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November 19, 2015 at 11:08 AM
The Securities and Exchange Commission said Thursday that it 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.
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 — including a mixed-use commercial project planned for the City Center in Port St. Lucie, Florida — but that nearly $1 million of investor funds was diverted to such purchases as a boat, a BMW and a Mercedes.
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.
“We allege that Zhong promised investors their money would be used to develop real estate projects, but she misused their funds to enrich herself while making material misrepresentations and omissions to investors,” said Eric Bustillo, director of the SEC’s Miami regional office.
The SEC said that it 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.
The SEC’s complaint, filed earlier this month in U.S. District Court for the Southern District of Florida against Zhong, who also goes by the name Lily Zhong, states that between November 2011 and October 2014, Zhong used approximately $34,760 of EB-5 Investments funds for expenses that have no legitimate business purpose, such as a Carnival cruise, personal real estate taxes, homeowner association fees, health and other personal care expenses, and pet care expenses.
