It reads like a John Grisham novel: Mysterious figures send dozens of anonymous e-mails alleging misdeeds by a boutique commercial real estate firm. Said e-mails flood the inbox of one of the firm’s biggest clients, which investigates the allegations of underhanded dealings, resulting in a lawsuit that now has the real estate world buzzing.
The client: Bethesda-based Host Hotels & Resorts, the largest hotel owner in the country.
The real estate firm: Molinaro Koger, a Vienna brokerage house that has engineered more than $15 billion in hotel transactions since 1959.
In a civil lawsuit filed in Montgomery County Court on June 3, Host accused Molinaro Koger and its president, Robert Koger, of conspiring with the buyers of three Host properties to surreptitiously flip the assets for a $15 million profit, instead of obtaining the highest sales price for Host.
Koger, in a statement, said he was “puzzled and disappointed by Host’s baseless accusations.” He stressed that the “senior management at Host had complete knowledge of the transactions.”
According to court records, Molinaro Koger brokered 11 transactions for Host between 2004 and last year, receiving upwards of $4.4 million in commissions. Three of those trades are at the heart of the suit.
One deal involved the 2009 sale of the Washington Dulles Marriott Suites and the Sheraton Stamford in Connecticut, which sold for a total of $36 million to Scioto Partners, a company Host claims it learned later was led by an employee of Molinaro Koger and one of its business partners. On the day of purchase, the buyer, with Molinaro Koger acting as the escrow agent, resold the pair of properties for $13 million more than it paid, the lawsuit alleged.
Molinaro Koger also arranged Host’s $3.8 million sale of the Ritz-Carlton in Dearborn, Mich., to Dearborn LLC, an entity allegedly fronted by the same employee named in the other deal. That employee died in February 2010 from gas poisoning, according to a police report filed as an exhibit in the case.
The man’s notarized signature, however, appeared on closing documents prepared four months after his death, Host claimed. The property was also allegedly flipped for a $2 million profit on the same day the sale agreement was reached.
“These are serious allegations,” said hotel analyst David Loeb of Robert W. Baird. “Host wouldn’t jeopardize their reputation by doing this if it was frivolous.”
Host was first alerted to possible misconduct in a series of anonymous e-mails sent in May 2010, according to company officials.
The company was one of several of Molinaro Koger’s clients to be bombarded with e-mails accusing the brokerage firm of being “unethical . . . and guilty of crimes of moral turpitude,” according to a separate lawsuit Molinaro Koger filed last fall against “John Does.”
The brokerage firm is close to naming the defendants, according to Charles Kimmett, a Wiltshire & Grannis representing Molinaro Koger.
The brokerage believes those same parties may have been involved in the December 2010 burglary of its headquarters, in which a set of financial records was stolen, including those pertaining to the deals named in the Host suit, according to Kimmett.
According to Molinaro Kroger’s suit, around the time of the break-in, an information broker allegedly hired by Rosetti Group, a private investigations firm in Potomac, posed as Robert Koger to access Molinaro Koger’s account information, a tactic commonly known as pretexting. Kimmett is trying to compel Rosetti to reveal its client roster in hopes of revealing the culprits.
Rosetti attorney Joseph Robert Caldwell of Baker Botts said in an e-mail, “The evidence will demonstrate that neither Rich Rosetti nor the Rosetti Group engaged in the pretexting conduct alleged.”