Real estate: About the Benjamins

Why investors are fuming about real estate developer Royal Indian Raj.

Manoj C. Benjamin has been refining his regal aura for years. In 1999, he incorporated a Nevada company that he grandly named Royal Indian Raj International Corp. The company’s mission — “to develop the New India, modernizing housing and businesses and realizing a self-sustaining city of the future for this country and its inhabitants” — is almost epic in its scope.

The company’s website features photographs (portraits would be a better word) of Benjamin standing in a drawing-room filled with sumptuous furniture, wearing an expensive suit that exposes two inches of French cuff, conspicuously punctuated by large gold cufflinks.

His biography explains that, “through real estate, Mr. Benjamin became a self-made millionaire by the age of 24,” and that since the company’s inception, he has been involved “in the modernization of real estate in the Indian market, including the launching of privatized cities under the Royal Garden City name in Bangalore, Delhi, Mumbai and Kolkatta.”

Royal Indian Raj’s headquarters, located on the sixth floor of an historic building in Vancouver’s Gastown area, provide an expansive view of the harbour and North Shore mountains. Soft light washes over the gilded Italian furniture and chestnut-hued hardwood floors. Adorning a wall is the Royal Indian Raj corporate crest, with the locations of the company’s branches emblazoned in gold letters: “New York, London, Vancouver, Bangalore.”

Also hanging on the walls are framed copies of articles about the company: “Vancouver Tycoon to Build Asian City,” reads the headline on one, published by the Asian Pacific Post in October 2004. The article said Royal Indian Raj was about to commence the first phase of its modernization program for India: a $3-billion “smart city” near the Bangalore airport.

The project, to begin in early 2005, would include 35,000 residential units, a central business district, industrial and entertainment districts, parks, restaurants, shops, educational facilities and civic amenities, with a combined retail value of US$9 billion when completed in 2015.

In the company’s reception area, glossy posters celebrate the first component of that city, the Royal Garden Villas & Resort, a 236-unit residential complex and 18-hole golf course designed by Jack Nicklaus. Both Nicklaus and former Indian tennis star Vijay Amritraj are being used to promote the project: “Vijay Amritraj and Jack Nicklaus welcome you to India’s most exclusive resort community,” the posters beckon.

Royal Indian Raj has been raising seed capital by selling shares and promissory notes to investors. Benjamin is coy about who they are. He identifies them only as “superstar baseball players, celebrity sports types, stars of the sports fraternity.” He declines to name them, but according to internal company records, they include a dugout full of Major League Baseball players, led by former Atlanta Braves pitcher Terry Mulholland and including current Braves manager Bobby Cox.

As well, the company has been raising money by pre-selling units of the Royal Garden Villas & Resort. According to its website, 85% have been sold. The company is also pre-selling golf memberships. On April 18, it hosted a “Private Dinner with Golf Legend Jack Nicklaus” at the luxurious Angsana Oasis Spa & Resort near Bangalore. In the Benjamin family’s typically hyperbolic style, the golf course is being billed as the first of a chain of links and resorts that the company — utilizing a “proven and disciplined approach to value creation” — will build throughout India.

There is, however, nothing “proven” or “disciplined” about the Benjamins’ business methods, and there is little or no evidence of any “value creation.” In fact, when they departed their adopted province of Nova Scotia in 1993, they left behind a slew of failed businesses and bad debts. That same year, Manoj Benjamin declared bankruptcy and Halifax police later charged him with two counts of fraud. His father, Collins Benjamin, went on social assistance and, to make ends meet, ran a concession stand at the annual Busker Festival in Halifax.

Buffeted by bad debts and negative publicity, the family slipped out of town and headed for Vancouver. With Collins Benjamin as the front man — Manoj was still an undischarged bankrupt — they formed Carriage Lane Fine Homes Ltd. and built five duplexes. Within months, however, Carriage Lane became insolvent, leaving behind another trail of liabilities and lawsuits.

Even as Carriage Lane was sinking in debt, the Benjamins were concocting their grandest-ever scheme. In 1999 — after Manoj had been acquitted of the fraud charges but hadn’t yet been discharged from his bankruptcy — the duo incorporated Royal India Raj in Nevada and, promising to become “the biggest real estate developer in the world,” started raising money from investors.

