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Massive $150 Million Loan Fraud Alleged in Lawsuit

Real Estate

Loan Paperwork | Image by Shutterstock

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A lawsuit filed on July 26 in the 160th Judicial District Court of Dallas County alleges a massive $150 million loan fraud involving a number of local companies and individuals.

In their original court petition for damages, Benefit Street Partners and its financing arm claim that in April 2022, IBF Properties and its owner, Raheel Bhai, secured the massive loan for a large portfolio of 24 commercial properties across 10 states.

All of these properties were purportedly leased by Walgreens, one of the nation’s largest retail pharmacy companies.

Industry articles written at the time celebrated the massive deal. For example, one piece touted that the deal was closed “in less than 45 days” and billed it as a “one-year $149 million floating bridge loan” to replace the financing utilized to acquire the properties originally.

Another article asserted that the “deal is part of IBF Properties’ effort to purchase retail assets en masse and create a real estate investment trust to hold and operate the properties.”

However, according to the petition, “following the closing and funding of the Loan, Plaintiff learned that Borrower and Raheel had falsified roughly seventy-five (75) documents (and there may be more), including all the Walgreens leases, … bank account statements, and other documents by overstating the rent and lease term.”

As part of the loan agreement, an account was to be created in which all rents from the leases with Walgreens across all of the commercial properties were to be deposited monthly.

Benefit Street Partner alleges that Bhai “prepaid” three months’ worth of rent (totaling $2.3 million) into the account, claiming that he was experiencing difficulties with Walgreens’ payment practices and that the prepayment would serve to ensure funds were available to the lender as he worked through this issue.

“While [Bhai] presented the Prepaid Rent as a benefit to [Benefit Street Partners] to protect it from delays in Walgreens payment practices, in reality, [Bhai] sent the Prepaid Rent to shield from [Benefit Street Partners] the actual amounts paid under the leases on the Collateral Property for the first three (3) months after the Loan closed,” the petition read.

As part of its due diligence process, Benefit Street Partners reviewed all lease agreements for the properties and claimed that Bhai “altered and forged the Walgreens Leases to reflect false and inflated amounts of rents and length of remaining lease term” in order to increase the amount in which he could borrow.

The purpose of this scheme quickly came to light. As part of the loan agreement, Benefit Street Partners would disperse three sums of money to three different entities to pay off the previous financing used to purchase the commercial properties.

One of these entities was called EPI and was purportedly owed $21,906,500 for its part of the initial acquisition financing. However, it was later revealed the EPI was only formed 11 days before the loan’s closing and could not possibly have been a part of the initial purchase of the commercial properties.

Benefit Street Partners claims that in a recorded call on July 12, Bhai admitted that EPI was created by an individual named “James Cohen,” who was also involved in falsifying other documents as part of the scam.

Further, Bhai admitted the payment to EPI was never intended to repay a previous lender but was to be split between him and “James Cohen” in the amounts of $3 million and $19 million, respectively. Bhai claimed that “James Cohen” has disappeared and has become difficult to reach.

Bhai finally provided a number for “James Cohen” that, when dialed, was answered by an administrative assistant named Aileen, who claimed that the number was for CrossTimbers Capital and EPI and “averred that CrossTimbers and EPI were ‘the same firm.'”

CrossTimbers was also named as a defendant in the lawsuit.

Benefit Street Partners wrote in its petition that it is “unconvinced that [Bhai] is being truthful regarding Mr. Cohen’s role on this fraud, or even Mr. Cohen’s existence, and reserves all rights in that regard.”

On July 24, Aileen Canta, the chief development officer of one of Bhai’s companies, contacted Benefit Street Partners regarding the alleged loan scam. On a recorded call, she confirmed that Bhai had admitted to her that he had defrauded the lender, according to the lawsuit.

In her call, Canta said that she discovered a room in one of the properties Bhai was currently renovating that contained a paper shredder and bags of shredded documents, the lawsuit states. She claimed she continued her search and found more bags of shredded documents in a private residence garage.

In another twist, after suspicions began to rise, individuals at Benefit Street Partners confronted Canta the next day on whether she was the same person who answered the phone at CrossTimbers and EPI. She admitted that it was, in fact, her, according to the lawsuit.

The petition also claims that Bhai and several business associates, all with family in Pakistan, appear to have fled the country, and investigative services have been unable to locate them.

The Dallas Express will continue to follow this case as it develops.

For more Dallas crime-related news, see how Gay Donnell Willis and Dallas District 13 saw a 23.1% increase in year-over-year Crime Score for August.

 

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Paul Ruffino
Paul Ruffino
3 months ago

I was recruited to Dallas to work for these thieves. The Bhai family ALL deserve prison and have left much damage in their wake. I quit six months before it all came down as their fraud was noticeable…but apparently not to the genius especially at the banks & lenders.

Paul Ruffino
Paul Ruffino
3 months ago

Oh..almost forgot. I reported them for PPP loan fraud as well and heard that they paid the loans off to limit further criminal prosecution. My complaint apparently sent the whole procedure in motion. SBA if you’re reading I believe I’m supposed to receive a reward??