Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 1 of 49 PageID #: 1

Securities Arbitration Law Group, PLLC

By: Mack Press (NY Bar: 2885424)
1200 G St NW, Suite 800
Washington, DC 20005
(202) 444-4222
[email protected]
Attorney for Plaintiffs
​​ ​ ​ ​ ​ ​
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
_________________________________________X ​​ ​ Index No _________
JAMES MAY, ANTHONY MUSTO, PATRICIA
THOMAS, JONATHAN CIANGIULLI, ABBA
KADER, CORY TEREICK, and STANLEY
GRUBER
Plaintiffs,​
- Against - ​ ​ ​ ​ ​
​ JURY TRIAL DEMANDED
FIRST NATIONAL REALTY PARTNERS ​ LLC,
FIRST NATIONAL REALTY ADVISORS LLC,
ANTHONY GROSSO, CHRISTOPHER
PALERMO, JARED FELDMAN, ANDREW
DENARDO, KURT PADAVANO , BILL
COMEAU, FRED BATTISTI, JR., MICHAEL
HAZINSKI, ANDREA BOITNOTT, SAM
COLLIER, MIKE LAW, ANDREA WHITE,
BRANDYWINE CROSSING REALTY FUND
LLC, CHAMPIONS VILLAGE REALTY FUND
LLC, PREMIER CANTON REALTY FUND LLC,
CROWE’S CROSSING REALTY FUND LLC,
HV CENTER REALTY FUND LLC, MCALPIN
SQUARE REALTY FUND LLC, SAND HILL
PLAZA REALTY FUND LLC, SOUTHLAND
CROSSINGS REALTY FUND LLC, SS TULSA
CENTER REALTY FUND LLC, SUMMERDALE
PLAZA REALTY FUND LLC, VILLAGE AT
PITT MILLS REALTY FUND LLC,
WESTWOOD SC REALTY FUND LLC, PC
CENTER TIC 1 MEMBER LLC, CTS CENTER
REALTY FUND LLC, CS CENTER REALTY
FUND LLC, CK CENTER REALTY FUND LLC,
TROPICANA CENTRE LV REALTY FUND
LLC, MCALPIN SQUARE TIC 5 LLC, MAPLE
PARK SC TIC 12 MEMBER LLC, TANNEHILL
TIC 5 LLC, AND JOHN DOES 1-50,
Defendants.
​ X
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 2 of 49 PageID #: 2

JAMES MAY (“May”), ANTHONY MUSTO (“Musto”), PATRICIA THOMAS

(“Thomas”), JONATHAN CIANGIULLI (“Ciangiulli”), ABBA KADER (“Kader”), CORY

TEREICK (“Tereick”), and STANLEY GRUBER (“Gruber”) (collectively, “Plaintiffs”), by and

through their attorneys, bring this action against ANTHONY GROSSO, CHRISTOPHER

PALERMO, JARED FELDMAN, ANDREW DENARDO, KURT PADAVANO, BILL

COMEAU, FRED BATTISTI, JR., MICHAEL HAZINSKI, ANDREA BOITNOTT, SAM

COLLIER, MIKE LAW, ANDREA WHITE, JOHN DOES 1-50 (the “RICO Defendants” or

“Individual Defendants”), FIRST NATIONAL REALTY PARTNERS LLC, FIRST NATIONAL

REALTY ADVISORS, LLC, BRANDYWINE CROSSING REALTY FUND LLC,

CHAMPIONS VILLAGE REALTY FUND LLC, PREMIER CANTON REALTY FUND LLC,

CROWE’S CROSSING REALTY FUND LLC, HV CENTER REALTY FUND LLC, MCALPIN

SQUARE REALTY FUND LLC, SAND HILL PLAZA REALTY FUND LLC, SOUTHLAND

CROSSINGS REALTY FUND LLC, SS TULSA CENTER REALTY FUND LLC,

SUMMERDALE PLAZA REALTY FUND LLC, VILLAGE AT PITT MILLS REALTY FUND

LLC, WESTWOOD SC REALTY FUND LLC, CTS CENTER REALTY FUND LLC, CS

CENTER REALTY FUND LLC, CK CENTER REALTY FUND LLC, TROPICANA CENTRE

LV REALTY FUND LLC, MCALPIN SQUARE TIC 5 LLC, MAPLE PARK SC TIC 12

MEMBER LLC, TANNEHILL TIC 5 LLC (collectively, “Defendants”)1, and respectfully allege

as follows:

NATURE OF THE CASE​

1.​ This action is brought pursuant to the Racketeer Influenced and Corrupt Organizations
1
RICO Defendants Anthony Grosso and Christopher Palermo own Defendant FNRP. RICO Defendants Jared Feldman, Andrew
Denardo, Kurt Padavano, Bill Comeau, Fred Battist, Michael Hazinski, Andrea Boinett, Sam Collier, Mike Law, and Andrea White
are the executive team for Defendant FNRP. Defendant FNRP owns all of the other corporate Defendants. Defendant FNRA is the
asset manager for the companies.

1
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 3 of 49 PageID #: 3

Act, 18 U.S.C. §§ 1961-1968 (“RICO”)2, New York General Business Law § 349 (“NYGBL §

349”) and other referenced law, against the Defendants named herein, for Defendants’ wrongful

and unlawful conspiracy, ponzi scheme, and systematic pattern of deception and fraud in

connection with Defendants’ marketing and sale to Plaintiffs of shares in Defendants’ various

LLCs (the “Defendant LLCs”),3 which purchased large-scale commercial properties for

investment (the “Underlying Properties”).

2.​ Defendants’ conspiracy to defraud Plaintiffs with respect to their investments in the

Defendant LLCs permeated every aspect of Defendants’ interactions and business dealings with

Plaintiffs, as well as the financials for the Underlying Properties and the Defendant LLCs. From

the start, Defendants employed sophisticated, unconscionable, and abusive phone-tactics that

preyed upon investors seeking investment returns, like Plaintiffs.

3.​ Defendants, upon information and belief, then maliciously and willfully conspired to

defraud Plaintiffs and violate RICO, NYGBL § 349, and Securities and Exchange Commission

(“SEC”) Regulations by, amongst the plethora of other reasons discussed herein:

​ (i) paying illegal commissions to their salespersons in violation of SEC ​

2
Defendants are included in this action independently and as RICO Association-In-Fact Enterprises. See 18 U.S.C. §§ 1961-1968.
3
The LLCs for which Defendants sold shares in to Plaintiffs included:

Brandywine Crossing Realty Fund LLC, McAlpin Square Realty

Fund LLC, Sand Hill Plaza SC Realty Fund LLC, HV Center
Realty Fund, Village at Pitt Mills Realty Fund LLC, Crowe's
Crossing Realty Fund LLC, Summerdale Plaza Realty Fund LLC,
Southland Crossings Realty Fund LLC, SS Tulsa Center Realty
Fund LLC, Westwood SC Realty Fund LLC, Champions Village
Realty Fund LLC, PC Center TIC 1 Member LLC, CS Center
Realty Fund LLC, CK Center Realty Fund LLC, and Tropicana
Centre LV Realty Fund LLC, CS Center Realty Fund LLC, CK
Center Realty Fund LLC, Tropicana Centre LV Realty Fund LLC,
McAlpin Square TIC 5 LLC, Tannehill TIC 5 LLC, and Maple
Park SC TIC 12 Member LLC (collectively, the “Defendant
LLCs”).

2
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 4 of 49 PageID #: 4

​ ​ Regulation D;4

​ (ii) overvaluing the Underlying Properties in order to fraudulently ​

​ ​ abscond with the difference in price between the amount that Plaintiffs
​ ​ invested in each Underlying Property and the lesser price Defendants ​
​ ​ actually paid for each Underlying Property;

​ (iii) making unauthorized transfers and distributions to themselves ​

​ ​ and companies they own and commingled funds, and using other ​
​ ​ related-entities to siphon funds from the Underlying Properties;

​ (iv) executing of a ponzi scheme to pay Plaintiffs false “distributions” by ​

​ ​ acquiring debt and feigning initial profits on the Underlying ​ ​
​ ​ Properties; and

​ (v) fraudulently skimming from Plaintiffs more than half of the ​

​ ​ returns from the Underlying Properties by falsely holding out to ​
​ ​ Plaintiffs that Defendants were buying the Underlying Properties at ​
​ ​ below market prices – which was false.

See Dr. Craig McCann, SLCG Economic Consulting: First Realty Partners Reg D Offerings:

Muppets Do Commercial Real Estate at 3-4 (the “Dr. McCann Article”) (attached hereto as

Exhibit 1, with the Curriculum Vitae of Dr. McCann) (showing an example Defendants scheme

and Cash Distributions Chart concerning Defendants’ purchase of and financial accounting for

Defendant LLC –Maple Park SC Realty Fund LLC (“Maple Park”) – and concluding that “FNRP

is not buying these properties at below market prices as it claims. FNRP buys a property at

or above market and shaves more than half of the returns for itself.”) Contra RICO FNRP’s

Marketing and Sales Materials, https://fnrpusa.com/fnrp360/ (FNRP video where Defendants

falsely state that Defendants “secure properties both on-market and off-market, at or below market

value . . . ); infra.5

4
Defendants violated SEC Reg D by selling private placement securities without a broker-dealer license while paying Defendants’
employees and salespersons transaction-based compensation, and also by trying to circumvent SEC Reg D and illegally paying
Defendants' employees and salespersons transaction-based compensation under the guise of a bonus pool.
5
Several of the Plaintiffs herein were sold by Defendants shares in the Maple Park investment.
3
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 5 of 49 PageID #: 5

4.​ Defendants continued to fraudulently induce Plaintiffs to make their investments in the

Defendant LLCs by conspiring to fraudulently misrepresent to Plaintiffs that:

(a) ​ Defendants had completed all of their due diligence respecting

their purchases of the Underlying Properties;

(b)​ the Underlying Properties required no significant, material

improvements before they could be occupied for profit and
resold by Defendants (with a significant payout to Plaintiffs);6

(c) ​ Plaintiffs would receive consistent, blended investment-returns

from the Defendant LLCs of up to 9% annually;7 and

(d) ​ Defendants had used fixed-interest financing to purchase the

Underlying Properties.8

5.​ In reality and unbeknownst to Plaintiffs, Defendants were able to make each of the

Underlying Properties appear like a profitable investment because Defendants had defrauded

Plaintiffs and covertly financed the Underlying Properties with variable interest-rate loans. And

when the market turned and interest rates rose, because Defendants conspired to deceive Plaintiffs

and failed to leverage the Underlying Properties with the fixed-interest financing as agreed, the

properties were significantly overvalued, and Plaintiffs were left with shares in companies that did

not – and could not – produce proper distributions to Plaintiffs, or be sold for profit.9

6
Defendants also deceived Plaintiffs and other investors in a video on their company website describing the due diligence that
Defendants’ supposedly perform on every investment deal, where RICO-Defendant FNRP falsely claimed that, before every
purchase of an investment property by Defendants: “we have a Strike Force . . .[and] we turn over every stone we can prior to
closing on an asset to make sure there are no surprises once we close.” See https://fnrpusa.com/fnrp360/
7
See Exhibit 2 (screenshots of financials sent to Plaintiffs from Defendants guaranteeing annual returns of more than 9% for
Defendant LLC investments).
8
Defendants have attempted to hide their conspiracy to defraud Plaintiffs by, amongst the other ways discussed herein, using a
program called “Deal Room,” which enabled Defendants to make presentations to Plaintiffs regarding the Defendants-LLC
investments, and then covertly take-back all of the documents they produced in those presentations. See infra.
9
It makes no logical or business sense for Defendants to have used variable rates to finance the Underlying Properties. Interest
rates at the time were as low as they have ever been, so Defendants had no good faith basis or business justification for having
financed the Underlying Properties, at the time they did, using variable-rate loans (let alone intentionally withholding that
information from Plaintiffs).

