Judge Calls Houston’s Ali Choudhri “Forger and a Liar”

10 September 2024

Ali Choudhri’s legal problems just got bigger than Texas.

The embattled real estate investor and CEO of Jetall Capital was called a “forger and a liar” in an order issued by United States Bankruptcy Judge Jeffrey Norman. The alleged fraud was so brazen that Norman referred the matter to a United States Attorney.

According to the order, Choudhri fabricated a deed of trust and promissory note related to 2425 West Loop South, the Galleria-area office building he lost in a lengthy foreclosure proceeding that came to a head in July. Choudhri used the documents to support a nearly $23 million claim against the LLC that owned the office building and is now in bankruptcy, Galleria 2425 Owner.

The order comes after damning testimony by two of Choudhri’s former associates, including his former chief operating officer. Choudhri did not attend the hearing, claiming he was ill — an assertion the court also found unlikely.

“The Court understands his failure to appear, as the only witnesses before the Court testified that Choudhri was of questionable conduct and created false documents,” Norman wrote in his order. “There are questions that Choudhri does not want to answer and if he had appeared, the Court would have forced him to answer them.”

Filing a false claim for proof against a debtor’s estate is a federal crime, carrying a penalty ranging from a fine to five years in prison.

Choudhri filed a claim in March against the bankrupt LLC, claiming it owed him nearly $23 million. In June, the bankruptcy trustee objected to the claim, and Choudhri amended his claim, but did not change the amount he claimed he was owed.

The claim uses as evidence a promissory note and a deed of trust, both dated May 23, 2018. According to the documents, an entity controlled by Choudhri called 2425 WL lent $14.78 million to the property’s new owner. Choudhri has at different times been connected to both entities, but in 2018, he did not actually have permission to sign for the ownership entity, invalidating his asserted lien.

While Choudhri was given control over the ownership entity in 2021, he could not have signed for it, according to testimony by Azeemah Zaheer, former CEO of Naissance Capital Real Estate, who at the time controlled the entity.

Instead of giving the new owner a loan, the seller entity gave the buyer a $14.7 million credit, reducing the amount due in the sale. The seller entity still collected $13.7 million in cash from the sale, according to a confidential settlement viewed in court as a result of the claim. The settlement was drawn up between the two parties and the National Bank of Kuwait, which lent the buyer entity $51.7 million to acquire the building in 2018.

That credit was not a loan, which would come with a claim against the property, but Choudhri’s documents purporting to show his entity lending money to the buyer would have.

In a critical piece of testimony, former Jetall COO Christopher Wyatt said Choudhri had asked him to draft a deed of trust and a promissory note to “secure leverage against” the National Bank of Kuwait. He said the documents were needed because of a bankruptcy that “severely impacted the financial standing of the debtor,” according to the order.

In his order, Judge Norman called the claim “fanciful, and wholly false.” On the same day the order was filed, Choudhri’s attorney, Stephen Sather of Barron and Newburger, withdrew from the case. In his filing, Sather said Choudhri has “failed substantially to fulfill an obligation to the firm regarding the firm’s services.”

Choudhri did not respond to a request for comment. Bisnow reported in July that an entity called QB Loop Property had agreed to buy 2425 West Loop South for $27.25 million, with $1 million earmarked for Chapter 11 claims. The court is not done with Choudhri, but it appears to be prepared to move on, with or without him.

“The Court believes that Choudhri is a forger and a liar, but he at least is smart enough to avoid a Court hearing where he would be forced to testify and face what is now very evident to this Court.”