SAN JOSE — A Bay Area developer who is the key figure in a federal fraud case has struck a deal with U.S. regulators that could help pave a path for investors in his projects to recoup some of the money they placed with him, court papers show.
Developer Sanjeev Acharya and his real estate firm Silicon Sage Builders have reached a partial settlement with the Securities and Exchange Commission in a fraud case, according to an order issued March 24 by U.S. District Court Judge Susan Illston.
Issues with Acharya’s Bay Area real estate business came to light in December when the SEC filed wide-ranging allegations of fraud against Acharya and Silicon Sage Builders.
In February, a federal court authorized a receiver to seize control of Acharya’s properties and business operations with the goal of potential sales of some or all of the assets to help pay back investors and creditors.
An estimated 250 people who paid about $119 million to invest in projects launched by Acharya and Silicon Sage Builders face the prospect of losing their money, according to the SEC.
Through the partial settlement with the SEC, both Acharya and the SEC are attempting to clear the decks in the case to help assist the investors.
“This is a settlement agreement in which Mr. Acharya does not admit or deny the SEC’s allegations,” Acharya said through a statement released by his attorney, John Hemann of Cooley LLP, a Palo Alto-based international law firm.
In the coming months, the focus is expected to shift towards how Acharya can assist the court-appointed receiver to handle and possibly sell off part or all of his Bay Area real estate empire to raise cash that could help pay back investors.
“Mr. Acharya wishes to focus all of his efforts on supporting and working collaboratively with the receiver and the SEC to deliver value to Silicon Sage investors,” Acharya said in the statement provided to this news organization. “This settlement allows him to concentrate on that priority in the weeks and months ahead.”
One early sign emerged recently that at least some of Acharya’s real estate properties could generate profits if they are sold.
A few days ago, the court authorized the sale of an Acharya-owned Hayward townhouse on B Street for $949,000. After payment of real estate commissions and mechanic’s liens on the property, the net proceeds from the transaction are expected to be $498,000, the receiver estimated.
Still, plenty of challenges could complicate the disposition of the Silicon Sage and Acharya real estate properties.
In multiple instances, lenders have filed notices of default on mortgages for the properties in an attempt to seize the sites through a foreclosure.
Bankruptcy court papers in a separate proceeding involving Acharya show numerous of his properties are burdened with debts. Among them:
— $45 million for a construction loan linked to a property at 42183 Osgood Road in Fremont. New York state-based Acres Capital was listed as the lender.
— $40.7 million for a construction loan connected to a property at 1821 to 1873 Almaden Road in San Jose. Acres Capital provided the financing.
— $39.6 million for a construction loan associated with a site on Balbach Street in downtown San Jose. Silicon Sage Builders has developed and completed a residential complex at 180 Balbach in San Jose called Aura. Chicago-based Prime Finance Partners was listed as the provider of the loan.
— $13.9 million for a land loan at 37358 to 37482 Fremont Blvd., which is in the Centerville area of Fremont. Beverly Hills-based Bolour Associates is listed as the lender.
— $8.3 million for a land loan at 41965, 41911 & 42021 Osgood Road in Fremont. Bolour Associates provided the loan.
— $7.9 million for a construction loan and land loan for a site at 1313 Franklin St. in Santa Clara. Bolour Associates is listed as the lender.
— $5.98 million for a land loan at 2101 to 2149 Alum Rock Ave. in San Jose. Los Angeles-based Parkview Financial, the lender, has filed a notice of default on the mortgage.
— $4.9 million for a land loan at 510 to 528 S. Mathilda Ave. in Sunnyvale. Bolour Associates is the lender.
— $3.6 million for a land loan at 1368 El Camino Real in Santa Clara. Lenders are seeking to foreclose on a $3.5 million note that is delinquent. The loan relates to the office and retail section of the property, which has been built and is known as Madison Park.
— $2.9 million for a building loan at 560 S. Mathilda Ave. in Sunnyvale. Silicon Sage maintains its headquarters at this location.
— $1.8 million for a land loan at 1661, 1663, and 1665 Alum Rock Ave. in San Jose.
In meetings with investors around August 2020, Acharya appeared to acknowledge that he had made some errors over the years, court papers show.
Acharya said he should have been more transparent with investors, the SEC’s fraud complaint stated.
“I should have done it,” Acharya said at an investment meeting. “Back then, maybe my thinking was that everybody’s returns will come. What my mistake was, I wasn’t thinking of a downside scenario.”