Since then, more than eight years have passed and nothing has been built. Investors have become impatient. Two have filed lawsuits in B.C. Supreme Court. One unhappy investor, Bill Zack, Royal Indian Raj’s former communications director, launched a website called www.royalindianscam. Vijay Amritraj, tired of being accosted by angry investors, long ago disassociated himself from the company.

Manoj Benjamin, meanwhile, remains cloistered in his Vancouver office, refusing to talk with reporters. Although under siege, there is still no sign that he has lost any of his imperial bearing. Noting that Royal Indian Raj has launched a lawsuit against Zack in an attempt to shut down his website, a company spokesman said it has been “advised by its legal teams to not grant you an interview.” Instead, it issued a release heralding its “Golf India” project, a “truly innovative initiative [that] will help grow the game of golf in India from the grassroots to the highest level of world-class courses.”

All of which makes Don Sweet hotter than Delhi in July. The retired former resident of Paradise Valley, Ariz., bought US$50,000 worth of seed shares in 1999, but so far has received nothing but excuses. “I feel stupid for getting myself into this,” he laments. “I hope somebody can do something to keep other people from getting burnt.”

The media love rags-to-riches stories. After the Benjamins created Royal Indian Raj in 1999, they tapped into this reservoir of free advertising with great zeal.

“On a cold November day in 1969, a man named Collin [sic] Benjamin passed through immigration at the Halifax airport,” New Westminster, B.C.’s Record reported in January 2003. “Walking the misty streets of Halifax, fingering the $8 in his pocket, Benjamin could never have dreamed that one day that $8 would be millions of dollars.”

Collins portrayed himself as smart and beneficent. He claimed to have three university degrees, and to be a minister. He told the newspaper how he got a job milking cows on a dairy, was manager of the dairy, then a realtor and life insurance salesman, and eventually a real estate developer who turned his “circle of wealthy friends into apartment landlords.” Royal Indian Raj’s promotional literature also portrays Collins as an accomplished businessman who “managed a nationwide development-construction consortium.” It doesn’t, however, identify the consortium, and the company has refused to provide any details.

In a much more skeptical story in May 2005, National Post reporter Brian Hutchinson quoted Manoj Benjamin as saying he emigrated to Halifax with his parents when he was just seven years old. He told Hutchinson that, by his early 20s, he was making good money buying and selling homes. “Mr. Benjamin claims to have amassed a $6-million fortune by the time he turned 24,” Hutchinson reported. “Life was good in the Maritimes. But in 1993, the Benjamins decided to move west, to Vancouver.”

It is now clear that Manoj Benjamin glossed over a key event. In August 1993 — just before the family left Nova Scotia — he filed for bankruptcy, declaring zero assets and $670,326 in liabilities. According to records obtained from the superintendent of bankruptcy office in Halifax, Manoj purchased several small properties and became involved in a variety of businesses, including a convenience store, a realty business, a doughnut shop and a nightclub. To finance these concerns, he borrowed heavily from banks, finance companies and friends. One creditor, Ed Sharma, said Manoj told him “the trick was to convince people that you are such a good businessman that they will give you money voluntarily,” according to bankruptcy records.

One of Manoj’s largest creditors was an elderly man, John Boutilier, who according to his family members was normally conservative and prudent in financial matters, but “suffered from severe diabetes, repetitive heart problems and was legally blind for the last year of his life.” Relatives also said medical documentation confirmed he would “lapse into periods of incompetency.”

Under questioning from creditors, Manoj admitted he was insolvent by June 1990 but continued to borrow money from Boutilier, even when Boutilier was admitted to hospital in the late spring of 1993. Relatives said the Benjamins told Boutilier they “had $100 million in India which they were going to collect, but had not been able to [collect] up to this point due to currency restrictions…. Mr. Boutilier was under the illusion that his assistance was required to get the money out of India. As he had lost so much money to the Benjamins, he saw this as his last hope.”

Boutilier died on Aug. 12, 1993, on a train to Toronto. The coroner found a crumpled piece of paper in his pocket, listing the loans he had made to Manoj. The day before, Manoj had filed for bankruptcy. The $670,326 in liabilities that he declared did not include the many thousands of dollars that Boutilier had loaned him.

