CEO Admits Illegal Property Flipping

Allison Tussey —  February 26, 2013 — Leave a comment

Jonathan Propp, 48, McLean, Virginia, pleaded guilty to conspiring with others to steal more than $20 million from Host Hotels and Resorts L.P., one of the nation’s largest hotel owners, by executing a series of illegal sales of hotels.

According to court records, Propp was the chief operating officer of Molinaro-Koger, an international hotel real estate brokerage firm headquartered in Tysons Corner, Virginia. From 2009 through 2012, Propp conspired with others to illegally sell hotels owned by Host to straw buyers, who would then immediately sell the properties to a buyer at a higher price, with the conspirators pocketing the difference. Propp admitted that he posed as a straw buyer, forged signatures, and obtained a driver’s license for one of the straw buyers who had died before the fraudulent sale could be completed.

Todd Lawyer, 53, Fairfax, Virginia, also pleaded guilty for his role as a straw buyer in the conspiracy. The conspirators earned more than $20 million by illegally flipping the hotels.

In addition, Propp admitted that he participated in a scheme to steal and launder an additional $15 million from deposits provided by prospective buyers of hotels, which they purported to hold in escrow but instead used to pay for personal and business expenses. Propp used the money to pay Molinaro-Koger‘s expenses and employee salaries, despite knowing the escrowed funds were obtained fraudulently.

Propp and Lawyer pled guilty to conspiring to commit wire fraud and face a maximum penalty of 20 years in prison when they are sentenced on May 31, 2013 and May 24, 2013, respectively.

Neil H. MacBride, United States Attorney for the Eastern District of Virginia, and Valerie Parlave, Assistant Director in Charge of the FBI’s Washington Field Office, made the announcement after the pleas were accepted by United States District Judge Liam O’Grady.

This ongoing investigation is being conducted by the FBI’s Washington Field Office. Assistant United States Attorneys Chad Golder of the Office’s Financial Fraud and Public Corruption Unit and Michael Rich of the Office’s Major Crime’s Unit are prosecuting the case on behalf of the United States.

Allison Tussey

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