First National Realty Partners Lawsuit: Claims, Response, and Status

A Red Bank, New Jersey commercial real estate firm, First National Realty Partners, is the subject of a lawsuit brought by two groups of investors who say they were defrauded out of more than $21 million through misleading return promises and a fee structure that funneled money to entities controlled by the firm’s founders. FNRP has denied every allegation and is trying to push the dispute out of federal court and into private arbitration. As of mid-2026, a pending arbitration ruling in the District of New Jersey will decide where the fight goes next.¹

Who Is Suing and For How Much

Two investor groups are pursuing claims in the U.S. District Court for the District of New Jersey. The May group represents seven investors who put roughly $12.2 million into 21 FNRP funds. The McGrath group represents investors who put approximately $9.4 million into 28 funds. A second wave of eighteen additional investors later joined the McGrath case, bringing the total across both matters to more than 30 plaintiffs.²³

The defendants include FNRP, its advisory arm FNRP Realty Advisors LLC, co-founders Anthony Grosso and Christopher Palermo, and about a dozen other officers. Both groups are represented by attorney Mack Press.¹

The May counterclaims assert twelve counts. The McGrath complaint contains 34 causes of action, thirteen of which are identical or nearly identical to the May counterclaims. Between them, the claims include:

RICO and RICO conspiracy
Mail and wire fraud
Fraudulent inducement and fraudulent concealment
Federal and state securities violations, including the New Jersey Consumer Fraud Act
Negligent misrepresentation, negligence, and civil conspiracy
Unjust enrichment
Alter ego and respondeat superior claims to pierce the corporate veil

⁴

What Investors Say FNRP Did

The overarching allegation is that FNRP ran a series of Regulation D offerings structured to enrich its founders through layered fees rather than to deliver the returns promised to investors. An independent analysis by Securities Litigation and Consulting Group described FNRP as a “serial sponsor” of these offerings.⁵

Misleading Return Promises

Investors say they were told they would earn annual returns of 6% to 9% through what the lawsuit describes as a “sophisticated telemarketing operation.”¹ FNRP’s website advertised “12–18+% average annual investor returns,” a figure the SLCG report called “almost certainly false.” SLCG estimated that after fees, actual returns to investors were likely closer to 3% to 4% annually. According to the report, the website’s disclaimers about the target returns appeared in small, faded gray text described as “virtually invisible against the black background.”⁵

The Affiliated-Entity Fee Structure

The complaints and the SLCG analysis describe a network of affiliated entities controlled by FNRP’s founders, each extracting fees from individual investment funds. In a typical fund such as the Maple Park SC Realty Fund, the layers worked like this:

FNRP CVD LLC received 7.5% of the fund’s equity simply for contributing the deal.
The Managing Member entity received 30% of all cash distributions to public investors after their initial capital was returned.
FNRP Realty Advisors LLC charged a 1.9% organization fee, an annual asset management fee, and additional charges for leasing, loan origination, and property transactions.

SLCG calculated that under this structure, the founders’ entities would collect $28.10 in distributions before public investors saw a dollar beyond their original $100 investment. By the time $320 per $100 invested had been paid out, FNRP’s owners would have received $110 on a zero-dollar investment while the public investor received the same $110 on a $100 outlay.⁵ The lawsuits allege this amounted to FNRP “skimming more than half of the money for itself.”⁶

Other Alleged Misconduct

Investors also allege that FNRP overvalued the commercial properties it acquired, used variable-rate loans while telling investors the financing was fixed-rate, paid illegal commissions to salespeople, and falsely claimed that investors could cash out at any time and that managers held personal equity stakes in the properties.¹ Court filings also reference “unauthorized transfers and distributions” as part of what the complaints describe as a “systematic pattern of deception and fraud.”²

Press, the attorney for the investor groups, told the Asbury Park Press: “Their investments are toxic. They’re never going to get their money back, and they’re never going to get the returns they were promised.”¹