On Nov. 9, 1993, Frank magazine reported in its Atlantic Canada edition that angry relatives were pursuing Manoj, and that bankruptcy officials had formally asked the RCMP to investigate his affairs. That investigation didn’t go anywhere, but Halifax police conducted their own probe and charged him with two counts of defrauding investors.

After a trial in February 1996, Nova Scotia Supreme Court Judge Margaret Stewart said Manoj’s actions made her `“suspicious” that he intended to commit fraud, but suspicion wasn’t enough. “I have strong reservations about the intentions of the accused, but on the totality of the evidence, I cannot find that the intent to defraud beyond a reasonable doubt was present,” she said.

In view of Manoj’s questionable conduct, the bankruptcy superintendent obtained a court order stipulating that, to obtain a discharge, Manoj would have to successfully complete a business ethics course within a year Also, he was required not to “actively solicit business investors except through a licensed securities dealer” for a year, and repay $24,000 according to a set payment schedule.

If Manoj was chastened, he didn’t show it. By this time, he was in Vancouver where he got involved in more real estate deals that ended badly for creditors.

Shortly after arriving in Vancouver, Manoj hooked up with developer Tarsem Singh Gill. Through Gill’s company, Vanview Construction Ltd., they built several small residential projects, the largest being a 17-unit apartment complex in East Vancouver.

The two men parted company in 1994. Gill went on to perpetrate one of the largest real estate frauds in B.C. history. With the help of lawyer Martin Wirick, he diverted millions of dollars in real estate financing provided by banks, credit unions and various private parties. (The B.C. Law Society has already paid out $38.4 million in claims on account of Wirick’s involvement.) The RCMP laid criminal charges against both men in late August. There is no suggestion that Manoj was involved in any of the alleged wrongdoing, but it is clear he kept questionable company.

In 1995, the Benjamins, along with two partners, set up Carriage Lane Fine Homes. Collins became a director. Manoj could not sit on the board because he was still bankrupt, but he acted as one, directing the flow of money and even arranging for the company to lease a Ferrari for his use.

Carriage Lane built five duplexes, financed mainly by bank loans, but creditors did not get paid. The company became insolvent and was inundated with nearly three dozen lawsuits from creditors during 1997 and 1998. One of the partners was forced to declare personal bankruptcy. Collins, who moved between Vancouver and India, managed to frustrate creditors. Manoj, because his name never appeared on any company documents, was not named in any of the lawsuits.

Manoj did not meet the terms of his discharge and remained an undischarged bankrupt until December 1999, more than six years after declaring bankruptcy. That same year, he and his father incorporated Royal Indian Raj in Nevada and unveiled what they billed as the largest private real estate development in modern India: a high-tech city on 2,400 hectares, comprising 13.5 million square metres of built-up space — 15 times the size of London’s famed Canary Wharf.

To raise seed capital, Benjamin began selling shares, first at $1 each and then at $5. Many of the purchasers were pro baseball players. One was Atlanta Braves pitcher Terry Mulholland. By May 31, 2001, Mulholland had purchased US$750,000 worth of shares, making him the company’s largest outside investor. At least half a dozen other MLB players, most associated with the Braves, also bought shares or promissory notes, including Mike Remlinger, Greg Maddux and Gary Sheffield. Mulholland also recommended the investment to his next-door neighbour Don Sweet, who bought US$50,000 worth of shares. Mulholland declined comment, saying it is a private matter.

By March 2004, Royal Indian Raj had induced 80 Canadian and 120 American investors to invest a total of US$3.5 million, nearly all of which had been consumed by management fees, office expenses, investor relations and a host of other operating costs. Inside sources say that figure is now closer to US$8 million.

According to e-mails, the money was raised in dribs and drabs, which made it difficult for the Benjamins to keep up appearances. Financial tensions ran high, with family members often accusing each other of dishonesty and incompetence. E-mails were often laced with profanities and insults. The overall picture was one of an extremely dysfunctional family.

“Your continued belief that I am padding the accounts here and negotiating contracts to suit my personal interest is wrong and extremely offensive to me,” Collins wrote to his son from India on May 31, 2005. “I will sue you for words like stealing, manipulating and padding….Actually you are the most dishonest person in the whole organization.”

