LOS ANGELES (CN) – Fraudsters rolled Chinese investors for $14.5 million by claiming that if they put the money into a debt-ridden California mall they could get legal residency, the investors claim in court.
Plaintiffs Liu Aifang et al. all applied to become permanent U.S. residents by investing $500,000 each in a limited partnership called Velocity VIII.
The investment fund is based in either Pasadena or Century City, the alleged victims say in the federal lawsuit.
Through Powerpoint presentations in Shanghai, defendant Catherine Guan told investors their money would be used to renovate and lease a profitable fashion mall in Indio, Riverside County.
The investors say defendants told them the mall would be ready to open in one year, that retailers like Walmart were going to rent space, and that the mall leases would generate $2.78 million a year.
The defendants used several supporting documents to reel the investors in, they say.
But they say the money wound up in a California-based limited liability company called REO Group, which is controlled or managed by the individual defendants.
REO used investors’ money to secure title to the Indio mall, which the investors say was already in debt and “essentially worthless.”
Under an EB-5 visa, foreign nationals are invited to invest at least $500,000 to help create jobs in rural parts of the country or in towns and cities with high unemployment.
EB-5 agents act as middlemen between regional centers designated by the U.S. Citizenship and Immigration Services and potential foreign investors. The plaintiffs say they worked with an immigration broker named Ronald Hse, who is not a party to the lawsuit.
Named as defendants are Velocity VIII Limited Partnership, Velocity Regional Center, REO Group Properties, Yin Nan Wang aka Michael Wang, Yunyan Guan aka Christine Guan, Ben Pang, REO Property Group LLC, and Frank Zeng.
Last year the SEC sued Wang and Wendy Ko in Federal Court, winning an emergency asset freeze against their companies.
The SEC claimed that Wang had raised more than $150 million from 2,000 investors by selling assets in Velocity.
“The SEC sought emergency action to prevent the further dissipation of investor assets through an expected set of upcoming Ponzi-like payments,” Michele Wein Layne, SEC Los Angeles Regional Office director, said in a Nov. 1 statement. “Wang falsified financial records and used another company to create the illusion of legitimate economic activity.”
The new lawsuit seeks damages for securities fraud, fraud, and breach of fiduciary duty.
The plaintiffs are represented by Mike Margolis with Blank Rome.
A representative for Wang did not immediately respond to a request for comment.
- Sexual Perverts
- 5th Circuit Upholds IRS Penalties Against Dow