Two residential buildings nearly finished in Fremont and San Jose are shrouded in a real estate fraud investigation.
The five-story buildings are being developed by Sanjeev Acharya and his SiliconSage Builders, both accused by the Securities and Exchange Commission of fraud and of swindling hundreds of investors, the San Jose Mercury News reported.
A 93-unit condominium complex at 42111 Osgood Road in Fremont and a 91-unit apartment building at 1821 Almaden Road in San Jose are in a court-ordered receivership.
Both buildings may offer opportunities for creditors and defrauded investors to salvage part of their losses arising from the shattered real estate empire of SiliconSage, based in Sunnyvale.
The Fremont project was deemed closer to completion than the San Jose development, according to an update by the court receiver on progress to raise cash from as many former Silicon Sage properties as possible.
“The construction at the Osgood project is nearing completion,” the receiver stated in court papers. “It is currently in the closeout phase of the process of getting the temporary certificate of occupancy and addressing small punch list items from the city inspectors.”
In December, the SEC charged SiliconSage Builders and Acharya with a $119 million securities fraud scheme that targeted members of the South Asian American community. The company allegedly raised funds from 250 investors by falsely saying its business was profitable and promising exorbitant returns.
In March, Acharya and his real estate firm reached a partial settlement with the SEC to allow creditors and investors to recoup some of their money. He and his company didn’t admit wrongdoing. The victims of the alleged fraud hope the proceeds from selling the projects will create funds to repay them after Acharya’s real estate empire crumbled beneath a mountain of debts and legal woes.
The receiver hopes to generate cash through sales of condo units in both the San Jose and Fremont projects.
Separately, the court-appointed receiver has found evidence that Archarya and SiliconSage used a Ponzi-style approach to pay some investors in the Bay Area projects, according to the Mercury News.
“The receiver is in the process of analyzing the use of investor funds to determine if funds from later investors were used to make distributions to earlier investors,” the court papers stated. “In an analysis of 14 random transactions in 2021, the receiver determined that three of those investments by new investors were used … to make payments to earlier investors.”
— Dana Bartholomew
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