Oct. 29, 2010--A Tampa cardiologist seeking to take over the former Hilton Pittsburgh admits to making mistakes in his dealings with an associate who once served as the hotel's asset manager.

On Thursday, he spent much of the day trying to explain them.

Testifying in U.S. Bankruptcy Court, Dr. Kiran C. Patel spent hours answering questions about his relationship and dealings with Jai Lalwani, the CEO of Black Diamond Hospitality who was instrumental in hotel affairs until recently.

New York lender BlackRock Financial Management Inc., which is seeking to foreclose against Shubh Hotels Pittsburgh LLC and reclaim the hotel property, has sought to tie Dr. Patel to Mr. Lalwani and Shubh, which it has accused of "gross mismanagement, incompetence, and deceitfulness" in the handling of the former Hilton.

BlackRock sought to foreclose after Hilton Hotels & Resorts terminated its franchise license agreement with Shubh, a default under Shubh's $49.6 million mortgage. Shubh filed for Chapter 11 bankruptcy protection in an effort to avoid foreclosure.

Dr. Patel is seeking to take over the hotel under a reorganization plan that would rebrand the property as a Wyndham Grand under the Wyndham hotel chain and repay allowable claims of contractors and vendors in full over several years.

Last month, Shubh transferred all equity to Dr. Patel.

In a full day of testimony, Dr. Patel was grilled about his relationship and dealings with Mr. Lalwani, in the end conceding that he had made a mistake in trusting him so much.

"In the bigger picture, I felt that I had failed in judgment and trust," he said. "I put too much faith and did some things that in hindsight I should not have done."

At the same time, Dr. Patel had harsh words for BlackRock.

He charged that the lender was not willing to risk any of its own money to shore up the financially struggling hotel, relying on a "fool like me to do it. That I am bitter about."

Dr. Patel estimates that he is owed $3.7 million for loans he advanced to the hotel to help keep it afloat and is now seeking to gain control of the property in order to protect his investment.

"I am the victim in this circus," he said. "The only person who lost money is me. I'm the sole supporter of this asset in this crisis."

Under questioning by his attorney, James Gassenheimer, Dr. Patel said he came to know Mr. Lalwani through his father in the close-knit Indian community in Tampa.

He ended up not only lending him $3 million for a business venture in Tampa but personally guaranteeing up to $5 million of the first mortgage to the State Bank of Texas.

The Lalwanis, he said, also introduced him to Shubh principal Atul Bisaria. At the time, the hotel needed $300,000 to $600,000. As time went on, Dr. Patel said he got "sucked ... deeper into the situation," and ended up providing much larger amounts as loans. He said he did so in hopes that the hotel would turn around and he eventually would be able to get his money back.

While Dr. Patel acknowledged that he told Jai Lalwani, who became the hotel asset manager, to "make sure my money is safe," he denied having a direct business relationship with him in either Black Diamond or Fuel Group International.

He was peppered with questions by Gregory Taddonio, an attorney for BlackRock, about various e-mails regarding Mr. Lalwani's efforts to find a replacement flag for the hotel after Hilton terminated the franchise and references to being Mr. Lalwani's partner.

However, Dr. Patel said the references involved deals that never materialized or were part of a pattern by Mr. Lalwani to say "different things at different times that are convenient to him." He accused BlackRock of "trying desperately to link me or associate me with the same brush as Jai."

He acknowledged sending more than $200,000 in wire transfers to Black Diamond in July and September. While he didn't remember the details, he added he has never denied lending Mr. Lalwani money. He also said he gave Mr. Lalwani, who no longer is allowed at the hotel, $55,000 last month so he could have legal representation.

Dr. Patel said he has confronted Mr. Lalwani about hundreds of thousands of dollars he has received from the hotel as well as $197,000 in payments that went to Mr. Lalwani's sister. Mr. Lalwani has said he earned all of the payments and that his sister got hers as owner of Black Diamond.

At the same time. Dr. Patel, who has a net worth of $225 million, described his reorganization plan as a "win-win." He said he would assume the $49.6 million mortgage and pay off allowed claims. He is "willing to be the last player to get my money out of this property."

"So why is this going on so long is the question I ask," he said.

When U.S. Bankruptcy Judge Jeffery A. Deller asked who is running the hotel, Dr. Patel said he wanted to take a more active role. "I'm willing to take the bull by the horns and make sure the buck stops here," he said.

Mark Belko: [email protected] or 412-263-1262.

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