Five Star Fends off Madison Realty’s Ritz Carlton Foreclosure

Commercial real estate borrowers facing foreclosure are known to sling all kinds of claims when they’re trying to fend off lenders, but RICO allegations are next-level.

Five Star Development won a reprieve in a lawsuit doing exactly that recently. Its $585 million debt from Madison Realty Capital, issued for a planned $2 billion Ritz Carlton resort near Scottsdale, Arizona, was steering a real estate portfolio in El Paso that backs the loan to foreclosure.

Five Star accused Madison in a court filing of acting in bad faith by manufacturing a default through inflated interest rates and said the lender misapplied payments. A Texas judge sided with Five Star, and the case is headed to trial in February. Its broader lawsuit filed in Arizona accused the lender of violating state racketeering statutes. The developer claimed a Madison employee forged signatures, misused funds and sabotaged the project by withholding payments to hotel contractors.

Here’s what else happened in Texas real estate this week.

Cresa named Carl Mueller, a longtime tenant rep broker formerly with JLL, as a principal in its Houston office, marking another step in its aggressive Texas and national expansion strategy. The move comes amid a leadership shakeup at the Chicago-based firm, including the exit of president Greg Schementi and the planned exit of CEO Tod Lickerman within two years.

Houston office broker Lucian Bukowski settled his legal dispute with CBRE, five months after suing the firm for allegedly blocking access to his client files following his termination. The case was dismissed without prejudice in June, with both sides agreeing to pay their own legal fees and take no further action. Bukowski, now at Stream Realty Partners, sued to enforce a contractual right to retain his client book and also raised broader concerns about internal practices at CBRE.

Embattled San Antonio syndicator Devin Elder launched a venture called Ark 40 Consulting, amid federal land seizure efforts and mounting investor lawsuits. The firm, which is not yet registered as a legal entity, claims to help nonprofits and small businesses with donor engagement and CRM systems. Its debut came just days after federal prosecutors moved to seize over 1,000 acres tied to Elder’s former company, DJE Texas Management Group, which is under investigation for alleged wire fraud and money laundering.

What’s attracting so many millionaire renters to Texas? Houston and Dallas have the nation’s highest rate of growth for high-net worth renters.

The federal government slashed 97,000 square feet of leases in Texas, including 15,000 square feet for the Federal Trade Commission in a high-profile Dallas building.

A Plano couple, Sidhartha “Sammy” Mukherjee and Sunita Mukherjee, were charged with first-degree felony theft recently for allegedly orchestrating over $4 million in real estate and financial fraud schemes that targeted more than 100 victims. Investigators say the couple used forged documents to solicit fake real estate investments, filed a fraudulent PPP loan and ran elder scams involving spoofed law enforcement emails.

Fort Worth’s biggest employer, Lockheed Martin, is putting nearly 540,000 square feet of office space up for sublease, despite growing its local workforce to over 19,000 employees. The move reflects the company’s shift toward hybrid and remote work and adds strain to Fort Worth’s already struggling Class B office market.