The popularity of EB-5 “cash-for-visa” program may have long since diminished, but lawsuits relating to the federal initiative just keep on coming.
In the most recent allegation of fraud, one Chinese investor is claiming his $500,000 investment for a Hilton hotel construction project in El Monte was redirected to a Long Beach home construction project without his knowledge.
Minghui Zheng alleges California Investment Regional Center and its affiliate, Los Angeles City Plaza LP, solicited Zheng to invest $500,000 into the Hilton Garden Hotel project in 2015, according to the lawsuit filed in Los Angeles Superior Court. Developers often open regional centers to gather investments together and commit them to large projects. In this case, Zheng was promised a 1-percent stake in the project — expected to be valued at $60 million upon completion — and a U.S. green card, according to the complaint.
By 2018, there was no update on the project or progress on the green card. Zheng decided to check on the status of his EB-5 application with attorney Daqin Zhang, a defendant in the suit. What Zheng realized was that his signature had been forged on various documents, and the $500,000 had been redirected to a home construction project in Long Beach, the suit claims.
According to the California Investment Regional Center website, the company mostly funds projects within the state and in Hawaii. Its Long Beach Garden Home project is expected to span 106,000 square feet, and include apartments and a retail component. The total investment cost is $20 million, according to the website.
An attorney for Zheng did not respond to requests for comment. No one from the regional center could be reached.
Zhang, however, alleges that “all the claims” are wrong, he wrote in an e-mailed statement.
“We believe Minghui Zheng’s suit against us was driven by his misunderstanding of our roles…or a litigation tactic advised by his lawyer,” Zhang wrote. “He should not blame his immigration attorney for the investment project he chose or an immigration category he chose, or visa backlog that is beyond our control.”
He also added that his law firm did not refer Zheng to the regional center, nor forge his signatures on any documents.
Zheng is suing for damages, citing “severe mental and emotional distress, shock, humiliation, mortification, anguish, psychological trauma and damage” to his nervous system.
The EB-5 program allows foreign investors to obtain lawful permanent residence status in the U.S. if they invest at least $500,000 in a job-creating development project in the U.S.
Recently, EB-5 applications have been diminishing amid a backlog of visa applications and allegations of fraud that have encompassed numerous lawsuits from overseas investors.
EB-5 lawsuits vary widely in scope. In one example in June, the former head of a regional center sued Extell Development in New York and its founder, Gary Barnett, for $65 million. Lela Goren, who worked as a director at Extell New York Regional Center, said Extell breached its fiduciary duty and engaged in fraud. That regional center had raised almost $500 million since its inception in 2010.