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MEMORANDUM

PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT PREPARED AT THE DIRECTION OF COUNSEL IN ANTICIPATION OF LITIGATION

TO: Conrad Ashby, Partner, White Collar & Investigations

FROM: Daniel Obi, Associate, Banking & Finance

DATE: January 10, 2023

RE: Fund Flow Analysis — Jonathan R. Caldwell Investments in and Distributions from Aegean Realty Entities

MATTER NO.: 1034-00001

GRAND JURY NO.: 22-GJ-4481

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I. Purpose and Scope

This memorandum was prepared at the direction of counsel in connection with the representation of Jonathan R. Caldwell in response to the federal grand jury subpoena dated November 18, 2022, issued by the United States Attorney's Office for the Southern District of New York (Grand Jury No. 22-GJ-4481). The memorandum constitutes attorney work product and reflects the mental impressions, conclusions, and legal theories of counsel. It should not be disclosed outside the representation without the express authorization of the supervising partner.

The purpose of this memorandum is to trace and document all fund flows between accounts held or controlled by Mr. Caldwell, on the one hand, and accounts held or controlled by Aegean Realty Partners LLC, its affiliated fund vehicles (Aegean Realty Fund III LP, Aegean Realty Fund IV LP, and Aegean Realty Fund V LP), and the two joint venture entities (710 Flatbush Holdings LLC and Stavros-Caldwell Industrial LLC), on the other. The analysis is intended to provide counsel with a comprehensive accounting of every capital deployment, distribution payment, and buyout or redemption transaction involving Mr. Caldwell and any Aegean Realty-related entity during the relevant period, and to identify whether any direct transfers exist between Mr. Caldwell's accounts and the personal accounts of Marcus W. Stavros.

The scope of this analysis covers the period from January 1, 2014 through December 31, 2021, which is consistent with the date range specified in the subpoena. Although Mr. Caldwell's earliest identified investment in the Aegean Realty entities occurred in 2016, the analysis extends back to January 1, 2014, as required by the subpoena, to confirm the absence of any earlier fund flows between the relevant parties.

The analysis is based on the following categories of source documents:

• Bank account statements for all accounts held or controlled by Mr. Caldwell, including accounts of Caldwell Capital Advisors LLC (EIN 83-2174056), JRC Realty Holdings LLC (EIN 81-4493217), and Mr. Caldwell's personal banking accounts;

• Wire transfer confirmations for each inbound and outbound wire identified in connection with the Aegean Realty entities;

• Subscription agreements, capital call notices, distribution notices, and related fund documentation for each of the three limited partnership investments;

• Joint venture operating agreements, closing statements, and related acquisition documents for each of the two joint venture investments;

• Buyout and separation agreement documents, including the December 15, 2019 separation agreement and related closing documents;

• Tax reporting records and workpapers obtained from Thornberg & Whitfield CPAs (Helen R. Thornberg, Senior Partner), Mr. Caldwell's outside accountant, for purposes of tax reporting reconciliation and verification of investment income and capital gains reporting; and

• All Bates-stamped documents produced to the government in response to the grand jury subpoena, identified as CALDWELL-00001 through CALDWELL-03633, which were collected, processed, and produced in two productions (Production 1: CALDWELL-00001 through CALDWELL-01842; Production 2: CALDWELL-01843 through CALDWELL-03633).

All source documents were cross-referenced against one another to ensure consistency across bank records, wire transfer confirmations, fund documentation, and tax reporting records. Where discrepancies were identified, they are noted in the relevant sections below.

Key Finding: Based on a comprehensive review of all available records, Mr. Caldwell's bank records do not reflect any direct transfers to or from personal accounts held by Marcus W. Stavros. All fund flows identified in this analysis were between Mr. Caldwell's accounts (or accounts of his controlled entities) and entity-level accounts of the Aegean Realty fund vehicles and joint ventures. This finding is discussed in detail in Section VI below.

II. Summary of Caldwell's Aggregate Investment and Return Activity

This section provides a high-level summary of Mr. Caldwell's aggregate capital deployments into, and returns received from, Aegean Realty-related entities during the period under review. Detailed transaction-by-transaction analyses are set forth in Sections III and IV below.

A. Total Capital Deployed

Mr. Caldwell deployed capital into Aegean Realty-related entities through two channels: (1) limited partnership investments in three Aegean Realty fund vehicles, and (2) equity contributions to two joint venture entities formed in partnership with Marcus W. Stavros.

Limited Partnership Investments. Mr. Caldwell made limited partnership investments in three Aegean Realty fund vehicles, totaling $10,000,000 in aggregate capital deployed:

1. Aegean Realty Fund III LP — $2,500,000, invested in June 2016. This investment was funded from the Caldwell Capital Advisors LLC operating account via wire transfer to the Fund III capital account at Westlake Fidelity Bank, N.A.

2. Aegean Realty Fund IV LP — $4,000,000, invested in March 2017. This investment was funded from the Caldwell Capital Advisors LLC operating account via wire transfer, with funds initially deposited to the Harborview Trust Company escrow account before release to the Fund IV capital account.

3. Aegean Realty Fund V LP — $3,500,000, invested in September 2018. This investment was funded from the Caldwell Capital Advisors LLC operating account via wire transfer, with funds initially deposited to the Harborview Trust Company escrow account before release to the Fund V capital account.

Joint Venture Equity Contributions. Mr. Caldwell made equity contributions to two joint venture entities, totaling $4,224,000 in aggregate capital deployed:

1. 710 Flatbush Holdings LLC — $2,800,000, contributed in April 2016 in connection with the acquisition of a 42-unit mixed-use building at 710 Flatbush Avenue, Brooklyn, New York 11225. Mr. Caldwell held a 50% membership interest in this entity.

2. Stavros-Caldwell Industrial LLC — $1,424,000, contributed in October 2017 in connection with the acquisition of a 65,000 square-foot industrial warehouse at 1500 Commerce Boulevard, Newark, New Jersey 07114. Mr. Caldwell held a 40% membership interest in this entity.

Total capital deployed by Mr. Caldwell into Aegean Realty-related investments: $14,224,000.

B. Total Distributions Received

During the period under review, Mr. Caldwell received distributions from both the limited partnership investments and the joint venture entities:

• Aggregate distributions from LP investments: $1,870,000. These distributions were received at various times between 2016 and 2019 from entity-level accounts of Aegean Realty Fund III LP, Aegean Realty Fund IV LP, and Aegean Realty Fund V LP, respectively. A detailed breakdown by fund vehicle and distribution date is set forth in Section III below.

• Aggregate distributions from JV entities: $635,000. These distributions represented Mr. Caldwell's share of operating cash flow distributions from 710 Flatbush Holdings LLC and Stavros-Caldwell Industrial LLC. A detailed breakdown by entity and distribution date is set forth in Section IV below.

Total distributions received by Mr. Caldwell: $2,505,000.

C. Buyout/Redemption Proceeds (Post-Separation)

Following the business dispute between Mr. Caldwell and Marcus W. Stavros, which culminated in October 2019, the parties negotiated and executed a separation agreement effective December 15, 2019. The separation agreement was negotiated on Mr. Caldwell's behalf by Patricia Sheldon of Whitmore & Kessler LLP, acting as independent counsel. Under the terms of the separation agreement, Stavros (or entities controlled by Stavros) purchased Mr. Caldwell's interests in the joint venture entities and redeemed Mr. Caldwell's limited partnership interests in the fund vehicles. The buyout and redemption transactions were as follows:

1. Buyout of 50% interest in 710 Flatbush Holdings LLC: $3,400,000, effective December 15, 2019. Proceeds were wired from the 710 Flatbush Holdings LLC account (or a Stavros-controlled entity account) to the JRC Realty Holdings LLC account.

2. Buyout of 40% interest in Stavros-Caldwell Industrial LLC: $1,850,000, effective December 15, 2019. Proceeds were wired from the Stavros-Caldwell Industrial LLC account (or a Stavros-controlled entity account) to the JRC Realty Holdings LLC account.

3. Redemption of Fund III LP interest: Redeemed at or around December 15, 2019 pursuant to the separation agreement. Proceeds were wired from the Fund III LP entity account to the Caldwell Capital Advisors LLC operating account. The specific redemption amount is included in the overall capital return analysis and detailed in Section III.A below.

4. Redemption of Fund IV LP interest: Redeemed at or around December 15, 2019 pursuant to the separation agreement. Proceeds were wired from the Fund IV LP entity account to the Caldwell Capital Advisors LLC operating account. The specific redemption amount is included in the overall capital return analysis and detailed in Section III.B below.

5. Redemption of Fund V LP interest: $3,150,000, effective March 2020 (following the six-month notice period specified in the Fund V LP partnership agreement). Proceeds were wired from the Fund V LP entity account to the Caldwell Capital Advisors LLC operating account.

Total buyout/redemption proceeds received by Mr. Caldwell: $8,400,000 (comprising the 710 Flatbush buyout of $3,400,000, the Stavros-Caldwell Industrial buyout of $1,850,000, and the Fund V LP redemption of $3,150,000, together with the Fund III and Fund IV redemption amounts reflected in the December 15, 2019 settlement disbursements).

D. Key Observation

The following observation is central to the analysis and should be highlighted for purposes of any presentation to the government or preparation for testimony:

• All investment outflows from accounts held or controlled by Mr. Caldwell were directed to entity-level bank accounts of the respective Aegean Realty fund vehicles or joint venture entities. At no point did Mr. Caldwell wire, transfer, or otherwise transmit funds directly to a personal account of Marcus W. Stavros.

• All distributions and buyout/redemption proceeds received by Mr. Caldwell were received from entity-level accounts of the respective Aegean Realty fund vehicles or joint venture entities. At no point did Mr. Caldwell receive funds directly from a personal account of Marcus W. Stavros.

• No direct transfers between Caldwell personal or business accounts and Marcus W. Stavros's personal accounts were identified in any of the records reviewed for this analysis.

This observation is discussed in further detail in Section VI below and has significant implications for Mr. Caldwell's potential exposure, as addressed in the separate exposure analysis memorandum dated December 15, 2022.

III. Detailed Fund Flow Analysis — Limited Partnership Investments

This section traces each of Mr. Caldwell's three limited partnership investments in Aegean Realty fund vehicles, from the initial capital deployment through periodic distributions to ultimate redemption. Each subsection identifies the relevant source and destination accounts, the mechanism of transfer, the supporting documentation, and the applicable Bates-stamped document references.

A. Aegean Realty Fund III LP ($2,500,000)

Investment.

• Investment Date: June 14, 2016

• Source Account: Caldwell Capital Advisors LLC operating account, held at Greaves Bancorp, Account No. ending in -7842

• Destination Account: Aegean Realty Fund III LP capital account at Westlake Fidelity Bank, N.A. (600 Summer Street, Stamford, CT 06901), Account No. ending in -3019

• Amount: $2,500,000

• Mechanism: Wire transfer, initiated by Mr. Caldwell on June 14, 2016, with same-day settlement

• Supporting Documents:

(i) Subscription Agreement dated June 10, 2016, executed by Jonathan R. Caldwell on behalf of Caldwell Capital Advisors LLC, as limited partner, and Marcus W. Stavros on behalf of Aegean Realty Partners LLC, as general partner (CALDWELL-00127 through CALDWELL-00156);

(ii) Capital Call Notice dated June 8, 2016, issued by Aegean Realty Partners LLC (as general partner of Fund III LP) to Caldwell Capital Advisors LLC, requesting payment of the full subscription amount of $2,500,000 (CALDWELL-00157 through CALDWELL-00159);

(iii) Wire Transfer Confirmation dated June 14, 2016, from Greaves Bancorp, confirming outbound wire of $2,500,000 from Caldwell Capital Advisors LLC account to Aegean Realty Fund III LP capital account at Westlake Fidelity Bank, N.A. (CALDWELL-00160);

(iv) Greaves Bancorp monthly account statement for Caldwell Capital Advisors LLC, June 2016, reflecting wire debit of $2,500,000 on June 14, 2016 (CALDWELL-00161 through CALDWELL-00168).

Distributions Received from Fund III LP.

Mr. Caldwell received periodic distributions from Aegean Realty Fund III LP during the period from 2017 through 2019. Each distribution was credited to the Caldwell Capital Advisors LLC operating account via wire transfer from the Fund III LP entity account at Westlake Fidelity Bank, N.A. The distributions were accompanied by distribution notices issued by Aegean Realty Partners LLC in its capacity as general partner. The following distributions from Fund III LP were identified in the bank records:

• March 15, 2017: $125,000 (CALDWELL-00212 through CALDWELL-00214)

• September 29, 2017: $110,000 (CALDWELL-00278 through CALDWELL-00280)

• March 16, 2018: $135,000 (CALDWELL-00341 through CALDWELL-00343)

• September 28, 2018: $120,000 (CALDWELL-00412 through CALDWELL-00414)

• March 15, 2019: $140,000 (CALDWELL-00487 through CALDWELL-00489)

• September 27, 2019: $105,000 (CALDWELL-00548 through CALDWELL-00550)

Total distributions from Fund III LP: $735,000. Each of these distributions was traced to a corresponding wire credit from the Aegean Realty Fund III LP account at Westlake Fidelity Bank, N.A. The distribution notices were cross-referenced with Mr. Caldwell's K-1 reporting as prepared by Thornberg & Whitfield CPAs, and the amounts are consistent across all records reviewed.

Redemption.

Mr. Caldwell's limited partnership interest in Fund III LP was redeemed in connection with the December 15, 2019 separation agreement. Under the terms of the separation agreement, the general partner agreed to repurchase Caldwell's interest at net asset value as of the most recent quarterly valuation. The redemption proceeds were wired from the Fund III LP entity account at Westlake Fidelity Bank, N.A. to the Caldwell Capital Advisors LLC operating account at Greaves Bancorp

• Redemption Date: December 20, 2019 (settlement date; effective date December 15, 2019 per separation agreement)

• Redemption Amount: $2,475,000

• Supporting Documents: Separation Agreement dated December 15, 2019 (CALDWELL-01288 through CALDWELL-01324); Wire Transfer Confirmation dated December 20, 2019 (CALDWELL-01325); Greaves Bancorp monthly statement, December 2019 (CALDWELL-01326 through CALDWELL-01335)

B. Aegean Realty Fund IV LP ($4,000,000)

Investment.

• Investment Date: March 22, 2017

• Source Account: Caldwell Capital Advisors LLC operating account, held at Greaves Bancorp, Account No. ending in -7842

• Destination Account: Aegean Realty Fund IV LP capital account at Westlake Fidelity Bank, N.A. (600 Summer Street, Stamford, CT 06901), Account No. ending in -4527. Note: Harborview Trust Company (88 Broad Street, Suite 200, Bridgeport, CT 06604) served as escrow agent for investor deposits in Fund IV LP. Mr. Caldwell's wire was initially directed to the Harborview Trust Company escrow account (Account No. ending in -8816) and subsequently released to the Fund IV LP capital account upon final closing.

• Amount: $4,000,000

• Mechanism: Wire transfer, initiated by Mr. Caldwell on March 22, 2017, with same-day settlement to the Harborview Trust Company escrow account

• Supporting Documents:

(i) Subscription Agreement dated March 15, 2017, executed by Jonathan R. Caldwell on behalf of Caldwell Capital Advisors LLC, as limited partner, and Marcus W. Stavros on behalf of Aegean Realty Partners LLC, as general partner (CALDWELL-00230 through CALDWELL-00264);

(ii) Capital Call Notice dated March 13, 2017, issued by Aegean Realty Partners LLC (as general partner of Fund IV LP) to Caldwell Capital Advisors LLC, requesting payment of the full subscription amount of $4,000,000 to the Harborview Trust Company escrow account (CALDWELL-00265 through CALDWELL-00268);

(iii) Wire Transfer Confirmation dated March 22, 2017, from Greaves Bancorp, confirming outbound wire of $4,000,000 from Caldwell Capital Advisors LLC account to Harborview Trust Company escrow account (CALDWELL-00269);

(iv) Greaves Bancorp monthly account statement for Caldwell Capital Advisors LLC, March 2017, reflecting wire debit of $4,000,000 on March 22, 2017 (CALDWELL-00270 through CALDWELL-00277);

(v) Escrow Release Confirmation from Harborview Trust Company dated April 5, 2017, confirming release of escrowed funds to Fund IV LP capital account at Westlake Fidelity Bank, N.A. (CALDWELL-00283 through CALDWELL-00284).

Distributions Received from Fund IV LP.

Mr. Caldwell received periodic distributions from Aegean Realty Fund IV LP during the period from 2017 through 2019. Each distribution was credited to the Caldwell Capital Advisors LLC operating account via wire transfer from the Fund IV LP entity account at Westlake Fidelity Bank, N.A. The following distributions from Fund IV LP were identified in the bank records:

• September 29, 2017: $95,000 (CALDWELL-00356 through CALDWELL-00358)

• March 16, 2018: $160,000 (CALDWELL-00418 through CALDWELL-00420)

• September 28, 2018: $145,000 (CALDWELL-00476 through CALDWELL-00478)

• March 15, 2019: $170,000 (CALDWELL-00523 through CALDWELL-00525)

• September 27, 2019: $80,000 (CALDWELL-00572 through CALDWELL-00574)

Total distributions from Fund IV LP: $650,000. Each of these distributions was traced to a corresponding wire credit originating from the Aegean Realty Fund IV LP account at Westlake Fidelity Bank, N.A. Distribution amounts were cross-referenced with K-1 reporting prepared by Thornberg & Whitfield CPAs.

Redemption.

Mr. Caldwell's limited partnership interest in Fund IV LP was redeemed in connection with the December 15, 2019 separation agreement, under the same terms as the Fund III LP redemption described above.

• Redemption Date: December 20, 2019 (settlement date; effective date December 15, 2019 per separation agreement)

• Redemption Amount: $3,775,000

• Supporting Documents: Separation Agreement dated December 15, 2019 (CALDWELL-01288 through CALDWELL-01324); Wire Transfer Confirmation dated December 20, 2019 (CALDWELL-01336); Greaves Bancorp monthly statement, December 2019 (CALDWELL-01326 through CALDWELL-01335, same statement reflecting Fund III and Fund IV redemption credits)

Sensitivity Note.

The government's theory, as communicated during the December 12, 2022 proffer call with AUSA Miriam T. Goldfarb, is that Marcus W. Stavros diverted approximately $18,700,000 from Funds IV and V to personal accounts and to fund operating shortfalls in earlier fund vehicles. The distributions received by Mr. Caldwell from Fund IV LP may have included diverted investor capital. While Mr. Caldwell's records demonstrate that these payments came from the Fund IV LP entity account—and not from Stavros personally—the ultimate source of the funds within the Fund IV LP account may be of interest to the government's forensic accountant, Meridian Forensic Advisors LLC (Nathan P. Solis, Managing Director). This area of factual sensitivity is addressed further in Section VII.A below.

C. Aegean Realty Fund V LP ($3,500,000)

Investment.

• Investment Date: September 19, 2018

• Source Account: Caldwell Capital Advisors LLC operating account, held at Greaves Bancorp, Account No. ending in -7842

• Destination Account: Aegean Realty Fund V LP capital account at Westlake Fidelity Bank, N.A. (600 Summer Street, Stamford, CT 06901), Account No. ending in -6193. Note: As with Fund IV LP, Harborview Trust Company (88 Broad Street, Suite 200, Bridgeport, CT 06604) served as escrow agent for investor deposits in Fund V LP. Mr. Caldwell's wire was initially directed to the Harborview Trust Company escrow account (Account No. ending in -9024) and subsequently released to the Fund V LP capital account upon final closing.

• Amount: $3,500,000

• Mechanism: Wire transfer, initiated by Mr. Caldwell on September 19, 2018, with same-day settlement to the Harborview Trust Company escrow account

• Supporting Documents:

(i) Subscription Agreement dated September 12, 2018, executed by Jonathan R. Caldwell on behalf of Caldwell Capital Advisors LLC, as limited partner, and Marcus W. Stavros on behalf of Aegean Realty Partners LLC, as general partner (CALDWELL-00430 through CALDWELL-00468);

(ii) Capital Call Notice dated September 10, 2018, issued by Aegean Realty Partners LLC (as general partner of Fund V LP) to Caldwell Capital Advisors LLC, requesting payment of the full subscription amount of $3,500,000 to the Harborview Trust Company escrow account (CALDWELL-00469 through CALDWELL-00472);

(iii) Wire Transfer Confirmation dated September 19, 2018, from Greaves Bancorp, confirming outbound wire of $3,500,000 from Caldwell Capital Advisors LLC account to Harborview Trust Company escrow account (CALDWELL-00473);

(iv) Greaves Bancorp monthly account statement for Caldwell Capital Advisors LLC, September 2018, reflecting wire debit of $3,500,000 on September 19, 2018 (CALDWELL-00474 through CALDWELL-00481);

(v) Escrow Release Confirmation from Harborview Trust Company dated October 3, 2018, confirming release of escrowed funds to Fund V LP capital account at Westlake Fidelity Bank, N.A. (CALDWELL-00482 through CALDWELL-00483).

Distributions Received from Fund V LP.

Mr. Caldwell received periodic distributions from Aegean Realty Fund V LP during the period from 2019 through the redemption in 2020. Each distribution was credited to the Caldwell Capital Advisors LLC operating account via wire transfer from the Fund V LP entity account at Westlake Fidelity Bank, N.A. The following distributions from Fund V LP were identified in the bank records:

• March 15, 2019: $175,000 (CALDWELL-00530 through CALDWELL-00532)

• September 27, 2019: $155,000 (CALDWELL-00580 through CALDWELL-00582)

• December 13, 2019: $155,000 (CALDWELL-00618 through CALDWELL-00620)

Total distributions from Fund V LP: $485,000. Each of these distributions was traced to a corresponding wire credit originating from the Aegean Realty Fund V LP account at Westlake Fidelity Bank, N.A. Distribution amounts were cross-referenced with K-1 reporting prepared by Thornberg & Whitfield CPAs.

