- An American businessman (if swindling is a business) and two colleagues with Chinese names conned 200 Chinese EB-5 investors into placing $110 million in EB-5 funds into his DHS-designated regional center’s projects;
- They co-mingled the funds with other investments and otherwise wasted much of this money;
- The Securities and Exchange Commission noticed and managed — three years ago — to freeze the assets of the trio in a civil action, as we reported at the time;
- Federal prosecutors finally filed criminal charges earlier this month;
- It all happened in California.
The EB-5 program rewards alien investors with a set of green cards for the family if they invest $500,000 per family in projects designated by, but not guaranteed by, the Department of Homeland Security.
The trio charged in California are Tom Henderson, Kexing Hu (aka Peter Hu), and Cooper Lee; they were indicted for several counts of conspiracy and wire fraud in the Northern District of California. If convicted they face up to 20 years in jail, though sentences that harsh are rare in the EB-5 business.
There was one different element in this one: The State Department’s Diplomatic Security Service played a role in the prosecution. Visas of all kinds, including those for EB-5 aliens, are issued by the State Department, but I have not seen the department mentioned in prior stories about EB-5 fraud.
Incidentally, if you look up Henderson’s San Francisco Regional Center on the long list (more than 800 names) of DHS-authorized regional centers, you will find that it is still on the roster — despite the SEC’s actions three years ago.
The PACER file of court documents in this instance is case 4:19-cr-00376-JSW.