Archive

December 7, 2015

The SEC announced a series of enforcement actions against lawyers across the country charged with offering EB-5 investments while not registered to act as brokers.  The SEC settled administrative proceedings against at least seven immigration law firms and/or attorneys, who agreed to cease and desist from acting as unregistered brokers, and collectively will pay over $700,000 in disgorgement, penalties, and prejudgment interest.  The SEC also filed a complaint in federal district court in Los Angeles alleging that immigration attorney Hui Feng and the Law Office of Feng & Associates not only acted as unregistered brokers by selling EB-5 investments to more than 100 investors, but also defrauded their clients by failing to disclose their receipt of commissions on the investments in breach of their fiduciary and legal duties. SEC

November 19, 2015

The SEC obtained a court order freezing the assets of Lin Zhong and her company EB5 Asset Manager LLC.  The SEC alleges that Zhong and EB5 raised at least $8.5 million for use in job-creating real estate development projects, but they diverted nearly $1 million to purchase a boat, a BMW, and a Mercedes among other improper personal uses of investor funds.  SEC

August 25, 2015

The SEC obtained court authorization to freeze the assets of Mr. Lobsang Fargey, a Bellevue, Washington man accused of defrauding Chinese investors seeking U.S. residency through the EB-5 program.  The SEC alleged that Dargey and his “Path America” companies raised at least $125 million for two Washington-based real estate projects, but Dargey diverted $14 million for unrelated real estate projects and $3 million for personal use.  The court’s order also restrains Dargey from soliciting additional investors and requires him to repatriate funds transferred to overseas bank accounts.  SEC

July 6, 2015

The SEC charged Bay Area oil and gas company, Luca International Group, and its CEO, Bingqing Yang, with running a $68 million Ponzi-like scheme and affinity fraud that targeted the Chinese-American community in California and investors in Asia, including some solicited as part of the EB-5 Immigrant Investor Program.  SEC

June 23, 2015

The SEC charged Ireeco LLC and Ireeco Limited with illegally brokering more than $79 million of investments by foreigners seeking U.S. residency through the EB-5 Immigrant Investor Program.  The companies are charged with acting as unregistered brokers for more than 150 EB-5 investors.  SEC

January 27, 2016

The FTC has filed suit against the operators of DeVry University, alleging that DeVry’s advertisements deceived consumers about the likelihood that students would find jobs in their fields of study, and would earn more than those graduating with bachelor’s degrees from other colleges or universities. “Millions of Americans look to higher education for training that will lead to meaningful employment and good pay,” said FTC Chairwoman Edith Ramirez. “Educational institutions like DeVry owe prospective students the truth about their graduates’ success finding employment in their field of study and the income they can earn.” FTC

September 3, 2014

The SEC charged Los Angeles-based immigration attorney Justin Moongyu Lee along with his wife Rebecca Taewon Lee and law firm partner Thomas Edward Kent with conducting an investment scheme to defraud foreign investors trying to come to the U.S. through the EB-5 Immigrant Investor Program.  According to the SEC, they raised nearly $11.5 million from two dozen investors seeking to participate in the EB-5 program, which provides immigrants an opportunity to apply for U.S. residency by investing in a domestic project to create jobs for U.S. workers.  The Lees and Kent informed investors that they would be EB-5 eligible if they invested in an ethanol production plant they would build and operate in Ulysses, Kansas.  However, investors’ money was misappropriated for other uses and the plant was never built and the promised jobs never created.  SEC

December 21, 2015

Texas-based University Furnishings LP and its general partner, Freedom Furniture Group Inc., agreed to pay $15 million to settle charges they violated the False Claims Act by making false statements to avoid paying duties on wooden bedroom furniture imported from China.  According to the government, between 2009 and mid-2012, University Furnishings misclassified wooden bedroom furniture on documents presented to U.S. Customs and Border Protection (CBP) to avoid paying antidumping duties on imports of wooden bedroom furniture manufactured in China.  The companies allegedly classified the furniture as office and other types of furniture not subject to duties while selling the furniture in the student housing market for use in dormitory bedrooms.  The allegations originated in a whistleblower lawsuit brought by University Loft Company under the qui tam provisions of the False Claims Act.  University Loft will receive a whistleblower award of $2.25 million from the proceeds of the government’s recovery. DOJ

November 20, 2015

The University of Florida agreed to pay $19.875 million to settle allegations the university improperly charged the U.S. Department of Health and Human Services for salary and administrative costs on hundreds of federal grants.  According to the government, the university overcharged hundreds of grants for the salary costs of its employees, where it did not have documentation to support the level of effort claimed on the grants for those employees.  The government also contended the university charged for impermissible administrative costs for equipment and supplies and inflated costs charged to the grants.  DOJ

November 16, 2015

Pittsburgh-based for-profit education company Education Management Corp. agreed to pay $95.5 million to resolves allegations it violated the federal False Claims Act and several state False Claims Acts by falsely certifying it was in compliance with Title IV of the Higher Education Act and parallel state statutes.  The government alleged the company violated the statute’s Incentive Compensation Ban by running a high pressure boiler room where admissions personnel were paid based purely on the number of students they enrolled.  The allegations first arose in series of whistleblower lawsuits filed under the qui tam provisions of the False Claims Act.  The whistleblowers will collectively receive a whistleblower award of $11.3 million from the proceeds of the government’s recovery.  Whistleblower Insider IN, IL, IA, MT, NJ, NY, NM, VA, WA