Patel was planning to develop 50 Bennigan’s restaurants in India.

By The American Bazaar Sstaff

NEW YORK: Nikesh Patel, 30, the founder and CEO of Orlando-based First Farmers Financial and who had recently launched a hotel redevelopment company, Alena Hospitality, has been arrested by federal authorities on fraud charges.

Authorities say Patel fraudulently sold $150 million in loans to an unidentified Milwaukee company, reported the Orlando Sentinel. The FBI alleges he sold the loans as being guaranteed by the U.S. Department of Agriculture when they were not.

An order releasing Patel on $100,000 bond was signed by U.S. Magistrate Judge David Baker in Orlando on September 30.

An affidavit from the FBI attached to Patel’s arrest warrant states: “Patel sold approximately 25 loans to Company A on false pretenses … Patel submitted among other things fabricated loan guarantee forms falsely reflecting that the USDA guaranteed a portion of the loan’s principal amount.”

Patel’s attorney, Mark NeJame, said Patel denies the allegations at this time, said the Sentinel.

“There’s a lot of confusion that surrounds the allegations and we are working to sort things out,” NeJame said. “I’m optimistic that once everything comes to bear, that all of this will be resolved in a very positive way. He’s not been indicted, and these are merely allegations.”

Alena Hospitality recently opened a Doubletree by Hilton at University of Central Florida and has been renovating the former Marriott hotel in downtown Orlando near the Bob Carr Performing Arts Center. Patel paid $14 million for the downtown hotel, which was slated to become the Renaissance Orlando with another $17 million renovation.

The Sentinel had reported on Patel’s downtown hotel project in July. Patel’s company website had listed him as a graduate of University of Central Florida, but the university had no record of his graduation there. When confronted about it, Patel told a Sentinel reporter that he didn’t write his corporate biographies and that he would change it. The biography was later changed to say he had attended classes at UCF.

Patel is a former bank executive for Fifth Third Bank, Beach Business Bank and Comerica Bank. He has also been involved in restaurant businesses including part ownership of downtown Orlando’s Mingos, said the report.

Courthouse News reported that Pennant Management sued First Farmers Financial, Nikesh and Trisha Patel, and a host of related entities on Monday in Federal Court. It claimed that it bought $22.8 million of purported USDA-guaranteed rural development loans from First Farmers Financial, but the loans were shams and the borrowers did not exist.

Pennant, a Milwaukee-based money management firm, acquires loans guaranteed by the government through the Small Business Administration or the Department of Agriculture. Its total portfolio of such loans is worth $850 million.

Pennant claims it acquired 26 such loans from First Farmers Financial (FFF), a Florida company, then discovered that several of them are fraudulent.

“Although all of the loan materials provided by FFF are facially regular and complied with USDA’s Good Delivery Requirements, Pennant has now discovered that at least three of the loans it acquired from FFF are fraudulent; the borrowers do not exist, and the USDA [U.S. Department of Agriculture] has told Pennant that the loans are not reflected in its books and records and may not be legitimately guaranteed. The scope of the fraud may be broader, but at least 3 loans with purportedly ‘guaranteed’ balances totaling $22.8 million, purchased by Pennant from FFF, have now been revealed to be shams,” the complaint states.

What’s more, Pennant says, the accountant who allegedly performed the most recent audit of FFF does not exist either.

“FFF has used its status as a USDA-approved lender to perpetrate a fraud on Pennant,” the complaint states. “It sent packages for the FFF Loans which represented that there were actual borrowers, and that the USDA had approved and guaranteed the FFF Loans. Both of those written representations were false, and were known to FFF, Nikesh, and Trisha to be false at the time those representations were made. In fact, FFF, through Nikesh and Trisha, invented each of these three ‘borrowers’ out of whole cloth, and forged the signatures of USDA officials on guarantees.”

Pennant claims that the Patels pocketed the proceeds of these loans, maintaining enough cash to make interest payments on the principal.

They “used the balance of the proceeds to purchase real estate investment properties and other investments, [and] purchase a lavish personal residence in Windermere, Fla.,” Pennant claims. It says the Patels are also negotiating to develop 50 Bennigan’s restaurants in India.

The defendants in the case are: First Farmers Financial, LLC; Nikesh Ajay Patel; Trisha N. Patel; Alena Hospitality, LLC; Alena Laboratories, LLC; Alena Aviation, LLC; Able Connection, LLC; NPSSS, LLC; Kuber Capital Funding, LLC; Kuber Consulting; Suri Hospitality, LLC; and Suri Hospitality International, LLC.