Coachella condo project at center of $20M alleged EB-5 fraud

Federal authorities say LA County resident and developer Serena Shi never secured permits for construction, and instead pocketed the money from Chinese investors

TRD LOS ANGELES /
Jun.June 22, 2020 10:00 AM
 Federal authorities charged developer Serena Shi in an alleged $20 million EB-5 scam
Federal authorities charged developer Serena Shi in an alleged $20 million EB-5 scam

Federal authorities have charged a Los Angeles County woman with stealing $20 million from EB-5 investors who thought they were putting their money into the construction of a Coachella condo and hotel development.

FBI agents charged Ruixue “Serena” Shi of Arcadia with one count of wire fraud for allegedly perpetrating the scheme, according to the Los Angeles Times. Instead of putting the money toward the project, the defendant allegedly pocketed the cash from the Chinese investors, spending it on travel, clothes, meals and other personal expenses, authorities have charged.

Shi allegedly solicited the money for the project that was to be called Hyde Resorts and Residences Coachella Valley, according to the report. Shi was head of a China-based development company and a Beverly Hills-based entity.

According to authorities, Shi told investors they could obtain EB-5 visas by purchasing condo units at the complex, and carried out the alleged scheme from 2015 to 2018. The defendant allegedly told investors that her development company owned 47 acres for the Hyde Resorts and Residences project, had obtained necessary government approvals and had already broken ground on the project.

Shi sold the unbuilt condos — listed for between $400,000 and $700,000 — to her victims with a 40 percent down payment.

In reality, Shi only owned 20 acres, and never secured approvals required to break ground.

The EB-5 program provides green cards to foreign nationals who invest a large sum of money into a business or development project that creates jobs in the U.S. Last year, in an effort to curb fraud, the government increased the minimum investment from $500,000 in high-unemployment areas — or $1 million everywhere else — to $900,000 in high-unemployment areas, or $1.8 million elsewhere.

The program is a popular way for developers to raise capital for real estate projects, although interest from foreign investors has fallen in recent years because of backlogs processing green cards and the incidents of fraud. [LAT]Dennis Lynch


Related Articles

arrow_forward_ios
Jose Huizar and a rendering of the project (Getty, City Market LA)

Huizar-tied community benefits fund linked to DTLA megaproject faces scrutiny

Huizar-tied community benefits fund linked to DTLA megaproject faces scrutiny
California State Senator Scott Wiener and Construction Trades Council President Robbie Hunter

Construction union pulls “anti-Semitic” Scott Wiener attack ad

Construction union pulls “anti-Semitic” Scott Wiener attack ad
California State Senator Scott Wiener

Coronavirus could hurt LA’s density push

Coronavirus could hurt LA’s density push
Renters across LA are at their wits end with construction and renovations (Credit: iStock)

LA renters stuck at home are fed up with ‘disruptive’ construction projects

LA renters stuck at home are fed up with ‘disruptive’ construction projects
Mayor Eric Garcetti and SoFi Stadium Justin Sullivan and Scott Varley/MediaNews Group/Torrance Daily Breeze via Getty Images)

LA will shut down construction sites that don’t follow COVID-19 guidelines

LA will shut down construction sites that don’t follow COVID-19 guidelines
Institutional investment in Los Angeles is lagging

LA is one of the trickiest cities for institutional investors to understand. Here’s why

LA is one of the trickiest cities for institutional investors to understand. Here’s why
Architect Simon Park and a rendering of the project (Credit: SSPSTUDIO ARCHITECTURE & URBAN DESIGN)

Boyle Heights slated for another mixed-use project

Boyle Heights slated for another mixed-use project
Monica Rodriguez orchestrated the nixing of a residential project set for the Verdugo Hills Golf Course (Credit: Google Maps, Wikipedia)

The threat of fire doomed this Tujunga resi project. Now the developer will sue

The threat of fire doomed this Tujunga resi project. Now the developer will sue
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...