Colliers is facing a second lawsuit over an alleged scheme to defraud investors involved in medical office acquisitions in Utah and Texas.

A group of 17 investors is suing Colliers, five current or former Colliers brokers, and others, accusing the group of lying to retirees and inexperienced investors in a $10M scheme involving inflated property values and a bankrupt tenant.

The suit, filed in the U.S. District Court for the District of Utah, centers around the sale of tenant-in-common interests of a medical office that the investors believed had an anchor tenant in place on a long-term lease.

Rent payments from the tenant would go to the investors monthly while a property manager handled operations, they were told. The passive income payouts would range from $1,430 per month to $8,170 per month, depending on the ownership share.

Using Colliers’ branding and marketing material, the defendants advertised the medical office in South Jordan, Utah, as worth roughly $10M — a valuation that the investors allege shifted across pitch decks.

In reality, the suit says, the property was valued at $2.6M, with much of the remaining cash raised from investors going to the brokerage team. The medical tenant, pain management company Neuragenex, never moved into the property and eventually filed for bankruptcy, all without investors’ knowledge, according to the suit.

“As this matter is with the courts, we have no comment at this time,” a Colliers spokesperson said in response to a request for comment.

The case has drawn attention from state and federal investigators, according to two investors who said they had been interviewed by officials at the Securities and Exchange Commission as well as the Department of Justice, the latter of which asked questions relevant to a criminal complaint.

Cheryl Tomac, 75, invested just under $326K in the Utah property. Tomac had been a family law attorney for nearly two decades before a stroke forced her into retirement, she told Bisnow.

She sold her legal practice’s property in 2023, and her broker recommended she invest in the medical office as part of a 1031 exchange to allow her to defer paying taxes on the sale. The roughly $1,700 per month in payments she would receive from the investment would provide a reliable source of income in retirement, she thought.

For three months, the deal seemed to be working out. But then the payments dropped to $200 a month after Neuragenex filed for bankruptcy, cutting into Tomac’s budget as she battles macular degeneration and cares for a husband with dementia.

Most of the investors were over 65, according to court records.

The suit names Utah-based Millcreek Commercial Properties, a now-defunct real estate firm that brokered the transaction, and associated entities as defendants. The firm, which focused on fractionalized ownership from smaller investors, was founded and operated by Kevin Long and pitched itself as taking the work out of property ownership, offering shares in fully managed properties with corporate guarantees.

Long declined a request for comment.

In addition to Colliers itself, defendants include Jerald Adam Long, Kevin Long’s son and a chief operating officer at Colliers from 2018 to 2021 who managed six offices in Utah and Alaska, according to his LinkedIn profile.

Lew Cramer, the firm’s Utah CEO; Brandon Fugal, a co-owner of Colliers International in Utah; and James Yeates, a vice president at the firm, are also defendants. Utah-based Green Ivy Realty, the property manager, is also named and accused of working with Kevin Long and others to conceal the property’s underperforming financial position.

The case involves many of the same individuals and entities, including Millcreek and Kevin Long, named in a Texas lawsuit against Colliers and others that alleges a group of around 20 investors were victims of a similar scheme involving a property in Crockett, Texas.

Millcreek ceased operations on Dec. 3, but both the Texas and Utah suits allege its agents have created a new company called KGL Advisors that effectively took over Millcreek’s operations. Kevin Long lists his current title as principal broker of KGL Advisors on the listing platform LoopNet, and a call to his contact number on the site returns a Millcreek voicemail.

Neuragenex declared bankruptcy in January 2024, having never moved into the Utah property. The suit says Millcreek and others hid the company’s failure from investors by using new investor funds to make expected monthly payments to other investors.

All the while, more fractionalized shares in the medical property were being sold to investors who were told that Neuragenex was a reliable, fast-growing company, according to the suit.

Brett Anderson, an attorney at Blackburn & Stoll representing the investors, lists 18 civil infractions in the suit, ranging from the sale of unregistered securities to elder abuse. He didn't respond to a request for comment.

The Utah investors are seeking damages, including for emotional pain and suffering, or the return of all investor funds.

None of the defendants have filed a response to the allegations. The next hearing has yet to be scheduled, but the parties have agreed to engage in settlement talks.