Did he pay Miami’s mayor? Developer accused of financial ‘fraud’ pleads the Fifth

One month after he was pushed out as the head of his development company, Rishi Kapoor found himself under subpoena reluctantly answering questions from federal securities lawyers about putting Miami’s mayor on his firm’s payroll as a $10,000-a-month consultant.

Kapoor, the former chief executive officer of Location Ventures LLC, was advised by his defense attorneys not to answer questions posed by Securities and Exchange Commission lawyers during the deposition last August. They cited his constitutional right under the Fifth Amendment not to incriminate himself.

“Is it true that you ... made monthly payments to Mayor Francis Suarez for him to assist in finding and/or soliciting prospective investors” for Location Ventures’ residential projects in Miami, Miami Beach and Coral Gables, SEC lawyer Jordan Cortez asked.

Kapoor’s response: “Decline to answer.”

Cortez then asked Kapoor if he paid other people to assist with soliciting investors for Location Ventures’ projects, and again the developer said: “Decline to answer.”

With the exception of providing some personal details of his life, Kapoor invoked the Fifth Amendment dozens of times during his SEC deposition on Aug. 22, 2023 — testimony that became part of voluminous evidence in the agency’s lawsuit filed under seal in late December against the developer and more than 20 other companies related to him. The civil complaint, unsealed in early January, claims Kapoor violated securities laws while he defrauded investors in his South Florida projects and misappropriated at least $4.3 million for himself from Location Ventures and its main subsidiary, URBIN LLC.

Kapoor is accused of “fraudulent” activities while using Location Ventures, URBIN and other affiliates to raise about $93 million from more than 50 investors to invest in luxury condo and mixed-use projects in Miami, Miami Beach, Coral Gables and Fort Lauderdale between January 2018 and March 2023, according to SEC court filings.

Kapoor, who lives in a $6 million waterfront home in Cocoplum facing foreclosure, had his assets frozen by a federal judge who found that he “could dissipate, conceal, or transfer” them out of South Florida. The 39-year-old Atlanta transplant, who obtained business and law degrees from the University of Miami, avoided answering the SEC attorney’s questions during his deposition out of concern for a parallel criminal investigation.

While Kapoor’s company was paying Suarez the monthly retainer, the developer was seeking permit approvals from Miami City Hall for a $70 million residential and retail project in Coconut Grove, a fact that caught the attention of the FBI. Cortez and other SEC attorneys, focused on violations of securities laws and financial regulations, did not delve into that area during Kapoor’s deposition — taken four months before the regulatory agency would accuse him of bilking investors in its lawsuit. Suarez is not mentioned by name in the SEC’s lawsuit or its motion to freeze Kapoor’s assets.

The once-rising star in Miami’s development community was advised not only by his attorneys but also by the SEC lawyer that his deposition responses during the civil probe could be used against him in a criminal investigation. Neither side, however, mentioned the parallel corruption investigation launched by the FBI last year.

During the deposition, Kapoor’s lawyer, Brian Miller, said that he and his client’s criminal defense attorney “have advised Mr. Kapoor that he should invoke his Fifth Amendment right not to answer questions given the early stage of things and where we are here.”

Cortez, the SEC lawyer, was even more explicit about the risks of Kapoor’s testimony under oath, saying at one point: “the facts developed in this investigation might constitute violations of other federal or state, civil or criminal laws.”

He told Kapoor that “you’re not compelled to answer any further questions if you believe that a truthful answer to the question might show that you committed a crime and you wish to assert your privilege against self-incrimination.”

But then he warned Kapoor: “You should be aware that if you refuse to answer a question based on your Fifth Amendment privilege, a judge or a jury may take an adverse inference against you in a civil action that the SEC may determine to bring against you. That means that the judge or jury would be permitted to infer that your answer to the questions might incriminate you.”

“Do you understand this?”

“I do,” Kapoor said

And with that terse comment, Kapoor set the stage for a series of unresponsive answers to questions about his development companies, investors, lenders, projects, budgets and finances, among other sensitive issues, according to a 127-page transcript of his deposition taken at the SEC’s regional office in Miami. He even refused to answer questions about known facts, including his $350,000 annual salary at Location Ventures.

Kapoor has called the SEC’s allegations “unfounded, twisted and/or flat out false.”

After this article was first published online, an attorney representing Kapoor, Fred A. Schwartz, said it’s standard practice to advise a client early in an investigation to assert Fifth Amendment privileges “wherever there are possible criminal ramifications.”

“Although Mr. Kapoor strongly believed at the time of his testimony, and still strongly believes, that he did nothing illegal, he reluctantly followed the advice of his attorneys and asserted his Fifth Amendment privileges,” Schwartz wrote in an email. “The filing of the lawsuit by the SEC will now give Mr. Kapoor the opportunity to defend himself in a court of law, where the rules of evidence apply.”

Legal implications

Legal observers said asserting the Fifth Amendment during a civil deposition is always a “double-edged sword” when there’s a parallel criminal investigation.

“The benefit is you cannot be compelled to incriminate yourself in the criminal investigation or prosecution,” said longtime defense attorney Rick Diaz, a former Miami-Dade police officer. “The downside, however, is that your Fifth Amendment assertion in the civil matter can be used by the judge or jury as an inference of guilt.

“Here, [in the Kapoor deposition] the witness made repeated Fifth Amendment assertions and that will invariably come back to haunt him in the SEC case or other potential civil litigation,” said Diaz, who represented some of the Venezuelan-American investors fleeced by a payday lender in another SEC case that resulted in a $39 million settlement in 2022.

