In January 2019, Ahmad Javid received an email from an escrow officer asking him to reconvey, or release, Dutchints Development LLC from a $2.7 million loan Javid had made toward the development of a home in Los Altos Hills.
The reason, the escrow officer explained, was that Dutchints’ managing director, Vahe Tashjian, was refinancing and securing a new lender. The officer promised to put Javid’s deed of trust, containing the $2.7 million owed, back on the property afterward so that his money would still be secured.
Javid had no reason to worry. He and his wife, Safoora, were longtime Bay Area residents who lived in San Jose and retired more than a decade ago – Ahmad’s last job was with IBM; Safoora did property management. Now, in their 80s, the Javids had been drawn in by Tashjian’s business acumen and integrity. They started investing in properties owned by Dutchints, a Los Altos-based real estate developer that specializes in flipping multimillion-dollar luxury homes on the Peninsula.
The partnership, which began in 2017, was going well. The houses were being flipped. The Javids were being paid back. They even convinced their daughter, Dr. Roya Javid, to join in – she loaned Dutchints $1.8 million toward the development of a Los Altos home in November 2018. A few months prior, Tashjian had made his biggest splash yet, purchasing a 77,000-square-foot property at 5150 El Camino Real for $48 million with a dream of turning it into a high-density, residential development. Channeling their hospitable Persian culture, the elderly Javids invited Tashjian to their home for dinner several times to get to know him better.
“There was confidence,” Roya, a dermatologist in Carmel, told the Town Crier. “There was trust.”
So when Ahmad received that email in January 2019, he agreed to release Dutchints from the loan to allow for refinancing, but only if the new loan did not exceed the amount of his loan. But after several months, Tashjian told Ahmad in an email that the loan on the Los Altos Hills home had still not closed, partly because it was “contingent on me recapitalizing my large deal at 5150 which has taken much longer then (sic) anticipated.”
“Thanks Vahe,” Ahmad wrote back. “Wish you the best in all your endeavors.”
But according to a lawsuit filed by the Javids last September, Tashjian had already agreed to a new loan in April on the Los Altos Hills property, for a total that far exceeded the amount of the Javids’ note. With Javid having reconveyed the loan, his money was no longer secured – though he didn’t know it at the time. Tashjian had, according to the Javids’ lawsuit, convinced them to remove their loan security so he could show the new lender that there weren’t any existing liens on the property. That, the lawsuit alleges, was fraud.
Tashjian declined comment on the case, but in a written statement said he had paid the Javid family “millions of dollars in interest without any issues” over a 10-year relationship until the COVID-19 pandemic hit.
The Javids say the $2.7 million, in addition to the $1.8 million loaned by Roya, has still not been repaid. Their lawsuit claims $5 million in total damages.
The Javids are far from the only party accusing Dutchints of illegal behavior. Since the Town Crier published initial claims of Dutchints’ financial and legal troubles last August, numerous investors have come forward with additional allegations of the real estate development company mismanaging their funds. The concern includes the progress of 5150 El Camino, a project that would provide Los Altos with a desirable amount of below-market-rate housing units to help meet substantial state-mandated targets.
As of January, Tashjian or Dutchints is involved in at least 14 lawsuits in Santa Clara County. One pending action asks to combine 11 separate cases during the time period when parties can seek evidence, stating that all of the plaintiffs are seeking Dutchints’ financial records related to loans that were not repaid and promised security that was never provided. The lawsuits altogether seek tens of millions of dollars in damages and span numerous properties owned by Dutchints.
“This is an aberration; this is not common,” said Harry Price, the attorney representing several plaintiffs as well as the 11 plaintiffs in the action to combine the cases, in an interview. “That’s why there are so many lawsuits. It’s not the custom and practice of real estate developers to either withhold information from their investors, let alone dilute their investments. Those are both rules to be avoided.”
Price added that there is a possibility the cases would be consolidated for trial, either in a state court or if Dutchints files for bankruptcy.
In a written response to the allegations presented in this article, Tashjian said he never diluted investments without the approval of a majority of the investor group, denied withholding information from investors that he was required to provide and blamed the COVID-19 pandemic for impacting Dutchints and its projects.
“Between lenders stopping loans, investors stopping investments and tenants unable to pay rents, our capital sources dried up immediately, jeopardizing our projects,” Tashjian said. “As a result, we did have some hiccups in payments early on, and have been working with parties to make good.”
Some investors claim they are in the dark, despite repeatedly raising concerns directly to Tashjian and asking for financial records, worried that they are racking up large losses. Several investors and lenders who once trusted Tashjian now complain of a pattern of bad business practices involving manipulation over the past year. A method that Tashjian uses, according to those who have invested in Dutchints, is convincing investors to roll over money from loan payments that he owed them on one property into an investment on another property. The people, who became investors within the past couple of years, spoke freely about Tashjian and Dutchints to the Town Crier on the condition of anonymity because they are currently invested in a Dutchints property or fear retaliation.
