Federal prosecutors investigating Rochester real estate developer Robert C. Morgan have agreed they will not try to seize more than 100 properties in which Morgan or his family members have an ownership interest – including 19 in Erie and Niagara counties that are co-owned by other developers.
The U.S. Attorney's Office in Buffalo – which indicted Morgan, his son Todd, and two other defendants for mortgage and insurance fraud – said in a court-approved stipulation that it will not seek forfeiture of the properties or any proceeds from their sales, unless "any new illegal activity occurs" involving them after Feb. 24.
That was the date when the order – which the defendants also agreed to – was signed by U.S. District Court Judge Elizabeth A. Wolford.
The stipulation document noted that the government had brought criminal forfeiture allegations against some Morgan properties as part of the May 2019 indictment – 20 were identified – and against 13 others in a separate civil action on Aug. 28.
But prosecutors said they have not taken action or made claims against any others since then. And both sides say they do not want to prevent "orderly" sales of other properties from occurring in the future, with prosecutors saying they are open to further stipulations related to specific deals.
The document identified 102 other properties that will not be targets of forfeiture. The properties in question – apartment buildings – are located in 11 states, with the largest concentration in the Rochester area, as well as the Buffalo and Pittsburgh markets.
Locally, the properties include apartments that Morgan co-owns or co-developed with Anthony Cutaia's Rane Property Management and Matthew Cherry's Glendale Development. Both have frequently worked with Morgan on projects in Western New York, but neither has been named in the indictments.
The Western New York properties are:
- Muir Lake Apartments at 2371 North Forest Road in Getzville
- 1217 Delaware Ave. in Buffalo
- 4285 Chestnut Ridge Road, 361-405, 340-354, 380 and 409 Joe McCarthy Drive in Amherst
- 269 Summer St., 789 W. Ferry St. and 604 Elmwood Ave. in Buffalo.
- Canterbury Lexington Apartments at 1042 and 1058 Delaware Ave. in Buffalo
- Garden Village Apartments at 70 Garden Village Drive in Cheektowaga
- Glen Park East Apartments at 4 E. Spring St. in Buffalo
- Hyde Park North Apartments at 196 North St. in Buffalo
- Meyer Pointe Senior Apartments at 80 Meyer Road in Amherst
- The Villages at Fairways at 2360-2410 Colvin Blvd. in Tonawanda
- Williamstowne Village at 2940 William St. in Cheektowaga
- Windsor Ferry Street Apartments at 703 W. Ferry St. in Buffalo
- Woods at Blairville at 830 Oriole Lane in Lewiston
- Milpine Apartments at 8203 Krull Pkwy. in Niagara Falls
- Green Lake Apartments at 50-100 North Lake Drive in Orchard Park
- Fox Creek Estates Apartments and Fox Creek Estates Townhouses at 9500-9510 Transit Road in Amherst, plus a commercial building
- Lockwood Villas at 2497 Sweet Home Road in Amherst.
At its height, Morgan's Morgan Communities and Morgan Management owned more than 180 properties with 36,000 apartments in 14 states nationwide. But in October, he sold half of his portfolio – 95 properties with 18,000 units in eight states – to a joint venture with Morgan Properties of King of Prussia, Pa. – an unrelated company despite the similar name. A handful of other properties have also been sold in one-off deals to other buyers.
The properties in the joint-venture deal were valued at about $2 billion, according to court filings. But instead of outright cash, Morgan and his family members received "units of equity" in the joint venture in exchange for the value of the properties that were sold.
Prosecutors agreed not to seek forfeiture against any properties in the joint venture that had not already been cited in court. But it reserved the right to try to seize the equity units of equivalent value for other properties, if warranted.
In the new stipulation, the government agreed to identify to Robert and Todd Morgan by March 2 "no more than 15 to 20" other properties for which "the United States contemplates filing a forfeiture action" against the equity units. It would also cite its justification. And it must file any civil actions by March 30.
Meanwhile, the father-and-son defendants, as well as Morgan's former finance chief, Michael Tremiti, and Buffalo mortgage broker Frank Giacobbe, continue fighting the government's charges as they await a trial that is not expected to begin in earnest until early next year. The defendants have asked the court to dismiss the case because they say the prosecution has violated their rights to a speedy trial by bumbling the document discovery process and timeline.
Most recently, the government acknowledged that 16,900 emails that may have been "privileged" or entitled to confidentiality – such as attorney-client communications or "marital" matters – were inadvertently made available to the investigators and prosecutors because of a software glitch. The emails were obtained from computers and servers seized in a May 2018 FBI raid of Morgan's Pittsford, N.Y., offices, but they were supposed to have been separated through a keyword search that didn't work.
Morgan's attorneys are now demanding that the government "immediately produce" them, arguing that his rights were violated.
Morgan is also battling a separate civil lawsuit by the Securities and Exchange Commission that accused him of running a "Ponzi-scheme" style operation by raising money from investors for real estate purchases and development but using the money to pay off earlier investors. Morgan has since used the proceeds from the joint-venture sale to repay all investors in the various funds.
However, the case still continues. The court-appointed receiver for the funds, Robert Knuts, this week filed an accounting of investor fund transactions involving "affiliate borrowers" – the Morgan limited-liability companies that own specific properties and borrowed money from the investors.
The accounting was prepared independently by Balmore Consulting, which did not find any payments from the affiliates that directly benefited Morgan. But it did find that he received an indirect benefit of $10.1 million – mostly for management and asset fees. That means that the Morgan-owned companies that owned the properties were also paying Morgan's separate management company for overseeing his apartments.
Story topics: bank fraud/ fbi/ indictment/ insurance fraud/ jonathan d. epstein/ Morgan Communities/ morgan management/ Morgan Properties/ mortgage fraud/ Robert C. Morgan/ U.S. Attorney/ U.S. District Court