A former hotel brokerage executive pleaded guilty Tuesday in federal court in Alexandria, Va., for his role in trying to steal more than $35 million from Host Hotels & Resorts of Bethesda, according to the U.S. Justice Department.
Jonathan Propp, 48, of McLean, Va., in pleading guilty to wire fraud conspiracy charges, admitted executing a series of illegal sales of hotels when he was the COO of Vienna, Va., hotel brokerage firm Molinaro Koger from 2009 to 2012.
Propp conspired with others to illegally sell the Host-owned hotels to straw buyers, who would immediately flip the properties to other buyers for a higher price, prosecutors said in a news release. The conspirators made more than $20 million through the scheme.
Propp admitted that he posed as a straw buyer, forged signatures and obtained a driver’s license for one of the buyers who had died before the fraudulent sale could be completed, officials said. Propp also admitted that he participated in another scheme to steal an additional $15 million in escrow deposits provided by prospective buyers of hotels.
He used the money to pay some expenses and employee salaries at Molinaro Koger, officials said.
Host Hotels is “pleased with the government’s prosecution of the fraud,” Bob Chlopak, a spokesman for the lodging real estate investment trust, said Tuesday. Because the investigation is ongoing, the company cannot comment further, he said.
Todd Lawyer, 53, of Fairfax, Va., also pleaded guilty for his role as a straw buyer in the scheme. Propp and Lawyer each face up to 20 years in prison and are scheduled to be sentenced on May 31 and May 24, respectively.
In July, Host Hotels won a $26.2 million judgment after filing a fraud lawsuit against Molinaro Koger, company President Robert T. Koger and other defendants in 2011 in Montgomery County Circuit Court.
Host determined that Koger and Molinaro Koger had one remaining asset, their insurance policy, and settled the litigation against Koger, his company and their insurance company for the policy limits, company executives said in a statement last month. The settlement did not discharge other defendants in the case, including Scioto Partners LLC of Dover, Del., and Dearborn Hotel LLC of Wilmington, Del., executives said.