Redemption.

Unlike the Fund III and Fund IV interests, which were redeemed concurrently with the December 15, 2019 separation agreement, Mr. Caldwell's Fund V LP interest was subject to a six-month redemption notice period under the terms of the Fund V LP partnership agreement. Mr. Caldwell submitted his redemption notice on or about September 15, 2019, and the interest was redeemed in March 2020.

• Redemption Notice Date: September 15, 2019

• Redemption Effective Date: March 15, 2020

• Redemption Amount: $3,150,000 (reflecting a $350,000 decrease from the original $3,500,000 investment amount)

• Source of Proceeds: Wire transfer from Fund V LP entity account at Westlake Fidelity Bank, N.A. to Caldwell Capital Advisors LLC operating account at Greaves Bancorp

• Supporting Documents: Redemption Notice dated September 15, 2019 (CALDWELL-01340 through CALDWELL-01342); Wire Transfer Confirmation dated March 16, 2020 (CALDWELL-01343); Greaves Bancorp monthly statement, March 2020 (CALDWELL-01344 through CALDWELL-01352)

Sensitivity Note.

The same diversion concern applicable to Fund IV LP applies to Fund V LP. The $3,150,000 redemption payment received by Mr. Caldwell in March 2020 originated from the Fund V LP entity account. However, this payment came from Fund V entity accounts after the period in which the government alleges significant diversions occurred. The government's forensic accountant may seek to trace the source of the funds that remained in the Fund V LP account at the time of Mr. Caldwell's redemption. This area of factual sensitivity is addressed further in Section VII.A below.

D. LP Investment Summary Table

The following table summarizes Mr. Caldwell's limited partnership investments, distributions received, and redemption proceeds:

Note: The total redemption amount of $9,400,000 for the LP investments comprises $2,475,000 (Fund III), $3,775,000 (Fund IV), and $3,150,000 (Fund V). The combined LP distributions and redemption proceeds total $11,270,000 against $10,000,000 invested, reflecting a net gain of $1,270,000 across the three LP investments.

IV. Detailed Fund Flow Analysis — Joint Venture Investments

This section traces each of Mr. Caldwell's two joint venture investments, from the initial equity contribution through operating distributions to the ultimate buyout of Mr. Caldwell's interests.

A. 710 Flatbush Holdings LLC (50/50 Joint Venture)

Property and Acquisition Overview.

• Property: 710 Flatbush Avenue, Brooklyn, New York 11225 — a 42-unit mixed-use building comprising ground-floor retail and upper-floor residential units

• Acquisition Date: April 28, 2016

• Acquisition Price: $11,200,000

• Financing Structure:

Total equity required: $5,600,000 (representing the difference between the $11,200,000 acquisition price and the $5,600,000 first mortgage loan from Westlake Fidelity Bank, N.A.)

Caldwell equity contribution (50%): $2,800,000

Stavros equity contribution (50%): $2,800,000

Westlake Fidelity Bank, N.A. commercial real estate loan: $5,600,000, secured by a first-priority mortgage on the property

Investment.

• Source Account for Caldwell's Equity: JRC Realty Holdings LLC account (EIN 81-4493217), held at Greaves Bancorp, Account No. ending in -2156

• Destination Account: 710 Flatbush Holdings LLC closing/operating account at Westlake Fidelity Bank, N.A., Account No. ending in -7301

• Amount: $2,800,000

• Mechanism: Wire transfer at closing on April 28, 2016

• Supporting Documents:

(i) Joint Venture Operating Agreement of 710 Flatbush Holdings LLC, dated April 15, 2016, executed by Jonathan R. Caldwell (through JRC Realty Holdings LLC) and Marcus W. Stavros (through Aegean Realty Partners LLC), establishing the 50/50 ownership structure and setting forth capital contribution, distribution, and management provisions (CALDWELL-00042 through CALDWELL-00098);

(ii) Closing Statement dated April 28, 2016, prepared by settlement agent, reflecting the acquisition price, loan proceeds, equity contributions, closing costs, and adjustments (CALDWELL-00099 through CALDWELL-00104);

(iii) Wire Transfer Confirmation dated April 28, 2016, from Greaves Bancorp, confirming outbound wire of $2,800,000 from JRC Realty Holdings LLC account to 710 Flatbush Holdings LLC closing account at Westlake Fidelity Bank, N.A. (CALDWELL-00105);

(iv) Greaves Bancorp monthly account statement for JRC Realty Holdings LLC, April 2016, reflecting wire debit of $2,800,000 on April 28, 2016 (CALDWELL-00106 through CALDWELL-00112);

(v) Westlake Fidelity Bank, N.A. Loan Agreement and Mortgage Note dated April 28, 2016, in the principal amount of $5,600,000 (CALDWELL-00113 through CALDWELL-00126).

Distributions Received.

Mr. Caldwell received periodic operating distributions from 710 Flatbush Holdings LLC representing his 50% share of distributable cash flow from the property's rental income, net of operating expenses and debt service. Each distribution was credited to the JRC Realty Holdings LLC account via check or wire transfer from the 710 Flatbush Holdings LLC operating account at Westlake Fidelity Bank, N.A. The following distributions were identified in the bank records:

• December 20, 2016: $45,000 (CALDWELL-00625 through CALDWELL-00627)

• June 23, 2017: $52,000 (CALDWELL-00658 through CALDWELL-00660)

• December 22, 2017: $48,000 (CALDWELL-00691 through CALDWELL-00693)

• June 22, 2018: $55,000 (CALDWELL-00724 through CALDWELL-00726)

• December 21, 2018: $50,000 (CALDWELL-00757 through CALDWELL-00759)

• June 21, 2019: $42,000 (CALDWELL-00790 through CALDWELL-00792)

Total distributions from 710 Flatbush Holdings LLC: $292,000. Each distribution was accompanied by a distribution summary from the entity's property manager. Distribution amounts were cross-referenced with K-1 reporting prepared by Thornberg & Whitfield CPAs.

Disputed Management Fees.

The bank records and operating statements for 710 Flatbush Holdings LLC reflect approximately $340,000 in management fees that were unilaterally charged by Stavros (through Aegean Realty Partners LLC) to the 710 Flatbush Holdings LLC operating account during the period from 2017 through 2019. These fees were not authorized under the joint venture operating agreement and were the principal source of the dispute between Caldwell and Stavros that precipitated the October 2019 business separation. The disputed management fees are documented in the email correspondence produced at CALDWELL-00800 through CALDWELL-00845 and in the demand letter from Whitmore & Kessler LLP to Stavros dated October 14, 2019 (CALDWELL-00846 through CALDWELL-00852).

Buyout.

Pursuant to the December 15, 2019 separation agreement, Stavros (through an entity controlled by him) purchased Mr. Caldwell's 50% membership interest in 710 Flatbush Holdings LLC.

• Effective Date: December 15, 2019

• Buyout Price: $3,400,000

• Source of Proceeds: Wire transfer from the 710 Flatbush Holdings LLC account (or a Stavros-controlled entity account) at Westlake Fidelity Bank, N.A.

• Destination Account: JRC Realty Holdings LLC account at Greaves Bancorp, Account No. ending in -2156

• Settlement Date: December 23, 2019

• Supporting Documents: Separation Agreement dated December 15, 2019 (CALDWELL-01288 through CALDWELL-01324); Membership Interest Purchase Agreement for 710 Flatbush Holdings LLC dated December 15, 2019 (CALDWELL-01353 through CALDWELL-01378); Wire Transfer Confirmation dated December 23, 2019 (CALDWELL-01379); Greaves Bancorp monthly statement for JRC Realty Holdings LLC, December 2019 (CALDWELL-01380 through CALDWELL-01388)

B. Stavros-Caldwell Industrial LLC (60/40 Joint Venture — Stavros/Caldwell)

Property and Acquisition Overview.

• Property: 1500 Commerce Boulevard, Newark, New Jersey 07114 — a 65,000 square-foot industrial warehouse

• Acquisition Date: October 12, 2017

• Acquisition Price: $8,900,000

• Financing Structure:

Total equity required: $3,560,000 (representing the difference between the $8,900,000 acquisition price and the $5,340,000 first mortgage loan from Westlake Fidelity Bank, N.A.)

Caldwell equity contribution (40%): $1,424,000

Stavros equity contribution (60%): $2,136,000

Westlake Fidelity Bank, N.A. commercial real estate loan: $5,340,000, secured by a first-priority mortgage on the property

Investment.

• Source Account for Caldwell's Equity: JRC Realty Holdings LLC account (EIN 81-4493217), held at Greaves Bancorp, Account No. ending in -2156

• Destination Account: Stavros-Caldwell Industrial LLC closing/operating account at Westlake Fidelity Bank, N.A., Account No. ending in -5488

• Amount: $1,424,000

• Mechanism: Wire transfer at closing on October 12, 2017

• Supporting Documents:

(i) Joint Venture Operating Agreement of Stavros-Caldwell Industrial LLC, dated September 28, 2017, executed by Jonathan R. Caldwell (through JRC Realty Holdings LLC) and Marcus W. Stavros (through Aegean Realty Partners LLC), establishing the 60/40 ownership structure (Stavros 60%, Caldwell 40%) and setting forth capital contribution, distribution, and management provisions (CALDWELL-00860 through CALDWELL-00918);

MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT PREPARED AT THE DIRECTION OF COUNSEL IN ANTICIPATION OF LITIGATION
TO: Conrad Ashby, Partner, White Collar & Investigations
FROM: Daniel Obi, Associate, Banking & Finance
DATE: January 10, 2023
RE: Fund Flow Analysis — Jonathan R. Caldwell Investments in and Distributions from Aegean Realty Entities
MATTER NO.: 1034-00001
GRAND JURY NO.: 22-GJ-4481
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I. Purpose and Scope
This memorandum was prepared at the direction of counsel in connection with the representation of Jonathan R. Caldwell in response to the federal grand jury subpoena dated November 18, 2022, issued by the United States Attorney's Office for the Southern District of New York (Grand Jury No. 22-GJ-4481). The memorandum constitutes attorney work product and reflects the mental impressions, conclusions, and legal theories of counsel. It should not be disclosed outside the representation without the express authorization of the supervising partner.
The purpose of this memorandum is to trace and document all fund flows between accounts held or controlled by Mr. Caldwell, on the one hand, and accounts held or controlled by Aegean Realty Partners LLC, its affiliated fund vehicles (Aegean Realty Fund III LP, Aegean Realty Fund IV LP, and Aegean Realty Fund V LP), and the two joint venture entities (710 Flatbush Holdings LLC and Stavros-Caldwell Industrial LLC), on the other. The analysis is intended to provide counsel with a comprehensive accounting of every capital deployment, distribution payment, and buyout or redemption transaction involving Mr. Caldwell and any Aegean Realty-related entity during the relevant period, and to identify whether any direct transfers exist between Mr. Caldwell's accounts and the personal accounts of Marcus W. Stavros.
The scope of this analysis covers the period from January 1, 2014 through December 31, 2021, which is consistent with the date range specified in the subpoena. Although Mr. Caldwell's earliest identified investment in the Aegean Realty entities occurred in 2016, the analysis extends back to January 1, 2014, as required by the subpoena, to confirm the absence of any earlier fund flows between the relevant parties.
The analysis is based on the following categories of source documents:
• Bank account statements for all accounts held or controlled by Mr. Caldwell, including accounts of Caldwell Capital Advisors LLC (EIN 83-2174056), JRC Realty Holdings LLC (EIN 81-4493217), and Mr. Caldwell's personal banking accounts;
• Wire transfer confirmations for each inbound and outbound wire identified in connection with the Aegean Realty entities;
• Subscription agreements, capital call notices, distribution notices, and related fund documentation for each of the three limited partnership investments;
• Joint venture operating agreements, closing statements, and related acquisition documents for each of the two joint venture investments;
• Buyout and separation agreement documents, including the December 15, 2019 separation agreement and related closing documents;
• Tax reporting records and workpapers obtained from Thornberg & Whitfield CPAs (Helen R. Thornberg, Senior Partner), Mr. Caldwell's outside accountant, for purposes of tax reporting reconciliation and verification of investment income and capital gains reporting; and
• All Bates-stamped documents produced to the government in response to the grand jury subpoena, identified as CALDWELL-00001 through CALDWELL-03633, which were collected, processed, and produced in two productions (Production 1: CALDWELL-00001 through CALDWELL-01842; Production 2: CALDWELL-01843 through CALDWELL-03633).
All source documents were cross-referenced against one another to ensure consistency across bank records, wire transfer confirmations, fund documentation, and tax reporting records. Where discrepancies were identified, they are noted in the relevant sections below.
Key Finding: Based on a comprehensive review of all available records, Mr. Caldwell's bank records do not reflect any direct transfers to or from personal accounts held by Marcus W. Stavros. All fund flows identified in this analysis were between Mr. Caldwell's accounts (or accounts of his controlled entities) and entity-level accounts of the Aegean Realty fund vehicles and joint ventures. This finding is discussed in detail in Section VI below.
II. Summary of Caldwell's Aggregate Investment and Return Activity
This section provides a high-level summary of Mr. Caldwell's aggregate capital deployments into, and returns received from, Aegean Realty-related entities during the period under review. Detailed transaction-by-transaction analyses are set forth in Sections III and IV below.
A. Total Capital Deployed
Mr. Caldwell deployed capital into Aegean Realty-related entities through two channels: (1) limited partnership investments in three Aegean Realty fund vehicles, and (2) equity contributions to two joint venture entities formed in partnership with Marcus W. Stavros.
Limited Partnership Investments. Mr. Caldwell made limited partnership investments in three Aegean Realty fund vehicles, totaling $10,000,000 in aggregate capital deployed:
1. Aegean Realty Fund III LP — $2,500,000, invested in June 2016. This investment was funded from the Caldwell Capital Advisors LLC operating account via wire transfer to the Fund III capital account at Westlake Fidelity Bank, N.A.
2. Aegean Realty Fund IV LP — $4,000,000, invested in March 2017. This investment was funded from the Caldwell Capital Advisors LLC operating account via wire transfer, with funds initially deposited to the Harborview Trust Company escrow account before release to the Fund IV capital account.
3. Aegean Realty Fund V LP — $3,500,000, invested in September 2018. This investment was funded from the Caldwell Capital Advisors LLC operating account via wire transfer, with funds initially deposited to the Harborview Trust Company escrow account before release to the Fund V capital account.
Joint Venture Equity Contributions. Mr. Caldwell made equity contributions to two joint venture entities, totaling $4,224,000 in aggregate capital deployed:
1. 710 Flatbush Holdings LLC — $2,800,000, contributed in April 2016 in connection with the acquisition of a 42-unit mixed-use building at 710 Flatbush Avenue, Brooklyn, New York 11225. Mr. Caldwell held a 50% membership interest in this entity.
2. Stavros-Caldwell Industrial LLC — $1,424,000, contributed in October 2017 in connection with the acquisition of a 65,000 square-foot industrial warehouse at 1500 Commerce Boulevard, Newark, New Jersey 07114. Mr. Caldwell held a 40% membership interest in this entity.
Total capital deployed by Mr. Caldwell into Aegean Realty-related investments: $14,224,000.
B. Total Distributions Received
During the period under review, Mr. Caldwell received distributions from both the limited partnership investments and the joint venture entities:
• Aggregate distributions from LP investments: $1,870,000. These distributions were received at various times between 2016 and 2019 from entity-level accounts of Aegean Realty Fund III LP, Aegean Realty Fund IV LP, and Aegean Realty Fund V LP, respectively. A detailed breakdown by fund vehicle and distribution date is set forth in Section III below.
• Aggregate distributions from JV entities: $635,000. These distributions represented Mr. Caldwell's share of operating cash flow distributions from 710 Flatbush Holdings LLC and Stavros-Caldwell Industrial LLC. A detailed breakdown by entity and distribution date is set forth in Section IV below.
Total distributions received by Mr. Caldwell: $2,505,000.
C. Buyout/Redemption Proceeds (Post-Separation)
Following the business dispute between Mr. Caldwell and Marcus W. Stavros, which culminated in October 2019, the parties negotiated and executed a separation agreement effective December 15, 2019. The separation agreement was negotiated on Mr. Caldwell's behalf by Patricia Sheldon of Whitmore & Kessler LLP, acting as independent counsel. Under the terms of the separation agreement, Stavros (or entities controlled by Stavros) purchased Mr. Caldwell's interests in the joint venture entities and redeemed Mr. Caldwell's limited partnership interests in the fund vehicles. The buyout and redemption transactions were as follows:
1. Buyout of 50% interest in 710 Flatbush Holdings LLC: $3,400,000, effective December 15, 2019. Proceeds were wired from the 710 Flatbush Holdings LLC account (or a Stavros-controlled entity account) to the JRC Realty Holdings LLC account.
2. Buyout of 40% interest in Stavros-Caldwell Industrial LLC: $1,850,000, effective December 15, 2019. Proceeds were wired from the Stavros-Caldwell Industrial LLC account (or a Stavros-controlled entity account) to the JRC Realty Holdings LLC account.
3. Redemption of Fund III LP interest: Redeemed at or around December 15, 2019 pursuant to the separation agreement. Proceeds were wired from the Fund III LP entity account to the Caldwell Capital Advisors LLC operating account. The specific redemption amount is included in the overall capital return analysis and detailed in Section III.A below.
4. Redemption of Fund IV LP interest: Redeemed at or around December 15, 2019 pursuant to the separation agreement. Proceeds were wired from the Fund IV LP entity account to the Caldwell Capital Advisors LLC operating account. The specific redemption amount is included in the overall capital return analysis and detailed in Section III.B below.
5. Redemption of Fund V LP interest: $3,150,000, effective March 2020 (following the six-month notice period specified in the Fund V LP partnership agreement). Proceeds were wired from the Fund V LP entity account to the Caldwell Capital Advisors LLC operating account.
Total buyout/redemption proceeds received by Mr. Caldwell: $8,400,000 (comprising the 710 Flatbush buyout of $3,400,000, the Stavros-Caldwell Industrial buyout of $1,850,000, and the Fund V LP redemption of $3,150,000, together with the Fund III and Fund IV redemption amounts reflected in the December 15, 2019 settlement disbursements).
D. Key Observation
The following observation is central to the analysis and should be highlighted for purposes of any presentation to the government or preparation for testimony:
• All investment outflows from accounts held or controlled by Mr. Caldwell were directed to entity-level bank accounts of the respective Aegean Realty fund vehicles or joint venture entities. At no point did Mr. Caldwell wire, transfer, or otherwise transmit funds directly to a personal account of Marcus W. Stavros.
• All distributions and buyout/redemption proceeds received by Mr. Caldwell were received from entity-level accounts of the respective Aegean Realty fund vehicles or joint venture entities. At no point did Mr. Caldwell receive funds directly from a personal account of Marcus W. Stavros.
• No direct transfers between Caldwell personal or business accounts and Marcus W. Stavros's personal accounts were identified in any of the records reviewed for this analysis.
This observation is discussed in further detail in Section VI below and has significant implications for Mr. Caldwell's potential exposure, as addressed in the separate exposure analysis memorandum dated December 15, 2022.
III. Detailed Fund Flow Analysis — Limited Partnership Investments
This section traces each of Mr. Caldwell's three limited partnership investments in Aegean Realty fund vehicles, from the initial capital deployment through periodic distributions to ultimate redemption. Each subsection identifies the relevant source and destination accounts, the mechanism of transfer, the supporting documentation, and the applicable Bates-stamped document references.
A. Aegean Realty Fund III LP ($2,500,000)
Investment.
• Investment Date: June 14, 2016
• Source Account: Caldwell Capital Advisors LLC operating account, held at Greaves Bancorp, Account No. ending in -7842
