SAN JOSE — Profits from the sale of condo units in San Jose and Fremont that were intended to help investors recoup the money they lost in what federal investigators claim was a massive Bay Area real estate fraud case are now expected to fall well short of the amount needed to provide restitution.
The residential hubs at 1853 Almaden Rd. in San Jose and at 42111 Osgood Rd. in Fremont are among many Bay Area properties tied to South Bay real estate executive Sanjeev Acharya and his company Silicon Sage Builders.
A residential complex with 93 condominium units located at 42111 and 42183 Osgood Road in Fremont, seen in 2022. (George Avalos/Bay Area News Group)In 2020, federal investigators claimed Acharya defrauded hundreds of investors out of more than $100 million they had invested in projects by Acharya and his company.
Acharya and Silicon Sage would frequently shift money from investors through numerous bank accounts at lightning-quick speeds to keep cash flows from drying up, according to papers filed by a court-appointed receiver.
Silicon Sage and Acharya maintained 77 different bank accounts and engaged in at least 130,000 banking transactions over a period of eight years, the documents filed by the receiver show.
The receiver and its forensic accountant scrutinized the activities of just seven entities that Acharya and his company controlled, a review that revealed an intricate web of dealings by the real estate executive.
“The transactions that the receiver’s forensic accountant analyzed consistently demonstrated that money put into a specific entity would be transferred through multiple accounts, usually within a matter of minutes, before ending up in the account of an entity that needed to make payments that day,” the receiver stated in a U.S. District Court filing on Dec. 3.
Acharya and Silicon Sage made no attempt to ensure that the money it received from investors for a specific property was used for that property. The primary goal was to keep money moving, according to the legal filing.
“The transfers appear to have been done without regard to the purpose that the creditor or investor intended the money to be used for and were instead used to satisfy each day’s cash flow needs,” the receiver reported to the court.
A receiver appointed by a federal judge hired a company to complete construction of the 96-unit San Jose complex and the 91-unit Fremont property, with the money raised from the condo sales going to help investors and other creditors recoup money from the alleged real estate fraud. But things did not go as planned.
“Unfortunately, the cost to complete the projects exceeded the original estimates and took longer than anticipated,” Kyra Andrassy, a legal counsel for the receiver, stated in the court filing.
Multiple factors contributed to the sinking prospects for how much money investors might receive, court papers show. “Economic repercussions of the pandemic and supply chain issues” were cited as factors, as well as the failure of Acharya and Silicon Sage Builders as professional developers.
“Much of the work that had been completed prior to the receiver’s appointment needed to be redone or repaired because of shoddy workmanship,” the receiver reported to the federal court. The projects also sat idle for “a number of months,” the receiver stated.
The receiver hired Acres Loan Origination, the senior construction lender for both the San Jose project and the Fremont project, to finish the condos.
“The Osgood Project (in Fremont) was fully completed in early 2024 and by June 2024 had sold all of its units,” the receiver reported.
Acres received $62.7 million from the sale of the 91 condos in the Fremont project.
“The Almaden project was completed in late 2024 and has been in the process of selling units, though sales are going slower than the parties had hoped,” the receiver stated.
As of Dec. 3, the San Jose condo project had sold 45 units, while another 12 were in escrow and 39 remained available for sale. Acres Loan has received $28.8 million in proceeds from the sales.
During the first two years of the receivership, the receiver sold 10 properties that had been owned by Silicon Sage- and Acharya-controlled entities.
These include the $53.5 million sale in 2021 of a 101-unit apartment complex on Balbach Street near the downtown San Jose convention center.
According to the latest court filing, the receiver expects to allow an array of claims that were filed against Silicon Sage and Acharya.
These include 483 claims filed by investors totaling $142.2 million, as well as 89 claims filed by former employees for wages, taxes, and unpaid benefits totaling $2.3 million and 82 claims filed by other creditors totaling approximately $10.7 million.
Creditors typically obtain 10 cents on the dollar from their claims. It wasn’t immediately clear how much creditors and investors will receive in this case.
The receiver expects to file a plan for distributing funds to creditors sometime during the first half of this year, court papers show.
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