4
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 6 of 49 PageID #: 6

6.​ For instance, approximately two to three years ago, Defendants purchased the Underlying

Property – Summerdale Plaza Realty Fund LLC (“Summerdale Plaza”) for approximately $35

Million, and Defendants sold shares to Plaintiffs and other investors in Summerdale Plaza.

Repeatedly, Defendants touted to Plaintiffs and other investors that the Summerdale Plaza

investment was a stabilized, extremely conservative investment. On February 6, 2025, however,

Plaintiffs were informed that Defendants sold Summerdale Plaza for approximately $15 Million –

a loss for Plaintiffs of approximately 60% on their investments in Summerdale Plaza, which is

unheard of.10

7.​ In addition, Defendants conspired to defraud Plaintiffs regarding their purchases of shares

in the Defendant LLC by covertly, altering material terms in the purchase documents respecting

the Underlying Properties (the “Purchase Documents”),11 without Plaintiffs’ knowledge or

informed consent, including: (i) Defendants’ fraudulent allocation to Plaintiffs with incorrect,

decreased fractional-ownership in the Defendant LLCs; and (ii) Defendants’ fraudulent

imposition to Plaintiffs of fraudulent acquisition-fees on every Defendant-LLC investment –

which allowed Defendants to wrongfully collect millions of dollars in fraudulent fees.12

8.​ To further help accomplish their scheme, Defendants unilaterally designated themselves

as the asset manager for the Defendant LLCs (the “Asset Manager”), and also as the sole realtor

respecting commercial-tenant deals in the Underlying Properties (the “Sole Realtor”). Then,

10
Plaintiffs will seek discovery in this case to determine how Defendants’ could allow such a massive loss to possibly occur with
respect to an investment that Defendants purported to Plaintiffs was a “stabilized, extremely-conservative investment.”
11
The Purchase Documents were drafted by Defendants and consist of many thousands of pages.
12
Defendants accomplished this misconduct by, amongst other devious methods, described herein: (i) using high-pressure,
fraudulent and abusive marketing and sales tactics; (ii) fraudulently and repeatedly holding out to Plaintiffs that, if Plaintiffs
desired, they could each “cash out” of the Defendant LLC investment-deals at any time, which was not true; (iii) failing to honor
agreements with Plaintiffs for reduced management fees; and (iv) intentionally failing to provide Plaintiffs with final copies of the
Purchase Documents with enough time for Plaintiffs' attorneys to properly review the Purchase Documents, or Plaintiffs file their
1031 property-exchange tax documents. See infra.

5
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 7 of 49 PageID #: 7

Defendants conspired to fraudulently and secretly include provisions in the Purchase Documents

that blocked Plaintiffs’ right to remove Defendants from those posts. Thus, Defendants were able

to continue their wrongful conspiracy – unfettered – and further defraud Plaintiffs and deplete the

assets of the Defendant LLCs.13

9.​ With Defendants now holding this self-imposed, “Golden Ticket” as the Asset Manager,

the Sole Realtor, and Owner of the Defendant LLCs (a textbook conflict-of-interest), Defendants

conspired to fraudulently manage the Underlying Properties, which enabled Defendants to

wrongfully collect from Plaintiffs and the Defendant LLCs: (a) millions of dollars in fraudulent

fees and other charges – disguised as payments for services to various Defendant-owned

companies; and (b) unreasonable, self-serving commissions and tenant-lease fees and costs.14

10.​ For instance, Defendants conspired to secretly form a construction arm of their business

(under the guise of being separate from Defendants) where, even though Defendants supposedly

completed all of their “due diligence” prior to purchasing the Underlying Properties, Defendants’

conspired to fraudulently charge the Defendant LLCs millions of dollars for excessive and

unreasonable construction-work and material improvements on the Underlying Properties –

which significantly depleted the assets of the Defendant LLCs and Plaintiffs’ investments and

13
Pursuant to the provisions of the Purchase Documents, removal of Defendant FNRA as the Asset Manager requires unanimous
consent of every Defendant LLCs. To block Plaintiffs and the other investors from being able to accomplish this, Defendants
secretly paid $1 to make themselves a voting LLC. With Defendants as a voting LLC, unanimous consent to remove Defendant
FNRA as the Asset Manager of the Defendant LLCs became impossible for Plaintiffs.
14
One egregious example of Defendants entering into a self-serving tenant-lease deal is the 2024 lease agreement between
Defendant Maple Park Place LLC and tenant Five Below, which Defendants executed and from which Defendants earned
substantial commissions and fees. Plaintiffs believe that discovery will show considerable other ways that Defendants wrongly
collected fees from the Underlying Properties and conspired to defraud Plaintiffs, including Defendants setting up and using other
related entities to wrongfully collect fees from the Underlying Properties and the Defendant LLCs. See infra.

6
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 8 of 49 PageID #: 8

distributions.15

11.​ Moreover, Defendants breached the Asset Management Agreement (“AMA”) that they

were bound by as the Asset Manager by, amongst other ways: (1) making it their policy of

refusing to provide to Plaintiffs any documents related to, or the list of other investors in, the

Underlying Properties and the Defendant LLCs, as required by the AMA; (2) failing to send to

Plaintiffs, for review and/or approval, regular Reports, Budgets and Notifications for the

Defendant LLCs and the Underlying Properties, as required by the AMA; and (3) also failing to

notify or gain approval from Plaintiffs for Defendants’ material expenditures outside those

contemplated in the Defendant-LLC operating agreements, as required by the AMA.

12.​ Defendants’ deceptive and fraudulent misconduct in this case, abusive methods of

solicitation, and misrepresentations and omissions of material facts with respect to Defendants’

wrongful conspiracy to market and sell to Plaintiffs shares in the Defendant LLCs and to manage

the Underlying Properties, as described herein, violate RICO, and also constitute deceptive and

unlawful acts and commercial practices in violation of NYGBL § 349, and the other laws

referenced herein. Each separate sale, commission earned, misrepresentation, and/or illegal act by

Defendants constitutes a separate violation under NYGBL § 349.

13.​ By way of this action, pursuant to RICO, NYGBL § 349, and other applicable law,

Plaintiffs seek to: (i) rescind their investments in the various Defendant LLCs that the Defendants

conspired to unlawfully market and sell to Plaintiffs; (ii) force Defendants to disgorge all monies

wrongfully collected from Plaintiffs in this case, including: (a) the amounts that Plaintiffs

15
In this regard, Defendants either: (a) fraudulently held out to Plaintiffs – at the time of Plaintiffs’ investments – that Defendants
had completed all of their due diligence respecting their purchase of the Underlying Properties (and that the Underlying Properties
were in good, working order) or (b) fraudulently held out to Plaintiffs – after Plaintiffs’ made their investments in the Defendant
LLCs – that Defendants’ construction company was required to charge the Underlying Properties and Plaintiffs millions of dollars
to work on multiple, material improvements for the the Underlying Properties.
7
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 9 of 49 PageID #: 9

invested in the Defendant LLCs, (b) the investment returns that Plaintiffs’ were guaranteed by

Defendants to receive from their Defendant-LLC investments, and (c) all acquisition and other

fees, and commissions, wrongfully collected by Defendants; (iii) pursuant to NYGBL § 349 have

the Court enjoin Defendants from continuing their unlawful and deceptive acts and practices

described herein; and (iv) recover actual damages in the amount of at least $12,283,804.00, plus

automatic treble damages under 18 U.S.C. § 1964(c), triple actual-damages under NYGBL §

349, consequential damages, exemplary damages, pre- and post-judgment interest, attorneys’

fees, litigation expenses, and costs of suit.

14.​ Because Defendants’ illegal conspiracy to defraud Plaintiffs was committed by Defendants

in this case with willful and malicious intent to injure and damage Plaintiffs, and with reckless

disregard for Plaintiffs’ legal rights, and because Defendants’ wrongful conspiracy allowed

Defendants to siphon tens of millions of dollars from Plaintiffs and the Defendant LLCs,

Plaintiffs also seek an award of punitive damages and triple actual-damages pursuant to NYGBL

§ 349(h).

JURISDICTION AND VENUE

15.​ ​ This Court has original subject-matter jurisdiction over the RICO claims pursuant to 29

U.S C. §1331, 18 U.S.C. §1964, and 18 U.S.C. §§1961 et seq.

16.​ This Court additionally has diversity jurisdiction pursuant to 28 U.S.C. § 1332(a) because

at least one Plaintiff resides in a different state than Defendants and the amount in controversy

exceeds $75,000 exclusive of interest and costs. In addition, this Court has supplemental

jurisdiction over the state law claims pursuant to 28 U.S.C. § 1367(a) as those claims are so

related to the federal claims in this action that they form part of the same case or controversy.

8
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 10 of 49 PageID #: 10

17.​ ​ Venue is proper in the United States District Court for the Eastern District of New York

pursuant to 28 U.S.C § 1391(a) because at all relevant times at least one Defendant resided, were

found, had agents, and/or conducted business in this District. In addition, at all relevant times,

Defendants maintained a corporate office in this District, and Defendants’ investor-relations team

and other sales, marketing, and/or advertising departments employees were employed and worked

in this District. In addition, Defendants’ sales strategy, advertising, marketing and promotion was

conceived, and emanated, in substantial part from Defendants' offices in this District, and the

Defendant LLCs were presented for sale to residents of this District, including several Plaintiffs.

Further, Defendants’ own and manage many commercial properties in this District. Moreover, a

substantial part of Defendants’ wrongful and unlawful acts and omissions to Plaintiffs occurred in

this District.

PARTIES

18.​ PLAINTIFF JAMES MAY is a resident of Quincy, Illinois. The plaintiff invested

$7,064,000.00 in the Defendant LLCs (see infra, Chart showing Plaintiffs’ investments in

Defendant LLCs).

19.​ PLAINTIFF ANTHONY MUSTO is a resident of Hewlett Harbor, New York. The

plaintiff invested $3,200,000.00 in the Defendant LLCs (see infra, Chart showing Plaintiffs’

investments in Defendant LLCs).

20.​ PLAINTIFF PATRICIA THOMAS is a resident of San Diego, California. The plaintiff

invested $409,804.00 in the Defendant LLCs (see infra, Chart showing Plaintiffs’ investments in

Defendant LLCs).

21.​ PLAINTIFF JONATHAN CIANGIULLI is a resident of Freeport, New York. The plaintiff

9
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 11 of 49 PageID #: 11

invested $60,000.00 in the Defendant LLCs (see infra, Chart showing Plaintiffs’ investments in

Defendant LLCs).

22.​ PLAINTIFF CORY TEREICK is a resident of Gilbert, Arizona. The plaintiff invested

$500,000.00 in Defendant LLCs (see infra, Chart showing Plaintiffs’ investments in Defendant

LLCs).

23.​ PLAINTIFF ABBA KADER is a resident of Laguna Niguel, California. The plaintiff

invested $800,000.00 in Defendant LLCs (see infra, Chart showing Plaintiffs’ investments in

Defendant LLCs).

24.​ PLAINTIFF STANLEY GRUBER is a resident of Delray Beach, Florida. The plaintiff

invested $250,000.00 in Defendant LLCs (see infra, Chart showing Plaintiffs’ investments in

Defendant LLCs).

25.​ Defendant FIRST NATIONAL REALTY PARTNERS LLC (“FNRP”) owns the other

Defendant LLCs and is a privately-held corporation with over $2 billion in assets, organized

under the laws of the State of Delaware, with its principal place of business located in Red Bank,

New Jersey. It can be served through the Delaware Secretary of State.

26.​ Defendant FIRST NATIONAL REALTY ADVISORS LLC (“FNRA”) is the asset

manager for the (FNRP-owned) Defendant LLCs, and is a privately-held corporation organized

under the laws of the State of Delaware, with its principal place of business located in Red Bank,

New Jersey. It can be served through the Delaware Secretary of State.

27.​ RICO Defendant Anthony Grosso is the owner, managing member, and head decision

maker for Defendant FNRP and Defendant FNRA; he completely dominates Defendant FNRP

10
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 12 of 49 PageID #: 12

and FNRA; he uses the corporate form for FNRP and FNRA as alter-egos and as mere tools

and/or business conduits; and, upon information and belief, Defendant Grosso has commingled

funds and made unauthorized transfers to and from the Defendant-companies named herein.