• Destination Account: Aegean Realty Fund III LP capital account at Westlake Fidelity Bank, N.A. (600 Summer Street, Stamford, CT 06901), Account No. ending in -3019
• Amount: $2,500,000
• Mechanism: Wire transfer, initiated by Mr. Caldwell on June 14, 2016, with same-day settlement
• Supporting Documents:
(i) Subscription Agreement dated June 10, 2016, executed by Jonathan R. Caldwell on behalf of Caldwell Capital Advisors LLC, as limited partner, and Marcus W. Stavros on behalf of Aegean Realty Partners LLC, as general partner (CALDWELL-00127 through CALDWELL-00156);
(ii) Capital Call Notice dated June 8, 2016, issued by Aegean Realty Partners LLC (as general partner of Fund III LP) to Caldwell Capital Advisors LLC, requesting payment of the full subscription amount of $2,500,000 (CALDWELL-00157 through CALDWELL-00159);
(iii) Wire Transfer Confirmation dated June 14, 2016, from Greaves Bancorp, confirming outbound wire of $2,500,000 from Caldwell Capital Advisors LLC account to Aegean Realty Fund III LP capital account at Westlake Fidelity Bank, N.A. (CALDWELL-00160);
(iv) Greaves Bancorp monthly account statement for Caldwell Capital Advisors LLC, June 2016, reflecting wire debit of $2,500,000 on June 14, 2016 (CALDWELL-00161 through CALDWELL-00168).
Distributions Received from Fund III LP.
Mr. Caldwell received periodic distributions from Aegean Realty Fund III LP during the period from 2017 through 2019. Each distribution was credited to the Caldwell Capital Advisors LLC operating account via wire transfer from the Fund III LP entity account at Westlake Fidelity Bank, N.A. The distributions were accompanied by distribution notices issued by Aegean Realty Partners LLC in its capacity as general partner. The following distributions from Fund III LP were identified in the bank records:
• March 15, 2017: $125,000 (CALDWELL-00212 through CALDWELL-00214)
• September 29, 2017: $110,000 (CALDWELL-00278 through CALDWELL-00280)
• March 16, 2018: $135,000 (CALDWELL-00341 through CALDWELL-00343)
• September 28, 2018: $120,000 (CALDWELL-00412 through CALDWELL-00414)
• March 15, 2019: $140,000 (CALDWELL-00487 through CALDWELL-00489)
• September 27, 2019: $105,000 (CALDWELL-00548 through CALDWELL-00550)
Total distributions from Fund III LP: $735,000. Each of these distributions was traced to a corresponding wire credit from the Aegean Realty Fund III LP account at Westlake Fidelity Bank, N.A. The distribution notices were cross-referenced with Mr. Caldwell's K-1 reporting as prepared by Thornberg & Whitfield CPAs, and the amounts are consistent across all records reviewed.
Redemption.
Mr. Caldwell's limited partnership interest in Fund III LP was redeemed in connection with the December 15, 2019 separation agreement. Under the terms of the separation agreement, the general partner agreed to repurchase Caldwell's interest at net asset value as of the most recent quarterly valuation. The redemption proceeds were wired from the Fund III LP entity account at Westlake Fidelity Bank, N.A. to the Caldwell Capital Advisors LLC operating account at Greaves Bancorp
• Redemption Date: December 20, 2019 (settlement date; effective date December 15, 2019 per separation agreement)
• Redemption Amount: $2,475,000
• Supporting Documents: Separation Agreement dated December 15, 2019 (CALDWELL-01288 through CALDWELL-01324); Wire Transfer Confirmation dated December 20, 2019 (CALDWELL-01325); Greaves Bancorp monthly statement, December 2019 (CALDWELL-01326 through CALDWELL-01335)
B. Aegean Realty Fund IV LP ($4,000,000)
Investment.
• Investment Date: March 22, 2017
• Source Account: Caldwell Capital Advisors LLC operating account, held at Greaves Bancorp, Account No. ending in -7842
• Destination Account: Aegean Realty Fund IV LP capital account at Westlake Fidelity Bank, N.A. (600 Summer Street, Stamford, CT 06901), Account No. ending in -4527. Note: Harborview Trust Company (88 Broad Street, Suite 200, Bridgeport, CT 06604) served as escrow agent for investor deposits in Fund IV LP. Mr. Caldwell's wire was initially directed to the Harborview Trust Company escrow account (Account No. ending in -8816) and subsequently released to the Fund IV LP capital account upon final closing.
• Amount: $4,000,000
• Mechanism: Wire transfer, initiated by Mr. Caldwell on March 22, 2017, with same-day settlement to the Harborview Trust Company escrow account
• Supporting Documents:
(i) Subscription Agreement dated March 15, 2017, executed by Jonathan R. Caldwell on behalf of Caldwell Capital Advisors LLC, as limited partner, and Marcus W. Stavros on behalf of Aegean Realty Partners LLC, as general partner (CALDWELL-00230 through CALDWELL-00264);
(ii) Capital Call Notice dated March 13, 2017, issued by Aegean Realty Partners LLC (as general partner of Fund IV LP) to Caldwell Capital Advisors LLC, requesting payment of the full subscription amount of $4,000,000 to the Harborview Trust Company escrow account (CALDWELL-00265 through CALDWELL-00268);
(iii) Wire Transfer Confirmation dated March 22, 2017, from Greaves Bancorp, confirming outbound wire of $4,000,000 from Caldwell Capital Advisors LLC account to Harborview Trust Company escrow account (CALDWELL-00269);
(iv) Greaves Bancorp monthly account statement for Caldwell Capital Advisors LLC, March 2017, reflecting wire debit of $4,000,000 on March 22, 2017 (CALDWELL-00270 through CALDWELL-00277);
(v) Escrow Release Confirmation from Harborview Trust Company dated April 5, 2017, confirming release of escrowed funds to Fund IV LP capital account at Westlake Fidelity Bank, N.A. (CALDWELL-00283 through CALDWELL-00284).
Distributions Received from Fund IV LP.
Mr. Caldwell received periodic distributions from Aegean Realty Fund IV LP during the period from 2017 through 2019. Each distribution was credited to the Caldwell Capital Advisors LLC operating account via wire transfer from the Fund IV LP entity account at Westlake Fidelity Bank, N.A. The following distributions from Fund IV LP were identified in the bank records:
• September 29, 2017: $95,000 (CALDWELL-00356 through CALDWELL-00358)
• March 16, 2018: $160,000 (CALDWELL-00418 through CALDWELL-00420)
• September 28, 2018: $145,000 (CALDWELL-00476 through CALDWELL-00478)
• March 15, 2019: $170,000 (CALDWELL-00523 through CALDWELL-00525)
• September 27, 2019: $80,000 (CALDWELL-00572 through CALDWELL-00574)
Total distributions from Fund IV LP: $650,000. Each of these distributions was traced to a corresponding wire credit originating from the Aegean Realty Fund IV LP account at Westlake Fidelity Bank, N.A. Distribution amounts were cross-referenced with K-1 reporting prepared by Thornberg & Whitfield CPAs.
Redemption.
Mr. Caldwell's limited partnership interest in Fund IV LP was redeemed in connection with the December 15, 2019 separation agreement, under the same terms as the Fund III LP redemption described above.
• Redemption Date: December 20, 2019 (settlement date; effective date December 15, 2019 per separation agreement)
• Redemption Amount: $3,775,000
• Supporting Documents: Separation Agreement dated December 15, 2019 (CALDWELL-01288 through CALDWELL-01324); Wire Transfer Confirmation dated December 20, 2019 (CALDWELL-01336); Greaves Bancorp monthly statement, December 2019 (CALDWELL-01326 through CALDWELL-01335, same statement reflecting Fund III and Fund IV redemption credits)
Sensitivity Note.
The government's theory, as communicated during the December 12, 2022 proffer call with AUSA Miriam T. Goldfarb, is that Marcus W. Stavros diverted approximately $18,700,000 from Funds IV and V to personal accounts and to fund operating shortfalls in earlier fund vehicles. The distributions received by Mr. Caldwell from Fund IV LP may have included diverted investor capital. While Mr. Caldwell's records demonstrate that these payments came from the Fund IV LP entity account—and not from Stavros personally—the ultimate source of the funds within the Fund IV LP account may be of interest to the government's forensic accountant, Meridian Forensic Advisors LLC (Nathan P. Solis, Managing Director). This area of factual sensitivity is addressed further in Section VII.A below.
C. Aegean Realty Fund V LP ($3,500,000)
Investment.
• Investment Date: September 19, 2018
• Source Account: Caldwell Capital Advisors LLC operating account, held at Greaves Bancorp, Account No. ending in -7842
• Destination Account: Aegean Realty Fund V LP capital account at Westlake Fidelity Bank, N.A. (600 Summer Street, Stamford, CT 06901), Account No. ending in -6193. Note: As with Fund IV LP, Harborview Trust Company (88 Broad Street, Suite 200, Bridgeport, CT 06604) served as escrow agent for investor deposits in Fund V LP. Mr. Caldwell's wire was initially directed to the Harborview Trust Company escrow account (Account No. ending in -9024) and subsequently released to the Fund V LP capital account upon final closing.
• Amount: $3,500,000
• Mechanism: Wire transfer, initiated by Mr. Caldwell on September 19, 2018, with same-day settlement to the Harborview Trust Company escrow account
• Supporting Documents:
(i) Subscription Agreement dated September 12, 2018, executed by Jonathan R. Caldwell on behalf of Caldwell Capital Advisors LLC, as limited partner, and Marcus W. Stavros on behalf of Aegean Realty Partners LLC, as general partner (CALDWELL-00430 through CALDWELL-00468);
(ii) Capital Call Notice dated September 10, 2018, issued by Aegean Realty Partners LLC (as general partner of Fund V LP) to Caldwell Capital Advisors LLC, requesting payment of the full subscription amount of $3,500,000 to the Harborview Trust Company escrow account (CALDWELL-00469 through CALDWELL-00472);
(iii) Wire Transfer Confirmation dated September 19, 2018, from Greaves Bancorp, confirming outbound wire of $3,500,000 from Caldwell Capital Advisors LLC account to Harborview Trust Company escrow account (CALDWELL-00473);
(iv) Greaves Bancorp monthly account statement for Caldwell Capital Advisors LLC, September 2018, reflecting wire debit of $3,500,000 on September 19, 2018 (CALDWELL-00474 through CALDWELL-00481);
(v) Escrow Release Confirmation from Harborview Trust Company dated October 3, 2018, confirming release of escrowed funds to Fund V LP capital account at Westlake Fidelity Bank, N.A. (CALDWELL-00482 through CALDWELL-00483).
Distributions Received from Fund V LP.
Mr. Caldwell received periodic distributions from Aegean Realty Fund V LP during the period from 2019 through the redemption in 2020. Each distribution was credited to the Caldwell Capital Advisors LLC operating account via wire transfer from the Fund V LP entity account at Westlake Fidelity Bank, N.A. The following distributions from Fund V LP were identified in the bank records:
• March 15, 2019: $175,000 (CALDWELL-00530 through CALDWELL-00532)
• September 27, 2019: $155,000 (CALDWELL-00580 through CALDWELL-00582)
• December 13, 2019: $155,000 (CALDWELL-00618 through CALDWELL-00620)
Total distributions from Fund V LP: $485,000. Each of these distributions was traced to a corresponding wire credit originating from the Aegean Realty Fund V LP account at Westlake Fidelity Bank, N.A. Distribution amounts were cross-referenced with K-1 reporting prepared by Thornberg & Whitfield CPAs.
Redemption.
Unlike the Fund III and Fund IV interests, which were redeemed concurrently with the December 15, 2019 separation agreement, Mr. Caldwell's Fund V LP interest was subject to a six-month redemption notice period under the terms of the Fund V LP partnership agreement. Mr. Caldwell submitted his redemption notice on or about September 15, 2019, and the interest was redeemed in March 2020.
• Redemption Notice Date: September 15, 2019
• Redemption Effective Date: March 15, 2020
• Redemption Amount: $3,150,000 (reflecting a $350,000 decrease from the original $3,500,000 investment amount)
