Duluth hotel developer R.C. Patel pleaded guilty on Monday to two counts of wire fraud in a federal court case involving an Atlanta hotel property.
Federal prosecutors said Patel, 55, defrauded a Tennessee investor of $500,000 that was supposed to be used to as part of a bid to buy the mortgage on the hotel. The bid failed and Patel instead used the money to pay unrelated debts, the government said.
Patel is well known in Atlanta’s hospitality community and ranked among the region’s most prominent Indian-American businessmen. But he ran into repeated business troubles as the economy tanked.
Patel was indicted in May 2014 on 10 felony counts accusing him of a $1.5 million fraud involving the Atlanta hotel property and another hotel in South Carolina. The government said in a news release Patel admitted to misleading the investor about the outcome of the bid on the Atlanta hotel and his use of the investor’s money for personal debts.
Sentencing is scheduled for Oct. 5 in U.S. District Court in Nashville. Patel faces up to 20 years in prison for each count, plus fines and possible forfeiture of assets accumulated through the fraud. Patel has paid full restitution to the investor, the government said.
A message left for Patel’s attorneys was not immediately returned.
Patel was a founder of Haven Trust Bank, a metro Atlanta institution that focused on financing the businesses of the region’s Asian communities, including hoteliers.
The bank failed in December 2008, crippled by bad bets in commercial real estate. A government post-mortem of the bank faulted bank insiders for many issues, including lax internal controls, sloppy loan underwriting and documentation and allegedly improper loans to family members. It also blamed regulators for not acting quickly enough to curb alleged abuses.
The FDIC later sued Patel and 14 other Haven Trust insiders seeking nearly $40 million in damages. The civil liability case was settled last year for about $2.5 million, according to FDIC records.
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