Tashjian said there is “no factual substance to the claims” mentioned, and “we are working with our legal team to mitigate.”
The investors described a positive first impression of Tashjian upon meeting him a few years ago. He was a personable, high-energy young man, with a track record of turning a profit from building luxury homes in the area and the ability to work with local city councils to get projects approved, the investors said. Early investments landed as much as a 25-30% return, the investors claimed, leaving the investors little doubt that Tashjian could be trusted to partner with on another project. He was responsive, honest, even charming, they said. Everything, it seemed, was fine.
If Tashjian was struggling, his personal life didn’t reflect it to those who were giving him money.
“All is well,” he wrote in an email to an investor in the summer of 2019.
He invited investors to Golden State Warriors games in his private suite at Chase Center, the glistening new San Francisco arena. He was married in September 2019 at a lavish wedding at a Newport Beach golf course with several hundred guests. An investor who attended said they had “no clue” that anything was wrong.
Tashjian’s projects had been getting bigger, the size of his developments larger. And then he spent nearly $50 million on 5150 El Camino, or more than $12.6 million per acre.
Dutchints, which specializes in luxury homes, had never embarked on a property as ambitious and dense as 5150 El Camino. It would add at least 28 affordable housing units in Los Altos, boosting the city’s numbers as it lags behind state affordable housing targets. The size of the development – 196 total units across 3.8 acres, including a proposed park next to it – would be the first of its kind in the city. The developer had won the support of the city council for the project after numerous meetings and negotiations, and many questions from public commenters.
At least one lawsuit has been filed by investors on the property, alleging breach of contract. Investors in the project complain that their requests for financial records, bank statements and increased financial controls due to the state of the business since early last year haven’t been provided. The property next door that Dutchints was supposed to turn into a public park – one of the city’s conditions for the development – was put under a Notice of Trustee Sale last October and one investor said in recent weeks that it was in “serious foreclosure.” If the park isn’t built, the developer would be responsible for paying a $9.5 million park in-lieu fee. No visible progress has been made at 5150 El Camino, despite Dutchints projecting groundbreaking on its website by the end of last year.
Tashjian said Dutchints is in good standing with its only lender on 5150 El Camino, adding the lawsuit is being settled. Dutchints still has control of the neighboring property and remains committed to building the park, according to Tashjian.
Tashjian said the project has been delayed due to the pandemic, but that the ownership group remains committed to prioritizing the development and moving it along.
“I would like to note that we are not the only developer or real estate entity that has seen delays in the past year,” he said.
‘No idle threat’
The first lawsuit related to Dutchints’ properties was filed March 17 last year, just as the COVID-19 pandemic hit the Bay Area, and Tashjian said the company suffered a “substantial” impact from the virus’ economic effects.
Tashjian admitted that Dutchints took losses on “almost every project we sold” after the pandemic began. Many tenants couldn’t afford rent, he added, and investors who were “fearful of the unknown” speared an exit of “viable projects.”
“In other instances, it has been difficult to raise capital on projects to help stabilize them,” Tashjian said. “We had to substantially reduce our staff in order to reduce our overhead. Overall, it’s been a rough year and we are trying to move forward.”
But privately, as the lawsuits on numerous developments pile up, Tashjian has tried to fight back and has questioned investors’ loyalty. In letters to investors’ attorneys through Dutchints’ attorney, Michael Abbott, he has threatened to let projects fail unless investors take their lawsuit back, claiming that the loss of a project would result in damages of approximately $25 million.
“Rather than accede to the wrongful demands and damages caused by your public filings, my client will allow the entire project to fail and will seek the entire sum of its damages from you and your client,” Abbott wrote in one October letter obtained by the Town Crier. “This is no idle threat.”
Tashjian said Dutchints isn’t threatening its investors, nor is it letting its projects fail. He blamed “a few of the people in the investor groups” for making what he called “defamatory” statements in print and on social media “to cause us and our various projects to fail.”
“It’s left me at a loss,” Tashjian said. “In any environment, their insults and actions would cause damage. Under the present circumstances, wild and false accusations can be destabilizing. Our investors need to know that we are in tough times together. If we could work together, we’d all be better off. That has been our hope all along.”
The ongoing litigation has taken a toll on Dutchints’ public image. Its website, which once claimed it was “developing the Bay Area’s finest real estate” and provided a sleek, glitzy overview with the projected groundbreakings of its numerous multimillion-dollar buildings, is now in “maintenance mode.” Its Instagram page that once touted photos of its luxury homes no longer exists. Dutchints hasn’t posted on its Facebook or Twitter accounts in nearly a year.
“We don’t have any ongoing construction projects to show progress of,” Tashjian said. “We are currently working to resolve many issues and that is our primary focus right now.”