “often forewent the formalities,” Prager said. He claimed Patel would raise money “without the type of underwriting and documentation processes” that most institutional investors use.

“In short, these transactions were informal, based on handshake agreements between two sophisticated businesspersons,” Prager said.

The investors allege Prager stopped paying them returns between November 2023 and January 2024. At that point, Prager claims, they agreed “on a handshake” that Prager would wire Patel $10 million to be distributed to the investors, and Patel would invest $25 million in new capital at a lower interest rate.

Prager sent the $10 million in January. He’s still waiting for Patel’s $25 million.

Patel’s investor group says the $10 million was for an unrelated investment, loan and fees, and is not the $10 million it is suing for.

His investor group also says Prager is concocting a fiction to buy time so he can conceal his assets. The suit claims there’s precedent for this, alleging Prager previously concealed 10 Ocean County properties, a Merrill Lynch account and a Golden Beach property that he listed for $68 million.

In their original complaint, the investors alleged Prager stopped paying their preferred returns on three office properties: 194 Wood Avenue, a 471,000-square-foot building in Iselin, New Jersey; 1001 Haxall Point, a 264,000-square-foot building in Richmond, Virginia; and 1100 Virginia Drive, a 680,000-square-foot building in Fort Washington, Pennsylvania.

They had put $8 million toward the Iselin property and were supposed to receive 1.25 percent per month. They allege Prager owes them $800,000.

They provided $7.5 million for the Richmond property at 18 percent annually, and say Prager owes $8.4 million.

For the Pennsylvania property, they contributed $10.5 million and were supposed to get 1.25 percent per month. Prager is $787,500 behind, their lawsuit states.

In February, the plaintiffs sent Prager a default notice. They claim to have provided him multiple opportunities to cure the default and requested his financial statements (a right provided by the deal terms), but Prager never responded.

The lawsuit comes as Prager, whose firm Opal Holdings purchased some $2 billion worth of office buildings in 2021 and 2022, faces scrutiny over the ground lease structure he used to fatten his portfolio.

He was forced to hand over the keys to two office buildings in Dallas-Fort Worth and is facing foreclosure on a Minneapolis-area office asset.

In addition, a court in Lake County, Illinois, appointed a receiver for Prager’s four-building, 697,000-square-foot Corporate 500 campus in Deerfield amid foreclosure proceedings.