DOJ has filed a civil complaint against father-son duo Pankaj Sheth and Rajan Sheth.
The Sheths, who share a home in Morganville, presented themselves as a legitimate, family-owned hotel operator, a report by NJ.com said. “DO NOT stay here,” one user wrote on Yelp reviewing one of their hotels. “Worst hotel I have ever been to. I used a whole can of Lysol to decontaminate…”
An Indian-origin family running a hotel business in the US secured more than $100 million in loans over nearly three decades despite a history of loan defaults, bankruptcies and court judgments, according to a civil complaint filed by the US Department of Justice. The allegations targeted hotel operators Pankaj Sheth and Rajan Sheth, five other relatives, 21 businesses and eight associates.
The 332-page complaint alleged that the family used a network of companies and so-called “straw owners” to conceal their control of hotels and obtain fresh financing even after earlier loans had gone into default. The Sheths and their associates repeatedly shifted ownership or control of distressed hotel properties among different entities, according to the DOJ. The Sheths hid their financial history and every time they needed a loan, they’d put a hotel in the name of a “straw owner” — someone whose name is on the paperwork but who has no real control — according to the complaint. Then that “straw owner” would apply for the loan. The applications often “falsified the straw owners’ management experience and personal financial statements,” concealed the company’s ties to the rest of the family’s troubled businesses and sometimes even forged signatures, prosecutors allege.
The Sheths would borrow against a hotel, use the money to pay off an older debt, then borrow again to cover the new one. A hotel in Browns Mills was on sale. It was later found that the buyer was a company that belonged to the Sheths only. The family had sold the hotel to itself — and gotten a federal judge to erase most of a taxpayer-backed debt.
Prosecutors alleged that the arrangement enabled companies linked to the family to apply for new loans without fully disclosing their relationships with earlier borrowers.