Contract analysis

I. Purpose and Scope of This Memorandum This memorandum analyzes whether the factual record, as currently known and developed through our investigation to date, suggests that Jonathan R. Caldwell ("Caldwell" or "the Client") has any potential criminal or civil exposure arising from his business relationship with Marcus W. Stavros ("Stavros") and his investments in or through entities affiliated with Aegean Realty Par

II. Summary of the Government's Investigation A. Nature of the Investigation The federal investigation at issue is believed to have commenced in early 2022 and is being conducted through Grand Jury No. 22-GJ-4481, empaneled in the United States District Court for the Southern District of New York, located at 500 Pearl Street, New York, NY 10007. The investigation is being led by Assistant United States Attorney Miria

1. Inflated Appraisals. The government alleges that Stavros caused Pinnacle Appraisal Group LLC ("Pinnacle"), located at 355 Lexington Avenue, 9th Floor, New York, NY 10017, to issue inflated property valuations for properties acquired by Aegean Realty syndication vehicles. According to the government's theory, these inflated appraisals enabled Aegean Realty entities to secure larger commercial real estate loans from

2. Diversion of Investor Capital. The government alleges that Stavros diverted approximately $18.7 million in investor capital from Aegean Realty Fund IV LP and Aegean Realty Fund V LP to personal accounts and to fund operating shortfalls in earlier fund vehicles — specifically, to cover obligations of Aegean Realty Fund I LP, Fund II LP, and Fund III LP that were experiencing negative cash flows. The government char

3. False Financial Statements. The government alleges that Stavros caused false financial statements to be submitted to Westlake Fidelity Bank, N.A. and to Harborview Trust Company ("Harborview Trust"), located at 88 Broad Street, Suite 200, Bridgeport, CT 06604, in connection with loan covenant compliance. The nature of the falsifications is not fully known to us at this time, but based on the subpoena specification

4. Scale of Alleged Losses. The government estimates total investor losses of approximately $43 million across the various Aegean Realty fund vehicles. Estimated total lender losses are approximately $31 million. These loss estimates suggest a significant fraud, if proved, and one that will likely attract substantial prosecutorial resources and attention.

5. Scale of Aegean Operations. By way of background, Aegean Realty Partners raised approximately $215 million in aggregate capital across seven syndication offerings between 2016 and 2021. These offerings were structured as Delaware limited partnerships and were marketed to accredited investors. Westlake Fidelity Bank extended approximately $127 million in commercial real estate loans to various Aegean-affiliated ent

6. Victim Institutions. The primary institutional victims in the investigation appear to be Westlake Fidelity Bank, N.A. and Harborview Trust Company. Westlake Fidelity Bank is represented in this matter by Graystone & Falk LLP, located at 100 Pearl Street, Suite 1600, Hartford, CT 06103, with lead partner Catherine A. Falk handling the engagement. We are not yet aware of the identity of counsel representing Harborvi

III. Caldwell's Business Relationship with Stavros and Aegean Realty Entities A. Introduction and Background Jonathan R. Caldwell, age 58, is a New York-based real estate investor and asset manager with approximately three decades of experience in the commercial real estate sector. He is the sole member and managing principal of Caldwell Capital Advisors LLC ("CCA"), a New York limited liability company bearing Emplo

1. Aegean Realty Fund III LP Aegean Realty Fund III LP is a Delaware limited partnership. In June 2016, Caldwell invested $2,500,000 as a limited partner in Fund III. Caldwell's investment was made through a standard subscription agreement, and his status in the fund was that of a passive limited partner. He had no management authority over Fund III, no role in investment decisions made by the fund's general partner,

2. Aegean Realty Fund IV LP Aegean Realty Fund IV LP is a Delaware limited partnership. In March 2017, Caldwell invested $4,000,000 as a limited partner in Fund IV. As with Fund III, Caldwell's investment was made through a standard subscription agreement, and his role was that of a passive limited partner without management authority or operational involvement. We note that Fund IV is one of the two fund vehicles fr

3. Aegean Realty Fund V LP Aegean Realty Fund V LP is a Delaware limited partnership. In September 2018, Caldwell invested $3,500,000 as a limited partner in Fund V. Once again, Caldwell's role was that of a passive limited partner. Fund V is the second fund vehicle from which the government alleges investor capital was diverted, further heightening the relevance of Caldwell's investment in this vehicle.

4. Total LP Investments Caldwell's total limited partnership investments across the three Aegean Realty funds are summarized as follows:

5. Distributions from LP Investments Over the course of the co-investment period, Caldwell received aggregate distributions of approximately $1,870,000 from the three LP investments. These distributions were received through standard fund distribution channels and were characterized as returns on invested capital. The precise allocation of these distributions among the three fund vehicles is currently being reconstru

2. Stavros-Caldwell Industrial LLC Stavros-Caldwell Industrial LLC is a New Jersey limited liability company formed as a joint venture between Stavros (60% interest) and Caldwell (40% interest). In October 2017, the entity acquired the property located at 1500 Commerce Boulevard, Newark, NJ 07114 — a 65,000 square foot industrial warehouse — for a purchase price of $8,900,000. The acquisition was financed as follows:

3. Total JV Equity Caldwell's total equity contributions to the two joint venture entities are summarized as follows:

4. Distributions from JV Entities Over the co-investment period, Caldwell received aggregate distributions of approximately $635,000 from the two joint venture entities. These distributions represented Caldwell's share of distributable cash flow generated by the underlying properties. The allocation between the two JV entities and the timing of individual distributions are being reconstructed through our document rev

IV. Analysis of Potential Criminal Exposure A. Analytical Framework The criminal statutes believed to be at issue in the Stavros/Aegean Realty investigation — wire fraud, bank fraud, money laundering, and conspiracy — are each specific intent crimes. That is, a conviction under any of these statutes requires proof that the defendant acted with the requisite mental state: typically, knowledge, willfulness, or specific

V. Analysis of Potential Civil Exposure A. Potential Clawback or Disgorgement Actions If the government's investigation results in criminal charges against Stavros and the eventual appointment of a receiver, trustee, or liquidator for the Aegean Realty entities — or if the Aegean entities file for bankruptcy protection — there is a possibility that a fiduciary representing the interests of defrauded investors or cred

VI. Areas of Factual Sensitivity While the overall criminal and civil exposure analysis is favorable to Caldwell, we have identified three areas of factual sensitivity that warrant further investigation, monitoring, and careful management as the investigation proceeds: A. Receipt of Distributions Potentially Sourced from Diverted Funds As discussed in Sections IV.D and V.A above, Caldwell received total distributions