Post by anenro on Nov 21, 2015 17:37:14 GMT 4
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23409 / November 19, 2015
Securities and Exchange Commission v. EB5 Asset Manager, LLC, et al., Civil Action No. 0:15-CV-62323 (S.D. Fla., filed November 3, 2015)
Assets Frozen in Alleged Immigration Scam
The Securities and Exchange Commission today announced it has obtained a court order freezing the assets of a South Florida woman and her company accused of purchasing a boat and luxury cars with money she raised from investors seeking U.S. residency through the EB-5 Immigrant Investor Pilot Program.
Under the EB-5 program, foreign citizens may qualify for U.S. residency if they make a qualified investment of at least $500,000 in a specified project that creates or preserves at least 10 jobs for U.S. workers. The SEC alleges that Lin Zhong and her company EB5 Asset Manager LLC raised at least $8.5 million for use by U.S. EB-5 Investments LLC in job-creating real estate development projects, but they diverted nearly $1 million to purchase a boat, a BMW, and a Mercedes among other improper personal uses of investor funds.
The SEC also obtained a court order appointing a receiver to administer and manage the business affairs and assets of the company and its subsidiaries for the protection of investors.
According to the SEC’s complaint filed earlier this month in U.S. District Court for the Southern District of Florida against Lin Zhong, who also goes by the name Lily Zhong:
Investors were told that money they invested in U.S. EB-5 Investments LLC would be used for real estate development including a mixed-use commercial project planned for the City Center in Port St. Lucie, Fla.
Zhong and EB5 Asset Manager diverted approximately $900,000 of those funds for unrelated personal uses that also included her own real estate taxes as well as education expenses for her family members.
Zhong and EB5 Asset Manager also made misrepresentations to investors about the use of U.S. EB-5 Investments’ funds and failed to disclose Zhong’s past failed real estate venture.
Investors were falsely told that U.S. EB-5 Investments would prepare and provide unaudited financial reports to investors.
Zhong and EB5 Asset Manager falsely claimed that certain investors’ funds would be held in escrow until the form filed by potential EB-5 investors to petition the U.S. Citizenship and Immigration Services (USCIS) for immigration status received that agency’s approval.
Zhong and EB5 Asset Manager also made material omissions and false statements about conflicts of interest, and made false statements about the location of real estate development projects.
The SEC’s complaint alleges that Zhong and EB5 Asset Manager violated the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. Zhong has agreed to stipulate to the asset freeze and receiver following a lengthy hearing on the SEC’s motions when the court issued a separate order granting expedited discovery, prohibiting the destruction of documents, and requiring Zhong, EB5 Asset Manager, and relief defendants to provide the SEC and the court with a sworn accounting of their assets.
The SEC’s continuing investigation is being conducted by Shelly-Ann A. Springer-Charles and Margaret Vizzi in the Miami office, and the case is being supervised by Eric R. Busto. The SEC’s litigation will be led by Alejandro Soto. The SEC appreciates the assistance of the USCIS.
See SEC Complaint
www.sec.gov/litigation/litreleases/2015/lr23409.htm
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 23410 / November 20, 2015
Securities and Exchange Commission v. Justin Moongyu Lee, Civil Action No. 2:14-cv-06865 (C.D. Cal.)
SEC Obtains Final Judgments Against Los Angeles Based Immigration Attorneys Who Defrauded Investors Seeking U.S. Residency, Ordering Payment of Over $8 Million in Monetary Relief
The Securities and Exchange Commission announced that it has obtained final judgments against a former Los Angeles-based immigration attorney, his wife, his former law firm partner and five entities he controlled for conducting an investment scheme to defraud foreign investors seeking to come to the U.S. through the EB-5 Immigrant Investor Program.
On October 29, 2015, the United States District Court for the Central District of California entered a final judgment against Defendant Justin Moongyu Lee, formerly an immigration attorney with an office in Los Angeles, and five entity defendants he controlled, after granting the Commission’s motion for entry of a final judgment by default. In addition to permanently enjoining the defendants from future violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, the judgment orders that the defendants are jointly and severally liable for disgorgement of $7,210,000, together with interest of $1,052,403.73, for a total of $8,262,403.73, and further orders Justin Lee to pay a civil penalty of $150,000.
Previously, on September 22, 2015, the court entered final judgments against Justin Lee’s wife, Rebecca Taewon Lee, and his former law partner, Thomas Edward Kent, pursuant to their consents. In addition to permanently enjoining Rebecca Lee and Kent from future violations of antifraud provisions, the court ordered them to pay disgorgement and penalties. Rebecca Lee was ordered to disgorge $92,255.85, together with interest of $13,207.31 for a total of $105,463.16, and to pay a civil penalty of $92,255.85; Kent was ordered to disgorge $102,548.20 together with interest of $14,680.80 for a total of $117,229, and to pay a civil penalty of $102,548.20. Previously, Kent had consented to entry of a permanent injunction and to be denied the privilege of appearing or practicing before the Commission as an attorney, with monetary relief to be determined at a later date. Rebecca Lee and Kent consented to entry of the judgments against them without admitting or denying the Commission’s allegations.
The SEC alleged that the defendants raised nearly $11.5 million from two dozen investors, primarily from China and South Korea, who sought to participate in the EB-5 program, which provides immigrants an opportunity to apply for U.S. residency by investing in a domestic project to create jobs for U.S. workers. The Lees and Kent told investors that they would be EB-5 eligible if they invested in an ethanol production plant the defendants would build and operate in Ulysses, Kansas. Instead, the defendants misappropriated the investors’ monies. The plant was never built and the promised jobs never created, yet the Lees and Kent continued to misrepresent to investors that the project was ongoing.
See also Litigation Release No. 23077 (September 4, 2014); Securities Exchange Act Rel. No. 74385 (February 26, 2015).
www.sec.gov/litigation/litreleases/2015/lr23410.htm