Upon information and belief, Defendant Grosso is a resident of the State of New Jersey.

Moreover, he is a RICO conspirator in this lawsuit (along with RICO Defendant Palermo and

other yet unnamed employees of Defendants FNRP and FNRA,16 and the RICO Enterprises

Defendant FNRP and Defendant FNRA) in connection with Defendants’ conspiracy to defraud

Plaintiffs and systematic pattern of deception and misrepresentation with respect to Defendants

sale to Plaintiffs of shares in Defendant LLCs.

28.​ RICO Defendant Christopher Palermo is the owner, managing member, and head decision

maker for Defendant FNRP and Defendant FNRA; he completely dominates Defendant FNRP

and FNRA; he uses the corporate form for FNRP and FNRA as alter-egos and as mere tools

and/or business conduits and, upon information and belief, Defendant Palermo has commingled

funds and made unauthorized transfers to and from the Defendant-companies named herein. Upon

information and belief, Defendant Palermo is a resident of the State of New Jersey. Moreover, he

is a RICO conspirator in this lawsuit (along with RICO Defendant Grosso and other yet unnamed

employees of Defendants FNRP and FNRA, and the RICO Enterprises Defendant FNRP and

Defendant FNRA) in connection with Defendants’ conspiracy to defraud Plaintiffs and systematic

pattern of deception and misrepresentation with respect to Defendants sale to Plaintiffs of shares

in Defendant LLCs.

29.​ RICO Defendant Jared Feldman is the Executive Chairman of Defendant FNRP. He is a

RICO conspirator in this lawsuit (along with the other RICO Defendants named herein, other yet
16
The other yet unnamed employees of and/or RICO co-conspirators with Defendants FNRP and FNRA have been captioned,
“John Does 1-50.”
11
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 13 of 49 PageID #: 13

unnamed employees of Defendants FNRP and FNRA, captioned as “John Does 1-50,” and the

RICO Enterprises Defendant FNRP and Defendant FNRA) in connection with Defendants’

conspiracy to defraud Plaintiffs and systematic pattern of deception and misrepresentation with

respect to Defendants sale to Plaintiffs of shares in Defendant LLCs.

30.​ RICO Defendant Andrew DeNardo is the President – Head of Investor Relations – of

Defendant FNRP. He is a RICO conspirator in this lawsuit (along with the other RICO

Defendants named herein, other yet unnamed employees of Defendants FNRP and FNRA,

captioned as “John Does 1-50,” and the RICO Enterprises Defendant FNRP and Defendant

FNRA) in connection with Defendants’ conspiracy to defraud Plaintiffs and systematic pattern of

deception and misrepresentation with respect to Defendants sale to Plaintiffs of shares in

Defendant LLCs.

31.​ RICO Defendant Kurt Padavano is the Chief Operating Officer of Defendant FNRP. He

is a RICO conspirator in this lawsuit (along with the other RICO Defendants named herein, other

yet unnamed employees of Defendants FNRP and FNRA, captioned as “John Does 1-50,” and the

RICO Enterprises Defendant FNRP and Defendant FNRA) in connection with Defendants’

conspiracy to defraud Plaintiffs and systematic pattern of deception and misrepresentation with

respect to Defendants sale to Plaintiffs of shares in Defendant LLCs.

32.​ RICO Defendant Bill Comeau is the Chief Financial Officer of Defendant FNRP. He is a

RICO conspirator in this lawsuit (along with the other RICO Defendants named herein, other yet

unnamed employees of Defendants FNRP and FNRA, captioned as “John Does 1-50,” and the

RICO Enterprises Defendant FNRP and Defendant FNRA) in connection with Defendants’

conspiracy to defraud Plaintiffs and systematic pattern of deception and misrepresentation with

12
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 14 of 49 PageID #: 14

respect to Defendants sale to Plaintiffs of shares in Defendant LLCs.

33.​ RICO Defendant Fred Battisti is the Chief Revenue Officer of Defendant FNRP. He is a

RICO conspirator in this lawsuit (along with the other RICO Defendants named herein, other yet

unnamed employees of Defendants FNRP and FNRA, captioned as “John Does 1-50,” and the

RICO Enterprises Defendant FNRP and Defendant FNRA) in connection with Defendants’

conspiracy to defraud Plaintiffs and systematic pattern of deception and misrepresentation with

respect to Defendants sale to Plaintiffs of shares in Defendant LLCs.

34.​ RICO Defendant Michael Hazinski is the Chief Investment Officer of Defendant FNRP.

He is a RICO conspirator in this lawsuit (along with the other RICO Defendants named herein,

other yet unnamed employees of Defendants FNRP and FNRA, captioned as “John Does 1-50,”

and the RICO Enterprises Defendant FNRP and Defendant FNRA) in connection with

Defendants’ conspiracy to defraud Plaintiffs and systematic pattern of deception and

misrepresentation with respect to Defendants sale to Plaintiffs of shares in Defendant LLCs.

35.​ RICO Defendant Andrea Boitnott is the Director of Property Management of Defendant

FNRP. She is a RICO conspirator in this lawsuit (along with the other RICO Defendants named

herein, other yet unnamed employees of Defendants FNRP and FNRA, captioned as “John Does

1-50,” and the RICO Enterprises Defendant FNRP and Defendant FNRA) in connection with

Defendants’ conspiracy to defraud Plaintiffs and systematic pattern of deception and

misrepresentation with respect to Defendants sale to Plaintiffs of shares in Defendant LLCs.

36.​ RICO Defendant Sam Collier is the Executive Vice President, Leasing – Anchors and

Accounts of Defendant FNRP. He is a RICO conspirator in this lawsuit (along with the other

RICO Defendants named herein, other yet unnamed employees of Defendants FNRP and FNRA,

13
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 15 of 49 PageID #: 15

captioned as “John Does 1-50,” and the RICO Enterprises Defendant FNRP and Defendant

FNRA) in connection with Defendants’ conspiracy to defraud Plaintiffs and systematic pattern of

deception and misrepresentation with respect to Defendants sale to Plaintiffs of shares in

Defendant LLCs

37.​ RICO Defendant Mike Law is the Senior Vice President of Marketing of Defendant FNRP.

He is a RICO conspirator in this lawsuit (along with the other RICO Defendants named herein,

other yet unnamed employees of Defendants FNRP and FNRA, captioned as “John Does 1-50,”

and the RICO Enterprises Defendant FNRP and Defendant FNRA) in connection with

Defendants’ conspiracy to defraud Plaintiffs and systematic pattern of deception and

misrepresentation with respect to Defendants sale to Plaintiffs of shares in Defendant LLCs

38.​ RICO Defendant Andrea White is the Director of Underwriting of Defendant FNRP. She

is a RICO conspirator in this lawsuit (along with the other RICO Defendants named herein, other

yet unnamed employees of Defendants FNRP and FNRA, captioned as “John Does 1-50,” and the

RICO Enterprises Defendant FNRP and Defendant FNRA) in connection with Defendants’

conspiracy to defraud Plaintiffs and systematic pattern of deception and misrepresentation with

respect to Defendants sale to Plaintiffs of shares in Defendant LLCs

39.​ Defendant BRANDYWINE CROSSING REALTY FUND LLC is a privately-held

corporation organized under the laws of the State of Delaware, with its principal place of business

located in Red Bank, New Jersey. It can be served through the Delaware Secretary of State.

40.​ Defendant CHAMPIONS VILLAGE REALTY FUND LLC is a privately held corporation

organized under the laws of the State of Delaware, with its principal place of business located in

Red Bank, New Jersey. It can be served through the Delaware Secretary of State.

14
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 16 of 49 PageID #: 16

41.​ Defendant CROWE’S CROSSING REALTY FUND LLC is a privately-held corporation

organized under the laws of the State of Delaware, with its principal place of business located in

Red Bank, New Jersey. It can be served through the Delaware Secretary of State.

42.​ Defendant HV CENTER REALTY FUND LLC is a privately held corporation organized

under the laws of the State of Delaware, with its principal place of business located in Red Bank,

New Jersey. It can be served through the Delaware Secretary of State.

43.​ Defendant MCALPIN SQUARE REALTY FUND LLC is a privately held corporation

organized under the laws of the State of Delaware, with its principal place of business located in

Red Bank, New Jersey. It can be served through the Delaware Secretary of State.

44.​ Defendant SAND HILL PLAZA REALTY FUND LLC is a privately held corporation

organized under the laws of the State of Delaware, with its principal place of business located in

Red Bank, New Jersey. It can be served through the Delaware Secretary of State.

45.​ Defendant SOUTHLAND CROSSINGS REALTY FUND LLC is a privately held

corporation organized under the laws of the State of Delaware, with its principal place of business

located in Red Bank, New Jersey. It can be served through the Delaware Secretary of State.

46.​ Defendant SS TULSA CENTER REALTY FUND LLC is a privately held corporation

organized under the laws of the State of Delaware, with its principal place of business located in

Red Bank, New Jersey. It can be served through the Delaware Secretary of State.

47.​ Defendant SUMMERDALE PLAZA REALTY FUND LLC is a privately held corporation

organized under the laws of the State of Delaware, with its principal place of business located in

Red Bank, New Jersey. It can be served through the Delaware Secretary of State.

15
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 17 of 49 PageID #: 17

48.​ Defendant VILLAGE AT PITT MILLS REALTY FUND LLC is a privately held

corporation organized under the laws of the State of Delaware, with its principal place of business

located in Red Bank, New Jersey. It can be served through the Delaware Secretary of State.

49.​ Defendant WESTWOOD SC REALTY FUND LLC is a privately held corporation

organized under the laws of the State of Delaware, with its principal place of business located in

Red Bank, New Jersey. It can be served through the Delaware Secretary of State.

Defendant PC CENTER TIC 1 MEMBER LLC is a privately held corporation organized under

the laws of the State of Delaware, with its principal place of business located in Red Bank, New

Jersey. It can be served through the Delaware Secretary of State.

50.​ Defendant CS CENTER REALTY FUND LLC is a privately held corporation organized

under the laws of the State of Delaware, with its principal place of business located in Red Bank,

New Jersey. It can be served through the Delaware Secretary of State.

51.​ Defendant CK CENTER REALTY FUND LLC is a privately held corporation organized

under the laws of the State of Delaware, with its principal place of business located in Red Bank,

New Jersey. It can be served through the Delaware Secretary of State.

52.​ Defendant TROPICANA CENTRE LV REALTY FUND LLC is a privately held

corporation organized under the laws of the State of Delaware, with its principal place of business

located in Red Bank, New Jersey. It can be served through the Delaware Secretary of State.

53.​ Defendant MCALPIN SQUARE TIC 5 LLC is a privately held corporation organized

under the laws of the State of Delaware, with its principal place of business located in Red Bank,

New Jersey. It can be served through the Delaware Secretary of State.

16
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 18 of 49 PageID #: 18

54.​ Defendant MAPLE PARK SC TIC 12 MEMBER LLC is a privately held corporation

organized under the laws of the State of Delaware, with its principal place of business located in

Red Bank, New Jersey. It can be served through the Delaware Secretary of State.

55.​ Defendant TANNEHILL TIC 5 LLC is a privately held corporation organized under the

laws of the State of Delaware, with its principal place of business located in Red Bank, New

Jersey. It can be served through the Delaware Secretary of State.

​ Application of New York law To The Facts of This Lawsuit Is Appropriate

56.​ Application of New York law to this lawsuit is appropriate because Defendants are have a

corporate office and have a substantial presence in New York and/or maintain some or all of their

customer relations, sales, marketing and/or advertising department(s) in New York, where a

substantial part of the alleged conspiracy and egregious misconduct by Defendants, described

herein, emanated from. In addition, Defendants’ sales strategy, advertising, marketing and

promotion was conceived, and emanated in substantial part, from Defendants' offices in New

York. Further, Defendant LLCs were presented for sale to residents of New York. Further,

Defendants own and manage many commercial properties in New York.

