Houston Real Estate CEO, Lawyer Named In $15M Fraud, Racketeering Suit
A Houston real estate owner fighting foreclosure on a Galleria-area office building is also facing a federal lawsuit for what plaintiffs allege is a scam resulting in over $15M in damages.
Jetall Capital CEO Ali Choudhri — who told Bisnow this summer about his fight to prevent foreclosure on a 283K SF building at 2425 West Loop S — leads a list of 10 defendants in a federal suit alleging fraud, racketeering, bribery and the theft of millions of dollars in a dispute over 829 Yale St., a five-story condo building in the Houston Heights.
According to a claim brought by Austin-based construction lender Steadfast Funding in July, Steadfast loaned $6M to the group after Choudhri and others allegedly bribed the original developer of the property to sign over 829 Yale to them without Steadfast’s knowledge. The suit, filed in the Corpus Christi Division of the U.S. District Court for the Southern District of Texas, alleges Choudhri and his associates never paid back any of the loan and engaged in a series of 17 “distinct scams” to hold on to the property and hide the deception.
The federal suit outlines allegations demonstrating “a lengthy pattern of fraudulent and felonious sham transactions,” Steadfast attorney Christopher Ramey wrote in the filing. In addition to Choudhri, the suit names Choudhri attorney Lloyd Kelley and Jetall’s former chief financial officer, Brad Parker, among the defendants and includes transcripts and a link to recordings between Kelley and Choudhri allegedly discussing the scheme.
The dispute with Steadfast has stacked up 43 case numbers throughout county, state, federal and bankruptcy courts in different venues over four years, according to the Steadfast suit and a search of court records. Steadfast has filed nearly identical cases in other Texas federal courts involving the same players and the same circumstances, including one in the court’s Houston Division naming 35 defendants, as the parties wrestle over jurisdiction. A jury trial in Houston is scheduled for April 22.
Choudhri didn’t respond to an emailed request for comment by press time. Kelley declined to directly answer several emailed questions from Bisnow seeking comment on specific claims made in the complaint, but said the recordings were inaccurate and could have been edited by the whistleblower who produced them or Ramey himself.
The events initiating the litigation began in June 2016 when Steadfast Funding owner Marc Sherrin loaned developer Terry Fisher $4.2M for construction of the 829 Yale St. project, according to the case filing.
The suit claims that just ahead of a refinancing the following year, Steadfast discovered during a title search that the project was now owned by a limited liability company linked to Choudhri-led Jetall. Steadfast alleges Fisher accepted $100K to illegally hand over the deed to Choudhri and others. Steadfast contacted the new owners and was given two choices, per the suit: hand over additional loan money, which the group claimed it was in position to pay off quickly, or face a raft of legal action.
Choudhri, Jetall, Parker and Fisher “fraudulently induced Steadfast into a loan workout,” according to the lawsuit. Steadfast went on to loan more than $8M to 2017 Yale Development, an LLC Choudhri and other defendants set up as an ownership vehicle with Parker at the helm, the suit claims.
Fisher and Parker couldn't be reached for comment.
The LLC drew out $6M of the loan while completing minimal construction before Steadfast determined that 2017 Yale was unlikely to complete the project and moved to foreclose, Sherrin told Bisnow and alleged in the more than 200-page Steadfast filing. Foreclosure proved difficult, however, due to legal moves 2017 Yale Development made to prevent it, per the lawsuit.
Parker was allegedly used as a “front-man” to act as the owner of 2017 Yale Development on paper, the filing says. The alleged ruse doubled as a means of keeping Choudhri’s ex-wife in the dark about his assets during divorce proceedings, as well as to conceal Choudhri transferring actual ownership of 829 Yale St. to Kelley as payment for a past-due legal debt, the plaintiffs’ petition claims.
Kelley also allegedly later transferred the property to a trust in what the suit claims was a maneuver to avoid Steadfast gaining ownership of the property through foreclosure.
The suit includes audio recordings and transcripts filed as exhibits, supplied by Chris Wyatt, Jetall’s former chief operating officer-turned-whistleblower. Wyatt has said in a sworn affidavit included in the suit that the recordings were made at Choudhri’s direction while Wyatt was working at Jetall’s Houston office, but he declined to comment for this article.
“You knew, because of my divorce, who owned 2017 Yale,” Choudhri told Kelley, who has often served as Choudhri’s attorney, in one recording.
“Because of the divorce, I had Brad [Parker] as my proxy and front. You know that,” Choudhri added.
“I own 2017 Yale unless you can come up with something to show me otherwise,” Kelley responded.
This appears to contrast with what Choudhri and Parker testified to in 2019 depositions, the lawsuit claims based on evidence submitted with the complaint. Asked about the link between Jetall and 2017 Yale Development in February 2019, Parker responded that “it’s not affiliated with Jetall. I mean, I’m affiliated with Jetall, and I own [2017 Yale],” adding he didn't expect to share any earnings with Choudhri.
Asked a similar question about being linked to 2017 Yale in January 2019, Choudhri answered with a flat “no.”
