In early 2018, Cole Harris, a wealthy Republican businessman, spent millions on an unsuccessful bid for California lieutenant governor while attracting attention for flashy social media posts that showed him posing with a private jet, fancy cars and expensive French wine.
A recent lawsuit alleges that some of the money came from international real estate fraud, after Harris and his wife, Cindy Chen, wired millions out of a Chinese development company’s account.
“Upon information and belief,” the suit says, “Harris and Chen treated [the company’s] bank account as their personal piggy bank and transferred substantial company funds … for their personal use.”
Through his lawyer, Harris vigorously denied the charges and hinted at a potentially nasty legal battle. In an email exchange the attorney, Allen Felahy, also repeatedly cast aspersions on the plaintiff in the case, suggesting the company suing Harris could be “a State-owned Communist front,” although he offered no evidence to support the claim.
“Our position is that the allegations made by this Chinese company with potential ties to the communist government of China are absolutely baseless and shameless lies which will be dealt with in due course,” Felahy wrote. “I expect that not only [will] Mr. Harris be fully vindicated but may also pursue a claim against the Plaintiffs in the case after the claim is successfully dismissed.”
The suit was filed in late July on behalf of Tianjin River West Real Estate Development Company, a Chinese company based in the northeastern city of Tianjin that previously did business with a company founded by Harris and Chen called Tianjin Jailei Real Estate Development Company.
The Newport Beach-based attorney for Tianjin River West did not immediately respond to inquiries. The suit, filed in L.A. County in late July, alleges multiple types of fraud and is seeking a jury trial.
The two companies’ relationship dates back decades, according to the suit, when a mutual contact introduced Harris and Chen to River West. The couple represented themselves “as successful business owners and investors in the United States” who were looking to invest in China; around 2006, the two companies struck up a partnership deal to develop an education center project, according to the suit.
By 2013 that project was complete, and the two companies, eyeing more development projects, entered into a loan agreement: Under the joint deal, River West would borrow 140 million yuan — at the time around $22 million — from China Merchants Bank, and disburse 80 million yuan of the loan to Jailei.
“The companies also agreed to be jointly responsible for repayment of the loan’s principal, interest, and other expenses based on the agreed-upon split,” the suit says.
But a few years later, Jailei stopped making repayments to China Merchant Bank, according to the suit. River West, which was forced to make repayments on behalf of both companies, ended up suing the company in China multiple times and won court judgments. The firm, however, failed to collect most of the money because of court findings that Jialei did not have collectible assets, the suit says.
As part of a Chinese legal investigation stemming from those cases, River West then discovered bank statements that showed tens of millions of yuan transferring between the Jialei company account and Chen’s personal account — money that was allegedly used to fund the couple’s luxurious lifestyle in L.A. County and Harris’s failed 2018 lieutenant governor campaign.
River West is seeking compensatory damages of at least $8.1 million, as well as punitive and other damages.
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The lawsuit adds to a litany of allegations against Harris and Chen since the businessman’s $3.5 million campaign. In late 2018, amid a dispute with Majority Strategies, Harris’s Florida-based campaign consulting company over unpaid bills, the firm edited the candidate’s own website to advertise his over $1 million in debts to various campaign vendors, and the consulting firm ended up suing for $420,000. (At the time Harris denied wrongdoing, and the parties appear to have eventually settled.)
Another suit, filed in L.A. County in February, alleges that Harris and Chen were part of a group that conspired to steal an $8 million house in San Marino by fraudulently taking over the title. The same month federal prosecutors filed criminal charges against the couple alleging they were part of a group that had fraudulently obtained over $3.75 million in Covid-19 PPP relief funds. Both of those cases remain ongoing.