Nine investors are accusing members of a prominent North Texas family of engaging in securities fraud in connection with a high-profile mixed-use project in Allen and other real estate investments, according to newly amended court documents.
The complaint, initially filed in October 2020 by Palazzo Holdings LLC, claims Thakkar family members defrauded investors who bought $2.5 million of securities in real estate investment funds, which were then used to pay entities owned by the family, including Thakkar Development Group LLC.
Saumil Thakkar, Poorvesh Thakkar, Mahesh Thakkar and Vaishali Thakkar were named in the suit alongside multiple Thakkar family-owned businesses. Some of the Thakkars’ best-known ventures, such as the FunAsia Radio Station and Fun Movie Grill theaters, were not listed in the lawsuit.
Palazzo Holdings was formed by investors who collectively put money into a fund managed by the Thakkars after reportedly forming strong relationships with the family members.
“My clients really trusted and respected the Thakkar family, which is one of the reasons they invested so much of their money in the fund,” said Bajaria & Forgerson law firm managing partner Favad Bajaria.
In a statement, Thakkar Developers refuted the lawsuit’s claims.
“The plaintiff is a group that includes experienced physician investors who now allege fraud because the Thakkar family refused to buy them out of an investment in which they no longer wish to be a participant,” according to the statement from Thakkar Developers. “This is an investor group that has made investments with the Thakkars, including after this lawsuit was filed.”
Investors claim in their lawsuit that they were told the fund would raise $20 million by October 2018 to invest in five North Texas real estate projects, including Park Plaza Tower in Dallas, land in Plano for a mixed-use development project and land in Allen for a mixed-use development project set to be anchored by a 15,000-seat cricket stadium.
Palazzo Holdings members were reassured by the fund’s affiliation with Thakkar-owned Perfect Tax and Finance, a McKinney tax consulting business, the complaint said.
“Most of [the investors] are health care professionals that had a relationship with the Thakkar family through their accounting firm,” Bajaria said. “They are just devastated and floored by what is happening in this fund.”
According to the lawsuit, Thakkar family members and their affiliated companies misrepresented information about the investment fund, including how much the Thakkar family would be investing and the registration status of the securities being issued.
The investors said they were given little information about the fund’s activities, which reportedly included “fraudulently transferring assets to Thakkar-connected entities.” The lawsuit also claimed the fund continued to accept new members beyond the agreed upon date of Oct. 31, 2018, diluting Palazzo Holdings’ ownership stake.
In total, the investors are suing the Thakkars for what they describe as 17 counts ranging from violations of the Texas Securities Act to breach of contract to unjust enrichment. They’re seeking to recover damages from the investments and related expenses.
The lawsuit is in the discovery process and is set to go to court in March, Bajaria said.