In another recording included in the filing, Choudhri and Kelley appear to argue again as they discuss a trust set up by Kelley to allegedly obscure ownership of the Yale Street property and keep it out of Steadfast’s hands in foreclosure proceedings.
“How is the trust, [Carb Pura Vida] or whatever it is, gonna deed the property back to me? How is that going to happen?” Choudhri asked his attorney.
“It’s not,” Kelley said.
“But I thought we were moving it to protect it and it would be deeded back,” Choudhri said.
“We moved it so that Ramey couldn’t get it,” Kelley responded, referring to Steadfast’s attorney.
In emailed comments, Kelley called the allegations “fanciful” and “frivolous” and warned Bisnow against using recordings and transcripts, though he offered no explanation for his taped statements or the claims in the lawsuit based on those statements.
In a statement to Bisnow, Kelley accused the prosecution of judge shopping.
“In desperation they are forum shopping, filing two more cases within a few days of each other trying to get some judge to have sympathy on their lack of ability to convince Judge [Keith] Ellison [the presiding judge in the similar case filed in Houston],” he said.
Sherrin said in an email that Steadfast is seeking justice, not sympathy.
“Kelley, Choudhri and others filed cases in multiple jurisdictions, but since the whistleblower evidence against them came out, have desperately avoided testifying under oath, unlike Steadfast,” Sherrin said in the email. “Steadfast will continue every legal effort to recover their losses, which is what they are doing.”
Kelley also alleged in a second email to Bisnow that the recordings and transcripts included in the filing may be inaccurate, suggesting Steadfast’s attorney could have doctored them.
“Mr. Wyatt testified that he took the tapes off of his phone and moved them to a program in which the tapes could be manipulated and then he gave them to Mr. Ramey,” Kelley said. “Although Mr. Ramey was evasive in his own testimony, I think its clear he also has the ability to cut and paste the tapes he gave you.”
Bisnow found the case and recordings as part of a routine Pacer search, which turned up multiple cases in multiple jurisdictions involving the Steadfast property.
In court filings, defendants in the related Houston case accuse Wyatt of violating the Electronic Communications Privacy Act, the Texas Interception of Communication statute and breaching his fiduciary duty as a Jetall employee for providing the recordings.
“From the outset of this case, it is clear that Mr. Ramey, as counsel for Plaintiffs, has been using the documents stolen from Jetall Companies, Inc. by Christopher Wyatt in this lawsuit,” Choudhri attorney Jennifer MacGeorge wrote.
“Mr. Ramey, on behalf of his clients, sent out a banker’s box of discovery documents, including many confidential and attorney-client protected communications, and recordings, which he could only have accessed and submitted before this court through engagement with the person who illegally stole them, in violation of his non-disclosure agreement with Jetall Companies, Inc., which was Christopher Wyatt.”
Choudhri filed a motion in April 2022 to dismiss the case, citing a number of related, unsuccessful lawsuits dating back to 2019 and a statute of limitations that “precludes this lawsuit in its entirety.” Those motions to dismiss were denied as moot when the plaintiffs amended their complaint.
Kelley also filed a motion in September 2022 to dismiss Steadfast’s Houston case, citing a “lack of the essential facts to support actual claims” and “over 500 pages of baseless attacks,” among other reasons.
Numerous defendants — including Kelley — subsequently filed requests for summary judgment, denying any wrongdoing. Those motions have not been decided.
On Oct. 6, one of Steadfast’s cases was dismissed per the plaintiffs’ motion for nonsuit in a Harris County District Court, online records show.
The Steadfast parties say the defendants were the ones to drag them into litigation in the first place.
Sherrin, Steadfast's owner, told Bisnow that when the 829 Yale St. job site was left abandoned for three weeks in 2017 and when no loan repayments had come in, it moved to foreclose. Jetall responded with threats and a lawsuit, Sherrin said.
“They [said] we need to not charge interest on the rest of the loan, let them finish, or they’ll sue us into the ground and we’ll never recover,” Sherrin said. “Super unusual.”
Steadfast continued with the foreclosure proceedings and got sued, Sherrin said.
“Not only do they sue me, they sue my attorney,” he said. “They sued the title company. They sued the escrow officer at the title company. The notary of the title company. The manager of the title company, the vice president of the title company, the owners of the title company, the president of the title company.”
Sherrin said he believes this type of behavior is a pattern for Choudhri, who is involved in more than 100 lawsuits throughout different courts, according to documents and filings reviewed by Bisnow.
The suit that includes the taped phone call evidence was filed in the U.S. District Court for the Southern District of Texas Corpus Christi Division on July 22. It asks for, among other remedies, declarative judgment on issues raised in the case; actual, compensatory and consequential damages; punitive, statutory and exemplary damages; attorney’s fees and cost of the suit; and an appointed receiver to sort it out.
The defendants in the Corpus Christi case haven't been served, a matter that came to light during a hearing Wednesday morning before District Judge David Morales. Morales ordered Ramey to serve the defendants within 10 days, adding he wants to give them an opportunity to respond before he considers a motion Ramey filed Tuesday. The motion asks for this case to be abated or consolidated with another similar case in the U.S. District Court for the Eastern District of Texas.
