A Phoenix hotel was shut down by a combined city and federal law enforcement effort amid what officials termed was widespread prostitution and drug trafficking that had gone unhindered by the hotel owners and operators, who were charged with several crimes.

The FBI, U.S. Marshal Service and Phoenix Police executed search and seizure warrants at the Royal Inn hotel, 2510 W. Palo Verde Drive in Phoenix. Federal agents seized control of the hotel and shut down its operations, according to a press release.

The seizure came amid a 44-count indictment from a federal grand jury on Sept. 17 against the Royal Inn’s owner, operator and corporate entity. Those indicted were:

• 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 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.

Conviction of the above counts could lead to hundreds of thousands of dollars in fines and maximum penalties in some cases of up to 20 years in prison, officials said.

The indictment alleges 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 to September 2024, investigators allege they used money from the Royal Inn room rentals to maintain and promote the Royal Inn’s operations; pay the mortgage on personal property in Chino Hills; fund certificates of deposit; purchase life insurance policies; and pay for their own personal expenses, according to the press release.

The indictment also alleges Varsha Patel, Nilam Patel, and Sarang Hospitality LLC were aware most activities at the Royal Inn were illegal acts of prostitution, drug dealing, and drug using, according to the press release.

Phoenix Police officials repeatedly informed the three defendants of the drug dealing and prostitution activities on the property, of the hundreds of calls for service local police received. Despite having been served with multiple abatement letters, Royal Inn continued to operate as usual, officials said.

Assistant U.S. Attorneys Gayle Helart and Patrick Chapman, United States Attorney’s Office, District of Arizona, Phoenix, are handling the prosecution.