In early 2005, Royal Indian Raj announced London-based Global Emerging Markets would provide the company with a US$547-million equity line of credit. But before it could access the money, Royal Indian Raj would have to obtain a listing on a European stock exchange. The company promised to obtain the listing, but hasn’t yet. Why is not clear, but a confidential legal analysis done by Vancouver lawyer Herb Ono in August 2004 may provide a clue: Ono noted that some of the shares sold to investors may have not been exempt from prospectus requirements, which could cause a problem with securities regulators, and require the company to offer refunds to shareholders. It is not clear whether this matter was ever formally addressed.

Pressed for funds, Royal Indian Raj began offering increasingly higher returns to investors. In June 2007, investor Dula Gettu filed a lawsuit in B.C. Supreme Court claiming she loaned US$100,000 to the company. She said Royal Indian Raj promised to repay all her principal plus 50% interest within four months, plus 10,000 shares, but when the note matured, the company repaid the principal but not the interest or the shares.

In a statement of defence, the company admitted it had borrowed the money, but argued that since the interest rate exceeded 60% per annum, it was criminally usurious and the note unenforceable. The irony of this defence is that, while tactically clever, it amounts to an admission of illegal conduct. In any event, the lawsuit was eventually settled on terms that were never disclosed.

Zack, who by this time had resigned as the company’s communications director, also filed a lawsuit claiming he bought US$113,097 worth of shares in September 2005. He said Royal Indian Raj agreed to repay the principal within 24 months, but failed to do so. The company has not filed a statement of defence, and the matter remains unresolved. In turn, the company has filed a lawsuit in the U.S. against Zack, claiming that he is responsible for the defamatory website, www.royalindianscam.

In its usual hyperbolic style, Royal Indian Raj claims in its libel suit that the website has created monumental hardship for the company. Among other things, Royal Indian Raj alleges that:

¦ People who prepaid for units “demanded refunds of as much as $10 million”

¦ The company has been forced to halt its Royal Garden Villa’s pre-sale efforts “at an estimated loss of $100 million”

¦ The company has lost bank financing of its development projects, and has been forced to delay its initial public stock offering, which is “projected to be a $15-billion undertaking”

¦ The company has been forced to cancel two fundraising events, which were “expected to raise, respectively, $40 million and $60 million”

¦ The company’s acquisition of a 1,136-acre parcel of property in India has been halted by authorities

¦ The Jack Nicklaus Group, hired to design a golf course in India for the company, “has expressed its hesitance to consummate a co-branding deal expected to generate $1.5 billion in profit”

Zack does not appear to be fazed by the lawsuit. He has refused to take down the website, now called www.royalindiansham, but has otherwise declined comment.

Some of the baseball players are also getting nervous. An agent for one of the players said he doesn’t think Royal Indian Raj will ever build anything. “At every point where people started to doubt, they would come up with some new story that was more mesmerizing than the one before: They were going to get money from some bank in England, they were going to get money from a hedge fund or a private equity fund, they had some star from India.”

The “star from India,” Vijay Amritraj, made several appearances on behalf of Royal Indian Raj, then formally severed all relations. The company, as nimble as ever, has since shifted the spotlight to Nicklaus, who “will create a series of world-class Jack Nicklaus Signature Golf Courses in India as centrepieces to [the company’s] revolutionary new resort and residential communities.”

To promote its “Golf India” initiative, Royal Indian Raj recently hired Vancouver golf marketing consultant Brad Ewart, who insists this is the real deal. “We will begin construction within 90 days,” he said in April. But since then, nearly six months have passed and no work has been done.

The delays have got Dhiraj Tyagi fuming. The 37-year-old software consultant from the San Francisco area prepaid US$122,484 in April 2007 for two units at the Royal Garden Villa. He said he was told construction would start the following month. However, by April this year, no work had been done and he asked for his money back.

The company promised a full refund in 90 days, but the due date came and went with no result. Bob Brown, Royal Indian Raj’s vice-president of corporate relations, assured him the company “has every intention of paying your refund. If it were not for the government delays….we would be in a position to do so immediately,” he said.

On the Labour Day weekend, Tyagi drove 18 hours to Vancouver to confront Manoj Benjamin. At a subsequent meeting, Benjamin promised a refund within four months, regardless of the status of the project. Tyagi isn’t about to hold his breath. “I don’t trust them anymore,” he says.