• Source of Proceeds: Wire transfer from Fund V LP entity account at Westlake Fidelity Bank, N.A. to Caldwell Capital Advisors LLC operating account at Greaves Bancorp
• Supporting Documents: Redemption Notice dated September 15, 2019 (CALDWELL-01340 through CALDWELL-01342); Wire Transfer Confirmation dated March 16, 2020 (CALDWELL-01343); Greaves Bancorp monthly statement, March 2020 (CALDWELL-01344 through CALDWELL-01352)
Sensitivity Note.
The same diversion concern applicable to Fund IV LP applies to Fund V LP. The $3,150,000 redemption payment received by Mr. Caldwell in March 2020 originated from the Fund V LP entity account. However, this payment came from Fund V entity accounts after the period in which the government alleges significant diversions occurred. The government's forensic accountant may seek to trace the source of the funds that remained in the Fund V LP account at the time of Mr. Caldwell's redemption. This area of factual sensitivity is addressed further in Section VII.A below.
D. LP Investment Summary Table
The following table summarizes Mr. Caldwell's limited partnership investments, distributions received, and redemption proceeds:
Note: The total redemption amount of $9,400,000 for the LP investments comprises $2,475,000 (Fund III), $3,775,000 (Fund IV), and $3,150,000 (Fund V). The combined LP distributions and redemption proceeds total $11,270,000 against $10,000,000 invested, reflecting a net gain of $1,270,000 across the three LP investments.
IV. Detailed Fund Flow Analysis — Joint Venture Investments
This section traces each of Mr. Caldwell's two joint venture investments, from the initial equity contribution through operating distributions to the ultimate buyout of Mr. Caldwell's interests.
A. 710 Flatbush Holdings LLC (50/50 Joint Venture)
Property and Acquisition Overview.
• Property: 710 Flatbush Avenue, Brooklyn, New York 11225 — a 42-unit mixed-use building comprising ground-floor retail and upper-floor residential units
• Acquisition Date: April 28, 2016
• Acquisition Price: $11,200,000
• Financing Structure:
Total equity required: $5,600,000 (representing the difference between the $11,200,000 acquisition price and the $5,600,000 first mortgage loan from Westlake Fidelity Bank, N.A.)
Caldwell equity contribution (50%): $2,800,000
Stavros equity contribution (50%): $2,800,000
Westlake Fidelity Bank, N.A. commercial real estate loan: $5,600,000, secured by a first-priority mortgage on the property
Investment.
• Source Account for Caldwell's Equity: JRC Realty Holdings LLC account (EIN 81-4493217), held at Greaves Bancorp, Account No. ending in -2156
• Destination Account: 710 Flatbush Holdings LLC closing/operating account at Westlake Fidelity Bank, N.A., Account No. ending in -7301
• Amount: $2,800,000
• Mechanism: Wire transfer at closing on April 28, 2016
• Supporting Documents:
(i) Joint Venture Operating Agreement of 710 Flatbush Holdings LLC, dated April 15, 2016, executed by Jonathan R. Caldwell (through JRC Realty Holdings LLC) and Marcus W. Stavros (through Aegean Realty Partners LLC), establishing the 50/50 ownership structure and setting forth capital contribution, distribution, and management provisions (CALDWELL-00042 through CALDWELL-00098);
(ii) Closing Statement dated April 28, 2016, prepared by settlement agent, reflecting the acquisition price, loan proceeds, equity contributions, closing costs, and adjustments (CALDWELL-00099 through CALDWELL-00104);
(iii) Wire Transfer Confirmation dated April 28, 2016, from Greaves Bancorp, confirming outbound wire of $2,800,000 from JRC Realty Holdings LLC account to 710 Flatbush Holdings LLC closing account at Westlake Fidelity Bank, N.A. (CALDWELL-00105);
(iv) Greaves Bancorp monthly account statement for JRC Realty Holdings LLC, April 2016, reflecting wire debit of $2,800,000 on April 28, 2016 (CALDWELL-00106 through CALDWELL-00112);
(v) Westlake Fidelity Bank, N.A. Loan Agreement and Mortgage Note dated April 28, 2016, in the principal amount of $5,600,000 (CALDWELL-00113 through CALDWELL-00126).
Distributions Received.
Mr. Caldwell received periodic operating distributions from 710 Flatbush Holdings LLC representing his 50% share of distributable cash flow from the property's rental income, net of operating expenses and debt service. Each distribution was credited to the JRC Realty Holdings LLC account via check or wire transfer from the 710 Flatbush Holdings LLC operating account at Westlake Fidelity Bank, N.A. The following distributions were identified in the bank records:
• December 20, 2016: $45,000 (CALDWELL-00625 through CALDWELL-00627)
• June 23, 2017: $52,000 (CALDWELL-00658 through CALDWELL-00660)
• December 22, 2017: $48,000 (CALDWELL-00691 through CALDWELL-00693)
• June 22, 2018: $55,000 (CALDWELL-00724 through CALDWELL-00726)
• December 21, 2018: $50,000 (CALDWELL-00757 through CALDWELL-00759)
• June 21, 2019: $42,000 (CALDWELL-00790 through CALDWELL-00792)
Total distributions from 710 Flatbush Holdings LLC: $292,000. Each distribution was accompanied by a distribution summary from the entity's property manager. Distribution amounts were cross-referenced with K-1 reporting prepared by Thornberg & Whitfield CPAs.
Disputed Management Fees.
The bank records and operating statements for 710 Flatbush Holdings LLC reflect approximately $340,000 in management fees that were unilaterally charged by Stavros (through Aegean Realty Partners LLC) to the 710 Flatbush Holdings LLC operating account during the period from 2017 through 2019. These fees were not authorized under the joint venture operating agreement and were the principal source of the dispute between Caldwell and Stavros that precipitated the October 2019 business separation. The disputed management fees are documented in the email correspondence produced at CALDWELL-00800 through CALDWELL-00845 and in the demand letter from Whitmore & Kessler LLP to Stavros dated October 14, 2019 (CALDWELL-00846 through CALDWELL-00852).
Buyout.
Pursuant to the December 15, 2019 separation agreement, Stavros (through an entity controlled by him) purchased Mr. Caldwell's 50% membership interest in 710 Flatbush Holdings LLC.
• Effective Date: December 15, 2019
• Buyout Price: $3,400,000
• Source of Proceeds: Wire transfer from the 710 Flatbush Holdings LLC account (or a Stavros-controlled entity account) at Westlake Fidelity Bank, N.A.
• Destination Account: JRC Realty Holdings LLC account at Greaves Bancorp, Account No. ending in -2156
• Settlement Date: December 23, 2019
• Supporting Documents: Separation Agreement dated December 15, 2019 (CALDWELL-01288 through CALDWELL-01324); Membership Interest Purchase Agreement for 710 Flatbush Holdings LLC dated December 15, 2019 (CALDWELL-01353 through CALDWELL-01378); Wire Transfer Confirmation dated December 23, 2019 (CALDWELL-01379); Greaves Bancorp monthly statement for JRC Realty Holdings LLC, December 2019 (CALDWELL-01380 through CALDWELL-01388)
B. Stavros-Caldwell Industrial LLC (60/40 Joint Venture — Stavros/Caldwell)
Property and Acquisition Overview.
• Property: 1500 Commerce Boulevard, Newark, New Jersey 07114 — a 65,000 square-foot industrial warehouse
• Acquisition Date: October 12, 2017
• Acquisition Price: $8,900,000
• Financing Structure:
Total equity required: $3,560,000 (representing the difference between the $8,900,000 acquisition price and the $5,340,000 first mortgage loan from Westlake Fidelity Bank, N.A.)
Caldwell equity contribution (40%): $1,424,000
Stavros equity contribution (60%): $2,136,000
Westlake Fidelity Bank, N.A. commercial real estate loan: $5,340,000, secured by a first-priority mortgage on the property
Investment.
• Source Account for Caldwell's Equity: JRC Realty Holdings LLC account (EIN 81-4493217), held at Greaves Bancorp, Account No. ending in -2156
• Destination Account: Stavros-Caldwell Industrial LLC closing/operating account at Westlake Fidelity Bank, N.A., Account No. ending in -5488
• Amount: $1,424,000
• Mechanism: Wire transfer at closing on October 12, 2017
• Supporting Documents:
(i) Joint Venture Operating Agreement of Stavros-Caldwell Industrial LLC, dated September 28, 2017, executed by Jonathan R. Caldwell (through JRC Realty Holdings LLC) and Marcus W. Stavros (through Aegean Realty Partners LLC), establishing the 60/40 ownership structure (Stavros 60%, Caldwell 40%) and setting forth capital contribution, distribution, and management provisions (CALDWELL-00860 through CALDWELL-00918);
(ii) Closing Statement dated October 12, 2017, prepared by settlement agent, reflecting the acquisition price, loan proceeds, equity contributions, closing costs, and adjustments (CALDWELL-00919 through CALDWELL-00924);
(iii) Wire Transfer Confirmation dated October 12, 2017, from Greaves Bancorp, confirming outbound wire of $1,424,000 from JRC Realty Holdings LLC account to Stavros-Caldwell Industrial LLC closing account at Westlake Fidelity Bank, N.A. (CALDWELL-00925);
(iv) Greaves Bancorp monthly account statement for JRC Realty Holdings LLC, October 2017, reflecting wire debit of $1,424,000 on October 12, 2017 (CALDWELL-00926 through CALDWELL-00933);
(v) Westlake Fidelity Bank, N.A. Loan Agreement and Mortgage Note dated October 12, 2017, in the principal amount of $5,340,000 (CALDWELL-00934 through CALDWELL-00950).
Distributions Received.
Mr. Caldwell received periodic operating distributions from Stavros-Caldwell Industrial LLC representing his 40% share of distributable cash flow from the warehouse's net operating income. Each distribution was credited to the JRC Realty Holdings LLC account via wire transfer from the Stavros-Caldwell Industrial LLC operating account at Westlake Fidelity Bank, N.A. The following distributions were identified in the bank records:
• June 29, 2018: $68,000 (CALDWELL-00970 through CALDWELL-00972)
• December 28, 2018: $72,000 (CALDWELL-00998 through CALDWELL-01000)
• June 28, 2019: $80,000 (CALDWELL-01025 through CALDWELL-01027)
• September 30, 2019: $73,000 (CALDWELL-01055 through CALDWELL-01057)
• December 6, 2019: $50,000 (CALDWELL-01080 through CALDWELL-01082)
Total distributions from Stavros-Caldwell Industrial LLC: $343,000. Each distribution was traced to a corresponding wire credit from the Stavros-Caldwell Industrial LLC entity account. Distribution amounts were cross-referenced with K-1 reporting prepared by Thornberg & Whitfield CPAs.
Buyout.
Pursuant to the December 15, 2019 separation agreement, Stavros (through an entity controlled by him) purchased Mr. Caldwell's 40% membership interest in Stavros-Caldwell Industrial LLC.
• Effective Date: December 15, 2019
• Buyout Price: $1,850,000
• Source of Proceeds: Wire transfer from the Stavros-Caldwell Industrial LLC account (or a Stavros-controlled entity account) at Westlake Fidelity Bank, N.A.
• Destination Account: JRC Realty Holdings LLC account at Greaves Bancorp, Account No. ending in -2156
• Settlement Date: December 23, 2019
• Supporting Documents: Separation Agreement dated December 15, 2019 (CALDWELL-01288 through CALDWELL-01324); Membership Interest Purchase Agreement for Stavros-Caldwell Industrial LLC dated December 15, 2019 (CALDWELL-01389 through CALDWELL-01412); Wire Transfer Confirmation dated December 23, 2019 (CALDWELL-01413); Greaves Bancorp monthly statement for JRC Realty Holdings LLC, December 2019 (CALDWELL-01380 through CALDWELL-01388, same statement reflecting both JV buyout credits)
C. JV Investment Summary Table
The following table summarizes Mr. Caldwell's joint venture investments, distributions received, and buyout proceeds:
V. Consolidated Fund Flow Summary Table
The following master table consolidates all investment outflows, distribution inflows, and buyout/redemption inflows identified in Sections III and IV above.
Net Position Calculation:
Total Capital Deployed (Outflows): $14,224,000
Total Distributions Received (Inflows): $2,505,000
Total Buyout/Redemption Proceeds (Inflows): $14,650,000
Total Inflows: $17,155,000
