Restaurant Owners Engage in Real Estate Fraud

Joseph O'Neill

Written by
— Updated on October 19, 2017

Real Estate Expert WitnessThis case takes place in Georgia and involves real estate fraud. The defendant and his mother decided to form a partnership, with each of them sharing the costs and profits evenly, to purchase and operate a restaurant. The defendant engaged the services of a real estate broker to provide them with advice relating to the fair market value of the restaurant, and to represent them in the negotiations for the purchase of the restaurant.  The agent had the defendant fraudulently execute an offer purportedly from his mother to purchase the restaurant. The fraudulent offer was accepted. The contract that resulted from this purchase agreement required the mother to apply for financing within a few weeks. In connection with the purchase of the restaurant, the defendant and his mother designed another artifice to obtain financing under the pretense that the mother was not the owner of the restaurant individually, but that a corporate entity was the owner.

They created a limited partnership with the defendant and his mother as partners. Using this structure, the defendant arranged for a large amount of financing towards the total purchase price of the restaurant. The financing was obtained using the false representation that the partnership would be the owner after the sale, rather than the mother. The restaurant purchase and sale transaction closed.

Some time later, the defendant made some improvements to the restaurant. The defendant had decided to sell the restaurant, and to use fraudulent financial information and fraudulent representations to inflate the restaurant’s valuation. When the defendant decided to sell the restaurant, he enlisted the assistance of a real estate company that was aware of the restaurant’s inflated valuation. The real estate company then began to market the property with a list price well above the actual value of the property. The plaintiff saw a listing for the restaurant and acted on the misinformation, purchasing the property at a much higher price than it was actually worth.

Question(s) For Expert Witness

  • 1. Please discuss your background in real estate anti fraud.
  • 2. What are the best practices for ensuring the proper valuation of commercial real estate property and relaying this information to prospective buyers?
  • 3. Have you ever served as an expert witness on a case similar to the one described above? If so, please explain.

Expert Witness Response E-008612

This case is right in my area of expertise and I am happy to assist. I have 15+ years real estate experience and have significant experience in real estate standards and valuation from the perspective of a broker.  I have concern that an appraiser was not hired and that industry standard and best practices for ensuring the property valuation of commercial real estate property was not followed in this case. I have reviewed similar cases before as an expert witness and a number of disciplinary cases as the former President of the Nevada Real Estate Commission. I am glad to discuss further. Currently, I am the owner of an independent commercial and investment real estate practice that specializes in investment acquisition and counseling.

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