Federal Agents Seize and Shut Down Royal Inn Hotel in Phoenix Due to Drug Trafficking and Other Unlawful Activities

Owner, Operator, and Corporate Entity Charged with Travel Act violations, Money Laundering, and Maintaining a Drug Premises

PHOENIX, Ariz. – Today, the Federal Bureau of Investigation and United States Marshal Service, in coordination with the Phoenix Police Department, executed search and seizure warrants at the Royal Inn hotel, located at 2510 West Palo Verde Drive in Phoenix. Federal agents seized control of the hotel and shut down its operations due to widespread prostitution and drug trafficking activities that have gone unabated by its owners and operators.

Also today, the United States District Court unsealed a 44-count indictment returned by a federal grand jury on September 17, 2024, against the Royal Inn’s owner, operator, and corporate entity, among others. Specifically:

• Varsha Patel, 56, of Chino Hills, California, the owner of Royal Inn, was charged with two counts of Using a Facility of Interstate Commerce in Aid of Racketeering, one count of Maintaining a Drug Premises, and 34 counts of Promotional Money Laundering. Varsha Patel was also charged with multiple counts of Making False Statements to Obtain a Small Business Administration Loan.
• Sarang Hospitality LLC, aka Royal Inn, the Arizona corporation through which the hotel does business, was similarly charged with two counts of Using a Facility of Interstate Commerce in Aid of Racketeering, one count of Maintaining a Drug Premises, and 34 counts of Promotional Money Laundering.
• Nilam Patel, 54, of Phoenix, the live-in operator and day-to-day manager of the Royal Inn, was also charged with two counts of Using a Facility of Interstate Commerce in Aid of Racketeering, one count of Maintaining a Drug Premises, and 34 counts of Promotional Money Laundering.
• Four other individuals were charged with Distribution of Fentanyl and Methamphetamine for drug dealing at the Royal Inn: Anthony Curtis, 42, of Buckeye; Otis Childers, 31, of Phoenix; Chauntelle Mills, 24, of Phoenix; and Leonardo Guerrero, 49, of Phoenix.

The indictment alleges that defendants Varsha Patel, Nilam Patel, and Sarang Hospitality LLC, operated the Royal Inn by primarily renting rooms to individuals engaging in prostitution and drug dealing. From 2017 through September 2024, these defendants used the funds they obtained from the Royal Inn room rentals to maintain and promote the Royal Inn’s operations; pay the mortgage on personal property located in Chino Hills, California; fund certificates of deposit; purchase life insurance policies; and pay for their own personal expenses.

The indictment further alleges that Varsha Patel, Nilam Patel, and Sarang Hospitality LLC were aware that most activities at the Royal Inn were illegal acts of prostitution, drug dealing, and drug using. Over the course of several years, Phoenix Police Department officials repeatedly informed these three defendants of the drug dealing and prostitution activities on the property, of the hundreds of calls for service local police received, and of the need to abate the criminal activities taking place. Despite having been served with multiple abatement letters, these defendants continued to operate the Royal Inn to intentionally facilitate and profit from the criminal activities occurring on the premises. This included: renting rooms to persons who overtly engaged in prostitution, and to persons who distributed illegal drugs; directing the sex workers to attract sex buyers off the property, and to walk separate from the sex buyer while going to the room; directing the sex workers, pimps, and drug dealers to park off the property; alerting sex workers, pimps, and drug dealers of law enforcement presence; failing to request a credit card, together with a government-issued identification, in order to rent a room; failing to evict persons engaged in prostitution and drug dealing, thereby allowing lengthy stays at the Royal Inn without detection; and failing to call the police when criminal activities were occurring.

A conviction for Using a Facility of Interstate Commerce in Aid of Racketeering carries a maximum penalty of five years in prison and a $250,000 fine. A conviction for Maintaining a Drug Premises carries a maximum penalty of 20 years in prison and a $500,000 fine. A conviction for Promotional Money Laundering carries a maximum penalty of 20 years in prison and a $500,000 fine. A conviction for Making False Statements to Obtain a Small Business Administration Loan carries a maximum penalty of two years in prison and a $250,000 fine. A conviction for Distribution of Fentanyl and Methamphetamine carries a maximum penalty of 20 years in prison and a $1,000,000 fine.

An indictment is simply a method by which a person or entity is charged with criminal activity and raises no inference of guilt. A criminal defendant is presumed innocent until evidence is presented to a jury that establishes guilt beyond a reasonable doubt.

This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and gun violence, and to make our neighborhoods safer for everyone. On May 26, 2021, the department launched a violent crime reduction strategy strengthening PSN based on these core principles: fostering trust and legitimacy in our communities, supporting community-based organizations that help prevent violence from occurring in the first place, setting focused and strategic enforcement priorities, and measuring the results.

The Federal Bureau of Investigation, United States Marshal Service, and Phoenix Police Department conducted the investigation in this case. Assistant U.S. Attorneys Gayle Helart and Patrick Chapman, United States Attorney’s Office, District of Arizona, Phoenix, are handling the prosecution.
 

CASE NUMBER:           CR-24-01529-PHX-SPL
RELEASE NUMBER:    2024-127_Patel