Seaside Heights: Motels Continuing to Operate Without Licenses, Inspections

Properties selected for an investigation into redevelopment declaration, Seaside Heights, March 2022. (Photo: Daniel Nee)

Seaside Heights officials have alleged in court documents that as many as three motels are continuing to operate without mercantile licenses or valid inspections as a legal battle continues, with the latest court filing from the borough indicating ongoing issues, including an allegation of insects observed by an inspector on a recent visit to one of the establishments.

The long-running dispute came after the borough began proceedings to revoke the mercantile licenses of the Cloud 9 Inn, Atlantic Motel, Flamingo Inn and La Fontana Motel. Of those four, three – Cloud 9, Atlantic Inn and Flamingo – were all continuing to operate even after they were found by the borough to be in violation of numerous safety codes, zoning codes, using excessive police resources, and were the subject of an injunction issued by a Superior Court judge. All of the motels are at least partially owned by Edison businessman Sandip Patel, who was convicted in 2016 for stealing more than $81,000 in federal disaster relief funds from the Federal Emergency Management Agency (FEMA) by fraudulently claiming to provide temporary shelter to victims of Superstorm Sandy.

Last week, the borough council voted to adopt a decision by made by a hearing officer finding that there was sufficient evidence to permanently revoke the mercantile licenses of the final two motels, Cloud 9 and La Fontana. Patel and his legal representatives have since sued the borough in Superior Court, denying that they are operating illegally since they deny the code is “valid and enforceable.”

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“The hearing officer did determine, after two extensive hearings, that there was enough evidence to permanently revoke both of those licenses,” said Borough Administrator Christopher Vaz, referring to the Cloud 9 Inn and La Fontana establishments. Mercantile licenses are also recorded in court documents as having been revoked for Atlantic Inn and Flamingo Inn.

In a filing with the court June 25, 2025, Kenneth Roberts, the borough’s code enforcement and zoning officer, swore in a statement that the impartial hearing officer, attorney Michael McKenna, found the borough met its burden of proof to revoke the mercantile licenses for Cloud 9 and La Fontana after “clearly demonstrating that the operation of the Cloud 9 Inn and the La Fontana would substantially strain and diminish critical municipal resources, and would also be injurious to the overall public health, safety and welfare.”

In addition to the mercantile license revocation, the filing from the borough states, Cloud 9 “has outstanding State Fire Marshall violations that required the permits from the borough to perform the work.”

The owners, officials allege, completed the work without permits or inspections, then reopened for business.

“Despite the fact that the motel has no mercantile license, no certificates of occupancy, and a temporary injunction is in place preventing the operation of the motel without compliance with borough ordinances, the Cloud 9 is open and accepting guests,” the filing states.

Roberts told the court The Atlantic Inn currently has no mercantile license, and has experienced 119 police calls for service in the last year. The filing also stated a temporary injunction had been granted, preventing the facility from operating until it complies with codes and obtains sufficient licensing.

“I personally visited the Atlantic Inn the week of June 23, 2025 and witnessed insects crawling all over the front desk,” Roberts stated in the court filing.

The Flamingo Inn, likewise, has no mercantile license and has had 56 police calls for service in the last year, but continues to operate.

Shorebeat confirmed the Cloud 9 Inn was accepting reservations Tuesday night for $78, Atlantic Inn offered rooms for $75, and Flamingo for $61. La Fontana was not accepting reservations and has been listed as permanently closed by motel booking websites.

Patel, through his attorney, filed an answer to the borough’s request that the court enjoin him from opening the motels or leasing any parts of them until inspections are completed, the facilities pass the inspections, and are awarded mercantile licenses and certificates of occupancy. A default judgment had initially been entered against Patel, but both parties entered into a consent order July 3 which set aside the default judgment and provided Patel 10 days to file an answer. That answer was filed with the court Monday, denying the borough’s charges, claiming that motel inspections are a state function – rather than a municipal function – and demands attorneys’ fees from the borough in a counterclaim.

In his counterclaim, Patel also contended that he was a victim of a “targeted campaign to eliminate older, legacy hotel businesses … in favor of high-end condominium developments.”

The cross-complaint also accuses the borough of using its regulatory power to attempt to force Patel out of business, which constitutes a de facto unlawful taking of property.

Long before the borough’s current building boom, however, Patel faced legal issues over the quality of his establishments, including a lawsuit filed by the Travelodge motel chain seeking to compel him to remove the company’s name from one of his Seaside Heights properties following failed inspections made by Travelodge quality control personnel.

“We’ve been in court with these companies and individuals, and there is another court date coming up,” said Vaz, before the borough council unanimously voted to accept the decision rendered by the special counsel in the license revocation matter.

The original complaint against Patel and his companies, the statement filed by the zoning officer, and Patel’s answer filed Monday are embedded below.

Original Complaint:

Original Complaint Filed Against Motels by Shorebeat on Scribd

Code Officer’s Filing:

Filing by Code Enforcement Officer by Shorebeat on Scribd

Motel Owner’s Answer:

Motel Owner’s Answer by Shorebeat on Scribd