FNRP’s Response

FNRP has denied every allegation. In an official statement posted on its website, the firm called the lawsuits “meritless,” “frivolous,” and “untrue,” and described them as “retaliatory actions” by a lead investor and his attorney intended to “impose maximum damage to FNRP’s hard-earned reputation and to extract a quick payout.”⁷ Defense attorneys Omar Bareentto and Brian Carroll described the claims as “frivolous” and “baseless” in comments to the press.¹

The firm said a lead investor received a contempt-of-court sanction from a federal judge and was ordered to compensate FNRP after what the company called “a year-long pattern of extortionary threats.” FNRP did not name the investor or identify the court. The firm said it is “exploring various rights and remedies” against the litigants and is “entirely confident that FNRP will ultimately prevail and be fully vindicated.”⁷

No court has made any finding of liability against FNRP. The firm has continued operating during the litigation and, according to a Yahoo Finance report, distributed over $5 million to investors in the first quarter of 2025 and has paid more than $140 million in total distributions since its founding.⁸

Where the Cases Stand Now

The central open question is whether the investors’ claims will be heard in federal court or in private arbitration. FNRP argues that the investment agreements (including TIC Purchase Agreements, Asset Management Agreements, and Subscription Agreements) contain mandatory arbitration clauses requiring disputes to be resolved in Red Bank, New Jersey.⁹

FNRP’s Motion to Compel Arbitration in the May case is pending before Judge Michael A. Shipp. In April 2026, the parties in the McGrath case entered a stipulation, signed by Judge Shipp, that effectively freezes McGrath: FNRP’s deadline to respond to the amended complaint runs until 21 days after the court rules on arbitration in May, and that arbitration ruling will be “binding on all claims” in McGrath as well.¹⁰ A motion to consolidate the two cases was denied without prejudice in March 2026 by Magistrate Judge J. Brendan Day, pending the arbitration decision.¹¹

If arbitration is compelled, the claims move to a private forum in Red Bank. If the motion is denied, both cases proceed in federal court and could be consolidated. No trial date has been set in either case, and no court has ruled on the merits of the fraud allegations.

How the Litigation Got Here

The dispute became public in early 2025. The May investor group, through Press, had prepared a draft RICO and fraud complaint and threatened to contact the New Jersey Attorney General’s Office of Securities Fraud and Financial Crimes if settlement talks stalled.⁹

FNRP filed first. On February 10, 2025, the firm sought a declaratory judgment in the District of New Jersey to compel arbitration and asked the court to block the investors from suing anywhere else.¹² The investors filed their own complaint the next day in the Eastern District of New York, then voluntarily dismissed it without prejudice on March 7, 2025. Judge Shipp denied FNRP’s request for a temporary restraining order on June 5, 2025.⁹

The litigation resumed that summer. On July 24, 2025, Press filed a new federal complaint in the District of New Jersey for the McGrath group. The case, McGrath et al. v. First National Realty Partners LLC (No. 2:25-cv-13714), was formally filed on August 14, 2025.¹³ The May investors, meanwhile, filed their counterclaims inside the arbitration case FNRP had started. Both actions now sit behind the same threshold ruling on whether these disputes belong in court at all.

1
Asbury Park Press. Red Bank Real Estate Investment Firm Accused in Lawsuit of Shortchanging Investors
2
Casemine. First National Realty Partners LLC v. May
3
FNRPFraud.com. Additional Investors Join
4
GovInfo. First National Realty Partners LLC v. May, Memorandum Opinion
5
SLCG. FNRP Reg D Offerings
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FNRPFraud.com. FNRP Fraud – Investor Litigation Tracker
7
FNRP. FNRP Lawsuit Official Statement
8
Yahoo Finance. First National Realty Partners Surpasses Over $140 Million in Total Distributions
9
Midpage. First National Realty Partners LLC v. May
10
PACER Monitor. McGrath et al v. First National Realty Partners LLC et al
11
PACER Monitor. First National Realty Partners LLC et al v. May et al
12
GovInfo. First National Realty Partners LLC v. May, Case No. 3:25-cv-01119
13
FNRPFraud.com. Case Assignment