You might call it the Dalai Lama's Revenge; it certainly is yet another one of those EB-5 scandals that pop up every few weeks.
This time the main ingredients are Lobsang Dargey, 41, who calls himself a former Tibetan monk turned real estate tycoon; 252 Chinese nationals who have invested in his EB-5 scams in the state of Washington; and real estate projects bearing the name of Potala — the palace that the Dalai Lama used to live in before being evicted by the Chinese government.
The EB-5 program provides a set of green cards to investors, their spouses, and their children in return for a half-million-dollar stake in a project approved by, but not guaranteed by, the Department of Homeland Security. The department's loose administration of this program, which has attracted a number of bad actors, has led to a series of scandals throughout the country, as we have reported earlier.
Yesterday, the Securities and Exchange Commission said that some of the $125 million Lobsang raised via the EB-5 program had been used "as his personal piggy bank", according to the Seattle Times. Lobsang had, it reported, "diverted millions to spend on a $2.5 million Bellevue [Wash.] home", and
Between 2012 and June 2015, Dargey withdrew about $300,000 in cash from the investor funds. More than two-thirds of those withdrawals were made at 14 gambling establishments, ranging from top Las Vegas casinos like the Bellagio to Washington's Tulalip Resort Casino and others in California and British Columbia.
Lobsang, who controls Path America, a development firm, raised millions from the Chinese to fund Potala Farmer's Market, a hotel, apartment, and retail project in Everett, as well as Potala Tower, in downtown Seattle. It is not known whether any of the Chinese investors caught the irony in the names of the projects.
Lobsang extracted from each of the investors a fee of $45,000 over and above the investment itself. This is legal, but the 9 percent fee structure appears to be on the high side in this business.
SEC said that he diverted $17.6 million for his own use. At the SEC's request, U.S. District Court Judge James Robart issued a temporary injunction yesterday, freezing the assets of Lobsang and his firms.