57.​ New York also has a substantial, compelling reason to protect consumers from deceptive

and unlawful misconduct of companies with corporate offices and a substantial presence there,

and who regularly sell services and products in and/or from New York and to New York residents,

such as Plaintiffs.

​ FACTS
58.​ Defendant FNRP is a significant investment company (with over $2 Billion in reported

assets), that uses capital from investors to purchase commercial real-estate properties for

17
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 19 of 49 PageID #: 19

investment. Plaintiffs are private investors that purchased from Defendants shares in various

Limited Liability Companies (“LLC”), which Defendants conspired to fraudulently market and

sell to Plaintiffs (and which are the basis for this lawsuit) (the “Defendant LLCs”).17 Throughout

2022 and 2023, Defendants offered to Plaintiffs and other investors shares in the Defendant LLCs.

59.​ From the start, Defendants conspired to engage in a systematic pattern of deception and

fraud with respect to Plaintiffs’ investments in the Defendant LLCs, which permeated every

aspect of Defendants’ interactions and business dealings with Plaintiffs (as well as the financials

for the Underlying Properties and the Defendant LLCs), and which allowed Defendants to

wrongfully collect more than $12 Million from Plaintiffs.18

60.​ Defendants initially employed sophisticated, abusive phone-tactics, and ran a masterful –

but fraudulent – sales-and-telemarketing operation, that preyed upon investors seeking investment

returns, like Plaintiffs. Defendants personally and through various employees/sales agents made

(and continue to make) thousands of intrastate and interstate telephonic sales calls per month, and

contacted potential investors throughout the country.19

61.​ Defendants then, upon information and belief, conspired to falsely overvalue the

Underlying Properties so that Defendants could unlawfully and fraudulently abscond with the

difference in price between the amount that Plaintiffs invested in each Underlying Property and

the lesser price Defendants actually paid for each Underlying Property. Upon information and

17
See supra note 3 (listing the Defendant LLCs).
18
Plaintiffs have alleged herein that Defendants’ have conspired to commit against Plaintiffs fraudulent inducement; fraud in
preparing the Agreements and financials concerning the Underlying Properties and the Defendant LLCs; and fraud by Defendants
in managing and being the Sole Realtor for the Underlying Properties. See infra.
19
Defendants’ conspiracy to use unscrupulous and manipulative sales and marketing techniques convinced each Plaintiff (and other
investors) to invest in the Defendant LLCs, by providing Plaintiffs with fraudulent and deceptive information, and collecting the
investment funds from Plaintiffs via the U.S. Mail and/or intrastate and interstate wire transfers.

18
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 20 of 49 PageID #: 20

belief, one egregious example where Defendants used their scheme and conspired to substantially

overvalue the Underlying Property, and wrongfully collect from that property significant funds,

was an investment that Defendants sold to investors, named: Waldorf Plaza.20

62.​ Incredibly, Defendants also conspired to defraud Plaintiffs by falsely holding out to

Plaintiffs that Defendants were buying the Underlying Properties at below market prices – which

was false – and then fraudulently skimming from Plaintiffs more than half of the returns from the

investment-properties they buy. See Dr. McCann Article at 3 (attached hereto as Exhibit 1, with

the Curriculum Vitae of Dr. McCann ) (showing an example Defendants scheme and Cash

Distributions Chart concerning Defendants’ purchase of and financial accounting for Defendant

LLC –Maple Park SC Realty Fund LLC (“Maple Park”) – and concluding that “FNRP is not

buying these properties at below market prices as it claims. FNRP buys a property at or above

market and shaves more than half of the returns for itself.”)

63.​ Moreover, Defendants violated Securities and Exchange Commission Regulation D by

marketing and selling shares in the Defendant LLCs to Plaintiffs and other investors (i.e., private

placement securities), while paying illegal transaction-based compensation to their salespersons

without a broker-dealer license, and also by Defendants paying their salespersons

transaction-based compensation under the guise of a bonus pool.21

64.​ In presenting the investments in the Defendant LLCs to Plaintiffs, Defendants falsely held

out that Defendants had completed all of their required due diligence before purchasing each of

the underlying investment properties (and that of Underlying Properties required virtually no

20
Plaintiffs will seek in discovery information and financials respecting the Waldorf Plaza deal that Defendants’ conspired to
severely overvalue.
21
Defendants’ unlawful violation of SEC Reg D in this case is also a violation of NYGBL § 349.

19
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 21 of 49 PageID #: 21

material improvements before they could be occupied for profit and re-sold by Defendants in the

near future).

65.​ In actuality, conspired to form a construction arm of their business (under the guise of

being separate from Defendants) where Defendants conspired to significantly deplete the assets of

the Defendant LLCs and Plaintiffs’ investments and distributions – by feigning material

improvements and, upon information and belief, collecting millions of dollars for fraudulent

construction-work to the Underlying Properties.22

66.​ In fact, RICO-Defendant FNRP falsely stated in a video on their company website that,

before every purchase of an investment property by Defendants: “we have a Strike Force . . .[and]

we turn over every stone we can prior to closing on an asset to make sure there are no surprises

once we close.”23 ​

67.​ For instance, approximately two to three years ago, Defendants purchased Summerdale

Plaza Realty Fund LLC (“Summerdale Plaza”) for approximately $35 Million, and Defendants

sold shares in that Underlying Property to Plaintiffs and other investors. In marketing

Summerdale Plaza, Defendants touted to Plaintiffs that the Summerdale Plaza investment was a

stabilized, extremely-conservative investment that was virtually guaranteed to be resold for profit.

Just today (February, 6, 2025), however, Plaintiffs were informed by Defendants that Defendants

sold Summerdale Plaza for approximately $15 Million – a loss to Plaintiffs and the other

investors of $20 Million, which is a 60% loss on Plaintiffs' investments in Summerdale Plaza.24

22
See also Dr. McCann Article (attached hereto as Exhibit 1)
23
https://fnrpusa.com/fnrp360/ (emphasis added).
24
Plaintiffs will seek discovery in this case to determine how Defendants could possibly allow such a massive loss to occur on a
purportedly stabilized, extremely-conservative investment.

20
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 22 of 49 PageID #: 22

68.​ As such, Defendants either (a) fraudulently held out to Plaintiffs – at the time of Plaintiffs’

investments – that Defendants had completed all of their due diligence respecting their purchase

of the Underlying Properties (and that the Underlying Properties were in good, working order) or

(b) fraudulently held out to Plaintiffs – after Plaintiffs’ made their investments in the Defendant

LLCs – that Defendants’ construction company was required to charge the Underlying Properties

and Plaintiffs millions of dollars to work on multiple, material improvements for the the

Underlying Properties.25

69.​ Defendants also conspired to misrepresent to Plaintiffs that the Underlying Properties

would produce to Plaintiffs consistent, blended investment-returns of up to 9% annually, because

Defendants had purportedly acquired the Underlying Properties with fixed-interest loans.26

70.​ In reality and unbeknownst to Plaintiffs, Defendants were able to make each Underlying

Property appear like a profitable investment, because Defendants had actually and covertly

financed the Underlying Properties with variable interest-rate loans. And when the market turned

and interest rates rose, because Defendants deceived Plaintiffs and failed to leverage the

Underlying Properties with the fixed-interest financing as agreed, the properties became

significantly overvalued, and Plaintiffs were left with shares in companies that did not – and could

not – produce proper distributions to Plaintiffs, or be sold for profit.27

25
See https://fnrpusa.com/fnrp360/ (video and website where Defendants claim they perform all of the due diligence required by
them using their “Strike Force Team,” before purchasing investment properties).
26
See Exhibits 2-3. These are the very reasons Plaintiffs invested their money with Defendants, as opposed to earning less
FDIC-backed interest in a federal bank or credit union.
27
As held out by Defendants, Plaintiffs were virtually guaranteed blended, annual investment-returns from the Defendant LLCs of
over 9% (with the Underlying Properties to be resold for significant profit) because: (i) Defendants supposedly financed the
Underlying Properties with fixed-rate loans; and (ii) the Underlying Properties allegedly required no significant, material
improvements before they could be occupied for profit and sold in the near future, with a significant payout to Plaintiffs. See, e.g.,
Exhibit 2-3

21
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 23 of 49 PageID #: 23

71.​ In order to further induce Plaintiffs to provide Plaintiffs additional, false security and to

make additional investments in the Defendant LLCs, Defendants made additional, material

misrepresentations to Plaintiffs in their conspiracy to fraudulently market and sell the Defendant

LLCs and manage the Underlying LLCs. For instance, Defendants repeatedly lied to Plaintiffs

and falsely claimed that: (a) if Plaintiffs desired, they could each “cash out” of the Defendant LLC

deals at any time; (b) salespersons of Defendants were in fact a managing principal of FNRP (with

decision making power) when, in reality, that was false; and (c) the founders and the management

of FNRP had bought shares for themselves in each and every one of the Defendant-LLC

investments that Plaintiffs had bought shares in. In reality, these statements by Defendants were

patently false.28

72.​ Plaintiffs were further lied to by Defendants and told that Plaintiffs would have access, any

time they requested, to the documents and financials respecting the Underlying Properties,

including the list of other investors. But when Plaintiffs requested these items, in order to cover-up

Defendants’ fraud, conspiracy, and material misrepresentations, Defendants made it their policy of

refusing to provide to Plaintiffs any underlying documents (or the list of other investors), despite

repeated demands by Plaintiffs.

73.​ In turn, Defendants’ intentionally failed to provide Plaintiffs with final copies of the

Purchase Documents with reasonable time before Defendants required Plaintiffs to execute the

Purchase Documents (so Plaintiffs’ attorneys could not properly review the Purchase Documents

and Plaintiffs were unaware of many contract terms and financial-numbers that Defendants added

at the last minute. Defendants also calculatingly stalled their completion of the Purchase

28
See Exhibit 4 (communication from Plaintiffs to Defendants requesting that Defendants cancel and return Plaintiffs’ investments
in the Defendants LLCs, and response from Defendants denying Plaintiffs’ requests to cancel their investments).

22
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 24 of 49 PageID #: 24

Documents until just before Plaintiffs were required to file their 1031 property-exchange

documents (which Plaintiffs had already designated with the IRS, so Plaintiffs were afraid to push

back the date that Defendants required Plaintiffs to execute the Purchase Documents).

74.​ These hard-nosed tactics by Defendants for immediate execution by Plaintiffs of the

Purchase Documents allowed Defendants to fraudulently alter material-terms in the Purchase

Documents without Plaintiffs’ informed consent and which Plaintiffs were not aware of,

including: (a) Defendants’ fraudulent allocation to Plaintiffs with incorrect, decreased

fractional-ownership in the Defendant LLCs; and (b) Defendants’ wrongful imposition of

substantial acquisition-fees to be paid by Plaintiffs to Defendants on every Defendant-LLC

investment. These illegal additions by Defendants to the Purchase Documents respecting the

Defendant LLCs allowed Defendants to collect millions of dollars in fraudulent fees.29

75.​ Defendants concealed their conspiracy and wrongful conduct from Plaintiffs, and kept

Plaintiffs from being able to physically keep, review, or compare the literature, documents, and

financials that Defendants used to present to Plaintiffs the terms concerning Plaintiffs’

Defendant-LLC investments and Defendants’ purchases of the Underlying Properties, by

activating a computer program called “The Deal Room” – which serves to delete Defendants’

literature, documents and financials related to the Defendant LLCs after a short period of time.

This enabled Defendants to make fraudulent presentations to Plaintiffs regarding the

Defendant-LLC investments, and then covertly “take back” all of the documents they produced in

those presentations.30

29
The Purchase Documents were drafted by Defendants and consist of many thousands of pages..
30
Plaintiffs will serve discovery requests and third-party subpoenas in this case for all documents that Defendants' kept or used at
any time in The Deal Room.

