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Remains of the lounge area of the legendary Hitching Post Motel

Remains of the lounge area of the legendary Hitching Post Motel are shown in this photo taken in 2010. The Cheyenne landmark burned to the ground in September of that year. A lawsuit filed in federal court this week alleges that the Hitching Post owners set the fire to collect insurance money.

CASPER, Wyo. — The owners of the Hitching Post Inn Resort and Conference Center allegedly conspired to burn down the legendary hotel in September 2010 to collect up to $13.6 million in insurance money, according to a civil lawsuit filed in federal court this week.

The Delaware-based CJM Hospitality LLC conspired in a pattern of racketeering with misrepresentations about buying the Hitch, applying for insurance and the investigation of the claim after the fire on Sept. 15, 2010, according to the complaint filed Wednesday by attorneys Pat Murphy and Scott Klosterman of the Casper firm Williams, Porter, Day & Neville.

Acts of “racketeering activity” include “the commission of arson of the Hitching Post Inn, and the conspiracy to commit arson of the Hitching Post Inn,” according to the complaint.

Mail, wire fraud

CJM’s owners and other defendants also committed mail and wire fraud to transmit false information and receive insurance funds, and misrepresented themselves about their finances and other matters, according to the complaint.

As a result, CJM has no right to claim anything for the damages, according to the complaint.

The Newark, N.J. law office representing CJM did not return a call Friday to comment on the allegations in the complaint.

Besides CJM Hospitality LLC, the other defendants are Atul Desai of Springfield, N.J.; Dr. Purshottam Bhangdia of South Setauket, N.Y.; Ajay Jariwala of Albuquerque, N.M.; Dipalie Jariwalla of Cedar Grove, N.J.; Falgun “Frank” Dharia of Wayne, N.J.; and Fidelity Bank of Florida in Merritt Island, Fla., as the mortgage holder for the Hitching Post Inn property.

Besides the racketeering allegations, National Surety Corp. said CJM voided its insurance policy when it misrepresented itself in its insurance application, concealed information during the investigation of the claim for damages incurred during the fire, and involved itself in setting the fire.

Likewise, Fidelity Bank of Florida should not recover any damages because it failed to cooperate with National Surety Corp. during the investigation.

On Friday, attorney Klosterman declined to comment on how the defendants knew each other.

He also declined to comment on whether a criminal investigation is underway.

Wyoming U.S. Attorney’s Office spokesman John Powell said he could neither confirm nor deny whether the federal government was conducting an investigation.

Legend and liabilities

The Sept. 15, 2010, fire destroyed the home away from home of legislators and politicians, businesspeople, lobbyists, journalists, sports figures, tourists and those just seeking a night’s rest and a good meal at 1700 W. Lincolnway, about a half mile northeast of Interstate 25 and about a half mile southwest of the Capitol.

The hotel had six buildings, 177 rooms, and 13,000 square feet of meeting space.

Longtime owner Paul Smith, who grew up working in the family-owned Hitch, died at age 61 in April 2006.

Later that year, Dharia of the New Jersey-based Mantiff Management Inc. signed an agreement to affiliate the hotel with the Best Western chain, obtained a $4.7 million loan from Fidelity Bank of Florida, and bought the hotel from the Smith family estate for about $7 million, according to the complaint and other public documents.

Dharia announced in December 2006 that his company was renovating the Hitch, and the lawmakers and lobbyists who regularly stayed there would have nothing to worry about for the 2007 general session of the Legislature.

But his Mantiff Cheyenne Hospitality LLC incurred mounting financial problems resulting in a decline of quality.

That decline reached a point where Best Western terminated its affiliation in October 2007, according to court records. Mantiff Cheyenne Hospitality later affiliated with the Ramada chain.

In June 2008, the Wyoming Secretary of State revoked the company’s license over delinquent business filings.

Mantiff Cheyenne Hospitality later filed for a new license.

By February 2009, the company filed for Chapter 11 bankruptcy, or business reorganization, in U.S. Bankruptcy Court in New Jersey, listing $4.8 million in assets and $8.5 million in liabilities.

Among its liabilities was $4.3 million it still owed Fidelity Bank.

Six months later, the bankruptcy judge authorized HREC Investment Advisors of Colorado to sell Mantiff Cheyenne Hospitality assets to HCW Hospitality LLC of Verona, N.J., for $3.7 million.

The second highest bid was $3.5 million from potential buyers including Pat Sweeney, owner of the Parkway Plaza in Casper.

While the sale forgave the debts, it didn’t fix the problems at the Hitch.

In September, Cheyenne city officials condemned the hotel after finding nearly 80 violations of health and safety codes.

Two months later, the bankruptcy judge authorized the transfer of rights from HCW Hospitality LLC to CJM Hospitality LLC, which was represented by defendant Desai.

Dharia was present at the closing with HCW and CJM and negotiated the purchase of the hotel for $1.05 million, according to the complaint by National Surety Corp.

While Dharia had experience running hotels with his multiple Mantiff corporations, CJM owners Desai and Bhangdia did not.

Seeking coverage

Meanwhile, Dharia attempted to obtain coverage from National Surety Corp. for the hotel under “CJM CORP DBA HITCHINGS POINTS INN,” but the insurance company denied that application in early May 2010, according to the complaint.

Later that month, defendant Jariwala contacted the Mahoney Group, which had helped him obtain insurance for two of his properties.

Jariwala told the Mahoney Group he owned the Hitching Post, there were no code violations affecting the hotel, the hotel would open in 60 days, all rooms would open and the hotel had not been denied previous applications for insurance.

With those misrepresentations, CJM acquired its insurance coverage in late May, according to the complaint.

The policy covered real property replacement costs up to $12,390,000, and covered business and personal property replacement costs up to $1,250,000, according to National Surety Corp.

Coverage inquiries

A little more than three months later, in early September, Jariwala called Mahoney Group to ask if coverage included replacement value of the hotel, and whether coverage existed if water was disconnected from the sprinkler system, according to the complaint.

The hotel burned for more than a day, leaving a blackened hulk.

Douglas Dawson, assistant special agent in charge at the Denver office of the federal Bureau of Alcohol, Tobacco, Firearms and Explosives, told reporters on Sept. 20 the fire was the result of arson.

Jariwala was at the scene of the fire, and had no comment about the cause being arson, he told reporters at the time.

The complaint said the ATF found six points of origin for the fire. National Surety Corp. hired its own investigators who found 13 points of origin, Klosterman said.

On Dec. 7, 2011, CJM sued the insurance company for failing to make good on its policy, saying it had cooperated by providing documents, submitted to interviews, and complied with the policy.

Klosterman said the CJM lawsuit is a separate legal action from the National Surety Corp. lawsuit filed Wednesday.

CJM now has 21 days to respond to his complaint, he said.

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