Federal authorities have charged a Los Angeles County woman with stealing $20 million from EB-5 investors who thought they were putting their money into the construction of a Coachella condo and hotel development.
FBI agents charged Ruixue “Serena” Shi of Arcadia with one count of wire fraud for allegedly perpetrating the scheme, according to the Los Angeles Times. Instead of putting the money toward the project, the defendant allegedly pocketed the cash from the Chinese investors, spending it on travel, clothes, meals and other personal expenses, authorities have charged.
Shi allegedly solicited the money for the project that was to be called Hyde Resorts and Residences Coachella Valley, according to the report. Shi was head of a China-based development company and a Beverly Hills-based entity.
According to authorities, Shi told investors they could obtain EB-5 visas by purchasing condo units at the complex, and carried out the alleged scheme from 2015 to 2018. The defendant allegedly told investors that her development company owned 47 acres for the Hyde Resorts and Residences project, had obtained necessary government approvals and had already broken ground on the project.
Shi sold the unbuilt condos — listed for between $400,000 and $700,000 — to her victims with a 40 percent down payment.
In reality, Shi only owned 20 acres, and never secured approvals required to break ground.
The EB-5 program provides green cards to foreign nationals who invest a large sum of money into a business or development project that creates jobs in the U.S. Last year, in an effort to curb fraud, the government increased the minimum investment from $500,000 in high-unemployment areas — or $1 million everywhere else — to $900,000 in high-unemployment areas, or $1.8 million elsewhere.
The program is a popular way for developers to raise capital for real estate projects, although interest from foreign investors has fallen in recent years because of backlogs processing green cards and the incidents of fraud. [LAT] — Dennis Lynch