‘Monk’ Turned Mogul Is a Fraud, SEC Says

     SEATTLE (CN) – A real estate developer diverted siphoned nearly $18 million from Chinese investors who sent him $125 million, seeking residency under a visa program, the Securities and Exchange Commission claims in court.
     The SEC on Monday froze the assets of Lobsang Dargey, of Bellevue, and his “Path America” companies.
     Dargey, 41, and his cronies “fraudulently raised at least $125 million through their sales of securities to 250 investors and collected at least $11 million in additional fees,” the SEC says in its civil fraud complaint.
     Dargey had his “investors” send $500,000 apiece to an offshore bank, and $45,000 in “administrative fees” to U.S. accounts, according to the SEC. It claims he spent $14.7 million of the money on unrelated projects and $3 million on himself, including a $2.5 million home and $350,000 on gambling.
     The EB-5 visa program allows foreign nationals to qualify for citizenship if they invest $500,000 in business that create or preserve at least 10 jobs for U.S. workers.
     Dargey and his companies sold securities to Chinese investors, ostensibly for a farmer’s market and mixed-use commercial and resident development in Everett, north of Seattle. But they “misappropriated” $17.6 million of it, the SEC says.
     Defendants include Path America, Path America Farmer’s Market, Path America Kingco, Path America Tower and Path America Tower Seattle. Relied defendants Potala Shoreline and Potala Village Kirkland, also owned by Dargey, also profited from the frauds, according to the SEC.
     Using U.S. residency as a “lure,” the SEC says, “and the promise of investment returns, defendants have targeted and continue to target Chinese investors in a scheme to sell securities to finance two different real estate projects, a skyscraper in downtown Seattle and a mixed-use commercial and residential development containing a farmer’s market in Everett, Washington.”
     “However, rather than use the money solely for the projects for which it was purportedly raised, defendants have misappropriated approximately $17.6 million. For example, Defendant Dargey misappropriated approximately $2.5 million of investor funds to purchase a residence in Bellevue, Washington.
     “Further, Dargey made cash withdrawals of investor funds totaling approximately $350,000, including more than $200,000 withdrawn at 14 different casinos in Washington, Nevada, California, and British Columbia, Canada.
     “Defendants have also misappropriated approximately $14.7 million of investor funds for use in real estate projects under Dargey’s control through relief defendants Potala Shoreline, LLC and Potala Village Kirkland, LLC, which are unrelated to the projects for which the funds were raised.”
     The SEC seeks disgorgement, an accounting, and an injunction ordering Dargey, among other things, to return any money he’s sent out of the country. It also wants his house and other property he allegedly bought with more than $6 million of the pilfered money.
     “We allege that Dargey promised investors their money would be used to develop specific real estate projects approved under the EB-5 program, but he misused millions of dollars to enrich himself and jeopardized investors’ prospects for U.S. residency,” the SEC said in a statement.
     Dargey’s attorney, John Wolfe, with Orrick, Herrington & Sutcliffe, did not immediately respond to a request for comment.
     Dargey’s “Potala” projects are named after Potala Palace, the home of the Dalai Lama in Lhasa, Tibet, until he had to flee Chinese persecution. Dargey told the Times he used to be a monk in Tibet.
     Washington Lt. Gov. Brad Owen took a trip to Shanghai last year paid for by a Path America company, the Seattle Times reported. Owen told the newspaper Monday that it was “incredibly, incredibly upsetting” to hear that Dargey has been accused of fraud.

%d bloggers like this: