A California real estate executive pleaded guilty to participating in an extensive, multi-year conspiracy to manipulate financial statements.
Tyler Ross, 37 and formerly of Michigan, was the co-chief executive officer of Roco Real Estate and Roco Management, both based in Bloomfield Hills, Michigan, commercial real estate companies that focused on acquiring, managing, and selling multifamily residential properties in the midwest, the Department of Justice said in a press release.
According to court documents, Ross engaged in a scheme to falsify corporate records with the intent of deceiving lenders by inflating the income of Roco properties from 2015 to 2019. The fraudulent activities involved submitting false financial documents to mortgage-lending businesses for underperforming Roco properties, making the properties appear more profitable than they were.
Ross, who is also an attorney, falsified historical operating statements and directed others to create and submit fraudulent financial statements to lenders. They manipulated the statements by deleting or reducing actual expenses from historical operating statements for certain underperforming ROCO properties.
Ross pleaded guilty to conspiring to commit an offense against the United States and is set to be sentenced on March 12, 2024. He could face a maximum penalty of five years in prison, with the actual sentence determined by a federal judge after considering sentencing guidelines and other factors.
Prior to the pandemic, Roco, which was founded in 2012, was a rapidly expanding outfit that engaged in some high-profile deals. In 2019, the Chetrit Group bought from Roco a 55-property portfolio of more than 10,000 rental apartments with buildings in Alabama, Arkansas, Florida, Illinois, Indiana, Louisiana, Mississippi, Ohio, New York, Tennessee and Texas.
Chetrit financed the deal with a $481 million loan from JP Morgan Chase. At a loan-to-value ratio of 84 percent, the purchase price worked out to nearly $573 million.
Roco currently has properties in Ohio, Michigan and Mississippi, according to its website.