23
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 25 of 49 PageID #: 25

76.​ And when Plaintiffs complained to Defendants about the excessive management and other

fees that Defendants were wrongfully collecting from Plaintiffs, Defendants executed separate

agreements with Plaintiffs for reduced management fees, but Defendants then fraudulently failed

to honor those separate agreements.31

77.​ Moreover, to give Defendants unfettered ability to continue their scheme, Defendants

unilaterally designated themselves as the asset manager for the Defendant LLCs (the “Asset

Manager”), and also as the sole realtor respecting commercial-tenant deals in the Underlying

Properties (the “Sole Realtor”). Then, Defendants conspired to fraudulently and secretly include

provisions in the Purchase Documents that blocked Plaintiffs’ right to remove Defendants from

those posts. Thus, Defendants were able to continue their wrongful conspiracy and further

defraud Plaintiffs and deplete the assets of the Defendant LLCs.32

78.​ With Defendants now holding this self-imposed, “Golden Ticket” as the Asset Manager,

the Sole Realtor, and Owner of the Defendant LLCs (a textbook conflict-of-interest), Defendants

conspired to fraudulently manage the Underlying Properties, which enabled Defendants to

wrongfully collect from Plaintiffs and the Defendant LLCs: (i) millions of dollars in fraudulent

fees and other charges – disguised as payments for services to various Defendant-owned

companies; and (ii) unreasonable, self-serving commissions and tenant-leasing fees and costs.33

31
See, e.g., Exhibit 5.
32
Pursuant to the provisions of the Purchase Documents, removal of Defendant FNRA as the Asset Manager requires unanimous
consent of every Defendant LLC. To block Plaintiffs and the other investors from being able to accomplish this removal process,
Defendants paid $1 to make themselves a voting LLC. With Defendants as a voting LLC, unanimous consent to remove Defendant
FNRA as the Asset Manager of the Defendant LLCs became impossible for Plaintiffs.
33
Plaintiffs believe that discovery will show considerable other ways that Defendants wrongly collected fees from the Defendant
LLCs and conspired to defraud Plaintiffs, including Defendants setting up and using other related entities to wrongfully collect fees
from the Underlying Properties and the Defendant LLCs.

24
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 26 of 49 PageID #: 26

79.​ As the Sole Realtor, Defendants also conspired to wrongfully collect unreasonable,

self-serving commissions and leasing fees regarding tenant-leasing deals. One egregious example

of Defendants entering into a self-serving lease deal is the 2024 lease agreement between

Defendant Maple Park Place LLC and tenant Five Below, which Defendants executed and from

which Defendants earned substantial commissions and fees. The reported leasing costs were

$1,071,380 for a lease agreement valued only at $2,286,284 over 10 years – which makes

absolutely no business or logical sense. And on top of that, Defendants took six-month longer

than reasonable to complete the self-serving, Five Below deal.

80.​ Moreover, Defendants breached the Asset Management Agreement that they were bound by

as the Asset Manager of the Underlying Properties by: 1. making it their policy of refusing to

provide to Plaintiffs any documents (or the list of other investors) related to the Underlying

Properties, as required by the AMA; 2. failing to send regular Reports, Budgets or Notifications

for the Defendant LLCs and/or the Underlying Properties to Plaintiffs for review and/or approval,

as required by the AMA; and 3. also failing to notify or gain approval from Plaintiffs for

Defendants’ material expenditures on the Underlying Properties outside those contemplated in the

Defendant-LLC operating agreements, as required by the AMA.

81.​ Specifically, Defendants failed to:

●​ deliver to the tenants-in-common Annual Budgets and

Operating Plans prior for the Defendant LLCs, which
Defendants were required to deliver by the 15th of December
each year;

●​ notify the tenants-in-common of any expenditures Defendants

made respecting the Underlying Properties that were not with
the budget;

●​ notify the tenants-in-common of material increases in costs

25
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 27 of 49 PageID #: 27

and expenditures respecting the Underlying Properties.

●​ notify the tenants-in-common of leasing expenditures and

vacancies outside the Operating Plan respecting the
Underlying Properties;

●​ notify the tenants-in-common of capital expenditures outside

the Operating Plan respecting the Underlying Properties;

●​ bid out contracts and expenditures over a certain threshold

amount respecting the Underlying Properties;

●​ deliver accounting documents for the Defendant LLCs for tax

filing purposes within the scheduled deadline.

82.​ To further cover-up Defendants’ conspiracy to defraud Plaintiffs in this case, upon

information and belief, Defendants also commingled funds and took unauthorized transfers to

themselves and – because Defendants had conspired to fraudulently finance the Underlying

Properties with variable rate loans (instead of fixed-rate financing, as agreed), and also because

Defendants’ conspired to skim money from the Underlying Properties , which depleted the assets

of the Underlying Properties and caused the Underlying Properties to be undervalued34 –

Defendants concealed this and their other misconduct through their execution of a ponzi scheme

to acquire debt and feign initial profits on the Underlying Properties.35

83.​ Accordingly, Plaintiffs have repeatedly requested that Defendants cancel and return

Plaintiffs’ investments in the Defendants LLCs, but Defendants have refused Plaintiffs’

requests.36

34
See Dr. McCann Article at 3-4 (Chart of Defendants’ Wrongful Cash-Distributions) (attached hereto as Exhibit 1, with the
Curriculum Vitae of Dr. McCann ).
35
Plaintiffs believe discovery in this case will help fill in any gaps that Defendants have hid from Plaintiffs regarding: the
parameters of Defendants’ Ponzi scheme; commingling of funds; unauthorized transfers; and fraudulent conspiracy to defraud
Plaintiffs.
36
See, e.g., Exhibit 4 (sample communication from Plaintiffs to Defendants requesting that Defendants cancel and return Plaintiffs’
investments in the Defendants LLCs, and response from Defendants denying those requests).

26
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 28 of 49 PageID #: 28

​ Plaintiffs’ Investments in the Defendant LLCs

84.​ Plaintiff James May invested in the Defendant LLCs as listed here: ​

Investment Name Ownership % Commitment Amount

1.​ Brandywine Crossing Realty Fund LLC​ 6.46%​ ​ ​ $2,000,000.00

2.​ McAlpin Square Realty Fund LLC​ ​ 10.77% ​ ​ $1,000,000.00
3.​ Sand Hill Plaza SC Realty Fund LLC​​ 8.61%​ ​ ​ $1,000,000.00
4.​ HV Center Realty Fund LLC​​ ​ 6.11% ​​ ​ $600,000.00
5.​ Village at Pitt Mills Realty Fund LLC​ 3.47% ​​ ​ $500,000.00
6.​ Crowe's Crossing Realty Fund LLC​ ​ 7.86% ​​ ​ $450,000.00
7.​ Summerdale Plaza Realty Fund LLC​​ 4.18% ​​ ​ $390,000.00
8.​ Southland Crossings Realty Fund LLC​ 2.72% ​​ ​ $344,000.00
9.​ SS Tulsa Center Realty Fund LLC​ ​ 4.02%​ ​ ​ $300,000.00
10.​ Westwood SC Realty Fund LLC​ ​ 1.68%​ ​ ​ $280,000.00
11.​ Champions Village Realty Fund LLC​​ 0.83% ​​ ​ $200,000.00
​ ​​ ​ ​ ​ ​ ​ Total: ​ $7,064,000.00

85.​ Plaintiff Anthony Musto37 invested in the LLCs as listed here: ​

Investment Name Ownership % ​ Commitment Amount

1.​ Champions Village Realty Fund LLC​0​ .83%​ ​ ​ $200,000.00

2.​ HV Center TIC 1 Member Realty Fund LLC​2.04% ​​ ​ $200,000.00
3.​ Crowe's Crossing Realty Fund LLC​ ​ 6.99%​ ​ ​ $400,000.00
4.​ PC Center TIC 1 Member LLC​ 11.04% ​ $1,000,000.00
5.​ CS Center Realty Fund LLC​ ​ ​ 0.57% ​​ ​ $100,000.00
6.​ CK Center Realty Fund LLC​ ​ ​ 0.55%​ ​ ​ $100,000.00​
7.​ Tropicana Centre LV Realty Fund LLC​ 0.25%​ ​ ​ $100,000.00
8.​ CTS Center TIC LLC​​ ​ 11.61%​​ $1,000,000.00
9.​ Summerdale Plaza Realty Fund LLC​​ 1.07%​​ ​ $100,000.00_
​ ​​ ​ ​ ​ ​ ​ Total: $3,200,000.00

86.​ Plaintiff Jonathan Ciangiulli invested $60,000.00 in the Summerdale Plaza Realty Fund

LLC investment, with 1.1% Ownership.

87.​ Plaintiff Abba Kader invested $400,000.00 in the McAlpin Square TIC 5 LLC (with

4.31% Ownership) investment, and the $400,000.00 in Tannehill TIC 5 LLC investment (with

37
Anthony Musto purchased his shares in the Underlying LLCs under his own name and also using entities he owns, including:
Anthony M Musto Grantor Retained Annuity Trust, TM Brooklyn Family Trust, TIC 1 LLC Piccadilly Associates LLC, and TIC 4
Member LLC Piccadilly Associates LLC.
27
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 29 of 49 PageID #: 29

2.04% Ownership), for a total investment of $800,000.00.

88.​ Plaintiff Cory Tereick invested $500,000.00 in the Maple Park SC TIC 12 Member LLC

investment, with 3.35% Ownership.

89.​ Plaintiff Patricia Thomas invested $409,804.00 in the CTS Center TIC 1 LLC.

90.​ Plaintiff Stanley Gruber invested $150,000.00 in the Bishops Corner SC Realty Fund

LLC investment, and the $100,000.00 in Tropicana Center LV Realty Fund investment, for a total

investment of $250,000.00.

CAUSES OF ACTION

COUNT I
MAIL FRAUD AND WIRE FRAUD
(A Pattern of Unlawful Activity Under 18 U.S.C. § 1961, et seq.)

91.​ The preceding paragraphs and allegations are incorporated by reference and re-alleged as

if fully set forth at length herein.

92.​ By engaging in the above-described open-ended actions and misrepresentations – which

also was a consistent, regular, and dominant part of the manner in which the RICO Persons

Anthony Grosso, Christopher Palermo, Michael Hazinski, Fred Battisti, Bill Comeau, Kurt

Padavano, Andrew DeNardo, Jared Feldman, Andrea Boitnott, Sam Collier, Mike Law and

Andrea White participated in and conducted the day-to-day business affairs of FNRP (RICO

Enterprise) and FNRA (RICO Enterprise) (collectively, “the RICO Defendants”) – the

Defendants instigated, perpetrated, and executed a scheme to defraud Plaintiffs and numerous

other of Defendants’ telemarketing customers; to wit: the RICO Persons (Anthony Grosso,

Christopher Palermo, Michael Hazinski, Fred Battisti, Bill Comeau, Kurt Padavano, Andrew

DeNardo, and Jared Feldman), individually or in concert, and by or through representatives and

employees of the RICO Enterprises (FNRP and FNRA), engaged in repeated and systematic
28
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 30 of 49 PageID #: 30

conspiracy to commit mail fraud and wire fraud (as described above), in violation of 18 U.S.C. §§

1341; 1343, that generated multiple and repeated unlawful investments by Plaintiffs and

numerous other of Defendants’ telemarketing customers that, in turn, generated exorbitant

compensation for Defendants.38

93.​ The RICO Persons caused the RICO Enterprises to use the interstate mails and wires to

repeatedly make and/or send fraudulent solicitations, sales receipts, and/or purchase

confirmations to Plaintiffs and other telemarketing customers for the above-described

transactions. As such, the RICO Persons conducted and/or participated in the business and

financial affairs of the RICO Enterprises through a pattern of racketeering activity (i.e. repeated

and systematic mail fraud and wire fraud in violation of 18 U.S.C. §§ 1341; 1343), as described

above, that generated multiple and repeated unlawful sales to Plaintiffs and numerous other of

Defendants’ telemarketing customers that, in turn, generated exorbitant compensation for them.

