EB-5 investors allege ex-developers of Miami immigration property diverted $70M
They allege funds were fraudulently transferred to entities controlled by Leo Wu and Benny Lam
The failed redevelopment of the former U.S. immigration building in Miami’s Upper Eastside sparked another lawsuit by the same foreign investor who previously sued the project’s developers for allegedly misappropriating more than $50 million.
Chun Liu, a Chinese national who was granted temporary U.S. residency and lives in Portland, Oregon, filed the March 16 complaint in Miami-Dade Circuit Court, seeking class action status. The suit is on behalf of himself and 139 other investors against Fu Jing “Leo” Wu and Wai Kin “Benny” Lam. Wu and Lam are the managers of Florida Fullview Immigration Building, the entity that owns the 3.5-acre property at 7880 Biscayne Boulevard.
Liu is seeking a court order freezing a potential $5 million payout that Wu would collect from the proposed sale of the property and a former trailer park spanning nearly 16 acres at 8500 Biscayne Boulevard, the new lawsuit states. The complaint also seeks to make Wu and Lam responsible for any amounts still owed to the investors if the sale proceeds are not enough to recoup their losses, Liu’s attorney Alexis Read said.
The proposed sale is the result of an agreement between Wu, Lam and Michael Goldberg, the court appointed receiver for Florida Fullview, to settle a 2020 class action lawsuit also brought by Liu.
Wu is not entitled to a “windfall” from the sale of the two properties as “he did not invest a single dollar” into the immigration building redevelopment project, Read said. “It was 100 percent investor money,” she said. “The pie is shrinking, so we made the decision to sue Wu and Lam for fraud. We are seeking damages to cover any deficiencies [from the sale proceeds].”
The latest lawsuit accuses Wu and Lam of fraudulently transferring about $70 million from the redevelopment project to unrelated U.S. and offshore entities they controlled. They then used the funds for their personal benefit, the lawsuit alleges. The pair raised about $50 million from 100 investors for the first phase of the project, and $20 million from 40 investors for the second phase, the complaint states.
Brian Barakat, the lawyer representing Wu and Lam, said his clients deny the allegations. “Thanks to the actions taken by Mr. Wu, all the investors, including Chun Liu, are getting their money repaid,” Barakat said. “This notion that the investors are out of anything is simply wrong.”
Settlement agreement or nothing at all
In 2013, Liu and 99 other investors each placed $500,000 and paid a $50,000 administrative fee with a Florida Fullview affiliate that raised the first $50 million, according to the 2020 lawsuit.
From that pot of money, Florida Fullview bought the immigration building site for $12.5 million.
The remaining funds were to be used for tearing down the immigration building and replacing it with Triton Center, a mixed-use project with a hotel, apartments, 25,000 square feet of commercial space and about 585 parking spaces, the 2020 lawsuit states. Triton Center qualified for the federal EB-5 visa program that allows participating investors and their immediate family members to obtain permanent U.S. residency for putting their money into projects that create at least 10 full-time jobs.
But Wu and Lam never delivered Triton Center, and instead allegedly diverted investor funds to other entities they controlled, including a corporation that paid $14.2 million for the Little Farm Trailer Park in El Portal in 2015, court filings show. In 2021, the city of Miami condemned the immigration building’s gutted shell, and the site remains dormant.
Liu and 20 other investors received temporary U.S. residency, but they have not been given permanent status, Read said. Other investors remained in China, and were unable to come to the U.S. due to the project never breaking ground, she added.
Goldberg, the court-appointed receiver, entered into the proposed settlement with Wu and Lam to avoid a prolonged and costly legal battle, according to a court filing from October of last year.
By agreeing to pay Wu $5 million from the sale of the immigration building site and the former trailer park, the receiver could move ahead with marketing and selling both properties to achieve the best possible outcome for the investors, Goldberg’s motion states.
“The payment to investors is the priority, and the receiver is hopeful that the sale will result in funds sufficient to make the investors whole,” Goldberg wrote. Investors can then redeploy their recovered capital into another EB-5 project, and reapply for permanent U.S. residency, Goldberg added.
Buyer backs out of trailer park purchase
In December, B Group Capital Management, a Miami-based real estate firm led by CEO Sebastian Barbagallo, submitted a $102 million stalking horse bid for the two development sites. But recent court filings show B Group backed out of buying the trailer park after discovering portions of the property are contaminated from old, abandoned septic tanks that Wu and Lam did not have removed.
On March 31, then-Miami-Dade Circuit Court Judge Michael Hanzman, in one of his final acts before retiring from the bench, issued an order approving just the sale of the former immigration property, court records show. B Group submitted a stalking horse offer of $23 million that any other potential bids have to beat.
The potential high cost of cleaning up the environmental waste at the trailer park has diminished the property’s market value, Read alleged. The receiver has a letter of intent from a potential buyer offering about $45 million, Read added.
If that’s the case, both properties would sell for a combined $68 million, instead of the $102 million B Group previously bid for the two sites.
“That’s a $34 million haircut,” Read said. “Investors are possibly looking at only getting 40 cents, 50 cents on the dollar. And, more importantly, they are not getting their visas. The ones who are in this country are at risk of being deported.”
Barakat disputed Read’s dire assessment of the trailer park’s market value. “Certainly, there are environmental concerns, and it has affected the value of the property,” Barakat said. “Even with that, the receiver expects these investors will be paid off. [The trailer park] is still an outrageously valuable property.”