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Robert Falor

(NEW YORK CITY, NY) -- Robert Falor, who once called himself the 'King of Miami Beach' condominium-hotel developers, faces a civil fraud lawsuit filed by the Securities and Exchange Commission, alleging he stole at least $4.6 million from investors in three Miami Beach hotels and three  in Chicago.

The SEC  and the U.S. Attorney's office in Chicago have been investigating Falor's past real estate promotional activities for two years.

The SEC suit involves securities offerings promoted by  Falor in 2004--2005 for the art deco-themed Breakwater, Edison and Tides Hotels on South Beach, and the 162-room hotel at 500 S. Dearborn St. in Chicago, now known as Hotel Blake.

Breakwater Hotel, Miami Beach

The SEC complaint alleges Falor raised $9 million from about 55 investors in 12 states for the projects.  He then "misappropriated investors' funds within a few days of the receipt of these funds," according to the complaint.

The SEC also accuses Falor of lying to investors about the status of his developments. In the Printers Row hotel case in Chicago, investors were told that they had invested in and owned the property when the investors' corporation only had entered into an installment agreement to buy the hotel, the suit charges.

 Falor also "provided false information concerning the progress" of the project and the "percentage of hotel-condominium units sold," the complaint says.
 

Edison Hotel, Miami Beach

Falor used the money "to buy expensive cars, to lease private airplanes, to finance unrelated real estate projects, and to pay unrelated business debts," according to the complaint, which was filed last week in U.S. District Court in Chicago.

The developer spent more than $70,000 on a Range Rover and nearly $48,000 on a Bentley with money that was supposed to pay for the redevelopment of a former Hyatt-managed hotel in the historic Chicago district of Printers Row, the SEC charges.

Falor made the headlines in 2004 as one of the industry's biggest dealmakers just as the hotel market began heating up in 2004. He launched several so-called condominium-hotel developments in Chicago and South Florida.

Tides Hotel, Miami Beach

At the time, Falor had little trouble selling investors on his strategy of buying conventional hotels and selling off individual rooms as condos, according to industry sources in a position to know.

But many of his projects, including three in Chicago, collapsed, prompting charges of malfeasance from investors and attracting the attention of federal law enforcement authorities.

Falor was indicted in March of this year  in Cuyahoga County, Ohio, on state charges of stealing from an investor in the Printers Row hotel, formerly a Hyatt-managed property. Falor pleaded not guilty. The case is pending.

Falor launched the Chicago project in 2004, but it wound up in bankruptcy court last year. The complaint alleges the 24 investors in the  Printers Row Hotel lost their entire $2.25 million investment.

Hotel Blake, Chicago

Some of the money was transferred to other Falor condo-hotel projects, the suit alleges. In total, Falor "misappropriated at least $1.2 million" from the Chicago development, according to the complaint..

The suit also lists  Falor's ex-wife, Jennifer Falor, as a defendant. The suit alleges she received at least $930,000 of the $9 million in investors' funds, including money used to pay for the Range Rover.
 
The SEC wants the Falors to return the money, plus interest, and to pay unspecified civil penalties.

Robert Falor and Jennifer Falor could not be reached a press time for comment. 

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