Investors accuse First National Realty Partners of fraud in $9.5m suit

A group of investors says real estate syndicator First National Realty Partners buried them in conflicts and fees, according to a lawsuit filed July 17 in New Jersey federal court.

The plaintiffs - individuals, a trust and investment vehicles spread from Florida to Ohio - say they put a combined $9,530,776.07 into limited liability companies that FNRP set up to buy shopping centers and other commercial properties. The complaint names the firm, two affiliates and eight senior executives.

The complaint describes FNRP as a private equity firm with over $2 billion in reported assets. And it argues the whole model was stacked against the people writing the checks. The firm, it alleges, made itself owner, asset manager and the "sole realtor" on tenant deals all at once, then locked those roles into the contracts so investors could not vote it out. The filing calls that a "Golden Ticket" and a "textbook conflict-of-interest."

From there, the plaintiffs say, the money flowed the wrong way. They allege FNRP pulled "millions of dollars in fraudulent fees" out of the deals even as properties suspended distributions. The complaint quotes an economist's report, prepared for the case, that it says concluded FNRP "shaves more than half of the returns for itself" - a long way from the 12 to 18 percent annual returns the plaintiffs say the firm's marketing promised.

The complaint gets specific. On the Tropicana Center deal, it claims the property was bought for $71.929 million but the firm escrowed $82.424 million, a roughly $10.5 million gap. On a Summerdale Plaza property, investors were told in February 2025 that it sold at about a 60 percent loss. And on a Maple Park lease with retailer Five Below, the filing alleges leasing costs of $1,071,380 on a lease "valued only at $2,286,284 over 10 years."

For advisors, the registration allegations may matter most. The complaint claims FNRP paid its salespeople "transaction-based compensation" with no broker-dealer license, in violation of SEC Regulation D, and that doing so should have triggered FINRA and state registration the firm never obtained. It also points to a separate complaint from a former senior marketing executive at an FNRP affiliate, who alleged that internal concerns about SEC compliance in the marketing material were brushed aside.

The plaintiffs are suing under RICO, federal securities law and more than a dozen state securities acts. They want their money back, plus treble and punitive damages.

The claims are allegations only, and no court has ruled.