Commercial Real Estate Direct Staff Report

Robert Koger is accusing Host Hotels & Resorts of dirty dealings in its investigation that led to fraud charges against his former firm, Molinaro Koger.

Host, a Bethesda, Md., REIT, had hired a private investigator that Koger says broke into Molinaro Koger's offices to steal files, illegally wire-tapped calls to the firm's brokers and stole information from its banking accounts. Koger had sold his stake in the brokerage firm in 2011 to Black Diamond Hospitality.

The U.S. Attorney's office, which has been investigating Host's claims of fraud on Molinary Koger's part, last week announced that Jonathan Propp, that firm's former chief operating officer, pleaded guilty to criminal fraud charges in the case. He admitted to conspiring with others to illegally sell hotels owned by Host to straw buyers, who would then immediately sell the properties to other buyers at higher prices, with all the conspirators pocketing the difference.

In a related civil suit filed by Host, a Montgomery County, Md., Circuit Court judge last summer ordered Molinaro and Molinaro Koger, along with its two co-defendants, Dearborn Hotel and Scioto Partners, to pay Host $22.8 million in damages.

That ruling, as it relates to Molinaro and his former brokerage, was vacated, or canceled, after they reached a settlement with Host, which included paying the REIT $1.7 million. However, the order to vacate did not apply to Scioto or Dearborn.

Robert Koger further accuses Host of scheming to cover its alleged wrongdoing, claiming that it sent copies of its civil lawsuit to national newspapers before either he or his former firm were served with the suit.

"Host's apparent intention was to divert attention from their funded illegal acts, as well as cover up their misconduct," he said on a Web site that includes other postings related to the case.

Comments? E-mail John Covaleski or call him at (267) 247-0112, Ext. 208.