Doctor details series of loans to Downtown Hilton hotel
Dr. Kiran Patel said he made a series of loans to the former Pittsburgh Hilton as a financial crisis threatened to close the region's biggest hotel, while its mortgage holder "didn't discourage" him -- and now wants to seize the property.
Patel, a Tampa cardiologist and entrepreneur who bought the equity of hotel owner Shubh Pittsburgh Hotels LLC in September, testified for several hours Thursday in a bankruptcy case that will decide the Downtown hotel's future.
Wyndham Hotel Group has a signed agreement with Shubh to rebrand the hotel as the Wyndham Grand Pittsburgh. BlackRock Financial Management Inc. wants the court to appoint a receiver -- a move that could restore the Hilton name.
Patel talked to BlackRock at one point about assuming the New York company's debt for $42 million, possibly less, said Patel, who has about $4 million invested in the deflagged Hilton and is determined to recoup it.
"My only hope is to make sure these people succeed," the doctor said, referring to the operators of the 712-room hotel -- renamed the Grand Pittsburgh Downtown after Hilton Hotels & Resorts terminated its franchise Sept. 2.
"The only reason for them to fail is lack of capital. This property that has a 50-year-old history has value."
Attorney Gregory Taddonio, representing BlackRock, questioned Patel about dozens of emails he wrote or received in the past two years that referred to loan and other payments taken out of hotel revenues, while the hotel missed payments to creditors. Taddonio asked Patel about his dealings with Jai Lalwani, a former manager at the hotel.
Patel repeatedly said he had little knowledge of day-to-day operations.
The doctor said Lalwani and former Shubh owner Atul Bisaria were acquaintances in Florida. He loaned Lalwani money for a Tampa development, Patel said, and worked with him on a Clearwater project that never got off the ground.
Lalwani "has used my name" to market business deals, Patel said, but he didn't always contradict him. "Jai can write anything he wants" to suit his purposes, he said.
Patel said he gave Lalwani marching orders to protect the money he put into the hotel.
Reached yesterday, Lalwani said he invested in or was involved in managing the hotel from June 2009 until mid-August of this year. Despite claims that owners' payments were taken out while bills were left unpaid, the hotel cut its debts from $10 million to about $1.6 million in that period, he said.
Patel said he was asked to loan up to $600,000 to the Downtown hotel in mid-2009 and talked to BlackRock executives who told him he "would be OK."
Instead, "they found a fool like me to do it," he said. Later "I got sucked deeper into the hotel," loaning more money, including $2 million needed in January to settle liens.
Patel discussed taking an ownership stake of 55 percent to 60 percent, but said Bisaria owned the hotel's stock until September. The doctor said he hired a forensic accountant to see whether his loans went into hotel operations.
Patel said he arrived in the United States from India in 1976, began to practice cardiology in Tampa in 1982 and had 26 other doctors working for him within a few years. Later, he acquired the struggling, publicly traded WellCare health maintenance organization and sold it for $200 million to billionaire George Soros and other investors in 2002.
The doctor founded two other businesses with revenues approaching $1 billion and said he owns 15 to 18 hotels and has a record of "taking troubled assets and making them better." He stopped practicing as a cardiologist in about 1997.
His net worth is $225 million, with $62 million in cash and securities, he said. Shubh's reorganization plan would repay BlackRock, which is demanding $49.7 million, plus creditors with rightful claims, as the court decides.
Patel said he's willing "to be the last player to get my money out of this property."