N.J. man admits to insurance fraud in Hitching Post fire case

Sept. 16--CHEYENNE -- A New Jersey man charged with aiding and abetting arson and several other crimes after the Hitching Post Inn caught fire five years ago has pleaded guilty to conspiring to commit insurance fraud.

Falgun Dharia was accused of engaging in mail and wire fraud to file an insurance claim for $13.64 million in damages caused by an intentionally set fire.

A federal grand jury in the U.S. District Court of Wyoming charged Dharia a year ago with six counts: conspiring to commit insurance fraud by mail and wire; aiding and abetting wire fraud; conspiring to commit arson; aiding and abetting arson; conspiring to use fire in the commission of another felony offense; and aiding and abetting the use of fire in the commission of another felony.

His case was transferred to the U.S. District Court of Eastern New York in July after he and federal prosecutors reached a plea agreement.

A notice filed in federal court here indicated Dharia would plead guilty in New York but did not say to which charge.

Dharia appeared in a New York courtroom on Sept. 1 and pleaded guilty only to the fraud charge.

Dharia's defense attorney, Robert S. Wolf of New York, said Tuesday by email that the rest of the counts listed in the indictment are proposed to be dismissed at the time of sentencing.

Wolf said Dharia did not admit any involvement in the arson.

According to Wolf, Dharia said on record that he filed the insurance claim shortly after learning that one of his partners, Ajay Jariwala, admitted responsibility for starting the fire.

"Although I had no prior involvement in the arson, I participated in filing the insurance claim," Dharia reportedly told the court.

Jariwala of Albuquerque, New Mexico, is serving a six-year sentence for conspiring to commit arson.

He pleaded guilty to the crime and was sentenced by U.S. Chief District Judge Nancy Freudenthal in September 2013.

Freudenthal also imposed three years of supervised release for Jariwala, fined him $10,000 and ordered him to pay $50,000 in restitution.

The crime to which Dharia pleaded guilty is punishable by zero to 20 years in prison, no more than three years of supervised release and up to a $250,000 fine.

A sentencing hearing is set for Nov. 20.

The indictment filed against Dharia says he purchased the Hitching Post in December 2006 for $5.95 million.

In April 2009, Dharia formed another company that bought the hotel about a year later for $1.05 million.

Two days before the late May 2010 purchase, the company obtained a $13.64 million insurance policy for the hotel.

At that time, Dharia arranged for Jariwala to oversee hotel renovations.

When the renovations became too costly, Jariwala hired Robert Rodriguez to set fire to the lodge building of the hotel so the company could cash in on its insurance policy.

Rodriguez in turn hired another man, identified in court documents as Marcus Trevino, to help set the fire.

They did so in the early morning hours of Sept. 15, 2010, by pouring gasoline in several places before setting the place ablaze.

Rodriguez reported to Jariwala when the deed had been done, and Jariwala called the insurance company.

Freudenthal sentenced Rodriguez in September 2013 to serve five years in prison, followed by three years of supervised release, for counts of conspiring to commit fraud and aiding and abetting arson. He was not fined but ordered to pay $50,000 in restitution.

Trevino was sentenced in June 2013 to serve two years in prison, followed by three years of supervised release, for the same crimes. He also was not fined but ordered to pay $2,000 in restitution.

Jariwala, Rodriguez and Trevino were ordered to share their obligation to pay restitution, meaning it's up to them to sort out who owes what portion.

All faced numerous other charges that were dismissed as part of plea agreements.

In addition, federal court documents in New York show Dharia pleaded guilty in August 2014 to two counts of bank fraud, making a false statement on a tax return and obstruction of justice.

Documents filed at that time accuse Dharia of minimizing his ownership in three Houlihan's restaurants so he didn't have to provide personal financial statements in order to obtain bank loans.

Dharia also reportedly used portions of the loans for other projects and investments without reporting his improper use of the funds to the bank.

He and his business partners wound up defaulting on the loans, causing the bank and the U.S. Small Business Administration to lose millions of dollars.

Documents say the same scenario played out with five hotels in need of renovation that Dharia and his business partners purchased throughout the U.S.

In November 2008, Dharia reportedly submitted an income tax return for the calendar year of 2006 that claimed a total loss in income of just over $1 million by submitting approximately $1.5 million in fraudulent deductions.

While Dharia reported owing no taxes that year, he in fact owed more than $77,000.

Dharia also was accused of hiding or destroying documents such as emails and bank loan documents after learning about an Eastern New York federal grand jury investigation into his various business dealings.

The government filed a letter in May requesting that Dharia's sentencing hearing in that case be put off for three months so leads he provided the government regarding other potential suspects could be investigated further.

A similar letter filed about a month ago asks the court to sentence Dharia in that case and the Hitching Post case at the same time.

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