A Sunnyvale-based building and construction company that is at the center of a federal fraud investigation is also the focus of two San Jose nonprofits that say they, too, were victims.
The Securities and Exchange Commission filed a complaint against SiliconSage Builders and its principal executive, Sanjeev Acharya, on Dec. 21.
According to its website, the company builds multi-family and mixed-use communities in Silicon Valley, but the complaint, filed in U.S. District Court, states Acharya and his business defrauded 250 retail investors — mostly from the South Asian community — and raised more than $119 million through a “continuous series of misrepresentations and omissions and other deceptive conduct.”
Acharya also told investors they could get payments back in one year but Acharya has not had enough money to repay investors since 2018, according to the SEC.
This sounded familiar to Teresa Alvarado, chief of local impact for the nonprofit Bay Area public policy organization SPUR. She said SiliconSage Builders offered the organization a $15,000 sponsorship in 2019 to be recognized at a SPUR awards event, but never paid the bill.
“What’s interesting is we were pitching them on a $10,000 sponsorship and they offered to sponsor for $15,000,” Alvarado said. “We were super excited — not knowing that they never had any intention of paying us the money.”
SPUR ran ads including their new sponsor in newspapers and posted signs that gave the company notoriety at the event, expecting that SiliconSage builders would stick to its word. Over the course of a year, SPUR made numerous attempts through phone calls, emails and in-person exchange to collect the money, which, per agreement, was due in April 2019.
“They wanted visibility in the community. They wanted to appear as though they were successful and wanted to be a good community partner,” Alvarado said. “I have no idea what their intentions were…. It’s clear they didn’t have the cash.”
Brendan Rawson, executive director of San Jose Jazz, tells a similar story.
Every year San Jose Jazz hosts the mayor’s jazz brunch, an annual event, which began during Mayor Ron Gonzalez’s term. The event entertains community organizations, donors and city leaders. Rawson said he wanted to include members of the development community and received a few recommendations from the mayor’s office on who to ask for sponsorships. SiliconSage Builders was on that list.
SiliconSage Builders offered $25,000 to San Jose Jazz to be the title sponsor of the mayor’s jazz brunch. The brunch provided SiliconSage Builders with significant public exposure, speaking and networking opportunities, according to Rawson, but San Jose Jazz never received the money and — like SPUR — spent a year trying to collect.
After getting a “long, extended, runaround” Rawson said San Jose Jazz worked with SiliconSage Builders to create a payment plan. The effort got them $5,000 of the $25,000 owed. The rest has yet to be seen.
“It’s been a real frustration,” Rawson said. “Obviously, this is a really tough year for any nonprofit organization to take a $20,000 hit.”
Acharya did not respond to a request for comment.
SiliconSage Builders referred SPUR and San Jose Jazz back to former Santa Clara City Council candidate Harbir Bhatia who assured Alvarado the money was on its way. She was one of 200 employees working at SiliconSage Builders since the company was founded in 2007.
Bhatia worked in the “community benefit innovation” department at SiliconSage Builders. While she was getting complaints about unpaid bills, it was the operations and finance teams that handled repayment — not Bhatia. She said her job was to remind the other department that payments were due.
She said she was told all outstanding bills would eventually be paid.
The SEC complaint suggests the problem was greater than just one building.
“Acharya falsely described SiliconSage Builders and all of its real estate projects as efficient, successful, and profitable when, in fact, from 2016 to 2019, all but one of his projects had significant cost overruns and did not generate enough revenue to cover the overruns, leaving SSB with mounting, undisclosed liabilities to investors, totaling over $18 million by 2019,” the complaint read.
Bhatia resigned in May before she ran for Santa Clara City Council to represent District 1. She said the work environment was positive overall and she never suspected any wrongdoing. Before Bhatia left, she said she gave Acharya a list of accounts that were due.
But she continued to receive emails from San Jose Jazz after she left the company and said she called SiliconSage Builders to remind the staff to uphold its commitment. She said she didn’t realize the organizations on the running list still hadn’t been paid.
Bhatia said she was shocked and saddened by SiliconSage Builders’ actions and prayed that it all wasn’t a big pyramid scheme, as suggested by the complaint.
“Is it all true? I don’t know — it didn’t seem like that … it just looks really bad,” she said. “I really put my heart and soul into trying to build really good programs and ideas for the community and projects that came from the heart.”
She kept repeating: “I just hope that this is not true.”
Contact Carly Wipf at [email protected] or follow @CarlyChristineW on Twitter.