Net Position (Total Inflows minus Total Outflows): $2,931,000 net gain
Mr. Caldwell's aggregate net gain of $2,931,000 across all Aegean Realty-related investments over the approximately four-year period reflects returns that are facially consistent with ordinary commercial real estate investment activity. This figure should be considered in connection with any analysis of potential disgorgement or forfeiture exposure.
VI. Analysis of Transfers — Absence of Direct Caldwell-Stavros Personal Transfers
A comprehensive review was conducted of all bank statements, wire transfer records, and account activity for the following accounts for the full period covered by the subpoena (January 1, 2014 through December 31, 2021):
1. Caldwell Capital Advisors LLC operating account, Greaves Bancorp (Account No. ending in -7842);
2. JRC Realty Holdings LLC account, Greaves Bancorp (Account No. ending in -2156);
3. Jonathan R. Caldwell personal checking account, Greaves Bancorp (Account No. ending in -4013);
4. Jonathan R. Caldwell personal savings account, Greaves Bancorp (Account No. ending in -4017);
5. Jonathan R. Caldwell and Eleanor M. Caldwell joint brokerage account, Vireo National Bank (Account No. ending in -8829).
The review encompassed all wire transfers (inbound and outbound), checks issued and deposited, ACH payments and receipts, internal transfers, and any other fund movements reflected in the account statements for the eight-year period.
Finding: No wire transfers, checks, ACH payments, or other fund movements of any kind were identified between any account held or controlled by Jonathan R. Caldwell (including all entity accounts and personal accounts listed above) and any personal account held or controlled by Marcus W. Stavros. This finding was confirmed through a systematic review of all counterparty names and account numbers appearing in the bank records, cross-referenced with known Stavros personal account information obtained from publicly available court filings in the related SEC enforcement action (SEC v. Stavros, No. 22-cv-8741 (S.D.N.Y.)).
All capital deployed by Mr. Caldwell into Aegean Realty-related investments flowed exclusively to entity-level accounts of the respective fund vehicles and joint venture entities, as detailed in Sections III and IV above. Similarly, all distributions, buyout proceeds, and redemption payments received by Mr. Caldwell originated exclusively from entity-level accounts of the respective fund vehicles and joint venture entities. At no point in the eight-year period under review did any funds flow directly between Mr. Caldwell and Mr. Stavros on a personal basis.
This finding is consistent with Mr. Caldwell's account that his financial relationship with Stavros was conducted exclusively through the formal entity structures established for each investment—the limited partnership vehicles and the joint venture entities—and not through personal accounts. Mr. Caldwell has stated that he never maintained any personal financial arrangement with Stavros outside of the entity-level investment relationships documented herein.
This finding is particularly significant in light of the government's allegation that Stavros diverted approximately $18,700,000 from Funds IV and V to personal accounts. Mr. Caldwell's records do not show any of the allegedly diverted funds flowing directly to Mr. Caldwell from Stavros personally. While it remains possible that funds within entity-level accounts included diverted capital (as discussed in Section VII.A below), the absence of any direct personal-to-personal transfers between Caldwell and Stavros is a material fact supporting the position that Mr. Caldwell was not a knowing participant in or beneficiary of the alleged diversion scheme.
VII. Areas of Factual Sensitivity
Notwithstanding the favorable finding regarding the absence of direct personal transfers, the following areas of factual sensitivity have been identified through this fund flow analysis and should be considered in connection with ongoing defense strategy and testimony preparation.
A. Distributions Potentially Including Diverted Funds
The government's theory, as described in the December 12, 2022 proffer call with AUSA Miriam T. Goldfarb and as reflected in the subpoena's accompanying letter, is that Marcus W. Stavros diverted approximately $18,700,000 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, including Fund III LP. The government has characterized this as a Ponzi-like structure in which capital from later investors was used to pay returns to earlier investors and to fund Stavros's personal expenditures.
If the government's factual allegations are correct, some portion of the $1,870,000 in LP distributions received by Mr. Caldwell may have originated from diverted investor capital rather than from legitimate investment returns. This concern is particularly acute with respect to the following:
• Fund III LP distributions: If Stavros used capital from Fund IV and Fund V investors to fund operating shortfalls and distribution obligations in Fund III LP, then some or all of the $735,000 in distributions received by Mr. Caldwell from Fund III LP may have been funded by diverted capital from later fund vehicles.
• Fund IV LP distributions: Some of the $650,000 in distributions received by Mr. Caldwell from Fund IV LP may have been funded by diverted capital from Fund V LP or from other sources.
• Fund V LP redemption: The $3,150,000 redemption payment received by Mr. Caldwell in March 2020 came from the Fund V LP entity account. The government may contend that the funds remaining in the Fund V LP account at that time included commingled diverted capital.
Additionally, some portion of the $635,000 in JV distributions from 710 Flatbush Holdings LLC and Stavros-Caldwell Industrial LLC could theoretically have originated from diverted investor capital if Stavros used diverted funds to support JV operations, though this theory has not been specifically articulated by the government to date.
While Mr. Caldwell's records establish that all of these payments came from entity-level accounts and not from Stavros personally, the ultimate source of the funds within those entity accounts may be of interest to the government's forensic accountant, Meridian Forensic Advisors LLC (Nathan P. Solis, Managing Director). The government's forensic analysis presumably has access to the internal banking records of the Aegean Realty entities, which would allow tracing of the actual source of funds used to pay distributions and redemptions.
Recommendation: This issue should be kept in mind during testimony preparation. Mr. Caldwell's position is that he received distributions in the ordinary course of his investment relationships, consistent with the terms of the applicable limited partnership agreements and operating agreements, and that he had no visibility into fund-level capital movements or the sources of funds within entity accounts. Mr. Caldwell relied upon the financial reporting provided by the general partner and had no reason to believe that distributions were being paid from diverted investor capital.
B. Westlake Fidelity Bank Loan Proceeds
Both joint venture acquisitions were partially financed by commercial real estate loans from Westlake Fidelity Bank, N.A. — specifically, $5,600,000 for the 710 Flatbush Avenue property and $5,340,000 for the 1500 Commerce Boulevard property, totaling $10,940,000 in aggregate loan proceeds for the two JV transactions.
The government has alleged, in the related civil enforcement proceedings and as indicated during the proffer call, that Stavros inflated property appraisals through Pinnacle Appraisal Group LLC (355 Lexington Avenue, 9th Floor, New York, NY 10017) to secure larger commercial real estate loans from Westlake Fidelity Bank, N.A. than the properties' actual values would have supported. According to the government, Westlake Fidelity extended approximately $127 million in total commercial real estate loans to various Aegean Realty-related entities between 2016 and 2020, and estimated total lender losses are approximately $31 million.
Mr. Caldwell's bank records show that his equity contributions to the joint venture entities were separate from and in addition to the loan proceeds. The loan proceeds flowed directly from Westlake Fidelity Bank, N.A. to the closing entities and did not pass through any account controlled by Mr. Caldwell. Mr. Caldwell's equity contributions of $2,800,000 (Flatbush) and $1,424,000 (Newark) were wired from his JRC Realty Holdings LLC account to the respective JV closing accounts, as documented in Section IV above.
However, if the appraisals supporting the JV acquisitions were in fact inflated, the loan amounts may have been higher than warranted by the actual property values, which could implicate broader issues in the investigation. To the extent the government contends that the inflated appraisals facilitated a scheme to obtain excess loan proceeds, the question may arise whether Mr. Caldwell was aware of or participated in the appraisal process. Mr. Caldwell has stated that he did not select the appraiser, did not review the appraisal reports prior to closing, and relied upon Stavros and the general counsel for the Aegean Realty entities to manage the due diligence and financing process for each acquisition.
Recommendation: The appraisal issue should be monitored closely. To the extent the government possesses the Pinnacle Appraisal Group appraisals for the 710 Flatbush and 1500 Commerce properties, we should obtain copies through the government's voluntary disclosure process (or via the pending FOIA request) and have them reviewed by an independent appraiser to assess whether the values were materially inflated as of the respective acquisition dates.
C. Buyout Pricing
The December 15, 2019 separation agreement, through which Stavros purchased Mr. Caldwell's interests in the two joint ventures and the fund vehicles were redeemed, was negotiated at arm's length through independent counsel. Mr. Caldwell was represented in the negotiations by Patricia Sheldon of Whitmore & Kessler LLP, and the agreement was the product of approximately two months of negotiations following the October 2019 dispute over the management fees charged to 710 Flatbush Holdings LLC.
The buyout prices appear consistent with then-current property values and market conditions:
• 710 Flatbush Holdings LLC (50% interest): $3,400,000. This implies a total equity value of approximately $6,800,000 for the LLC, which, when added to the $5,600,000 outstanding loan balance, suggests a total property value of approximately $12,400,000 — a 10.7% increase over the $11,200,000 acquisition price in April 2016. This appreciation rate is consistent with Brooklyn multifamily market trends during the period.
• Stavros-Caldwell Industrial LLC (40% interest): $1,850,000. This implies a total equity value of approximately $4,625,000 for the LLC, which, when added to the approximately $5,100,000 estimated outstanding loan balance (accounting for principal amortization), suggests a total property value of approximately $9,725,000 — a 9.3% increase over the $8,900,000 acquisition price in October 2017. This appreciation rate is consistent with northern New Jersey industrial market trends during the period.
• Fund V LP redemption: $3,150,000. This reflected a $350,000 decrease (10.0%) from the original $3,500,000 investment, which Mr. Caldwell understood to be attributable to unrealized losses on certain assets within the Fund V portfolio at the time of redemption.
A more detailed analysis of the fair market value of each interest at the time of the separation agreement is set forth in the separate Memorandum — Analysis of 2019 Separation Agreement and Buyout Terms, dated January 5, 2023, which should be reviewed in conjunction with this fund flow analysis.
The significance of the buyout pricing to the investigation lies in the government's potential argument that the buyout prices were inflated as a means of transferring excess value to Mr. Caldwell. Based on the analysis to date, we do not believe the government has a strong factual basis for such a contention, as the prices are within the range of reasonable fair market values. However, this issue warrants continued monitoring.
VIII. Methodology and Limitations
Methodology
The fund flow analysis set forth in this memorandum was prepared based on a review of the following categories of documents and records:
Document Collection and Processing. Approximately 14,200 documents were collected from Mr. Caldwell's custodial sources, including:
• Personal email account: jrc@caldwellcap.com (hosted on Strathmore Data Systems via Caldwell Capital Advisors LLC domain)
• Personal mobile device (Ashbury Corporation 13 Pro, collected December 2, 2022)
• Physical files maintained at Mr. Caldwell's residence (1140 Park Avenue, Apt. 14C, New York, NY 10128) and at the offices of Caldwell Capital Advisors LLC (590 Madison Avenue, 22nd Floor, New York, NY 10022)
• Caldwell Capital Advisors LLC shared network drive (CCA-SharedDrive, collected December 5, 2022)
All documents were collected, processed, and hosted by Clearpath Document Solutions Inc. (Raj K. Anand, Project Manager). The total volume of collected data was approximately 8.3 GB. Documents were processed using Relativity for review, search, and production purposes. Bates numbering was applied sequentially across the two productions (Production 1: CALDWELL-00001 through CALDWELL-01842; Production 2: CALDWELL-01843 through CALDWELL-03633).
Bank Records. Bank account statements and wire transfer records were obtained directly from Mr. Caldwell for all accounts identified in Section VI above. Statements were obtained for the full subpoena period (January 1, 2014 through December 31, 2021). Bank records were cross-referenced with records obtained from Thornberg & Whitfield CPAs (Helen R. Thornberg, Senior Partner), Mr. Caldwell's outside accountant, who maintained copies of certain bank statements and wire transfer confirmations in her working files for tax reporting and reconciliation purposes.
Transaction Tracing. Each investment, distribution, and buyout/redemption transaction was traced from the source account to the destination account using the following methodology: (i) identification of the transaction in the source account bank statement; (ii) matching to the corresponding wire transfer confirmation; (iii) cross-reference to the underlying fund documentation (subscription agreement, capital call notice, distribution notice, or closing statement, as applicable); and (iv) reconciliation with tax reporting records (K-1 schedules, Thornberg & Whitfield workpapers).
Limitations
The following limitations apply to this analysis:
1. Scope of available records. This analysis is based solely on records in Mr. Caldwell's possession and records obtained from Mr. Caldwell's accountant (Thornberg & Whitfield CPAs). The firm has not had access to internal bank records of Aegean Realty Partners LLC, Aegean Realty Fund III LP, Aegean Realty Fund IV LP, Aegean Realty Fund V LP, 710 Flatbush Holdings LLC, Stavros-Caldwell Industrial LLC, Westlake Fidelity Bank, N.A., Harborview Trust Company, or any accounts held or controlled by Marcus W. Stavros. The government's forensic accountant (Meridian Forensic Advisors LLC, Nathan P. Solis, Managing Director) may have access to a substantially broader universe of financial records through grand jury subpoenas, bank regulatory processes, or voluntary cooperation from financial institutions.
2. Visibility into entity-level fund movements. Wire transfer confirmations in Mr. Caldwell's records identify sending and receiving account numbers and entity names for each transaction but do not provide visibility into subsequent movements of funds within recipient entity accounts. Accordingly, while this analysis can confirm that Mr. Caldwell's capital contributions were deposited into the designated entity accounts and that distributions and buyout/redemption proceeds were received from entity accounts, this analysis cannot trace the movement of funds within those entity accounts before or after Mr. Caldwell's transactions.
3. Completeness of Aegean Realty records. No representations are made regarding the completeness or accuracy of Aegean Realty's internal accounting records, financial statements, or capital account records. The financial information reflected in distribution notices and capital call notices issued by Aegean Realty Partners LLC was accepted at face value for purposes of this analysis.
4. Unbanked transfers. This analysis is limited to fund movements that appear in bank records. Cash payments, cryptocurrency transfers, or other non-bank fund movements, if any, would not be captured in this analysis. Mr. Caldwell has represented that no such transfers occurred in connection with any Aegean Realty-related transaction.
IX. Conclusion and Recommendations
Conclusion
The fund flow analysis set forth in this memorandum confirms the following:
1. All of Mr. Caldwell's capital deployments into Aegean Realty-related investments ($14,224,000 in total, comprising $10,000,000 in LP investments and $4,224,000 in JV equity contributions) were directed to entity-level bank accounts of the respective fund vehicles and joint venture entities.
2. All returns received by Mr. Caldwell ($2,505,000 in distributions and $14,650,000 in buyout/redemption proceeds, totaling $17,155,000) were received from entity-level accounts of the respective fund vehicles and joint venture entities.
3. No direct personal-to-personal transfers between any account held or controlled by Jonathan R. Caldwell and any personal account held or controlled by Marcus W. Stavros were identified in any of the records reviewed for this analysis.
4. The analysis supports the position that Mr. Caldwell's financial dealings with Stavros and the Aegean Realty entities were conducted through formal entity channels consistent with standard commercial real estate investment practice.
Recommendations
1. Areas of factual sensitivity identified in Section VII—including distributions potentially sourced from diverted investor funds, the inflated appraisal exposure relating to Westlake Fidelity Bank loans, and buyout pricing—should continue to be monitored as the investigation progresses, particularly in the event the government requests testimony from Mr. Caldwell or issues a follow-up document subpoena.
2. The accompanying Excel workbook ("Fund Flow Analysis — Summary Tables," file name: fund-flow-analysis-tables.xlsx) should be maintained as attorney work product and should not be produced to the government absent further analysis and an express determination by counsel that production is warranted. The workbook contains detailed tab-by-tab breakdowns for each investment vehicle, including columns for date, description, source account, destination account, amount, running balance, and Bates-stamped document cross-references, and reflects the mental impressions and analytical framework of counsel.
3. This memorandum and the supporting tables should be used for testimony preparation in the event AUSA Goldfarb schedules a testimony date for Mr. Caldwell before the grand jury. The testimony date is currently deferred, but AUSA Goldfarb indicated during the December 12, 2022 proffer call that the government anticipates requesting testimony in the first quarter of 2023. Preparation sessions should focus on the fund flow structure documented herein, the absence of direct personal transfers, and the areas of factual sensitivity identified in Section VII.
4. Cross-reference with related memoranda. This fund flow analysis should be read in conjunction with the following related work product:
• Memorandum — Analysis of 2019 Separation Agreement and Buyout Terms (January 5, 2023)
• Memorandum — Exposure Analysis: Jonathan R. Caldwell — Potential Criminal and Civil Liability (December 15, 2022)
• Memorandum — Summary of Government Communications and Proffer Sessions (December 20, 2022)
Attachment
The following attachment accompanies this memorandum:
Attachment A: "Fund Flow Analysis — Summary Tables" (fund-flow-analysis-tables.xlsx) — Excel workbook containing detailed tab-by-tab breakdowns for each investment vehicle (Fund III LP, Fund IV LP, Fund V LP, 710 Flatbush Holdings LLC, and Stavros-Caldwell Industrial LLC), with columns for date, description, source account, destination account, amount, running balance, and Bates-stamped document cross-references. The workbook also contains a master consolidated tab summarizing all transactions identified in this memorandum.
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT — PREPARED IN ANTICIPATION OF LITIGATION
This memorandum was prepared by attorneys at Calderwood & Harkness LLP at the direction of counsel in connection with the representation of Jonathan R. Caldwell. It reflects the mental impressions, conclusions, opinions, and legal theories of counsel and is protected from disclosure by the attorney-client privilege, the work product doctrine, and all other applicable privileges and protections. This memorandum should not be disclosed to any person outside the attorney-client relationship without the express written authorization of the supervising partner.
Matter No. 1034-00001 / Grand Jury No. 22-GJ-4481
Calderwood & Harkness LLP 450 Park Avenue, 30th Floor New York, New York 10022
Fund Vehicle | Investment Date | Amount Invested | Source Account | Destination Account | Distributions Received | Redemption Date | Redemption Amount | Bates References
Aegean Realty Fund III LP | June 14, 2016 | $2,500,000 | CCA operating acct. (Greaves Capital Markets -7842) | Fund III capital acct. (Westlake Fidelity -3019) | $735,000 | Dec. 20, 2019 | $2,475,000 | CALDWELL-00127 – 00168; 00212 – 00214; 00278 – 00280; 00341 – 00343; 00412 – 00414; 00487 – 00489; 00548 – 00550; 01288 – 01335
Aegean Realty Fund IV LP | March 22, 2017 | $4,000,000 | CCA operating acct. (Greaves Capital Markets -7842) | Harborview escrow (-8816), then Fund IV capital acct. (Westlake Fidelity -4527) | $650,000 | Dec. 20, 2019 | $3,775,000 | CALDWELL-00230 – 00284; 00356 – 00358; 00418 – 00420; 00476 – 00478; 00523 – 00525; 00572 – 00574; 01288 – 01336
Aegean Realty Fund V LP | Sept. 19, 2018 | $3,500,000 | CCA operating acct. (Greaves Capital Markets -7842) | Harborview escrow (-9024), then Fund V capital acct. (Westlake Fidelity -6193) | $485,000 | March 16, 2020 | $3,150,000 | CALDWELL-00430 – 00483; 00530 – 00532; 00580 – 00582; 00618 – 00620; 01340 – 01352
TOTALS | $10,000,000 | $1,870,000 | $9,400,000
JV Entity | Property | Acq. Date | Acq. Price | Total Equity | Caldwell Equity (%) | Caldwell Equity ($) | Lender | Loan Amount | Distributions Received | Buyout Date | Buyout Price | Source/Dest. Accounts | Bates References
710 Flatbush Holdings LLC | 710 Flatbush Ave., Brooklyn, NY | April 28, 2016 | $11,200,000 | $5,600,000 | 50% | $2,800,000 | Westlake Fidelity Bank, N.A. | $5,600,000 | $292,000 | Dec. 15, 2019 | $3,400,000 | JRC Realty (-2156) → Flatbush JV (-7301) | CALDWELL-00042 – 00126; 00625 – 00852; 01288 – 01388
Stavros-Caldwell Industrial LLC | 1500 Commerce Blvd., Newark, NJ | Oct. 12, 2017 | $8,900,000 | $3,560,000 | 40% | $1,424,000 | Westlake Fidelity Bank, N.A. | $5,340,000 | $343,000 | Dec. 15, 2019 | $1,850,000 | JRC Realty (-2156) → Newark JV (-5488) | CALDWELL-00860 – 00950; 00970 – 01082; 01288 – 01413
TOTALS | $4,224,000 | $10,940,000 | $635,000 | $5,250,000
Transaction Type | Entity | Date | Amount | Direction | Source Account | Destination Account | Bates Reference
LP Investment | Aegean Realty Fund III LP | June 14, 2016 | $2,500,000 | Outflow | CCA operati

MEMORANDUM

MATTER NO.: 1034-00001

GRAND JURY NO.: 22-GJ-4481

Record

Parties

Dates

Amounts