“In essence the witness is gambling on a trade of no criminal self-incrimination against what’s functionally or theoretically tantamount to an admission of guilt for civil purposes,” Diaz added.

In an emergency motion to freeze his assets, the Miami-based SEC regional office said that Kapoor “shuffled investor funds” between different development projects and “misappropriated at least $6 million — $4.3 million of which Kapoor misappropriated for himself.” SEC lawyers, citing a forensic accounting team that assisted with their investigation, accused Kapoor of using Location Ventures and various other affiliates in a “scheme to defraud investors” while falsely claiming that he, his business partner and family members put $13 million of their own money into the umbrella company.

The SEC asserted in its lawsuit that he sold “investment contracts” in individual projects that were actually “securities” subject to federal regulation, placing him in the agency’s cross hairs.

Calling his conduct as an executive “fraudulent,” SEC lawyers said that as he lured in investors, Kapoor purchased a 2023 68-foot Princess yacht for more than $5 million, bought a marina slip at the Cocoplum Yacht Club for $695,000, leased a 2020 600LT Spider McLaren sports car and paid a private chef $10,000 a month.

U.S. District Judge Cecilia Altonaga, who granted the SEC’s motion to freeze Kapoor’s assets, is considering the regulatory agency’s proposal to have her appoint a receiver in an effort to recover millions of dollars for investors in Location Venures and its affiliates — all of which shut down after Kapoor was forced out in July by the parent company’s board of directors. For receiver, the SEC has recommended Andres Rivero, a widely respected white-collar defense lawyer who had served as a federal economic crimes and public corruption prosecutor in Miami for five years.

Kapoor and Suarez

Kapoor’s reckoning with the SEC was spurred by a dispute over a relatively small amount of money between him and a former high-ranking executive in Location Ventures

Kapoor hired Greg Brooks as the firm’s chief financial officer through a headhunter in August 2022 and fired him eight months later. Brooks sued Location Ventures last May, demanding back pay of $80,000 and laying out a series of alleged financial violations — revealing publicly for the first time the company’s payments to Suarez for what Brooks described as “unknown services.”

Brooks’ lawsuit exposed not only frustrated investors and unpaid contractors but also Kapoor’s lobbying at Miami City Hall and consulting arrangement with the mayor.

According to federal court records in the SEC case, one other witness besides Kapoor was asked during a deposition about his secret consulting agreement with Suarez. The Miami mayor was paid at least $170,000 between September 2021 and March 2023 by a Location Ventures’ subsidiary, URBIN LLC, which was developing residential and retail projects in Miami, Miami Beach and Coral Gables during that period. According to the SEC, Location Ventures and its investors owned 40% of the equity in the URBIN affiliate.

The witness, Alex Kleyner, a wealthy New York businessman, was a major investor in Location Ventures who had a falling out with Kapoor and eventually sued him to recover $25 million of equity in the company, including two of its projects in Coral Gables and Fort Lauderdale. During his SEC deposition last May, Kleyner was asked about the Kapoor-Suarez consulting arrangement and whether he was “aware that there were payments of $10,000 per month going to Mr. Suarez.”

“Yes, but as I understood it, those payments were [made] by URBIN, not on the Location Ventures side,” Kleyner said during the May 31, 2023, deposition, noting the subsidiary was paying Suarez directly.

Cortez then asked Kleyner about the purpose of those payments.

“As far as what I understood from Rishi, it’s primarily to assist with some introductions for potential investors,” Kleyner said.

After becoming closer in 2019, public records show that Miami’s mayor met multiple times with Kapoor while trying to change city laws to help him build $70 million residential and retail complex in Coconut Grove. In July 2021, Suarez quietly signed the $10,000-a-month consulting contract with Location Ventures’ subsidiary, URBIN.

Suarez, who makes $130,000 a year as mayor, says he worked for URBIN as a consultant to find private-equity investors and denies lobbying his own city on behalf of Kapoor. He says he didn’t meet with the developer about his Miami project while on his company’s payroll. But notes of company meetings held in 2022 by Location Ventures indicate Kapoor told his staff that he would ask Suarez to help when his Coconut Grove project ran into roadblocks with city regulators.

The meeting notes, provided to investors to appease their frustrations over repeated delays on the project, stated: “Mayor Suarez to assist in pushing this along.”

Ultimately, Kapoor worked through Suarez’s staff to lobby the city’s zoning director to change his position that the project’s dimensions were illegal under Miami law.

“Please thank the Mayor for his support and assistance,” Kapoor wrote in an Oct. 11, 2022 email to the Suarez aide who interceded.

While speaking to reporters Wednesday during a press conference about crime statistics, Suarez told a Miami Herald reporter that he had been in contact with the SEC but not the FBI regarding Kapoor, but then corrected himself, saying he had not been in contact with any federal investigators about any topics. Suarez then stepped away from the microphone and approached the reporter, saying that he had been advised by his attorney not to answer those kinds of questions. Suarez’s defense attorney, Armando Rosquete, did not respond to an emailed request to comment about the SEC case against Kapoor and his client’s potential liability.

In September, Suarez told the Herald, “I haven’t spoken with the SEC but they have communicated with me.” He did not provide any details about the nature of the inquiry.

Miami Herald staff writer Sarah Blaskey contributed to this report.