Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Portfolio > Alternative Investments > Real Estate

SEC Charges Woman With Ripping Off Immigrant Investors to Go on a Cruise

Your article was successfully shared with the contacts you provided.

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.

Zhong and EB5 Asset Manager also made misrepresentations to investors about the use of U.S. EB-5 Investments’ funds and failed to disclose Zhong’s past failed real estate venture.

Investors were also falsely told that U.S. EB-5 Investments would prepare and provide unaudited financial reports to investors, the SEC complaint says, and that Zhong and EB5 Asset Manager “falsely claimed that certain investors’ funds would be held in escrow until the form filed by potential EB-5 investors to petition the U.S. Citizenship and Immigration Services (USCIS) for immigration status received that agency’s approval.”

Zhong and EB5 Asset Manager also made material omissions and false statements about conflicts of interest, and made false statements about the location of real estate development projects.

The SEC’s investigation is continuing.

— Check out Why Immigrants Are the New Clients You Need on ThinkAdvisor.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.