Investors Sue Colliers Over Texas Medical Property Investments

A group of investors is suing Colliers International Group, accusing the firm of preying on small-time real estate investors by selling unregistered securities.

The investors, located around the country, say they lost millions after entrusting their “nest eggs” to agents and property managers in Utah who used Colliers’ branding to lure them into investing in medical offices in 2022 and 2023, according to a December filing in the U.S. District Court for Central California.

The suit centers on a medical property in Crockett, Texas, between Dallas and Houston.

It was listed for $1.9 million in September, or about $157 per square foot. The investors claim Millcreek Commercial Properties, one of the firms named in the suit, valued it at $9.5 million when they invested.

It’s not clear what caused the property value to tank, but the tenant for this property and others in the portfolio, Pulse Healthcare Systems, went bankrupt in June 2024.

“It was just a whole scam — I felt like it was a Ponzi scheme,” plaintiff Russell Chadwick McAllister said about the investment. McAllister and his wife, Amy, are in their early 50s and own a cabinet company in Washington, Utah.

McAllister met two agents listed in the suit, brothers Doug and Troy Scheel, when he was selling 4 acres of land, and they approached him with a buyer, he said.

They brought the Millcreek investment shortly after, and McAllister invested $2 million in January 2023, according to the lawsuit.

McAllister said there were 20 investors in the property apart from the four named in the suit. He said he and other plaintiffs had spoken with the Federal Bureau of Investigation months before the suit was filed and that the agency was investigating; the FBI couldn’t be reached to confirm.

The suit claims agents worked with property managers to conceal critical risks, like issues with the quality of the tenants. They engaged in misleading or false marketing, such as claiming a triple-net lease wouldn’t require investors to pay taxes and other costs, the suit alleged.

To top it off, Colliers and others were not licensed with the Securities and Exchange Commission to sell the “fractional interests of securitized real estate,” the suit said.

In addition to Colliers, the suit names Utah-based companies Millcreek Commercial Properties, Millrock Investment Fund 1, Mountain West Commercial, KGL Advisors, Cams Realty, four real estate agents from Utah and one from California.

Colliers declined to comment. Most of the defendants said they were not aware of the lawsuit, filed at the end of December, and declined to comment.

Millcreek Commercial’s website deactivated around the time the lawsuit was filed, posting a notice saying the firm “has ceased operations.”