Sales take place at fraud-tied condo site

Receiver hopes swindled investors can recoup money with movement

Property sales are underway for Bay Area condominium units linked to a massive real estate fraud case. But it's unclear how much of the proceeds will be used to pay investors who were swindled.

Condo sales have begun for units in a Fremont residential complex that was developed by Silicon Sage Builders and its principal executive Sanjeev Acharya, federal court documents show. Separately, it's expected that condominium sales should begin soon at a San Jose residential project that also was developed by Acharya.

The Securities and Exchange Commission has accused Acharya and Silicon Sage of fraud and swindling hundreds of investors out of more than $100 million. Silicon Sage's properties, most of which are incomplete projects or have yet to begin development, have been shoved into court-ordered receivership.

The receiver has been attempting to get the Fremont and San Jose projects completed so the units could be sold to help the investors recoup at least some of their losses.

Sales of several condos in a 93unit residential complex with addresses of 42111 and 42183 Osgood Road in Fremont have been completed, according to court papers.

“Sales have begun to close, with 12 units sold to date,” the receiver stated in the court papers. “Six more are scheduled to close this week or shortly thereafter.”

The proceeds from these transactions are expected to raise a combined $12.2 million, according to the legal filing.

Efforts are proceeding to complete a project at 1821 Almaden Road in San Jose, a 91-unit residential development.

“Almaden owns a condominium project in San Jose that remains under construction, although it is nearing completion,” the court-appointed receiver

stated in the legal documents.

Among the major hurdles to clear for the San Jose complex: the project requires approval from the state Department of Real Estate and PG&E must provide electricity

to the property.

“Almaden continues to make substantial construction progress,” the receiver stated in the court papers. “As of the date of this report, all level five and four units have been completed and finish work has commenced on levels three, two and one. Domestic water and gas have now been tied into the building. The

exterior of the project is now 90% enclosed.”

A federal court that's supervising the case has appointed David Stapleton as a receiver to handle, operate, and dispose of the Silicon Sage properties in an effort to raise cash to pay off creditors and possibly investors in the bankrupt development firm, at least to some unspecified extent.

However, it's unclear how much will be left over after the properties are sold because in multiple instances, the original lenders for the properties are often being repaid before the investors are repaid. That's because lenders typically have first rights to repayment because of how mortgages are structured.

In 2020, the SEC filed a

complaint whose allegations placed Acharya and Silicon Sage at the center of a wide-ranging scheme to defraud hundreds of investors, many of South Asian ancestry.

Acharya's federal court criminal case has yet to be fully resolved because Acharya is cooperating with the receiver and the SEC to help dispose of the properties he controls. He has yet to be sentenced in connection with the fraud allegations.

“Since August 24, 2016, Silicon Sage Builders has raised approximately $119.2 million from approximately 250 investors through a continuous series of misrepresentations and omissions and other deceptive conduct,” the SEC stated in the court filing.