The Securities and Exchange Commission (SEC) in the United States has brought fraud charges against a Chinese businessman who holds a diplomatic position with the ruling New National Party (NNP) administration in the Spice Isle.
The powerful SEC has taken action against husband and wife, Charles C. Liu and Xin Wang aka Lisa Wang for allegedly defrauding at least 50 investors in a California oncology center.
Documents filed in court claims that the couple, now residing in California, took $27 million of investors’ money raised for a cancer treatment center for their own personal use.
Liu and Wang ran the alleged scheme using a federal immigrant investor program run by the U.S. Citizenship and Immigration Service, according to the May 26 SEC complaint.
The EB-5 Immigrant Investor Program sets aside visas for investors in approved commercial enterprises, so foreign investors can apply for two-year residencies in the U.S.
The plan was to build a new cancer center that would use proton radiation to treat patients, and Liu and Wang raised $27 million through 50 Chinese investors, according to the complaint, which was unsealed last week Thursday.
Liu and Wang also claimed their companies would create more than 4,500 jobs and would have a yearly impact of $728 million, according to the government.
The Chinese businessman is the holder of a diplomatic passport that was issued in St. George’s by the NNP administration.
The Mitchell government has identified Liu as the man behind the planned proposed 2 billion dollar investment project at Mt. Hartman.
His name has also surfaced as the person who will bankroll the administration in its efforts to battle the private-run Grenada Electricity Company GRENLEC on deregulation of the energy sector.
The SEC says Liu and Wang collected investments for more than a year and a half to build the new cancer treatment center, but construction never started.
“Rather than invest the investors’ Capital Contributions as promised – and as required for the investors to meet the EB-5 program requirements – the defendants misappropriated or diverted approximately $17.4 million from the accounts where the contributions were deposited,” the complaint states.
Liu diverted $7 million of the investor funds into his and Wang’s personal accounts, and transferred $11 million into three Chinese marketing firms, the SEC alleges.
A federal judge granted the SEC’s request to freeze Liu and Wang’s assets and accounts and prohibited them from raising more money from investors.
Michele Layne, director of the SEC’s Los Angeles office, said Liu and Wang “are using investor funds as their personal piggy bank and exploiting Chinese residents who were assured they were investing in an innovative project to create jobs and cure cancer patients.”
Liu and Wang, along with their associated companies, were charged with three counts of securities fraud.
The couple’s attorney, Edward Gartenberg, did not immediately respond to email and phone requests for comment Friday.
THE NEW TODAY was able to access the case that was filed in California against the Chinese couple.
The documents said in part: “This case involves an ongoing fraudulent scheme perpetrated by defendant Charles C. Liu (“Liu”) and his wife, defendant Xin Wang, a/k/a Lisa Wang (“Wang”), to defraud Chinese investors in the federal “EB-5 Immigrant Investor Program,” which is administered by the United States Citizenship and Immigration Service (“USCIS”).
To date, the defendants have defrauded at least 50 Chinese investors of almost $27 million by falsely claiming that their monies would be invested in a program that met the requirements of the EB-5 program, and would be used to build and operate a proton therapy cancer treatment center in Southern California.
The EB-5 Immigrant Investor Program was created to stimulate the U.S. economy with capital investment from foreign investors.
Under the program, foreign investors can receive a permanent visa to live and work in the U.S. if they make a capital investment that satisfies certain conditions over a two-year period, including the creation of jobs.
Under the program’s regulations, the foreign investors must put “the required amount of capital at risk for the purpose of generating a return.”
From at least October 2014 to the present, the defendants have offered and sold, and continue to offer, EB-5 investments to Chinese investors, allegedly to fund the development and operation of the cancer treatment center.
The investors made their investment in two parts: a $500,000 “Capital Contribution,” which was to be escrowed for use in developing and operating the center, and a $45,000 “Administrative Fee.”
Rather than invest the investors’ Capital Contributions as promised – and as required for the investors to meet the EB-5 program requirements – the defendants misappropriated or diverted approximately $17.4 million from the accounts where the contributions were deposited.
Liu misappropriated at least $6,285,000 for himself, and his wife and co-defendant, Wang, misappropriated at least $1,400,000. Liu also transferred over $11,845,000 to three marketing firms in China, including $3,500,000 to a firm of which Wang is CEO and Chairman of the board.
Liu also allowed most of the Administrative Fees to be used for undisclosed purposes. As a result, the EB-5 eligible cancer treatment center that the defendants represented would be constructed with investor funds has not been built.
Liu and Wang have carried out this fraud through a number of entities, three of which are named as defendants.
The defendants’ fraud is still ongoing. The majority of the funds dissipated by the defendants were transferred as recently as February and March 2016, shortly after the SEC subpoenaed Liu for investigative testimony.
Also, the website primarily used to offer the EB-5 investments to Chinese investors remains active, and continues to market and promote the investments in a materially misleading manner.
By engaging in this conduct, the defendants have violated, and continue to violate, the anti-fraud provisions of Sections 17(a) of the Securities Act, 15 U.S.C. § 77q(a), and Section 10(b) of the Exchange Act, 15 U.S.C. § 78j(b), and Rules 10b- 5(a) and (c) thereunder, 17 C.F.R. 240.10b-5(a) & 240.10b-5(c)”.