94.​ The RICO Persons committed these substantive RICO offenses, all the while knowing

about, and agreeing to, the overall objective of the fraud – generating exorbitant compensation for

themselves. By their unlawful actions, therefore, they (i) conducted and/or participated in the

affairs of FNRP and FNRA (in violation of 18 U.S.C. § 1962(c)) and/or (ii) conspired with others

(the identities of whom are only known by Defendants at this stage in the litigation and are

captioned “John Does 1-50”) to violate 18 U.S.C. § 1962(b); (iii) and defrauded Plaintiffs and

numerous other of Defendants’ telemarketing customers in the process, in violation of 18 U.S.C.

38
Upon information and belief, the RICO Defendants conducted their business and financial affairs through an open-ended
and/or closed pattern of racketeering activity as set forth herein. At all relevant times, the RICO Defendants wrongful
actions were committed willfully, maliciously, fraudulently, and with intent to injure and damage Plaintiffs, and with
reckless disregard of their legal rights. The Defendants’ relationship with Plaintiffs does not represent a one-off transaction
but rather were representative of and were part and parcel of the RICO Defendants’ normal pattern and scheme through
which they have defrauded – and continue to defraud – other unsuspecting consumers out of millions of dollars.

29
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 31 of 49 PageID #: 31

§1962(d).39

95.​ The multiple, repeated, and continuous acts of mail fraud and/or wire fraud described

above, plus the active marketing and fraudulent sales to countless other victims over the course of

numerous years, constitute a pattern of unlawful activity under 18 U.S.C. § 1961(1); (5). Nothing

about the RICO Persons’ schemes to defraud Plaintiffs and numerous other Defendants’

telemarketing customers indicated that the scheme would ever terminate. Moreover, and

independent of the duration of the scheme, their wrongful acts were and are a consistent, regular,

and dominant part of the manner in which they participate in and conduct the day-to-day business

and financial affairs of the RICO Enterprises, FNRP and FNRA.

COUNT II
VIOLATION OF 18 U.S.C. § 1962(c)

96.​ The preceding paragraphs and allegations are incorporated by reference and re-alleged as

if fully set forth at length herein.

97.​ Defendants FNRP and FNRA are each an “enterprise” engaged in, and the activities of

which affected, interstate commerce within the meaning of 18 U.S.C. §§ 1961(4); 1962(c);

39
Defendants maliciously conspired to defraud Plaintiffs, in violation of RICO, NYGBL § 349, and Securities and Exchange
Commission (“SEC”) Regulations by, amongst the plethora of reasons discussed below, and upon information and belief:

​ (i) paying illegal commissions to their salespersons in violation of SEC Regulation D;

(ii) overvaluing the Underlying Properties in order to fraudulently abscond with the difference from Plaintiffs’
investments;
​ (iii) making unauthorized transfers to themselves and commingled funds;
(iv) executing of a ponzi scheme to pay Plaintiffs false “distributions” by acquiring debt and feigning initial profits on the
Underlying Properties; and
(v) fraudulently skimming from Plaintiffs more than half of the returns from the Underlying Properties by falsely holding
out to Plaintiffs that Defendants were buying the Underlying Properties at below market prices – which was false.

See Dr. Craig McCann, SLCG Economic Consulting: First Realty Partners Reg D Offerings: Muppets Do Commercial Real Estate
by Dr. at 3-4 (“Dr. McCann Article”) (attached hereto as Exhibit 1, with the Curriculum Vitae of Dr. McCann ) (“FNRP is not
buying these properties at below market prices as it claims. FNRP buys a property at or above market and shaves more than half of
the returns for itself.”) Contra RICO FNRP’s Marketing and Sales Materials, https://fnrpusa.com/fnrp360/ (FNRP video where
Defendants falsely state that Defendants “secure properties both on-market and off-market, at or below market value . . . ).

30
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 32 of 49 PageID #: 32

1962(d).

98.​ Anthony Grosso, Christopher Palermo, Michael Hazinski, Fred Battisti, Bill Comeau, Kurt

Padavano, Andrew DeNardo, Jared Feldman, Andrea Boitnott, Sam Collier, Mike Law and

Andrea White are “persons” within the meaning of 18 U.S.C. §§ 1961(3); 1962(c); 1962(d).

99.​ Anthony Grosso, Christopher Palermo, Michael Hazinski, Fred Battisti, Bill Comeau, Kurt

Padavano, Andrew DeNardo, Jared Feldman, Andrea Boitnott, Sam Collier, Mike Law and

Andrea White conducted and/or participated in the business and financial affairs of FNRP (RICO

Enterprise) and FNRA (RICO Enterprise) through patterns of unlawful activity within the

meaning of 18 U.S.C. §§ 1961(1)(B); 1961(5); 1962(c); to wit, the multiple, repeated and

continuous acts of mail fraud and wire fraud, in violation of 18 U.S.C. §§ 1341; 1343, set forth

above.

100.​ The patterns of unlawful activity and corresponding violations of 18 U.S.C. § 1962(c) (see

¶¶ 15-36, supra) by Anthony Grosso, Christopher Palermo, Michael Hazinski, Fred Battisti, Bill

Comeau, Kurt Padavano, Andrew DeNardo, Jared Feldman, Andrea Boitnott, Sam Collier, Mike

Law and Andrea White proximately and/or directly caused Plaintiffs to suffer injury within the

meaning of 18 U.S.C. § 1964(c); to wit, Plaintiffs was damaged by, inter alia, the fraudulent

representations made by Defendants and the corresponding mental anguish they suffer. Anthony

Grosso, Christopher Palermo, Michael Hazinski, Fred Battisti, Bill Comeau, Kurt Padavano,

Andrew DeNardo, Jared Feldman, Andrea Boitnott, Sam Collier, Mike Law and Andrea White

committed these substantive RICO offenses by using FNRP and/or FNRA to engage in multiple

predicate acts of mail fraud and wire fraud, all the while knowing about, and agreeing to, the

overall objective of the mail fraud – generating exorbitant compensation for themselves. They

31
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 33 of 49 PageID #: 33

knew their tactics and marketing practices were misleading and unlawful and would cause

Plaintiffs and numerous other Defendants’ telemarketing customers to suffer damages that were

reasonably foreseeable by them and/or anticipated as a substantial factor and a natural

consequence of their pattern of unlawful activity.

COUNT III
VIOLATION of 18 U.S.C. § 1962(d) by
CONSPIRACY TO VIOLATE 18 U.S.C. § 1962(c)

101.​ The preceding paragraphs and allegations are incorporated by reference and re-alleged as

if fully set forth at length herein.

102.​ FNRP and FNRA are each an “enterprise” engaged in, and the activities of which affected,

interstate commerce within the meaning of 18 U.S.C. §§ 1961(4); 1962(c); 1962(d). Anthony

Grosso, Christopher Palermo, Michael Hazinski, Fred Battisti, Bill Comeau, Kurt Padavano,

Andrew DeNardo, Jared Feldman, Andrea Boitnott, Sam Collier, Mike Law and Andrea White

are “persons” within the meaning of 18 U.S.C. §§ 1961(3); 1962(c); and 1962(d).

103.​ Anthony Grosso, Christopher Palermo, Michael Hazinski, Fred Battisti, Bill Comeau, Kurt

Padavano, Andrew DeNardo, Jared Feldman, Andrea Boitnott, Sam Collier, Mike Law and

Andrea White conspired with other persons (the identities of whom are only known by

Defendants at this stage in the litigation and are captioned John Does 1-50) within the meaning of

18 U.S.C. § 1962(d) to violate 18 U.S.C. § 1962(c); that is, they conspired to conduct and/or

participate in the business and financial affairs of FNRP (RICO Enterprise) and FNRA (RICO

Enterprise) through a pattern of unlawful activity within the meaning of 18 U.S.C. §§ 1961(1)(c);

1961(5); and 1962(c); to wit, the multiple, repeated and continuous acts of mail fraud and wire

fraud, in violation of 18 U.S.C. §§ 1341; 1343, set forth above.

32
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 34 of 49 PageID #: 34

104.​ The RICO Persons’ pattern of unlawful activity and corresponding violations of 18 U.S.C.

§ 1962(d) were the causes-in-fact and proximate cause of Plaintiff's suffering injury to his

business and/or property within the meaning of 18 U.S.C. § 1964(c); to wit: Plaintiffs was

damaged by, inter alia, the fraudulent representations made by the Defendant. The RICO Persons,

themselves and through their representatives agreed to commit these substantive RICO offenses

by using the RICO Enterprises (FNRP and/or FNRA) to engage in multiple predicate acts of mail

fraud and wire fraud, all the while knowing about, and agreeing to, the overall objective of the

mail fraud – generating exorbitant compensation for themselves. They knew their tactics and

marketing practices were misleading and unlawful and would cause Plaintiffs and numerous other

Defendants’ telemarketing customers to suffer damages that were reasonably foreseeable by them

and/or anticipated as a substantial factor and a natural consequence of their patterns of unlawful

activity.

COUNT IV
FRAUDULENT INDUCEMENT

105.​ The preceding paragraphs and allegations are incorporated by reference and realigned as if

set out at length herein.

106.​ Defendants, by and through the FNRP telemarketing salespersons and representatives,

utilized one or more of the above-described unlawful, false, misleading, and unconscionable sales

tactics to fraudulently induce Plaintiffs into the purchases of the investments in the Defendant

LLCs. Specifically, Defendants, through their employees and representatives, intentionally and

fraudulently induced Plaintiffs by misrepresenting (and omitting) material facts prior to and after

Defendants investments, which Defendants knew were false at the time they were made with the

intent to induce Plaintiffs to invest in the Defendant LLCs, including, amongst other falsehoods

33
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 35 of 49 PageID #: 35

described above, that: (a) the underlying real estate purchased by each Defendant LLC had been

secured with fixed-interest loans; (b) Defendants’ high valuations of the underlying properties

were correct and the Defendant LLCs would thus generate continued revenue-streams for

Plaintiffs; (c) Plaintiffs were “preferred” customers, which guaranteed to Plaintiffs a blended,

annual investment-return from the Defendant LLCs of more than 9%; (d) the underlying

properties required no material improvements before they could be occupied for profit and resold

by Defendants (which would have provided Plaintiffs with a lump sum payment); (e) Plaintiffs

were able to “cash out” of the Defendant-LLC investments at any time; (f) Plaintiffs would have

access to all of the underlying documents for each deal that they invested in; and (g) Defendants

completed all of their due diligence respecting their purchase of the underlying Defendant-LLC

properties (and that the underlying properties were in good, working order).40

107.​ Had Plaintiffs known about Defendants’ conspiracy to fraudulently misrepresent and omit

material information related to their Defendant-LLC investments, described herein, Plaintiffs

never would have invested in the Defendant LLCs or entered into any agreements with

Defendants, and as such would not be governed by any provisions in those agreements.

108.​ In fact, Defendants, by and through the FNRP telemarketing salespersons, continued their

fraudulent conspiracy to induce Plaintiffs even after Plaintiffs’ original purchases by providing a

“double whammy” of false promises to Plaintiffs: Defendants first prepared false and misleading

sales, marketing, and other data, and then Defendants’ telemarketing salespersons used one or

more of the unconscionable sales tactics described herein to make “follow up” calls to Plaintiffs

40
See, e.g., https://fnrpusa.com/fnrp360/; Exhibit 2 (examples of correspondence between FNRP-representatives and Plaintiffs
guaranteeing 9% “preferred customer” annual, blended investment-return); Exhibit 3 (screenshots of financials – prepared by
Defendants’ representatives – where Defendants use fixed interest-rates to provide Defendants with valuations of the underlying
Defendant-LLC properties); Exhibit 4 (communication from Plaintiffs to Defendants requesting that Defendants cancel and return
Plaintiffs’ investments in the Defendant LLCs and Defendants’ response denying Plaintiffs’ requests).
34
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 36 of 49 PageID #: 36

with additional false information and misrepresentations about their own fraudulent data, in order

to entice Plaintiffs into signing agreements and continuing to invest in additional shares of the

Defendant LLCs (each time making the next Defendant-LLC investment seem more grand and

profitable).

109.​ Defendants made the misrepresentations, described herein, with full knowledge that such

representations were false when made with the intent to induce Plaintiffs to purchase the

investments in the Defendant LLCs, to Plaintiffs’ financial detriment and Defendants’ financial

gain. As a direct and/or proximate result of Defendants’ false and misleading representations (and

material omissions) about the investments in the Defendant LLCs, Plaintiff suffered (and continue

to suffer) damages in the form of, inter alia, the amounts paid to Defendants for investments in

the Defendant LLCs and mental anguish damages.

110.​ Defendants, by and through the FNRP telemarketing salespersons and representatives,

committed the tort of fraudulent inducement in their verbal and telephonic sales pitches to

Plaintiffs through the falsehoods, half-truths, and omissions. Moreover, Defendants’ false

representations and/or omissions were made knowingly and intentionally or, at the very least, in

reckless disregard of Plaintiffs rights and interests.

111.​ Plaintiffs justifiably relied upon Defendants’ material misrepresentations. Absent those

falsehoods, Plaintiffs would never have entered into any agreements with Defendants to purchase

the investments in the Defendant LLCs (and Plaintiffs would not be governed by any of the

provisions of those agreements). Accordingly, Defendants’ wrongful actions constitute fraudulent

inducement under New York law.

35
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 37 of 49 PageID #: 37

COUNT V
FRAUD AND/OR FRAUDULENT CONCEALMENT

112.​ The preceding paragraphs and allegations are incorporated by reference and realigned as if

set out at length herein.

113.​ Defendants defrauded Plaintiffs pursuant to common law. In order to sell the shares of

Defendant LLC’s to Plaintiffs, Defendants conspired to utilize one or more of the

above-described unlawful, false, misleading and unconscionable high-pressure sales tactics.

Specifically, Defendants and their telemarketer employees and representatives falsely and/or

misleadingly represented to Plaintiffs, amongst the plethora of falsehoods described above, that:

(a) the underlying real estate purchased by each Defendant LLC had been secured with

fixed-interest loans; (b) Defendants’ high valuations of the underlying properties were correct and

the Defendant LLCs would thus generate continued revenue-streams for Plaintiffs; (c) Plaintiffs

were “preferred” customers and Defendants guaranteed to Plaintiffs a blended investment return

on the Defendant LLCs of more than 9% annually; (d) the underlying properties were claimed by

Defendants to require no material improvements before they could be occupied for profit and sold

by Defendants, which would have provided Plaintiffs with a lump sum payment; (e) Plaintiffs

would have access to all of the underlying documents for each deal that they invested in; (f) if

Plaintiffs desired, they could each “cash out” of the Defendant LLC deals at any time; and (g)

Defendants completed all of their due diligence respecting their purchase of the underlying

Defendant-LLC properties (and that the underlying properties were in good, working order).41

114.​ As such, Defendants are liable for fraudulent concealment against Plaintiff.42 Defendants

41
Id.
42
The elements of fraudulent concealment are identical to the elements for fraud with the addition that the defendant must have a
duty to disclose material information and failed to do so, as in the instant case.
36
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 38 of 49 PageID #: 38

had a duty to disclose to Plaintiff based upon their contractual relationship. In addition, or else in

the alternative, Defendants had a duty to disclose to Plaintiff based upon the “special facts”

doctrine, which provides that a duty to disclose arises when one party's superior knowledge of

essential facts renders a transaction without disclosure inherently unfair. The “special facts”

doctrine is applicable to the present case because the withheld and hidden material information as

to the investments in the Defendant LLC’s at issue was “peculiarly within the knowledge” of

Defendants and that the information was not such that could have been discovered by Plaintiff

through the exercise of ordinary intelligence.

115.​ Defendants, by and through their employees and representatives, made the herein-detailed

false representations (and material omissions) to Plaintiffs with the intent that Plaintiffs relied

upon them and with full knowledge that such representations were false when made. Plaintiffs

relied on Defendants’ material and false representations when deciding to invest in the Defendant

LLC’s. In fact, they purchased shares in the Defendant LLC to their financial detriment and

Defendants’ financial gain. As a direct and/or proximate result of Defendants’ false and

misleading representations to Plaintiffs (and material omissions) concerning Plaintiffs’

investments in the Defendant LLCs, Plaintiffs suffered (and continue to suffer) damages in the

form of, inter alia, the amounts paid in fees and commissions to Defendants, as well as

consequential damages related to the lost profits, and other statutory damages.

116.​ By virtue of the confidential business relationship between Plaintiff and Defendants,

Defendants had a duty to disclose the above concealed material facts to Plaintiff. Their deliberate

silence, when they had a duty to speak, and the resulting nondisclosure of the above concealed

material facts, is the equivalent of false representations and/or omissions. Such false

representations and/or omissions were made knowingly and intentionally or, at the very least, in

37
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 39 of 49 PageID #: 39

reckless disregard of Plaintiff’s rights and interests.

117.​ Plaintiffs justifiably relied on Defendants’ false representations and/or omissions to their

financial detriment by investing in the Defendant LLCs. Defendants’ wrongful actions constitute

fraud at common law and a conspiracy to defraud under RICO.

118.​ Defendants concealed their wrongful actions with the intent to mislead and defraud

Plaintiffs. Plaintiffs were not aware of, nor, through the exercise of due diligence, could have

become aware of Defendants’ wrongful actions until such wrongful actions brought to light by

third parties. Due to the Parties’ confidential business relationships, which were predicated on

their mutual trust and confidence, and Defendants’ superior knowledge and/or means of

knowledge, Defendants had a duty to disclose to Plaintiffs the above materially false and omitted

information. Defendants’ failure to do so constitutes fraudulent concealment under law.

COUNT VI
NEGLIGENT MISREPRESENTATION

119.​ The preceding factual statements and allegations are incorporated by reference and related

as if set out at length herein.

120.​ Defendants made certain representations (and material omissions) to Plaintiffs in the

course of their business and in transactions in which Defendants had a substantial monetary

interest. Defendants negligently supplied false information that guided Plaintiffs to make

investments in the Defendant LLCs.

121.​ Defendants failed to exercise reasonable care and competence in obtaining, confirming the

accuracy of, and communicating such information to Plaintiffs by, inter alia, utilizing one or more

of the herein-described unlawful, false, misleading and unconscionable sales tactics typical of the

38
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 40 of 49 PageID #: 40

direct sales industry and/or making the above-described false and material misrepresentations and

omissions.

122.​ Plaintiffs justifiably relied on Defendants’ negligent misrepresentations when investing in

the Defendant LLCs, which directly and/or proximately caused them each to suffer damages to

the financial benefit of Defendants. Plaintiffs continued to justifiably rely upon Defendants’

negligent misrepresentations in their oral telephonic representations and various presentations and

print advertisements regarding investment in the Defendant LLCs, which directly and/or

proximately caused them to suffer ruinous damages to the financial benefit of Defendants.

Defendants’ wrongful conduct constitutes negligent misrepresentation under New York common

law.

COUNT VII
​ ​ ​ ​ ​ VIOLATIONS OF NYGBL § 349

123.​ Plaintiffs incorporate by reference each preceding and succeeding paragraph as though

fully set forth at length herein.

124.​ NYGBL § 349 declares unlawful “deceptive acts or practices in the conduct of any

business, trade or commerce or in the furnishing of any service in [New York] state.”

125.​ NYGBL § 349(h) includes the right of an injured party to bring a private right of action,

and states that a Plaintiff may bring an action under NYGBL § 349 and the Court may also enjoin

a defendants’ unlawful act of practice, and the statute computes damages to be the the greater of

actual damages or $50, and at the Court’s discretion where a defendant’s conduct is willful or

knowingly (like here), three times the amount of the actual damages:

any person who has been injured by reason of any violation

of this section may bring an action in his own name to
enjoin such unlawful act or practice, an action to recover

39
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 41 of 49 PageID #: 41

his actual damages or fifty dollars, whichever is greater, or

both such actions. The court may, in its discretion, increase
the award of damages to an amount not to exceed three
times the actual damages up to one thousand dollars, if the
court finds the defendant willfully or knowingly violated
this section. The court may award reasonable attorney's fees
to a prevailing plaintiff (emphasis added).43
126.​ At all relevant times, Defendants have conducted their business, trade and commerce and

furnished services in New York within the meaning of NYGBL § 349; specifically, Defendants’

marketing and sales to Plaintiffs of shares in the Defendant LLCs, as detailed herein.

127.​ From the start, Defendants’ conspiracy to defraud Plaintiffs with respect to their

investments in the Defendant LLCs permeated every aspect of Defendants’ interactions and

business dealings with Plaintiffs, and included Defendants: (a) fraudulent inducements to cause

Plaintiffs to invest in the Defendant LLCs; (b) fraudulent preparation and handling of Plaintiffs’

investments and the Purchase Documents; and (c) fraudulent mismanagement of the

Defendant-LLC investments and Underlying Properties. These are additional willful and unlawful

acts and deceptive trade practices by Defendants in violation of NYGBL § 349

128.​ Defendants additionally disclosed materially misleading and false information in their

sales of shares of Defendant LLCs to Plaintiffs, which was a willful, unlawful act and deceptive

trade practice by Defendants in violation of NYGBL § 349, including Defendants false and

misleading statements to Plaintiffs that: (a) the underlying real estate purchased by each

Defendant LLC had been secured with fixed-interest loans; (b) Defendants’ high valuations of the

underlying properties were correct and the Defendant LLCs would thus generate continued

revenue-streams for Plaintiffs; (c) Plaintiffs were “preferred” customers, which guaranteed to

43
NYGBL § 349 states that this section shall apply to all deceptive acts or practices declared to be unlawful, whether or not subject
to any other law of this state, and shall not supersede, amend or repeal any other law of this state under which the attorney general
is authorized to take any action or conduct any inquiry.
40
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 42 of 49 PageID #: 42

Plaintiffs a blended, annual investment-return from the Defendant LLCs of more than 9%; (d) the

underlying properties required no material improvements before they could be occupied for profit

and resold by Defendants (which would have provided Plaintiffs with a lump sum payment); (e)

Plaintiffs were able to “cash out” of the Defendant-LLC investments at any time; (f) Plaintiffs

would have access to all of the underlying documents for each deal that they invested in; and (g)

Defendants completed all of their due diligence respecting their purchase of the underlying

Defendant-LLC properties (and that the underlying properties were in good, working order).44

129.​ Further, as set forth above, Defendants omitted material information in their sale and

marketing of the Defendant LLCs to Plaintiffs, which was an act likely to mislead a plaintiff

acting reasonably under the circumstances, and constitutes an additional willful, deceptive and

unlawful trade practice by Defendants in violation of NYGBL § 349.

130.​ Defendants further conspired to defraud Plaintiffs by forming a construction arm of their

business (under the guise of being separate from Defendants), where Defendants’ wrongfully

earned millions of dollars by charging the Defendant LLCs for construction-work and material

improvements supposedly needed to the underlying Defendant-LLC properties. Such misconduct

by Defendants is an additional violation of NYGBL § 349.

131.​ Defendants also violated NYGBL § 349 by maliciously conspiring to defraud Plaintiffs by,

amongst the plethora of reasons discussed herein, and upon information and belief:

​ (i) paying illegal commissions to their salespersons in violation of SEC ​

​ ​ Regulation D;45

​ (ii) overvaluing the Underlying Properties in order to fraudulently ​

44
See FN 41, supra.
45
Defendants violated SEC Reg D by selling private placement securities without a broker-dealer license while paying
Defendants’ employees, owners and partners transaction-based compensation, and later again violating SEC Reg D by paying
Defendants' employees, owners and partners transaction-based compensation, under the guise of a bonus pool.

