Daniel Motha played an integral role helping Rishi Kapoor establish Location Ventures. Now, Motha is fighting the U.S. Securities & Exchange Commission’s efforts to pry company information out of him.
Motha, a former CFO for defunct Coral Gables-based Location Ventures, wants a Miami federal judge to deny a subpoena filed by the SEC seeking his tax returns, emails and texts from the past eight years in connection with the ongoing civil lawsuit against Kapoor, Location Ventures and its affiliates, recent court filings show.
The SEC’s lawsuit, filed in late December, accuses Kapoor, who founded Location Ventures in 2016, of defrauding more than 50 investors who contributed $93 million in his firm’s real estate projects that were not completed or never broke ground. A court-appointed receiver is now managing Location Ventures and its affiliates, as well as liquidating assets to pay off creditors.
While he is not named as a defendant, the lawsuit alleges Motha aided Kapoor in the alleged scheme, including receiving $5.6 million in questionable fees from Location Ventures. Motha’s attorney Constantine Economides did not respond to requests for comment.
On July 10, Economides filed a motion on behalf of Motha seeking dismissal of the subpoena by claiming that he is not a party to the SEC lawsuit and that he has not been indemnified by Location Ventures.
“The complaint does not even allege that Motha was involved in or witness to defendants’ purported scheme,” the motion states. “Indeed, the complaint itself makes no reference to Motha that would establish his relevance to the claims at issue in this matter.”
Despite meetings with SEC lawyers, the commission failed to show any justification for “this wholesale fishing expedition through Motha’s communications and confidential tax records,” the motion states.
In an Aug. 5 response, SEC lawyers accuse Motha of “displaying a remarkable lack of candor with the court.” The SEC motion noted that Motha is a primary witness who personally benefited from Kapoor’s alleged scheme by collecting $1 million in unsupported bank transfers, as well as having signing authority over Location Ventures’ bank accounts. He was also responsible for maintaining the company’s books and records.
In addition, Motha, Kapoor and two of Kapoor’s relatives are principals of Patriots United, a holding company that was used to form Location Ventures that purportedly contributed $13 million in start-up capital. According to a forensic accountant’s analysis commissioned by the SEC, Patriots United never really contributed any cash to Location Ventures.
The SEC initially subpoenaed Motha in July of last year, the court filing states. Since that time, Motha has only turned over 20 documents out of thousands of pages requested by federal regulators, the SEC alleges.
“Motha produced text messages between Motha and several of [Location Ventures’] employees and key investors,” the SEC motion states. “Motha’s counsel has represented to the Commission that not all responsive text messages have been produced.”
Motha’s tax returns are also subject to the subpoena because the SEC is attempting to find out what he did with the $1 million in unauthorized fees he received, the motion states.
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