FBI raids offices of developer Robert Morgan

The Perinton offices of prominent real estate developer Robert Morgan were raided early Monday by FBI agents executing a court-ordered search warrant.

FBI spokeswoman Maureen Dempsey confirmed that agents conducted "court-authorized activity at 1080 Pittsford-Victor Road." The address is located in the Basin Tech Centre, an office park on Route 96.

Morgan, the CEO of Morgan Management LLC and a key player in the Rochester and Buffalo development markets, did not return messages from the Democrat and Chronicle seeking comment. The FBI raid was first reported by The Buffalo News.

Outside the office, armed federal agents carried boxes to and from the building and a black SUV in the parking lot.

Morgan was in the office during the search. His black Chrysler minivan was parked in a space at the entrance of the building reserved for him a few steps from where agents had parked.

Inside, a man who identified himself as a representative of the company agreed to take a message to Morgan, then said, “We’re closed today and this is private property so you have to leave.”

Morgan's attorney, John Speranza, was also at the office. He and Morgan were spotted leaving the offices around 11:45 a.m. They drove away in separate cars. Agents were still inside.

The Democrat and Chronicle reported in September that the FBI was scrutinizing bank loans that financed some of Morgan's Buffalo-area projects and questioning whether they were secured by false information.

The loans would have been secured by projections of how much revenue the properties could generate, such as through rent or sales.

Of particular interest to investigators is what is known as the "loan-to-value" ratio — that is, the size of the loan compared to the actual value of the property.

Public records show outsized bank loans on multiple properties purchased by Morgan-connected companies, including many properties in the Rochester area.

The Democrat and Chronicle examined publicly available records for 20 Morgan-owned properties in and around Rochester, all of them established multi-family residential buildings or complexes.

In 19 of the 20 cases, the properties were collateral for mortgage loans that exceeded the assessed value of the parcels by 40 to nearly 200 percent. The average excess on those 19 properties was 94 percent.

There was no clear explanation for that pattern.

In some cases, the assessments may not have reflected the true market value of the properties. It is also not uncommon for companies to borrow extra funds when they buy a property to pay for repairs or renovations.

The federal investigation at this point appears centered on Buffalo activities, although The Buffalo News has reported that the probe extends to a Syracuse apartment complex called Rugby Square.

Nevertheless, criminal allegations would surely have significant ripples in Rochester and Monroe County, where Morgan has become the largest private property owner, biggest landlord and most ambitious developer.

In the city, Morgan is involved in the performing arts/mixed-use residential project proposed for Midtown's Parcel 5; Tower280 at Midtown; the Court Street apartments now under construction adjacent to Dinosaur Bar-B-Que; the purchase and planned redevelopment of the Gannett Building at 55 Exchange Blvd., and the Lincoln Alliance building redevelopment on East Main Street.

He also has a share in one of three development proposals on the Inner Loop, and has housing projects under construction on University Avenue near the George Eastman Museum and at East Avenue near the Rochester Museum and Science Center.

City spokesman James Smith, responding to an inquiry from the Democrat and Chronicle, said Morgan Management has been a "good corporate citizen" and made major investments in the Rochester community.

"Obviously, from the news reported today, there's an investigation ongoing that may involve the company in some way," Smith said. "However, at this time, they haven't been accused or charged with anything, so it would seem premature to rush to judgment."

Morgan owns an additional 10 apartment buildings outside downtown Rochester, and co-owns the Hyatt Regency, Strathallan and Raddison Rochester Riverside hotels.

The real estate magnate also has been very active in the suburbs, where his companies own at least 55 apartment and townhouse complexes.

Morgan has numerous other projects under development in the suburbs, including a 249-unit apartment complex off Publisher's Parkway in Webster and a 209-unit complex in Henrietta's Town Center. Their combined value is $81 million.

DANDREATTA@Gannett.com

SORR@Gannett.com