41
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 43 of 49 PageID #: 43

​ ​ abscond with the difference in price between the amount that Plaintiffs
​ ​ invested in each Underlying Property and the lesser price Defendants ​
​ ​ actually paid for each Underlying Property;

​ (iii) making unauthorized transfers to themselves and commingled ​

​ ​ funds;

​ (iv) executing of a ponzi scheme to pay Plaintiffs false “distributions” by ​

​ ​ acquiring debt and feigning initial profits on the Underlying ​ ​
​ ​ Properties; and

​ (v) fraudulently skimming from Plaintiffs more than half of the ​

​ ​ returns from the Underlying Properties by falsely holding out to ​
​ ​ Plaintiffs that Defendants were buying the Underlying Properties at ​
​ ​ below market prices – which was false.

See Dr. McCann Article at 3-4 (attached hereto as Exhibit 1, with the Curriculum Vitae of Dr.

McCann) (showing an example Defendants scheme and Cash Distributions Chart concerning

Defendants’ purchase of and financial accounting for Defendant LLC –Maple Park SC Realty

Fund LLC (“Maple Park”) – and concluding that “FNRP is not buying these properties at below

market prices as it claims. FNRP buys a property at or above market and shaves more than half of

the returns for itself.”) Contra RICO FNRP’s Marketing and Sales Materials,

https://fnrpusa.com/fnrp360/ (FNRP video where Defendants falsely state that Defendants “secure

properties both on-market and off-market, at or below market value . . . ).

132.​ Defendants’ willful and unlawful deceptive acts against Plaintiffs in violation of NYGBL

§ 349, as set forth herein, directly and proximately caused injury to Plaintiffs in the amount of at

least $12,033,804.00

133.​ Defendants’ deceptive, unlawful, abusive, and fraudulent misconduct in this case, methods

of solicitation, and conspiracy to misrepresentation material facts with respect to Defendants’

marketing and sales to Plaintiffs of shares in the Defendant LLCs, and Defendants’ other

fraudulent, unlawful, and willful misconduct described herein, including Defendants’ secret

42
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 44 of 49 PageID #: 44

formation of a construction arm of their business and other related entities and falsely earning

millions of dollars for unnecessary work on the underlying Defendant LLC properties, also

constitute unlawful and unconscionable commercial practices in violation of NYGBL § 349 and

the other laws referenced herein. Each separate instance of fraudulent conduct by Defendants,

every sale and unreasonable commission collected, and all other misrepresentations by

Defendants in this case, constitute a separate violation under NYGBL § 349, subjecting

Defendants to separate penalties and violations for each instance of misconduct.

134.​ In addition, Defendants' conspiracy to defraud Plaintiffs in this matter violated NYGBL §

349 because, as detailed herein, Defendants’ misconduct in this case also violated other statutes

and laws, including RICO and SEC Regulations, which is also violation of NYGBL § 349.

COUNT VIII
NEGLIGENCE

135.​ The preceding factual statements and allegations are incorporated by reference and

realigned as if set out at length.

136.​ Defendants negligently valued, promoted, marketed, advertised, and sold investments to

Plaintiffs in the Defendant LLCs. This violated and breached Defendants’ duty to Plaintiffs to

exercise reasonable care in valuing, promoting, marketing, advertising, and selling the

investments to Plaintiffs. Defendants’ wrongful conduct directly and/or proximately caused

Plaintiffs to suffer damages. Defendants’ wrongful conduct constitutes negligence at common

law.

COUNT IX
​ ​ ​ ​ ​ CONSPIRACY

137.​ The preceding factual statements and allegations are incorporated by reference and

43
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 45 of 49 PageID #: 45

realigned as if set out at length.

138.​ Defendants (and possibly others, i.e., “John Does 1-50”), either working together as a

combined group or in sub-combinations of two or more, affirmatively conspired to engage in the

wrongful actions set forth above. By doing so, Defendants conspired to accomplish an unlawful

purpose or a lawful purpose by an unlawful means. As such, Defendants conspired to commit the

wrongful actions outlined above, all of which directly and proximately caused Plaintiffs to sustain

actual and consequential damages. Defendants’ wrongful actions constitute civil conspiracy at

common law.

COUNT X
UNJUST ENRICHMENT

139.​ The preceding factual statements and allegations are incorporated by reference and

realleged as if set out at length

140.​ A measurable benefit has been conferred on Defendants under such circumstances that

Defendants’ retention of the benefit without payment to Plaintiffs would be unjust.

141.​ The benefit is the taking of Plaintiffs’ money under false pretenses and not providing

Plaintiffs with the revenue stream and increased investment-value, which Plaintiffs were

supposed to receive for Plaintiffs’ investments in the Defendant LLCs.

142.​ Defendants’ employees and representatives have been unjustly enriched by: (i) being paid

fees for investments in the Defendant LLCs; (ii) taking salaries for working for the Defendant

LLCs; (iii) receiving unreasonable commissions related to the tenant leases in the Defendant

LLCs; (iv) unjustly receiving fees through related entities; and (v) taking a share of the profits of

the Defendant LLCs. Accordingly, Plaintiffs seek to impose a constructive trust over (and

44
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 46 of 49 PageID #: 46

recover) all amounts by which Defendants have been unjustly enriched.

143.​ The benefit is measurable because Defendants’ have in their possession detailed records

concerning their sales of shares to Plaintiffs in the Defendant LLCs, including monies Defendants

earned.

COUNT XI
ALTER-EGO
144.​ Alter-ego liability is established upon a showing that a defendant has complete domination

of a corporation in respect to the transaction at issue and that such domination was used to

commit a fraud or wrong against the plaintiff which resulted in plaintiff's injury. Because a

decision to pierce the corporate veil will necessarily depend on the attendant facts and equities of

the case at issue, there are no definitive rules governing the circumstances when this power

Plaintiffs be exercised.

145.​ Based upon information and belief, RICO Persons Anthony Grosso and Christopher

Palermo, individually and collectively, used the corporate form as an alter-ego and as mere tools

or business conduits. They completely dominated Defendant FNRP and Defendant FNRA to

shield assets and thus cause a diminution of available resources from which Plaintiffs may satisfy

the damages, directly and/or proximately caused by Defendants’ wrongful conduct. Upon

information and belief, there are a plethora of undocumented funds-transfers – and an unclear

allocation of profit and losses – between Defendant FNRP, Defendant FNRA, RICO Person

Anthony Grosso and RICO Person Christopher Palermo.46

146.​ Upon information and belief, Defendants also commingled funds and took unauthorized

transfers to and from themselves and Defendants FNRP and Defendant FNRA. In short,

46
See Dr. McCann Article at 3-4 (attached hereto as Exhibit 1, with the Curriculum Vitae of Dr. McCann) (showing an example
Defendants scheme and Cash Distributions Chart),
45
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 47 of 49 PageID #: 47

Defendant FNRP and Defendant FNRA is substantially one and the same with Anthony Grosso

and Christopher Palermo, and the relationship between them is an illegitimate use of the corporate

form.

COUNT XII
RESPONDEAT SUPERIOR

147.​ The preceding factual statements and allegations are incorporated by reference and

realigned as if set out at length.

148.​ Defendants, including but not limited to, Defendant Anthony Grosso, Christopher

Palermo, Michael Hazinski, Fred Battisti, Bill Comeau, Kurt Padavano, Andrew DeNardo, Jared

Feldman, Andrea Boitnott, Sam Collier, Mike Law and Andrea White are also liable for the above

wrongful acts committed by their employees during the course and scope of their employment by

the Defendants; to wit, the employees’ and representatives’ wrongful conduct was committed (i)

within their general authority, (ii) in furtherance of Defendants’ business, and (iii) to accomplish

the objective for which the employees/representatives were hired (i.e., selling investments in the

Defendant LLCs to customers like Plaintiffs)— all of which directly and/or proximately caused

Plaintiffs to suffer damages to the financial benefit of Defendants—and for which Defendants are

liable under the doctrine of respondeat superior.

RELIEF REQUESTED

149.​ RECISSION. Based on Defendants’ above-described wrongful conduct, Plaintiffs are

entitled to full recission of the Defendant-LLC transactions at issue by which Defendants

conspired to fraudulently market and sell to Plaintiffs investments in the Defendant LLCs. All

conditions precedent to Plaintiffs’ claims for relief have been performed and/or occurred.

150.​ ACTUAL AND CONSEQUENTIAL DAMAGES. As direct and proximate result of

46
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 48 of 49 PageID #: 48

Defendants’ wrongful conduct and illegal conspiracy, Plaintiffs have suffered (and continue to

suffer) damages in the form of, inter alia, the amounts paid to Defendants for the investments in

the Defendant LLCs. Plaintiffs are entitled to recover consequential damages related to lost

investments when they were lured into purchasing the investments in the Defendant LLCs and the

mental anguish they have suffered in connection with these transactions— in an amount to be

determined by the trier of fact. All conditions precedent to Plaintiffs’ claims for relief have been

performed and/or occurred.

151.​ AUTOMATIC TREBLE DAMAGES UNDER 18 U.S.C. § 1964(c). Plaintiffs are also
entitled to automatic treble damages under 18 U.S.C. § 1964(c) for Defendants’ knowing, willful

and intentional wrongful conduct in violation of the RICO statute. All conditions precedent to

Plaintiffs’ claims for relief have been performed and/or occurred.

152.​ TRIPLE ACTUAL-DAMAGES UNDER NYGBL § 349. Plaintiffs are also entitled to

statutory penalties of triple actual-damages for Defendants’ willful, unlawful, deceptive, and

fraudulent misconduct described herein with respect to Defendants’ marketing and sales to

Plaintiffs of shares in the Defendant LLCs, and fraudulent mismanagement of the Defendant

LLCs and the Underlying Properties.

153.​ EXEMPLARY DAMAGES. Defendants' wrongful and unlawful conspiracy to defraud

Plaintiffs was actions was committed intentionally, willfully, with malice and/or with conscious

and/or reckless disregard for Plaintiffs’ rights and interests. Accordingly, Plaintiffs are also

entitled to an award of punitive damages against Defendants, both as punishment and to

discourage such wrongful conduct in the future.

154.​ ATTORNEYS’ FEES, LITIGATION EXPENSES AND COSTS. Plaintiffs are also

47
 Case 2:25-cv-00780 Document 1 Filed 02/11/25 Page 49 of 49 PageID #: 49

entitled to recover their reasonable and necessary attorneys' fees, litigation expenses and court

costs, to be determined by the trier of fact.

155.​ TRIAL BY JURY. Plaintiff requests trial by a jury of all legal claims herein.

WHEREFORE, Plaintiffs request judgment in their favor and against the Defendants,

jointly and severally, awarding compensatory damages for all actual and consequential losses in

an amount to be determined by the Court but equaling or exceeding TWELVE MILLION, TWO

HUNDRED AND EIGHTY THREE THOUSAND, AND EIGHT HUNDRED AND FOUR

DOLLARS ($ $12,283,804.00); treble damages under 18 U.S.C. § 1964(c); statutory triple

actual-damages penalties under NYGBL § 349; exemplary and punitive damages; and all

amounts by which Defendants have been unjustly enriched; directing an equitable accounting for

all benefits, consideration, and profits received, directly or indirectly, by Defendants, including

the imposition of a constructive trust and the voiding of unlawful transfers; enjoining Defendants’

unlawful and deceptive conduct pursuant to NYGBL § 349; and awarding attorneys' fees and

litigation expenses pursuant to 18 U.S.C. § 1964(c) and NYGBL § 349, and the costs of suit

pursuant to 28 U.S.C. § 1920 and Fed. R. Civ. P. 54(d); together with pre-judgment interest

pursuant to the highest legal rate, and such other and further relief as the Court deems just, proper,

and equitable.

Dated: February 11, 2025​ ​ ​

Respectfully submitted,

SECURITIES ARBITRATION LAW GROUP

/s/ Mack Press​​ ​

By: Mack Press (NY Bar: 2885424)
​ ​ ​ ​ ​ ​ ​ ​ 1200 G St NW SUITE 800
​ ​ ​ ​ ​ ​ ​ ​ Washington, DC 20005
​ ​ ​ ​ ​ ​ ​ ​ (202) 444-4222
​ ​ ​ ​ ​ ​ ​ ​ [email protected]
48