Fraud Charges Brought in Cancer Center Scheme

     (CN) — The Securities and Exchange Commission claims in court that a California couple took $27 million of investors’ money raised for a cancer treatment center for their own personal use.
     The SEC accused husband and wife Charles C. Liu and Xin Wang aka Lisa Wang of defrauding at least 50 investors in a California oncology center.
     Liu and Wang ran the alleged scheme using a federal immigrant investor program run by the U.S. Citizenship and Immigration Service, according to the May 26 SEC complaint.
     The EB-5 Immigrant Investor Program sets aside visas for investors in approved commercial enterprises, so foreign investors can apply for two-year residencies in the U.S.
     The plan was to build a new cancer center that would use proton radiation to treat patients, and Liu and Wang raised $27 million through 50 Chinese investors, according to the complaint, which was unsealed Thursday.
     Liu and Wang also claimed their companies would create more than 4,500 jobs and would have a yearly impact of $728 million, according to the government.
     The SEC says Liu and Wang collected investments for more than a year and half to build the new cancer treatment center, but construction never started.
     “Rather than invest the investors’ Capital Contributions as promised— and as required for the investors to meet the EB-5 program requirements—the defendants misappropriated or diverted approximately $17.4 million from the accounts where the contributions were deposited,” the complaint states.
     Liu diverted $7 million of the investor funds into his and Wang’s personal accounts, and transferred $11 million into three Chinese marketing firms, the SEC alleges.
     A federal judge granted the SEC’s request to freeze Liu and Wang’s assets and accounts and prohibited them from raising more money from investors.
     Michele Layne, director of the SEC’s Los Angeles office, said Liu and Wang “are using investor funds as their personal piggy bank and exploiting Chinese residents who were assured they were investing in an innovative project to create jobs and cure cancer patients.”
     Liu and Wang, along with their associated companies, were charged with three counts of securities fraud.
     The couple’s attorney, Edward Gartenberg, did not immediately respond to email and phone requests for comment Friday.

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